Comment

7 May 2009

Black gold has positive future

Oil has a strong future.

While you might expect that kind of reaction from those attending the Offshore Technology Conference (OTC) in Houston, all you have to do is look at the facts.

With the disappearance of a real research in renewable energy over the past eight years, it becomes abundantly clear renewable energy will gain strength in the coming decades, but the numbers simply show wind, solar and biofuels will do it all.

Even if the U.S., and the world for that matter, hikes renewable up to 20% to 30% of capacity, that means fossil fuels have a solid future. Couple that with heightened energy needs from growing economies, and that adds up to a bright future for the oil and gas market.

“The Obama administration has suggested renewable energy is just around the corner,” said Larry Nichols, chairman and chief executive at Devon Energy. “Obama said wind energy will account for 20% by 2020, however the Energy department said it will only supply, at best estimates, 11% by 2030.”

“What the U.S. does not need is further restrictions on offshore development,” he said.

No one denies oil and gas have an end in sight, but there is a thought there is more oil out there just waiting to be tapped.

“Hydrocarbons are finite, but we still have plenty to go, said Tim Cejka, president Exxon Mobil Exploration Co. “The world is not running out of energy resources. We are now able to find reservoirs well below the surface.”

From Brazil to Mexico and the U.S. to Asia, all regions are going to continue to push oil exploration and production.

Mexico feels they have an additional 45 billion barrels of oil equivalent, and new technologies will allow for exploration and discovery.

“Our new frontier is in deep water,” said Carlos Morales Gil, general director of exploration and production for Mexico’s state-owned petroleum company. “We plan to expand a drilling program to the 10,000 foot environment.”

“Brazil is producing 2.4 million barrels a day right now, and that will increase to 2.7 million,” said Nelson Narciso, director of ANP, Brazil’s National Agency of Petroleum, Natural Gas and Biofuels.

Even the U.S. wants to start producing more oil. In a taped message, U.S. Sen. Lisa Murkowski from Alaska gave her views on where she stands on energy policy under the new administration.

“Domestic energy production is under attack,” she said. “We should be developing our own oil and gas reserves,” Murkowski said in her taped message. “If we don’t produce our own oil and gas, it will hurt when the economy comes back, we will be more dependent on foreign oil and prices will continue to go up.”

Even Asia wants to produce more.

Bob Fryklund, vice president at IHS, said there is potential for oil and gas recovery in the disputed areas of the region. Once political settlements are reached by China, Taiwan, the Philippines, Brunei, Cambodia, Vietnam, Indonesia and other players, work can move forward.

Evidence that development is not far off, Paul Tossetti, director at PFC Energy, said China and India are building more refineries and will soon export gasoline and other petroleum products.

“Also in 2009, there will be an increase and surplus of liquefied natural gas (LNG) in the region while at the same time the demand is woeful. Beyond 2009 and in 2010 this excess will be absorbed by China and India,” Tossetti said.

Even the Arctic seems ripe for development.

Total (25%), StatoilHydro (24%), and Gazprom (51%) are jointly developing the Shtokman. The Shtokman field is one of the world's largest natural gas fields and it lies in the central part of the Russian sector of the Barents Sea, 600 kilometers (370 mi) north of Kola Peninsula.

 “We talk about the resources that are out there, but in reality we just don’t know,” said Karen Harbert, president and chief executive, U.S. Chamber of Commerce’s Institute for 21st Century Energy.

 -- Gregory Hale