After all, the IEA just increased their forecast for global oil consumption in 2010. According to their report this morning, world oil demand is expected to rise by 1.3% to 85.7 million barrels per day next year. If you’re counting, that’s an increase of nearly half a million barrels per day over their previous estimates.
Meanwhile, OPEC members converged this week and decided to keep oil quotas unchanged. No shock there, especially considering oil prices have been holding steady between $65 and $75 per barrel.
However, BP’s new discovery in the Tiber prospect isn’t as rosy as it seems.
Let’s assume (for now, at least) that BP is correct in predicting this new field is the same size as their other discoveries in the Gulf of Mexico. That comes out to about 3 billion barrels of oil in place.
Try not to make the same mistake that other, overexcited people have with this discovery. If anything, it’s proof of how far we need to go to continue pumping crude. In order to reach the discovery, Transocean drilled a well to a depth of 35,000 ft. That makes this the deepest well drilled to date in the oil and gas industry.
Believe me, it’s not an easy feat to extract this oil. It’s not as simple as setting up a rig on Texas soil and drilling until you hit pay dirt. Some of you may recall the technological difficulties involved in developing offshore oil and gas.
There are a few other problems, too. For starters, the Gulf of Mexico hasn’t exactly been the least volatile area when it comes to oil and natural gas production. BP will be on their toes whenever we enter a hurricane season. One storm has the power to completely shut-in production, and that’s not to mention the potential damage to the infrastructure itself.
And then there’s the problem of time. The real question is how long we’ll have to wait for BP to begin pumping oil from this field. I’ve heard projections between three and seven years being thrown around. Either way, BP isn’t shouldn’t be expecting this production for quite some time.
Of course, by then we’ll be needing that oil more than ever before.
Until next time