Full steam ahead as energy sources come in abundance

Syed Rashid Husain

THIS is a long way - from the Peak Oil era. The energy world has traversed a long, long distance from the gone by days, when people like the late Matthew Simmons, were in plenty all around - occupying the center stage - and howling at their full voice the oil era is about to end.

No - not at all - it now seems. The earth is not running out of oil and gas - any time soon. The world is no longer at risk of running out of oil or gas, with existing technology capable of unlocking so much that global reserves would almost double by 2050 despite booming consumption, oil major BP is now saying.

Taking into account all accessible forms of energy, including nuclear, wind and solar, there are enough resources to meet 20 times what the world will need over that period, David Eyton, BP Group head of technology was quoted as saying by The Telegraph.

"Energy resources are plentiful. Concerns over running out of oil and gas have disappeared," Eyton said at the launch of BP's inaugural Technology Outlook.

Oil and gas companies have invested heavily in squeezing the maximum from existing reservoirs by using chemicals, super computers and robotics.

By applying these technologies, the global proved fossil fuel resources could increase from 2.9 trillion barrels of oil equivalent (boe) to 4.8 trillion boe by 2050, nearly double the projected 2.5 trillion boe required to meet global demand until 2050, BP said.

And with new exploration and technology, the resources could leap to a staggering 7.5 trillion boe, Eyton emphasized.

And this is despite the fact that the halving of oil prices since last June has in the meantime, dampened the appetite of the energy world to go for new resources, with more than $200 billion-worth of projects scrapped in recent months only.

There are a number of indicators, in recent weeks and months, to the drastic change in the fortunes of the global energy industry. Russia is already producing at the post-Soviet high, emerging as the world's top producer.

Russian oil production rose to a post-Soviet record of 10.78 million barrels a day last month. This rise in Russian output has withstood a collapse in oil prices amidst a global supply glut.

And despite gloom in the US shale industry, on account of the collapsing oil market prices, four companies involved in shale oil exploration are lifting their output projections for the coming months and year, underlining efficiency gains from drilling in prime rock, as helping them eke out more crude in the middle of the worst price crash in six years.

The outlooks this week from Oasis Petroleum Inc, Devon Energy Corp, Pioneer Natural Resources Co and Diamondback Energy Inc underline, in rather bold terms, that the US shale boom is yet to be fully tempered with, despite the more than 50 percent drop in oil prices since last year.

"Over time, we continue to think we'll need less rigs than we're even saying now," Reuters quoted Pioneer Chief Executive Officer Scott Sheffield as telling investors last week. Sheffield said Pioneer, which is adding rigs, expects to grow production 11 percent this year, up from a previous view of 10 percent.

The company also confirmed it would grow 15 percent per year through 2018, thanks in part to cost cuts and tweaked technology. It produced 211,000 barrels of oil equivalent per day (boepd) in the third quarter.

Pioneer said some of its well performance in the Eagle Ford shale of Texas was hurt recently when it tried to complete wells with lower fluid concentrations. In future, it said wells would be fracked with more fluid and more sand so as to boost production.

At Oasis, executives now expect the company to produce 49,700 to 50,100 boepd, up from a previous estimate of 49,000 to 50,000 boepd. Oasis Chief Executive Thomas Nusz cited the company's use of ceramics and other techniques to boost production, and touted a drop of more than 50 percent in capital spending and other costs.

And at Devon, Chief Executive Dave Hager raised the company's full-year production growth outlook for the second time this year. "We are delivering this incremental production growth with significantly lower costs," Hager said in a statement, adding he expects Devon to cut about $1 billion from its budget by yearend.

Diamondback too raised the lower end of the range for its production guidance to 31,000 boepd from 30,000 boepd while saying it would come in at the low end of its expected capital spending of $400 million to $450 million. The top end for production stayed at 32,000 boepd.

"We continue to deliver robust well results ... while lowering both well costs and total expenses," said Diamondback CEO Travis Stice.

And despite concerns and hesitation to move ahead due to the low oil prices, DuPont last week formally opened the world's largest cellulosic ethanol plant - producing, advanced biofuel made from agricultural waste, often cited as the "second generation" biofuels.

DuPont’s new $225 million Iowa plant will, after some delay, begin making cellulosic ethanol next year, and the fuel is expected to result in 90 per cent fewer greenhouse gas emissions than conventional petrol, Ed Crooks of Financial Times reported.

At the plant DuPont will take corn waste left over from the harvest - leaves, husks, cobs and stalks, collectively known as “stover” - and turn its cellulose into ethanol. Other sources for cellulosic ethanol include bagasse, the waste cane left from sugar production, and specialist energy crops such as switchgrass.

Using waste as a feedstock in this way avoids many of the concerns raised by first-generation biofuels, particularly the worry that food production was being sacrificed to create fuel additives.

And in the meantime, Iran is about to enter the fray too. It will officially notify OPEC in December of its plans to raise crude oil output by 500,000 barrels per day (bpd), the Iranian oil minister was quoted as saying.

"We...ask them to respect the 30-million-barrel ceiling which they have agreed," Bijan Zanganeh was quoted as saying by Shana, the ministry's news agency. "Iran is prepared to supply at least 500,000 bpd of crude oil to global markets," he added.

Despite question marks in many minds about its capacity to do so in the immediate aftermath of the lifting of sanctions, Tehran continues to insist, it planned to raise oil output by 500,000 bpd as soon as sanctions are lifted in early 2016 and by one million bpd in March.

Oil is often found in the minds of people - pundits have been stressing for long. With the issue of Peak Oil buried deep for now - the old saying has proven itself correct - one more time. Let's be contented with that - for the time being.