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Doug50
Guest
for the datas he gave I’d say that’s close to inflation adjustments. The highest inflation adjusted price paid was 1980 due to oil shortfall casues by the Iran/Iraq war. Both the oil embargo a few years earlier and this war caused gas lines at the pump. $103adjusted for inflation to that of 1980 was where oil prices went to new record highs. ricmat and myself are both 70’s brats although he might be a little older. I can remember the gas lines and once driving in Dallas rush hour with friends. One of them commented sarcastically, “look at all these cars! yea we’re never going to run out of oil. Is the world running out, Doug?” Me: “it’s going to run out some day.”I don’t believe that is correct. Doug?
ricmat, I’ve said this in the past: With all we now know about global oil fields from what we knew back then the world is pretty picked over. Any new fields found will be like the Brazilian 33 billion that they MIGHT have. I would bet there’s oil there but the cost of getting it out alone with the time involved isn’t going to make your pump price cheaper. It’s like T Boone Pickens said about the Chevron Jack II well estimated to IP (initial production) 6000 barrels per day, wells like these have to make those volumes just to breakeven due to drilling and production costs. economist.com/displaystory.cfm?story_id=11043022&fsrc=RSS
ricmat, Here’s the heart of the problem. The following is a partial trascript to this news video feed abc.net.au/4corners/special_eds/20060710/default_full_mac.htm
JONATHAN HOLMES: But even they admit that at least outside the Middle East the era of cheap oil - oil that flowed abundantly from wells all over the world, at a cost to its producers of $3 or $4 a barrel - is almost over.
GUY CARUSO, US DEPT OF ENERGY: Oh, we would agree with that. You know, the low-cost, high-reserve finds, that era’s probably over.
CLAUDE MANDIL, EXEC. DIRECTOR, INTERNATIONAL ENERGY AGENCY: I think that this oil probably is not far from peaking, I agree with that. Now, if you take all the oil which is not of easy access today, because very deep offshore or in the arctic ocean, I think that there is still plenty of oil to be discovered. And we have to keep in mind that technical progress makes extraordinary reserves.
JONATHAN HOLMES: The technology is certainly impressive. This is the Noble Therald Martin, one of 62 marine drilling rigs and ships owned by the Noble Corporation of Texas, and deployed all over the world. The Therald Martin is drilling an exploratory well 200km out in the Gulf of Mexico. It looks and feels as solid as an island, but in fact it’s floating on giant submerged pontoons, anchored to the seafloor 3,500ft - or more than a kilometre - below the surface.
10 years ago, drilling in such depths was impossible. By today’s standards, says Noble’s CEO, it’s almost shallow water.
JAMES DAY, CHAIRMAN & CEO NOBLE CORPORATION: Deep water, a decade ago, was 1,000ft. People used to think 1,000ft would never be passed. We drilled a well recently at 9,000ft of water. We’ve got rigs that are designed for 10,000ft of water, which is about 3.2km, something of that nature.
JONATHAN HOLMES: The precision of modern rigs is extraordinary. Starting at the seabed 3km down, the drill bit can be guided through a further 10km of rock, gradually changing direction, until it’s travelling horizontally. It’s aimed at a sweet spot in a reservoir that’s been mapped by three-dimensional seismic surveys. The target may be no more than a couple of metres square. But all this technology comes at a cost.
My guide on the Noble Therald Martin was the man after whom it was named - senior Noble executive and lifelong oilman, Therald Martin. He manages all Noble’s deep-water rigs in the Gulf.
THERALD MARTIN, DEEP WATER DRILLING SUPT., NOBLE CORP: You can take a land rig, the whole land rig total might cost you $10 million. One single piece of equipment on a semi could cost you more than a total land rig can. The cranes that you see on the rig, these cranes are $2 million a piece to operate them.
JONATHAN HOLMES: A rig like the Therald Martin would cost half a billion dollars to build. All this expense is passed on to the oil companies that hire the rigs, and, ultimately, to the customer at the petrol bowser.
So what are your customers having to pay per day?
JAMES DAY, CHAIRMAN & CEO NOBLE CORPORATION: Well, they have to pay for - for, our increased investment. Day rates range from $300,000 to $600,000 per day.
JONATHAN HOLMES: So if they drill a dry hole, that’s a very expensive exercise?
JAMES DAY, CHAIRMAN & CEO NOBLE CORPORATION: It is indeed, and that’s why high oil prices will have to stay in place for a while, because of the cost involved in drilling for that product.
JONATHAN HOLMES: Therald Martin assured me that in the world’s deep waters, he believes there are vast reservoirs of oil waiting to be found. But his boss, James Day, is not so optimistic.
JAMES DAY, CHAIRMAN & CEO NOBLE CORPORATION: The people that I trust and believe - geophysicists, geologists - say the days of the big fields are gone.
JONATHAN HOLMES: Only a tiny proportion of the deep ocean floors are thought to cover substantial reservoirs of oil - mainly on the fringes of the South Atlantic, and in the Gulf of Mexico.
JAMES DAY, CHAIRMAN & CEO NOBLE CORPORATION: While we can drill off West Africa, and they have significant reserves, or Brazil, or the deepwater US Gulf, they’re just going to be replacing what we’re currently consuming. But that’s just treading water. That assumes that we’re not increasing consumption.