There is a must-read article in the Times on Monday looking at how changes in technology — combined with, yes, higher prices — are leading to significant improvements in extraction rates from both new and declining oil fields. The main technologies highlighted are three-dimensional imaging and steam (or carbon dioxide) injection, which aren’t as existing some newer stuff going on, but you’ll get the picture:
At the Kern River field just outside of Bakersfield, millions of gallons of steam are injected into the field to melt the oil, which has the unusually dense consistency of very thick molasses. The steamed liquid is then drained through underground reservoirs and pumped out by about 8,500 production wells scattered around the field, which covers 20 square miles.
Initially, engineers expected to recover only 10 percent of the fieldâ€™s oil. Now, thanks to decades of trial and error, Chevron believes it will be able to recover up to 80 percent of the oil from the field, more than twice the industryâ€™s average recovery rate, which is typically around 35 percent. Each well produces about 10 barrels a day at a cost of $16 each. That compares with production costs of only $1 or $2 a barrel in the Persian Gulf, home to the worldâ€™s lowest-cost producers.
The killer quote is at the end though:
“Thatâ€™s why peak oil is a moving target,” [Chevron engineer Jeff] Hatlen said. “Oil is always a function of price and technology.”
I stand by my prediction that oil may one day hit $100, but I bet it touches $30 first.
[via NY Times]