Two experts from the French Petroleum Institute (Institut Français du Pétrole – IFP) take a look at the situation created by rising oil prices and argue that, paradoxically, they also bring about new opportunities to push back the oil-production peak. The article was originally published in Total’s ‘Energies’ magazine December 2006 issue.
With rising oil prices, consuming nations in Europe and the United States are seeking to diversify their supply sources and reduce their consumption with efficiency measures, write Jean-Pierre Favennec and Nathalie Alazard-Toux in the December 2006 edition of ‘Energies’, a publication by oil major Total.
But while investments in exploration and production have increased, these have not yet followed in the same proportion as rising oil prices would suggest, the authors observe. They put forward a number of reasons to explain this:
- Market players have adopted a ‘wait-and-see’ attitude as they did not know whether the trend would continue;
- with rising prices, the tendency has been for oil-producing nations to toughen the conditions set out in exploration and production contracts, and;
- even when a strong will to invest existed, it was impeded by insufficient human and technological means.
To avoid future supply crises, and assuming that oil will continue to be an important energy source in the foreseeable future, the authors argue that new resources will need to mobilised:
- First, by improving the extraction rate of conventional oil which is currently at around 30% but which in fact varies between 10-50% according to the technologies used;
- then by new detection technologies such as 4D numerical and seismic mapping that help identify oil fields with more precision, and;
- finally by tapping into non-conventional resources such as tar-sands and extra-heavy crude oils, the amounts of which are estimated to be equivalent to that of Saudi Arabia’s reserves.
The aim, the authors argue, is to reduce oil dependency in a world in which hydrocarbons are becoming scarce and more costly. But this could also bring a paradox in which high oil prices coincide with a ‘golden age’ of oil as exploration and production technologies become ever-more sophisticated, leading to the exploitation of previously untapped reserves.