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Can technology help find oil fast enough? Debate over 'peak oil' turns on industry advances

BELLAIRE, Tex. - You’re 11,000 feet below the surface of the earth, somewhere off the coast of West Africa. All around you are bright blue and orange bands depicting materials that were deposited layer by layer, over a hundred million years ago. You dive and spin, traveling through rock as effortlessly as a fish underwater. You are looking for oil at ChevronTexaco’s 3D visualization lab in the heart of Houston oil country.

We don’t have to connect the dots any more,” saidVicki Sare, who leads a team of 16 geologists and engineers specializing in 3D visualization.

In the old days, "connecting the dots" to find oil meant poring over lines drawn on two-dimensional charts that showed the rough locations of fault lines and other topographical features, providing hints about the presence of underground structures that might contain oil. Today, with a click of a mouse you can travel halfway around the world and explore massive geologic formations, grab a block of rock 20 kilometers on a side, and then zoom in to see what it holds. The journey is played out on an IMAX-like computer screen powered by a battery of high-end computers and graphics software that would make your average video gamer drool.

But you won’t find one of these set-ups at your local computer store; these 3D labs don’t come cheap. Neither does the extensive field data required to feed these systems.  For the past decade, the oil industry has invested heavily in high-end, 3D computing to extend its reach and find more oil. And the investment is paying off, according to the “Nintendo geologists” who use these systems.

“One misplaced well costs us a lot of money,” as much as $40 million in some parts of the world, said Sare. “One well that we decide not to drill," she added, "saves us money that then we can put toward one that’s more economic.”

But there’s more than oil company profits at stake. With oil prices hitting new highs, proponents of so-called “peak oil” argue that the world may be approaching the point where production can’t keep up with demand. And innovations, like 3D, are at the center of a debate over whether technology can help replace the world’s known oil supplies before they are depleted.

Some of the leading proponents of this camp, including Princeton University geology professor Kenneth Deffeyes,believe that roughly half of the world’s available supply of oil has been produced. As a result, he predicts that global production will peak sometime around Thanksgiving of next year. The resulting supply squeeze would send oil prices soaring.

“It’s like catching bass in a pond,” he said. “After you catch most of the fish, it gets harder to catch the rest.”

In the meantime, oil markets have continued to bid up prices as weekly data show available production barely keeping up with demand. And "peak oil" theorists say that because there are no easy solutions, this daunting energy issue is not likely to be addressed in this year's presidential campaign.

Ironically, the issue of dependence on foreign oil has recently taken a back seat to the Iraq war in the candidates' latest speeches. The Bush administration has strongly favored policies aimed at increased production, including opening up the Alaska National Wildlife Refuge for drilling, a position Sen. John Kerry opposes. Kerry has stressed greater emphasis on conserving oil by promoting more efficient cars, homes and offices. Both candidates have backed the development of alternative fuels to replace oil. But proponents of "peak oil" argue that those alternatives won't be ready in time to head off looming oil shortages.

Draining oilfields faster?
There’s no question that technology has revolutionized the oil industry -– just as it has boosted the overall productivity of the U.S. economy. The use of conference-room-sized 3D labs, for example, has shorted the turnaround time for making decisions on drilling new wells. It used to take weeks – or more – to get various parties at an oil company to weigh in on a proposed drilling program. Now geologists, field experts and financial managers can get in the same room and hash out decisions together.

But is this technology helping expand the supply of oil that can ultimately be pulled out of the ground? Skeptics say no. They argue that recent advances are only helping the industry pull oil out of the ground faster, and that the overall pace of discovery hasn’t picked up. That’s one reason the debate over peak oil tends to break along generational lines, according to Matt Simmons, a Houston investment banker to the oil industry.

“The old timers basically, who are people that were schooled in the 60s and 70s,” he said, “tend to be saying that all of this new technology allows you to see a lot more, but that the basics are still the basics. The new generation guys are convinced that we’ve totally changed the game.”

Advances in drilling techniques do hold the promise of further lowering the cost of producing new oil and extending the industry’s reach. That’s especially true in deepwater offshore fields where many promising discoveries are turning up. Aside from the huge cost of conventional steel drilling platforms, operations on gigantic rigs are subject costly interruptions from hurricanes in the Gulf of Mexico and typhoons in the Pacific rim. 

“Ten years from now they’re going to become obsolete,” said Barton Smith, an economics professor at Rice University in Houston. “What they’re moving toward is robotics -- in which you literally have submarine operations. The drilling activity all occurs at the bottom of the ocean. And these robotics will have all the capabilities of being able to fix anything down there.” 

Long-range communications technology is also helping to cut the cost of managing oilfields -- in some cases halfway around the world, Smith said.

“With a lot of these oilfields the trick is not just finding the oil and pulling the oil out of the ground,” he said. “But the trick is then -- through vast pipelines and so forth -- getting it to some deliverable point. And those pipelines require all sorts of types of monitoring. They’re going to monitor that from Houston.”

Technology is even expanding the definition of oil. Vast deposits of oil shale and tar sands –- formations of oil-saturated rock and sand –- have until recently been uneconomic to produce. But as recovery methods improve, and oil prices rise, production of this so-called “synthetic” oil has increased. New technologies are also being developed to extract natural gas from coal -– which remains plentiful in the U.S.

Still, even the most ardent proponents of technology say there’s no guarantee that advances will come fast enough and be applied quickly enough to head off the possibility of oil shortages in the future. But they note that most of the major increases in discovery and production in this century have been associated with major breakthroughs that open up new supplies.

“What we saw as a limitation 20 years ago is no longer a limitation now,” said Sare. “So who’s to say in 20 years whether our current limitations will be relevant?”

 © 2004 MSNBC Interactive

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