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Iraq may hold twice as much oil

Ed Crooks, Financial Times
Iraq could hold almost twice as much oil in its reserves as had been thought, according to the most comprehensive independent study of its resources since the US-led invasion in 2003.

The potential presence of a further 100bn barrels in the western desert highlights the opportunity for Iraq to be one of the world’s biggest oil suppliers, and its attractions for international oil companies – if the conflict in the country can be resolved.

If confirmed, it would raise Iraq from the world’s third largest source of oil reserves with 116bn barrels to second place, behind Saudi Arabia and overtaking Iran.

The study from IHS, a consultancy, also estimates that Iraq’s production could be increased from its current rate of less than 2m barrels a day to 4m b/d within five years, if international investment begins to flow.
(19 April 2007)
Related from AP: Oil Prices Off on Inventory Worries:

“It’s not going to (affect markets), today,” said [Phil Flynn, analyst at Alaron Trading Corp., in Chicago]. “But long-term, it definitely does. This pushes back peak oil a few years, now, doesn’t it?”

The markets are concerned about violence in Iraq, however, he said. That will have to be quelled before traders take any announcements about increased production seriously.

“Obviously, the violence is going to have to calm,” Flynn said. “It’s going to take years to bring that oil to the market.”

See skeptical comments from Jerome a Paris in the next item.

Yippee – another 100 billion barrels of oil found in Iraq

Jerome a Paris, Daily Kos
[comment on previous article] I actually went to the website of IHS and found the underlying press release. It’s transparently an attempt to sell their maps to oil producers seeking new oil fields. While IHS is a respected player in the industry, and is known to have one of the most extensive proprietary databases on world oil fields, it is a lot harder to gauge the reliability of this new publication. Iraq has been largely inaccessible and unexplored for most of the past 25 years, and the situation has not really changed in the past few years… While I have no doubt that IHS has been able to put its hands on data on known oil fields, I just don’t see how their number for additional resources is anything other than a marketing coup based on wild-assed guesses, as they themsleves admit:

The Iraq Atlas estimate of up to another potential 100 billion barrels of oil reserves is largely based on the establishment of new play concepts in the Western Desert of Iraq, which have been generated from a recent study of the Western Arabian Platform. The Western Desert of Iraq is widely regarded as being substantially under explored with only one commercial discovery in the region largely because Iraq has had a surplus of oil to date and little incentive for exploration.

And of course, as the FT article above notes (those innocuous if I bolded), and as I have pointed out before in my comments on the new Iraqi oil law, there is the small issue of the lack of security and, more importantly, the lack of legitimacy of the current government, which makes it certain that

  • no money will be invested (as opposed to “deals of the century” mooted, announced or even signed) as long as the civil war rages, i.e. for a bit longer than American forces will be in the country;
  • any contract signed today will be re-negotiated in full when a new regime finally emerges.

Did Bush and Cheney genuinely expect a “cakewalk”? Are they just playing a cynical game to deny oil to the market (in the short term) and to preserve the biggest untapped reserves on the planet (in the long term)? I’m not sure we’ll know that soon, but it’s certain that this oil will attract the attention of all oil player for as long as it’s there, and will allow smart players like IHS to sell a portion of the dream.
(19 April 2007)

Bering Sea likely rich in hydrates

Alan Bailey, Petroleum News
Cold war era acoustic research may have stumbled across vast quantities of methane trapped under 12,000 feet of water
The remote Bering Sea seems an unlikely location for a major natural gas province. Yet the region may hold thousands of trillions of cubic feet of gas resources.

At a Jan. 11 meeting of the Geophysical Society of Alaska, U.S. Geological Survey Senior Research Geologist David Scholl described how what appear to be massive methane hydrate bodies pepper the south-central Bering Sea subsurface in a region that straddles the divide between the U.S. and Russian economic zones. The hydrates occur in a flat area of the abyssal plain, comparable in size to Nevada and Utah combined, Scholl said. ..

On Alaska’s North Slope there are extensive gas hydrate deposits within underground rock formations around the base of the permafrost zone – a government and industry team is currently engaged in a multi-year project to determine whether it is possible to viably extract natural gas from these hydrates. ..

But before anyone gets too excited about developing this spectacular resource they might want to consider that the gas lies many miles from land under more than 12,000 feet of water in one of the world’s harshest marine environments – economic extraction of the gas seems implausible in the foreseeable future. ..
(21 Jan 2007)