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Oil production - Sept 3

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Mentioned at Talking Points Memo.


Iraq Far From U.S. Goals for Energy

Dana Hedgpeth, Washington Post
Iraq's crucial oil and electricity sectors still need roughly $50 billion to meet demand, analysts and officials say, even after the United States has poured more than $6 billion into them over more than four years.

Since the U.S. invasion of Iraq in 2003, the Bush administration has focused much of its $44.5 billion reconstruction plan on oil and electricity. Now, with the U.S.-led reconstruction phase nearing its close, Iraq will need to spend $27 billion more for its electrical system and $20 billion to $30 billion for oil infrastructure, according to estimates the Government Accountability Office collected from Iraqi and U.S. officials.

Even with the funding, the GAO notes that it could take until 2015 for Iraq to produce 6 million barrels of oil a day and have enough electricity to meet demand. A commanding general of the Army Corps of Engineers says it could have enough electricity sooner -- 2010 to 2013.

...If the problems aren't fixed, it will be difficult to establish a strong economy and improve the standards of living, and could cause people to lose confidence in the government.

Oil and electricity are two of Iraq's most important industries, each depending heavily on the other. Iraq imports about $2.6 billion worth of petroleum products a year. Oil exports account for 90 percent of the Iraqi government's revenue, but oil production is crippled without enough electricity for refineries and pipelines. Electricity, in turn, cannot be generated without the fuel that powers most of Iraq's power plants.

U.S. officials say they found the country's infrastructure in worse shape than they expected, hit hard by the Persian Gulf War of 1990-91 and a decade of economic sanctions.
(2 September 2007)


Big gamble can yield bigger payoff

Kristen Hays, Houston Chronicle
Deep sea drilling in the Gulf is chancy, but state-of-the-art equipment and scientific data improve rates of success
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Even with all the science involved in finding oil below the seabed, drilling in the ocean's deep waters is a pricey gamble.

But it's worth the risk for companies betting on big rewards.

"Everything we drill, we're going at it because we think there's something there," said Kevin Koen, a drilling engineer for Chevron Corp. aboard Transocean's Discoverer Deep Seas, a state-of-the-art drillship under contract to the San Ramon, Calif.-based oil major.

The vessel is drilling a third exploratory well about 130 miles southeast of New Orleans, looking for oil in Chevron's Bob North field under more than a mile of water.

The first two wells didn't find oil, but discoveries by other companies surrounding the field, as well as Chevron's own scientific data, indicate something's there. They just have to pick the right spot.

Exploratory wells, known in the industry as "wildcat" wells, assess whether oil exists in a field. Subsequent appraisal wells help gauge how much.

Exploratory wells take several months to drill, and 65 percent or more fail. Koen projects a 1-in-12 chance of success in the Bob North field probe.

Chevron spends $500,000 to $850,000 a day to lease the Discoverer Deep Seas. The daily cost depends on how much hardware, what type of work, and how many people are needed on a given day.

The well will cost about $100 million, regardless of whether it produces oil.
(2 September 2007)


Denmark, Texas swap their wind and oil knowledge

Shelley Emling, Cox News Service
The tiny country of Denmark is emerging as a model for Texas in the booming field of wind energy, just as Texas has been for Denmark in the traditional energy businesses of oil and gas.

Denmark has become a world leader in wind power, generating nearly 25 percent of the county's electricity needs, while Texas has vaulted past California to become the top wind energy state, with nearly a quarter of U.S. generating capacity.

"In so many ways, we are modeling our wind energy industry on Denmark's wind energy industry," said Michelle Warren, the deputy commissioner overseeing renewable energy at the Texas General Land Office in Austin.

...Close ties in the energy industry are nothing new for Texas and Denmark, a Scandinavian country with one-quarter the state's population and one-twentieth its area.

Denmark is the third-largest oil producer in Western Europe behind Norway and Britain, and "U.S. companies have a long history here," said Kai Olsen, director of market and business development at Ramboll Oil & Gas, the largest independent engineering firm in Scandinavia.

"We jokingly refer to ourselves as little Texas," he said.
(1 September 2007)

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