New oil proves elusive, and alarm bells ring

Jad Mouawad writing in the New York Times discusses such as facts as:

According to Wood Mackenzie, an energy research firm, six of the 10 largest oil companies have cut their investments in exploration since 1998. Together, the world’s leading companies spent $8 billion drilling for oil last year; in 1998, they spent more than $11 billion. The number of wells drilled in the 11 full members of the Organization of Petroleum Exporting Countries fell 6.5 percent in 2003 from the year before.

As worldwide oil consumption has grown by about 17 percent over the past decade, to about 80 million barrels a day, explorers need to find ever growing quantities of oil to replace depleted reserves. Exxon Mobil, BP and Royal Dutch/Shell alone need to find 4.4 billion new barrels of oil each year just to replace their current production.

Along with most U.S. production, Alaska’s North Slope, which provides a quarter of America’s output, is in decline. With the United States importing increasing quantities of oil to meet demand – to a projected 70 percent in 2025 from 54 percent in 2002 and 37 percent in 1980, according to a forecast by the U.S. Energy Information Administration – the oil industry wants to be allowed to look at the Alaska National Wildlife Refuge.

More interesting stuff:

Unlike the British sector of the North Sea, which is considered completely explored, the Norwegian continental shelf is believed to still hold substantial quantities of undiscovered oil – perhaps one-third of the amount already found, or 9.4 billion barrels of oil and 67 trillion cubic feet, or 1.9 trillion cubic meters, of gas, according to estimates by the Norwegian Petroleum Directorate, the government agency that oversees the oil industry.

But only 19 exploratory wells were drilled last year in Norwegian waters, the fewest since 1977. Only about one in three found oil or gas, down from half in 2002.

Increasingly, the search is moving northward into the Barents Sea, above the Arctic Circle and near Norway’s far northeastern border with Russia, where the weather is bitter and there is no daylight for months in the winter.

The oil industry is also eyeing the Lofoten Islands off Norway’s northern coast, which are closed to exploration because of seabird colonies and cod spawning grounds that environmentalists and the Norwegian fishing industry want protected. Environmental concerns led to a two-year halt in drilling throughout the Barents Sea, but the Norwegian government allowed exploration programs to resume in December, and three more wells are due to be drilled this winter.

“We’re forced into new frontier areas, into deeper and harsher conditions, and into potentially more politically and environmentally sensitive areas,” says Tore Holm, the director of exploration for Shell in Norway. “It’s by nature riskier, and by nature most costly. But the rewards could be higher.”