It’s OTC time in Houston and everyone in the oil business is in town. I went to a welcome reception last night which was preceded by five industry presentations. Most of the presenters started off paying lip-service to climate change and the need for conservation and for renewable energy sources, and also for Houston to become the “Energy Capital” of the world instead of just the “Oil and Gas Capital,” and then went on to say how many billions of barrels of oil there was left to exploit. Quite depressing, and maybe I should give them some slack in view of their target audience, but I have to think the current guard at the oil companies needs to retire.
One presenter described how the next phase in the Gulf of Mexico is Tertiary deposits which are not on the continental shelf but way off shore in water which is 15,000 feet deep and the oil itself another 35,000 below that. It is also at 400 degrees (Fahrenheit or Celsius?) and under unprecedentedly high pressure. In spite of this pressure, they would still need pumps to get it to the surface because of its depth, and all this presented enormous technical problems. For example, new materials will be needed to withstand the temperature and pressure. Then of course there are the hurricanes. One has to wonder whether the billions which will be spent on this technology could be better spent on renewables.
The experience reminded me that high oil prices are a 3-edge sword. On the first two hands, it encourages consumers to conserve and entrepreneurs to come up with alternatives, but on the third hand it makes it economic to pursue more and more inaccessible sources of fossil fuels. Next time someone tells you that wind power is capital intensive, remind them that oil is getting increasing so too.
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