Friday, November 03, 2006

Arctic Oil Significantly Less Than Previous Estimate

Nov 1: According to a new joint study by Wood Mackenzie and Fugro Robertson entitled, Future of the Arctic, A New Dawn for Exploration, the U.S. can no longer consider the Arctic as a long-term strategic energy supply source. The study found the Arctic potential is "significantly less than previous estimations had suggested, and the mix of resources have been found to contain much less oil and more gas." lead study author, Andrew Latham, Vice President, Energy Consulting at Wood Mackenzie said, "These findings are disappointing from a world oil resource base perspective.

The study shows only approximately one quarter of the oil volumes previously assessed in key North American and Greenland basins. Most importantly, the study reveals the Arctic to be a gas province, with 85 percent of the discovered resource and 74 percent of the exploration potential as gas. This oil:gas mix is not ideal because remote gas is often much harder to transport to markets. In addition, export and technology constraints are expected to delay production of a large portion of the commercial gas until 2050. This assessment basically calls into question the long-considered view that the Arctic represents one of the last great oil and gas frontiers and a strategic energy supply cache for the US. While these results are disappointing to the US as a whole, the Arctic still holds great potential for individual oil and gas companies with the advanced technology, money and time to develop the challenging resources and build the infrastructure required to transport it."

According to a release, Wood Mackenzie and Fugro Robertson assessed the Arctic resource potential using detailed geoscience analysis of individual basins and their various petroleum reservoirs, ground-truthed by industry data on exploration wells and existing discoveries. Under the most likely scenario, it is projected that production from the Arctic will contribute some 3 million barrels of oil equivalent per day (mboepd) liquids and 5 mboepd gas at peak, with the proportion of production from U.S. basins lower than previously anticipated. The findings also indicate the US must look elsewhere to meet rising demand - namely to OPEC nations such as Venezuela, and to Russia. Although these supply options are not expected to face long-term technical challenges, they do carry broader, geopolitical concerns relating to security of supply.

Access a release (click here). Access links to audio and video announcements (click here). Access more information on the report including a brochure and links to contacts and related information (click here). Access the Wood Mackenzie website for additional information (click here). Access the Fugro Robertson website for additional information (click here). [*Energy]