Deep Currents

Oilmen will always tell you that concerns about running out of oil are overblown. “Just raise the price,” they say. “We’ll go find you some more.” They must be pleased today, because Brazil discovered a deeply buried oil field in 2007 that it has just today estimated at 100 billion barrels (bbl). For comparison, Kuwait has reserves of 101.5bbl and Saudi Arabia has the world’s largest at 260bbl. This is a serious contribution to world reserves and bodes well for Brazil’s chance to take a seat at the table of global oil producers. (The impact on Brazilian politics is worth watching in the coming years.)

This news should not comfort anyone who thinks that we shouldn’t have to worry about alternative sources of energy. The new field is among the most inaccessible in the world, buried underneath a layer of salt underneath 7,000 meters of water and rock. It is a miracle of engineering that we can reach it at all, and we have the profits of the oil industry to thank for that innovation. But the release made no mention of the extraction costs for this field, which will doubtless be high. As “The Bottomless Well” is fond of reminding us, it takes energy to get energy. (See my summary for more details.) We may not be running out of oil immediately but we will gradually pay higher and higher prices as we continue to scrape the bottom of the global barrel, as the IEA has reminded us:

Written: November 9th, 2008