You are here:
Celebrate our 150th anniversary with fantastic savings on a joint magazine and IC Advantage subscription.
The world has vast proved energy reserves of 1.3 trillion barrels of oil and 185 trillion cubic metres of natural gas, according to BP statistics. Even if we were never to find another barrel of oil or gas, that's still enough to let us continue consuming oil at current rates for over 40 years and gas for over 60 years. With such reserves, and more being found, it's hard to imagine 'peak oil' – beyond which point production enters terminal decline – happening any time soon.
Advertising
The 'easy oil' has been found
However, what the statistics don't show is that exploration is getting tougher and more expensive, and the costs of drilling an unsuccessful well are surging. David Bamford, director of Finding Petroleum and non-executive director of Tullow Oil, warns: "The numbers and data are all beset by uncertainty. A lot of the resources are in difficult places that require lots of investment and long lead times. These regions are politically challenging and drilling is getting deeper and tougher." BP echoes these sentiments, saying: "The geologically 'easy' reservoirs were found long ago".
Tullow's recent stream of successes in the Albert Rift in Uganda makes exploration look deceptively easy: from 22 wells drilled over the past two years, Tullow made a staggering 18 oil discoveries and seven gas discoveries.
However, the latest well, Ngassa-2, illustrates the growing challenges that even a successful campaign faces to find and then produce hydrocarbons. Drilling at a 30-degree angle to target a reservoir beneath Lake Albert, the first wells collapsed and had to be re-drilled. Tullow finally struck oil, but the waxy quality of the oil means it needs to be heated or chemically injected to make it flow. Developing this find could involve building a 1,200km heated pipeline. Offshore exploration involves substantially greater challenges.
In part two of this feature Martin Li examins how to discover the oil reserves of the future and then in part three, he names the high impact exploration wells that could make or break the companies that drill them.
To read part three of this feature, you can either buy today's issue of the Investors Chronicle magazine (cover date: 6 - 12 November), or you can read it online now if you are an IC Advantage subscriber.
Why not take our new site tour and a trial (no-obligation) subscription?
Read more Investors Chronicle cover features here.
Free access to financial data, charts, portfolio tools and more - registration is quick, secure and free!
Profit from IC share tips; discover the benefits of IC Advantage and sign up for a free trial.
© The Financial Times Limited 2010. All rights reserved. "Investors Chronicle", "FT" and "Financial Times" are trademarks of The Financial Times Limited. No part of these web pages may be reproduced or transmitted to or stored in any other website or other form of electronic retrieval system, without prior permission in writing from the editor.
Warning: Do remember, particularly if you are new to stock market investment that the prices of shares and other investments can fall sharply. You may not get back the money you originally invested. The material here is for general information only and is not intended to be relied upon for individual investment decisions. Take independent advice before making such decisions. This site is aimed at UK residents only. To read more please see our Important Warning
v6.2.10.5 running on www.investorschronicle.co.uk
