Peak Oil Complacency

Take the BP find in the Gulf of Mexico. Its drill hole is a staggering 10,685 metres deep – this is nearly two kilometres more than the height of Mount Everest. The well is also in deep water, which will make it much more expensive to construct a drilling platform and pipeline to shore.

Analysts were estimating last week that BP's cost of production from the Tiber field could be as high as $40 (Dh146.92) a barrel, which given that we have seen oil as low as $33 this year may not be very attractive to shareholders. Also, while there may be five billion barrels of oil in the field the chances of BP getting anywhere near that amount out of the ground is zero.

Indeed, the company might be lucky to get five per cent to 15 per cent of the total, which would turn Tiber into a pretty mediocre find rather than an exceptional one.

SHOOT: I wrote on exactly this topic a few days ago.

clipped from www.business24-7.ae Flying across the Gwahar oil field in Saudi Arabia is a startling reminder of just how vast and impressive the oil industry is. Wells are dotted everywhere, huge pipes run across the desert and towers belch fire as the excess gas is flamed off. Gwahar is the largest oil field in the world and seen at sunset from above, it looks beautiful. The enormity of an operation such as Gwahar can make us complacent about the scarcity of the world's supplies of oil but, as we all know, this is a finite resource and it will not last for ever. Dubai is already moving to a non-oil economy and many other countries [the UK not least] will have to do the same in the coming years. However, before we get complacent and rush out to swap the Toyota Prius for a thirsty Land Rover, none of this new development is going to be easy to exploit. The days of oil bubbling out of the ground, as it used to do in Saudi and Bahrain, are long gone and the new fields are often extremely hard to tap.