Paul Kedrosky's Infectious Greed

The End of “Easy Oil”
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Posted: 23 May 2011 11:20 PM PDT

Useful WSJ piece tonight on the end of “easy oil”. Mind you, it does get lost in heavy oil hopes for a while, before circling back at the end to concede the following:

An even bigger challenge is getting the two crucial elements for generating steam: water and a source of energy to boil it. Most successful steam projects are in places with easy access to relatively pure water and a cheap fuel source, usually natural gas. Saudi Arabia and Kuwait have little of either.

With no fresh-water sources in the Arabian desert, Chevron has been forced to use salt water found in the same underground reservoirs as the oil. That water is full of contaminants that must be removed before it can be boiled and injected into the ground.

Finding the energy to boil the water will be even tougher. Chevron could use oil instead of natural gas—literally burning oil to produce oil—but that would burn profits, too. So the company likely will be forced to import natural gas from overseas, an expensive process that involves chilling it to turn it into a liquid, then shipping it thousands of miles.

Some experts are shaking their heads.

“They’re in trouble,” says Robert Toronyi, a retired Chevron engineer who now serves as chief operating officer for Quantum Reservoir Impact, a Houston-based consulting firm. He says the project is so challenging that it will be hard for Chevron to turn much of a profit.

via Saudi Arabia Puts Efforts Into Tapping Heavy-Oil Deposits – WSJ.com.

Field Notes: Lists, Opulence, Physics, Grimsvotn, Federer, Star Wars, etc.

Posted: 23 May 2011 10:44 PM PDT

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