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The search for oil
Demand for oil is driving exploration in ever more unlikely frontiers. Are the benefits worth the risks?
 
The world's oil consumption is on the rise with China alone using four times what it did in 1985.
The world's oil consumption is on the rise with China alone using four times what it did in 1985.
Corbis

How much oil is left?
No one knows for sure. Global reserves are estimated at 1.2 trillion barrels—enough to last for many decades at current levels of consumption. But some geologists believe there might be twice that much, if we’re aggressive in prying the remaining oil out of the Earth. At the same time, consumption is rising: The world used 84 million barrels daily in 2009, up from 60 million in 1985. China alone consumes four times what it did in 1985. As industrialization accelerates, oil consumption is expected to grow another 36 percent by 2035. Consequently, the search for oil is expanding.

What are the new frontiers?
Most of them are places so remote they’ve never before been tapped. A major oil field recently discovered lies two miles beneath the Atlantic Ocean, off the coast of Brazil—twice as far below the waves as BP’s Macondo well in the Gulf of Mexico. Once drillers get to the sea bottom of the Brazil deposit, they have to get through a three-mile-thick salt layer to reach the oil. Another major deposit is believed to lie below the icy Arctic Ocean. Russia, the U.S., Canada, and other countries are now competing to establish claims to drill in the Arctic, which is said to hold up to one-quarter of the world’s retrievable oil. “It’s just getting harder to find this stuff,” said Randy Udall, a renewable-energy advocate.

What are the risks of drilling in these places?
They’re greater. The Arctic is windy, subfreezing, and distant from population or transportation centers, making it difficult to move people or equipment to the scene of a spill. In addition, the region lacks abundant microbes and, in winter, sunlight, both of which helped break down oil in the Gulf spill. Shell Oil, which is planning exploratory wells off the Alaskan coast, says it will keep a spill-response fleet on call, including helicopters and skimmers. But environmental groups have sued to prevent drilling in the region, arguing that the harsh weather conditions make cleanup unfeasible. “You would have to break and remove thousands of tons of ice as the oil keeps moving with the currents farther out into the ocean,” said Vladimir Chuprov, an energy specialist at Greenpeace. “Cleaning up oil under ocean ice is impossible.”

Are there alternatives on land?
Quite a few, but they all have significant drawbacks. The U.S.’s biggest oil supplier is now Canada, which has been so successful at extracting oil from tar sands in Alberta that it’s now said to have the world’s second-largest supply, after Saudi Arabia. But extracting oil from tar sands is a wrenching and costly process requiring steam heat, natural gas, and staggering amounts of water. It takes up to six barrels of water to generate a single barrel of oil, depleting regional water supplies and threatening wildlife. Extracting oil from shale rock, which is plentiful in the Western U.S., is also expensive and poses its own environmental risks. That’s why much recent exploration has focused on deepwater deposits. But BP’s Gulf spill altered the risk equation for government and industry alike. The Obama administration recently shelved plans to drill in the eastern Gulf and along the Atlantic coast. California Gov. Arnold Schwarzenegger has withdrawn his support for drilling off California’s coast, and lawmakers in Florida and Virginia who once supported offshore projects are now balking. “Oil spills are terrible things to see,” said Tupper Hull of the Western States Petroleum Association. “They have a visceral and emotional impact on people that cannot be trivialized.”

So where will oil companies go?
Where environmental standards are weak and the political climate is accommodating. In poor countries like Ecuador and Peru, said City University of New York law professor Judith Kimerling, “there is no meaningful regulation.” Oil companies have flocked to Iraq, which is rich in oil reserves but has yet to create the political stability required to exploit them; indeed, oil executives describe the situation for drillers there as “chaos.’’ Similarly, Nigeria has large reserves, earning some $600 billion from oil production since the 1960s. But the country’s lopsided distribution of revenue and rampant environmental degradation have also sparked political violence, including the sabotage of rigs and kidnappings of oil workers. Between nine million and 13 million barrels of oil have spilled into the Niger Delta over the past five decades, roughly equivalent to one Exxon Valdez disaster every year.

Are huge oil spills inevitable?
They do seem to come with the territory. But the world still runs on oil. And until it no longer powers the global economy, companies will seek to extract oil from deep beneath the sea and other challenging realms, regardless of the risk. “We’ve run out of everything else and don’t have access to reserves elsewhere,” said oil analyst Fadel Gheit, explaining why the BP disaster hasn’t scared off companies from deepwater sites. The era of “easy oil’’ is clearly drawing to a close. “It’s obviously not available,” said Gheit, “except in Iraq, where you can be kidnapped and beheaded. It is always a question of risk and return.”

Has ‘peak oil’ already passed?
The moment at which global oil production reaches its zenith before entering perpetual decline—“peak oil”—has long been the subject of contentious debate. But in November the International Energy Agency, which advises governments on energy policy, announced that peak oil had already occurred, in 2006. The agency, previously skeptical that peak oil was near, said fuel supplies would nevertheless remain abundant because of “unconventional” sources like tar sands. But it forecast rising oil and gas prices ahead. “The age of cheap oil is over,” said IEA economist Fatih Birol. More bullish analysts say the world still has decades of affordable oil and gas supplies, which will dampen the incentive to develop alternative energy sources. “The competitiveness of oil and gas and the scale at which they are produced,” said energy consultant James Burkhard, “mean that there are no readily available substitutes in either one year or 20 years.”

 

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