When you meet someone who doesn’t quite get the correlation between high energy company profits and the capital-intensive nature of oil and gas production, pass along this NY Times article to them:
As oil consumption grows and access to most oil-rich regions becomes increasingly restricted, companies are venturing farther out to sea, drilling deeper than ever in their quest for energy. The next oil frontier ó and the next great challenge for oil explorers ó lies below 10,000 feet of water, through five miles of hard rock, thick salt and tightly packed sands.
ìItís not a place for the timid,î said Paul K. Siegele, the vice president for deepwater exploration at Chevron, which commissioned a survey by the Neptune. ìItís a place where a lot of people have lost their shirts.î
To picture the challenge, imagine flying above New York City at 30,000 feet and aiming a drill tip the size of a coffee can at the pitcherís mound in Yankee Stadium. Then imagine doing it in the dark, at $100 million a go.
Even after hitting pay dirt, it will take another decade and billions of dollars to transform oil from these ultra-deep reserves into gasoline. Some of the technology to pump the sludge from these depths, at these pressures and temperatures, has not yet been developed; only about a dozen ships can drill wells that deep, and no one knows for sure how much oil is down there.
While most people regard affordable and abundant supplies as an essential element of the nationís prosperity, few realize how complex and costly the quest has become, even in the nationís own backyard. At the same time, some experts argue that the industry is nearing the limits of what it can do to maintain a growing supply of fossil fuels.
Amen. Read the entire article.
