Oil majors attracted by the scent of nonconventional reserves
The economic viability of heavy oil, sometimes called nonconventional oil, had long been considered doubtful, but is now a reality owing to improved technologies that put Canada and Venezuela in the spotlight. Two years ago, Canada edged in between Saudi Arabia and Iraq as holder of the second largest reserves of oil according to the influential Oil and Gas Journal.
Proven reserves were estimated at around 180 billion barrels, but 95 percent of that are tarsands found in the western province of Alberta. |
 |
Until recently, bituminous substances such as shale oil and tarsands were not included in classifications such as that established by the journal, owing to major difficulties in exploiting the reserves.
Accounting methods remain a controversial issue within the oil sector, but the reserves are nonetheless there and they are gigantic.
At almost four trillion barrels, of which 600 billion barrels are considered potentially exploitable, nonconventional oil represents a supplemental resource almost equal to the current reserves of conventional oil in the Middle East, according to the French Oil Institute.
"Extraction in some zones has already begun and is economically viable with a barrel at $25," the institute said.
Last week oil prices hit new highs of $67 in New York and more than $66 in London.
"Valorization of heavy oil is without doubt one of the technological paths that must be mastered as quickly as possible," noted Francis Perrin, editor in chief of the trade magazine Le petrole et le Gaz Arabes (Arab Oil and Gas).
"The main interest is these are reserves that have already been discovered. There is no exploration risk. We have estimated them and they are absolutely gigantic," Perrin said.
Serious obstacles remain such as the amount of water needed or quantities of carbon dioxide released in the extraction process, but techniques have advanced a long way.
Once treated, nonconventional oil can be used to produce synthetic oil, which can then be refined and used in place of conventional oil.
As a result, the sector is now humming, and two major operations were announced this month.
The U.S. pipeline operator Kinder Morgan has acquired the Canadian group Terasen for about $5.6 billion.
Morgan said on August 1 that Alberta oils and reserves owned by Terasen were "expected to become an increasingly important supply source to North America and Asia."
The French group Total announced that it would pay $1.11 billion for the Canadian Deer Creek Energy, which owns massive reserves near Athabasca, in the same western province.
Oil majors such as ChevronTexaco, ConocoPhillips and Total are also working on heavy oil reserves in the Orenoque region of Venezuela, where reserves are estimated at between 100-270 billion barrels.
The situation appears to be a bit more delicate than in Canada, however.
Venezuelan President Hugo Chavez is cranking up pressure on foreign oil companies to sign contracts that provide more royalties and tax revenue for his country.
Beirut
22-08-2005
Redaction
The Daily Star
|
