Energy
Energy Companies May Be On Cusp Of Uncorking Next Massive Oil, Gas Boon
From the Daily Caller News Foundation
These companies, all run by smart business people, continue to invest many billions of capital dollars in these risky, long-term projects even as “experts” like the bureaucrats at the International Energy Agency (IEA) continue to predict demand for crude oil is about to peak in the next few years.
Constantly advancing technology has always been the driver behind the advance of the oil-and-gas industry since the first successful U.S. well was drilled by Edwin Drake near Titusville, Pennsylvania, in 1859. The Drake well was drilled to a then unheard-of depth of 69 feet using the most primitive equipment imaginable.
This week, 165 years later, U.S. oil giant Chevron announced it had achieved first production in its Anchor field in the Gulf of Mexico. At its shallow depth, underground pressure in the Drake well would have been negligible, just enough to force the oil up out of the ground. The Anchor semi-submersible floating production unit (FPU) that was started up by Chevron this week enables the capture of massive volumes of oil and natural gas from underground formations up to 34,000 feet below sea level at pressures up to 20,000 pounds per square inch.
“The Anchor project represents a breakthrough for the energy industry,” said Nigel Hearne, executive vice president, Chevron Oil, Products & Gas. “Application of this industry-first deepwater technology allows us to unlock previously difficult-to-access resources and will enable similar deepwater high-pressure developments for the industry.”
Chevron says seven deepwater wells will be tied into the Anchor FPU, which has the capacity to capture, process and transport as much as 75,000 barrels of oil and 28 million cubic feet of natural gas every day. The company estimates reserves in the field of 440 million barrels of oil equivalent with current technology. But, again, the technology deployed by the industry advances every day, meaning a far bigger amount of oil and gas will ultimately be recovered over the coming years.
Other major oil companies, like BP, are also beginning to deploy similar high-pressure technology that they and analysts believe will help them tap into billions of new barrels known to exist in deep, high-pressure formations in various parts of the world. Globally, BP says it believes deployment of advanced technology could help it access up to 10 billion barrels of known high pressure reserves.
Reuters quotes Wood Mackenzie principal analyst Mfon Usoro as saying the new high pressure technologies could enable companies like BP and Chevron to unlock as much as 2 billion barrels of known reserves in the Gulf of Mexico alone. “The industry has done their bit to safely deliver the barrels, with the new technology,” she said, adding: “These ultra-high-pressure fields are going to be a big driver for production growth in the Gulf of Mexico.”
On the same day Chevron made its announcement, Chinese national oil company CNOOC announced the completion of what it believes is the largest offshore platform on Earth, the Marjan facility. The giant platform, which serves similar functionality as the Anchor FPO, will now be shipped 6,400 nautical miles to the Persian Gulf, where it will facilitate the full development of Saudi Arabia’s deepwater Marjan Field.
It is important to keep in mind that the mounting of these massive offshore facilities and drilling of the deepwater wells are all long-term, multi-billion-dollar projects. These are facilities designed to handle the production from these deepwater fields for decades, not just a few years until the vaunted energy transition takes away all the demand for the commodities being produced.
In addition to the projects in the Gulf of Mexico and Persian Gulf, all the companies mentioned here are involved in aggressive efforts to discover and produce oil and gas in deepwater regions around the world. CNOOC, for example, is a 20% owner in the prolific Stabroek block development offshore of Guyana operated by ExxonMobil. Chevron stands to become a 30% owner in that same development via its proposed buyout of Houston-based Hess Corp.
These companies, all run by smart business people, continue to invest many billions of capital dollars in these risky, long-term projects even as “experts” like the bureaucrats at the International Energy Agency (IEA) continue to predict demand for crude oil is about to peak in the next few years. Meanwhile, OPEC says it believes demand for crude will keep rising through at least 2045, perhaps longer.
Someone will be right, and someone will be wrong. Regardless, we can rest assured that advancing technology in the industry itself will ensure there will be no shortage of supply.
David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.
Featured image credit: (Screen Capture/PBS NewsHour)
Much of the commentary on the Carney-Smith pipeline Memorandum of Understanding (MOU) has focused on the question of whether or not the proposed pipeline will ever get built.
That’s an important topic, and one that deserves to be examined — whether, as John Robson, of the indispensable Climate Discussion Nexus, predicted, “opposition from the government of British Columbia and aboriginal groups, and the skittishness of the oil industry about investing in a major project in Canada, will kill [the pipeline] dead.”
But I’m going to ask a different question: Would it even be worth building this pipeline on the terms Ottawa is forcing on Alberta? If you squint, the MOU might look like a victory on paper. Ottawa suspends the oil and gas emissions cap, proposes an exemption from the West Coast tanker ban, and lays the groundwork for the construction of one (though only one) million barrels per day pipeline to tidewater.
But in return, Alberta must agree to jack its industrial carbon tax up from $95 to $130 per tonne at a minimum, while committing to tens of billions in carbon capture, utilization, and storage (CCUS) spending, including the $16.5 billion Pathways Alliance megaproject.
Here’s the part none of the project’s boosters seem to want to mention: those concessions will make the production of Canadian hydrocarbon energy significantly more expensive.
As economist Jack Mintz has explained, the industrial carbon tax hike alone adds more than $5 USD per barrel of Canadian crude to marginal production costs — the costs that matter when companies decide whether to invest in new production. Layer on the CCUS requirements and you get another $1.20–$3 per barrel for mining projects and $3.60–$4.80 for steam-assisted operations.
While roughly 62% of the capital cost of carbon capture is to be covered by taxpayers — another problem with the agreement, I might add — the remainder is covered by the industry, and thus, eventually, consumers.
Total damage: somewhere between $6.40 and $10 US per barrel. Perhaps more.
“Ultimately,” the Fraser Institute explains, “this will widen the competitiveness gap between Alberta and many other jurisdictions, such as the United States,” that don’t hamstring their energy producers in this way. Producers in Texas and Oklahoma, not to mention Saudi Arabia, Venezuela, or Russia, aren’t paying a dime in equivalent carbon taxes or mandatory CCUS bills. They’re not so masochistic.
American refiners won’t pay a “low-carbon premium” for Canadian crude. They’ll just buy cheaper oil or ramp up their own production.
In short, a shiny new pipe is worthless if the extra cost makes barrels of our oil so expensive that no one will want them.
And that doesn’t even touch on the problem for the domestic market, where the higher production cost will be passed onto Canadian consumers in the form of higher gas and diesel prices, home heating costs, and an elevated cost of everyday goods, like groceries.
Either way, Canadians lose.
So, concludes Mintz, “The big problem for a new oil pipeline isn’t getting BC or First Nation acceptance. Rather, it’s smothering the industry’s competitiveness by layering on carbon pricing and decarbonization costs that most competing countries don’t charge.” Meanwhile, lurking underneath this whole discussion is the MOU’s ultimate Achilles’ heel: net-zero.
The MOU proudly declares that “Canada and Alberta remain committed to achieving Net-Zero greenhouse gas emissions by 2050.” As Vaclav Smil documented in a recent study of Net-Zero, global fossil-fuel use has risen 55% since the 1997 Kyoto agreement, despite trillions spent on subsidies and regulations. Fossil fuels still supply 82% of the world’s energy.
With these numbers in mind, the idea that Canada can unilaterally decarbonize its largest export industry in 25 years is delusional.
This deal doesn’t secure Canada’s energy future. It mortgages it. We are trading market access for self-inflicted costs that will shrink production, scare off capital, and cut into the profitability of any potential pipeline. Affordable energy, good jobs, and national prosperity shouldn’t require surrendering to net-zero fantasy.If Ottawa were serious about making Canada an energy superpower, it would scrap the anti-resource laws outright, kill the carbon taxes, and let our world-class oil and gas compete on merit. Instead, we’ve been handed a backroom MOU which, for the cost of one pipeline — if that! — guarantees higher costs today and smothers the industry that is the backbone of the Canadian economy.
This MOU isn’t salvation. It’s a prescription for Canadian decline.
From the Daily Caller News Foundation
By Steve Milloy
The Paris Climate Accord was adopted 10 years ago this week. It’s been a decade of disaster that President Donald Trump is rightly trying again to end.
The stated purpose of the agreement was for countries to voluntarily cut emissions to avoid the average global temperature exceeding the (guessed at) pre-industrial temperature by 3.6°F (2°C) and preferably 2.7°F (1.5°C).
Since December 2015, the world spent an estimated $10 trillion trying to achieve the Paris goals. What has been accomplished? Instead of reducing global emissions, they have increased about 12 percent. While the increase in emissions is actually a good thing for the environment and humanity, spending $10 trillion in a failed effort to cut emissions just underscores the agreement’s waste, fraud and abuse.
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But wasting $10 trillion is only the tip of the iceberg.
The effort to cut emissions was largely based on forcing industrial countries to replace their tried-and-true fossil fuel-based energy systems with not-ready-for-prime-time wind, solar and battery-based systems. This forced transition has driven up energy costs and made energy systems less reliable. The result of that has been economy-crippling deindustrialization in former powerhouses of Germany and Britain.
And it gets worse.
European nations imagined they could reduce their carbon footprint by outsourcing their coal and natural gas needs to Russia. That outsourcing enriched Russia and made the European economy dependent on Russia for energy. That vulnerability, in turn, and a weak President Joe Biden encouraged Vladimir Putin to invade Ukraine.
The result of that has been more than one million killed and wounded, the mass destruction of Ukraine worth more than $500 billion so far and the inestimable cost of global destabilization. Europe will have to spend hundreds of billions more on defense, and U.S. taxpayers have been forced to spend hundreds of billions on arms for Ukraine. Putin has even raised the specter of using nuclear weapons.
President Barack Obama unconstitutionally tried to impose the Paris agreement on the U.S. as an Executive agreement rather than a treaty ratified by the U.S. Senate. Although Trump terminated the Executive agreement during his first administration, President Joe Biden rejoined the agreement soon after taking office, pledging to double Obama’s emissions cuts pledge to 50 percent below 2005 levels by 2030.
Biden’s emissions pledge was an impetus for the 2022 Inflation Reduction Act that allocated $1.2 trillion in spending for what Trump labeled as the Green New Scam. Although Trump’s One Big Beautiful Bill Act reduced that spending by about $500 billion and he is trying to reduce it further through Executive action, much of that money was used in an effort to buy the 2024 election for Democrats. The rest has been and will be used to wreck our electricity grid with dangerous, national security-compromising wind, solar and battery equipment from Communists China.
Then there’s this. At the Paris climate conference in 2015, U.S. Secretary of State John Kerry stated quite clearly that emissions cuts by the U.S. and other industrial countries were meaningless and would accomplish nothing since the developing world’s emissions would be increasing.
Finally, there is the climate realism aspect to all this. After the Paris agreement was signed and despite the increase in emissions, the average global temperature declined during the years from 2016 to 2022, per NOAA data.
The super El Nino experienced during 2023-2024 caused a temporary temperature spike. La Nina conditions have now returned the average global temperature to below the 2015-2016 level, per NASA satellite data. The overarching point is that any “global warming” that occurred over the past 40 years is actually associated with the natural El Nino-La Nina cycle, not emissions.
The Paris agreement has been all pain and no gain. Moreover, there was never any need for the agreement in the first place. A big thanks to President Trump for pulling us out again.
Steve Milloy is a biostatistician and lawyer. He posts on X at @JunkScience.
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