16 November 2009 07:12 [Source: ICIS news]
By John Richardson
SINGAPORE (ICIS news)--Technological innovation will ensure that the world will not run out of crude because only about a fifth of recoverable oil reserves have so far been extracted, energy expert Daniel Yergin said on Monday.
“There are 4.8 trillion barrels of recoverable reserves in the world with only 1 trillion barrels recovered so far,” said Yergin, a Pulitzer Prize-winning energy author, in his opening lecture at the Singapore International Energy Week 2009.
Yergin is the chairman of energy consulting company IHS Cambridge Energy Research Associates.
“I recently looked back through my book, The Prize (a history of the oil industry, and discovered that we have been about to run out of oil on five occasions – the first time in the 1880s and the last time in the 1970s,” said Yergin.
The world is concerned about how long fossil fuels will be able to meet the growing energy needs of the world, especially growth in Asia led by China.
A challenge for oil companies is the cost of recovery of oil from greater depths - although there are reports of costs coming down significantly.
Yergin said drilling technology had improved that rigs can go many thousands of feet beneath the seabed offshore of countries such as ?xml:namespace>
“We know only when we know,” said Yergin, referring to technology breakthroughs such as those which have made extracting shale gas economically viable in the
The development of unconventional shale gas was “the biggest energy technology breakthrough this decade,” he said.
The big surge in natural gas availability from shale gas – combined with the big increase in liquefied natural gas (LNG) capacity at a time of weakening global demand – has made gas-based US-based petrochemical production much more competitive, industry sources say.
“We don’t at this stage [know] if shale-gas technology will go global, but it’s a possibility.”
He also highlighted that the technology could help unlock an estimated 7,000bn cubic feet of unconventional gas resources outside of
He told reporters on the sidelines of the lecture that these new sources of gas found in
Despite Yergin’s optimism over plentiful oil and hydrocarbon supply in general, he said that between 2004-08 energy exploration costs had doubled.
The era of $10/bbl crude had created another problem as it had “squeezed qualified people” out of the industry, he said. “Costs haven’t come down so much, despite of the recession.”
The general consensus is that about $55-80/bbl of crude oil would be a doable price as it doesn’t put a great burden on the world economy in fragile times and can help maintain consistency of investment, he told reporters.
When prices were lower, it did look like a lot of projects would be postponed and would get us back to a cycle, he added.
In the epilogue to the latest edition of The Prize, Yergin has dealt with the rise of oil as a financial tool, meaning that “sets of beliefs” as much as hard data have become important in setting prices.
He highlighted the roles of correlations with equity prices and inverse correlations with the value of the dollar as big influences on the crude price.
And he warned: “(A return to) $100/bbl crude would be a problem for the economic recovery.”
At 14:27 hours
In its monthly oil report, the IEA said that oil demand was “well on track for year-on-year growth in the fourth quarter 2009 for the first time since the second quarter in 2008”.
The agency said it revised up its dlobal demand forecasts for 2009 by 210,000 bbl/day to 84.8m bbl/day and for 2010 by 140,000 bbl/day to 86.2m bbl/day.
Singapore International Energy Week finishes on Friday.
With additional reporting from Serene Cheong
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