Adira Energy Ltd. announces that Modiin Energy L.P, on behalf of the Gabriella License consortium, including Adira and Brownstone Energy, has executed a detailed drilling contract with Noble International Ltd (“Noble Drilling”). The Agreement provides for the drilling of the Gabriella License by the Noble Homer Ferrington semi-submersible rig prior to the government regulated spud date of June 30, 2013.
Jeffrey E. Walter, Chief Executive Officer of Adira Energy stated: “Another major milestone has been delivered to Adira’s shareholders with the signing of the Homer Ferrington rig contract. This will enable us to drill the highly anticipated Gabriella License which is Adira’s core asset. With over 110 million barrels of contingent oil resources, this project is important to Adira as well as a fundamental key in moving forward on the oil potential offshore Israel. The Homer Ferrington has drilled some of the most successful discovery wells in the Eastern Mediterranean including “Leviathan” offshore Israel and “Block 12” offshore Cyprus. ”
The Gabriella License is located approximately 10 kilometers northwest of Tel Aviv, in the waters offshore Israel. The block covers an area of approximately 392 square kilometers (97,000 acres) and is in water depths that range from 100 meters on the east side of the block to just over 425 meters on the southwest side of the block. Adira holds a 15% Working Interest in the Gabriella License plus a 15% back-in option from Modin Energy, to be exercised within six months of discovery, at cost.
According to President Obama, the United States contains only 2 percent of the planet’s proven oil reserves, Of course, he’s right — to a point. In classic fashion, he’s using a technicality to skirt the facts and keep the myth of energy scarcity alive. The reality is that the U.S. has enough recoverable oil for the next 200 years, despite only having 2 percent of the world’s current proven oil reserves.
Proven oil reserves are not all of our oil resources—not even close. In fact, proved reserves represent a tiny portion of our total oil resources. Proven (or proved) oil reserves are reserves that have already been discovered, typically through actual exploration or drilling, and which can be recovered economically. That estimate does not include oil that we know about, yet are unable to access because of regulatory barriers. For example, the billions of barrels of oil in ANWR are not included in our proved oil reserves. So let’s look at the facts.
Currently, the United States has 1,442 billion barrels of technically recoverable oil, but only about 20 billion barrels are considered proven oil reserves.[ii] That is partly because the federal government is denying access to hundreds of millions of acres oil-rich federal lands: the Alaskan National Wildlife Refuge, the Naval Petroleum Reserve-Alaska, federal waters off the Atlantic and Pacific coasts, at least 45 percent of the Gulf of Mexico, the Chukchi and Beaufort Seas, and oil shale on federal lands in Colorado, Utah, and Wyoming, to name a few. In the case of oil shale (an oil composed of kerogen), technology needs to be perfected to make its production viable, but this will not happen until the land is leased. Regrettably, the Department of Interior has stopped a leasing program Congress directed it to undertake.
Proved Oil Reserves Are Not Static
Let’s take a look at history. In 1944, U.S. proven oil reserves were 20 billion barrels — about the same as they are today. Yet, between 1945 and 2010, the United States produced 167 billion barrels of oil. In other words, the United States produced over 8 times more oil than the amount of proven oil reserves it had in 1944. How can that be? The answer is that proven oil reserves are not stagnant because people keep looking for oil. Proven oil reserves keep changing, are officially recorded every year, tallied country by country, and published in the Oil and Gas Journal, among other publications. And due to U.S. entrepreneurship and ingenuity, more reserves are found and proven each year.
What happens is one or more of the following: 1) technology is found that converts hard-to-produce resources into proven reserves, 2) oil prices increase to allow more expensive types of oil to be produced, and/or 3) companies are able to purchase additional leases and explore for new basins of oil. An example of the first case where technology enables oil resources to become proven reserves is hydraulic fracturing and horizontal drilling used to produce shale oil resources, most notably in North Dakota. North Dakota now ranks third among the states in oil production.[iii] Its proven reserves have increased 25-fold in 13 years, and are likely to grow much larger. An identical increase from the rest of the United States would result in US reserves of 500 billion barrels, or almost twice those of Saudi Arabia.
What Does More Recent Data Look Like?
So, is this an historic anomaly? No. Let’s look at more recent data. In 1980, according to the Energy Information Administration, the United States had 31.3 billion barrels of proven oil reserves. However, between 1980 and 2010, the United States produced 77.8 billion barrels of oil and still had 20.7 billion barrels of oil reserves left. In other words, between 1980 and 2010, the United States produced 2.5 times the amount of oil as it has proven oil reserves in 1980.
Conventional and Unconventional Oil
Proven oil reserve data for the most part are comprised of conventional oil resources. Yet, today unconventional sources of oil are being produced. For example, Canada has proven reserves of conventional oil of only 5 billion barrels, but has 170 billion barrels of oil sands–a heavy oil whose production is based on unconventional technology –either by open pit mining or in-situ techniques, which reduce the viscosity of the oil by injecting steam and/or hot air into the oil sands. Canada’s proven oil reserves are officially set at 175 billion barrels, because it requested that oil sands be included in its proven oil reserve estimate. Canada now ranks third in the world in proven reserves, behind Saudi Arabia and Venezuela.[iv]
Proven oil reserves are not stagnant. They are continually changing as companies explore, find and produce oil. Declaring that “the U.S. has only 2% of the world’s oil is akin to saying that the only gasoline we will have is that which is in our tanks.” The president should know better, and if he does not, his Secretaries of Energy and Interior should tell him.
So, what can be done to increase our oil reserves? First and foremost, the United States needs to open more federal lands and waters to oil leases. Currently, only about 3 percent of government property is leased for finding energy. Once that is done, American ingenuity will take over to explore and produce those resources. ”According to a Gallup poll, an overwhelming number of consumers — 85% — say Obama and Congress should take “immediate” action to keep a lid on (gasoline) prices.”[v]
It is time our government stops misleading the American public and starts owning up to the reality of our energy situation – we are a nation rich in energy resources with poor policies that do not allow us to access them.
- Big Lies on Big Oil (gompsparky.wordpress.com)
- President Obama’s Energy Lies (inquisitr.com)
- Big Lies on Big Oil – David Limbaugh – Townhall Conservative Columnists (gds44.wordpress.com)
- Will Release of Strategic Oil Reserves Matter? (247wallst.com)
By JOHN MERLINE, INVESTOR’S BUSINESS DAILY
Posted 03/14/2012 01:03 PM ET
When he was running for the Oval Office four years ago amid $4-a-gallon gasoline prices, then-Sen. Barack Obama dismissed the idea of expanded oil production as a way to relieve the pain at the pump.
“Even if you opened up every square inch of our land and our coasts to drilling,” he said. “America still has only 3% of the world’s oil reserves.” Which meant, he said, that the U.S. couldn’t affect global oil prices.
It’s the same rhetoric President Obama is using now, as gas prices hit $4 again, except now he puts the figure at 2%.
“With only 2% of the world’s oil reserves, we can’t just drill our way to lower gas prices,” he said. “Not when we consume 20% of the world’s oil.”
The claim makes it appear as though the U.S. is an oil-barren nation, perpetually dependent on foreign oil and high prices unless we can cut our own use and develop alternative energy sources like algae.
U.S. Awash In Oil
But the figure Obama uses — proved oil reserves — vastly undercounts how much oil the U.S. actually contains. In fact, far from being oil-poor, the country is awash in vast quantities — enough to meet all the country’s oil needs for hundreds of years.
The U.S. has 22.3 billion barrels of proved reserves, a little less than 2% of the entire world’s proved reserves, according to the Energy Information Administration. But as the EIA explains, proved reserves “are a small subset of recoverable resources,” because they only count oil that companies are currently drilling for in existing fields.
When you look at the whole picture, it turns out that there are vast supplies of oil in the U.S., according to various government reports. Among them:
At least 86 billion barrels of oil in the Outer Continental Shelf yet to be discovered, according to the government’s Bureau of Ocean Energy Management.
About 24 billion barrels in shale deposits in the lower 48 states, according to EIA.
Up to 2 billion barrels of oil in shale deposits in Alaska’s North Slope, says the U.S. Geological Survey.
Up to 12 billion barrels in ANWR, according to the USGS.
As much as 19 billion barrels in the Utah tar sands, according to the Bureau of Land Management.
Then, there’s the massive Green River Formation in Wyoming, which according to the USGS contains a stunning 1.4 trillion barrels of oil shale — a type of oil released from sedimentary rock after it’s heated.
A separate Rand Corp. study found that about 800 billion barrels of oil shale in Wyoming and neighboring states is “technically recoverable,” which means it could be extracted using existing technology. That’s more than triple the known reserves in Saudi Arabia.
All told, the U.S. has access to 400 billion barrels of crude that could be recovered using existing drilling technologies, according to a 2006 Energy Department report.
When you include oil shale, the U.S. has 1.4 trillion barrels of technically recoverable oil, according to the Institute for Energy Research, enough to meet all U.S. oil needs for about the next 200 years, without any imports.
And even this number could be low, since such estimates tend to go up over time.
Back in 1995, for example, the USGS figured there were 151 million barrels of oil in North Dakota’s Bakken formation. In 2008, it upped that estimate to 3 billion barrels to 4.3 billion barrels — a 25-fold increase. Now, some oil analysts say there could be as much as 20 billion barrels there.
To be sure, energy companies couldn’t profitably recover all this oil — even at today’s prices — and what they could wouldn’t make it to market for years. But from the industry’s perspective, the real problem with domestic oil is that the government has roped off most of these supplies.
The Alaska National Interest Lands Conservation Act of 1980, for example, put a huge swatch of land off-limits to drilling. And in 1982, Congress blocked access to most of the oil in the Outer Continental Shelf. Much of the oil on federal lands is also off-limits.
Obama and others say the industry’s claim about lack of access isn’t true, since they aren’t even using many of the offshore leases they already have. The industry counters that this is misleading, since a company needs the lease before it can determine if any oil exists there — a potentially time-consuming process.
In any case, any attempt to get at these vast new oil supplies is sure to face fierce opposition from environmental groups worried about oil production’s direct impact on the environment, as well as global warming worries.
But given today’s prices, most of the public is willing to expand drilling offshore, in ANWR, and in shale oil reserves, according to the latest IBD/TIPP poll.
“This is not a geological problem — it’s a political problem,” said Dan Kish, senior vice president for policy at the Institute for Energy Research. “We’ve embargoed our own supplies.”
- Energy: Texas Tops Finds From Brazil to Bakken as Best Prospect (mb50.wordpress.com)
- Are Obama’s Oil Numbers Rigged? (foxnews.com)
- Exposing the 2 percent oil reserves mythInstitute for Energy Research (mb50.wordpress.com)
- The US Is Sitting On A 200-Year Supply Of Oil (businessinsider.com)
- Obama Misleads on Oil Reserves, Networks Defend Him, Fail to Fact Check (newsbusters.org)
The intense agitating power of the Azipods can actually help break ice from underneath
The Arctic North end of Russia is believed to hold as much as a quarter of all the world’s oil deposits – an utterly monstrous economic prize, hidden in one of the toughest and least hospitable environments on the planet. Getting to this prize, and then transporting it back to refineries, is a monolithic task that requires one of the most awe-inspiring pieces of machinery man has ever built – the nuclear icebreaker. Purpose-built to the point of being almost unseaworthy on the open waves, these goliaths smash their way through 3-meter (10-foot) thick ice crusts to create viable pathways for other vessels – but fascinating new technologies could mean the days of the dedicated icebreaker are numbered.
Where there’s a well, there’s a way. An oil well, that is. Black gold. Texas tea. And some of the world’s richest reserves of the stuff are buried beneath the beds of the Berents sea, North of Russia and well into the Arctic Circle. It’s estimated that this area holds somewhere around a quarter of all the oil reserves in the world.
But it’s an area that gets no sun at all for at least one day every year, and which is so cold that the sea itself freezes over with 2-meter (6.5-foot) thick ice for more than two thirds of the year. When it’s not frozen over, there’s 12-meter (40 foot) waves to deal with. It’s one of the world’s most extreme environments; inhospitable doesn’t even begin to cover it.
Getting resources like oil and natural gas out of the earth – and safely back to shore – would be prohibitively expensive, if the prize wasn’t worthwhile. Where these sorts of quantities of fossil fuels are concerned, however, all bets are off and just about any expense can be justified.
… and the expense we’d like to take a look at today is the nuclear-powered icebreaker – a vessel whose sole task is to smash its way through packed sea ice and clear a path for other ships to follow in.
It’s a specialist job that boats have been designed to tackle since the 1830s – and it’s interesting to note that while today’s enormous icebreakers generally use nuclear power to generate the immense thrust needed to power through the ice fields, in other ways the design hasn’t changed too much for nearly 200 years.
- Weatherwatch: Trade traffic in Arctic waterways is increasing (guardian.co.uk)
- Fatal Fire Aboard Russian Nuclear Icebreaker (gcaptain.com)
- The Lone Icebreaker: U.S. Sovereignty in the Arctic (mb50.wordpress.com)
- Reversing U.S. Retreat from the Arctic (mb50.wordpress.com)
Saudi Arabia has stopped $100bn expansion of its oil production capacity after reaching a target of 12m barrels a day and now plans to shift its spending priorities to natural gas, refining and the chemicals business, media reports said.
The kingdom is, therefore, not pushing ahead with an assumed expansion plan to produce 15 million barrels a day by the end of 2020.
- Saudis face waning power in North America (mb50.wordpress.com)
- Saudi Arabia: Shia Protests Against the State Intensify (ibtimes.com)
- Two dead in Saudi Arabia gunfight (bbc.co.uk)
- Iran oil targeted by Obama sanctions (money.cnn.com)
- Saudis plan for future of unconventional oil from oilsands and tight oil and more expensive Saudi oil (nextbigfuture.com)
By Elias Biryabarema
KAMPALA (Reuters) – Uganda‘s energy minister said she expects to send three petroleum bills to parliament by the end of the year as the government moves quickly to put laws in place to regulate the country’s nascent oil sector before the start of production.
Earlier in the week, President Yoweri Museveni said he would discuss a parliamentary vote to delay UK exploration company Tullow Oil‘s planned sale of stakes in local oil fields, pledging to defend the country’s interests in the case.
Earlier this week, Uganda’s parliament passed a resolution urging the government to withhold consent for Tullow‘s proposed deal with France’s Total and China’s CNOOC until laws were in place to regulate the industry.
“We’re working very hard, and we expect that by the end of this year we’ll have brought the three bills — Resource Management Bill, Revenue Management Bill and Value Addition Management Bill — to parliament,” Energy Minister Irene Muloni told a news conference on Saturday.
“The problem is that I can’t control the process thereafter. So how fast the bills will be debated and passed into law will depend on parliament, but at least on my side we’re moving very quickly.”
Last year, Tullow agreed to sell stakes in its Ugandan assets to Chinese group CNOOC and French oil company Total for $2.9 billion.
In March, Tullow said Uganda had assessed taxes of $472 million on its earnings from the sale, and it was disputing that figure. It has since begun an arbitration process before a tax appeals tribunal in Kampala.
The company, meanwhile, has been awaiting final government approval for the partnership, which would allow it to move ahead with a project to develop oil reserves.
Endorsement of the deal is expected to kick start a $10 billion investment to develop the country’s oil fields and start production.
Muloni said government officials expected to extract more favourable terms from companies in future oil deals because the discovery of oil has diminished the exploration risk for oil firms.
“Before the discovery we didn’t know what we had. We didn’t know whether we had oil or not, and for an oil company to bring in a big investment they needed stabilisation clause,” she said.
“Now we’re operating with certainty, we have the oil. So when we’re negotiating new deals, we’ll put up tough positions on the table.”
Hydrocarbon deposits were discovered along Uganda’s border with the Democratic Republic of Congo in 2006.
- Tullow Denies Uganda Graft Charges (online.wsj.com)
- Why U.S. military in Uganda? Soros fingerprints all over it (mb50.wordpress.com)
- Uganda MPs vote to bar oil deals (bbc.co.uk)
- Graft Probe Claims Uganda Minister (online.wsj.com)
- 3 Officials Quit in Uganda Over Scandals (nytimes.com)
- (Updated 10-12) Ugandan Parliament Votes to Suspend Oil Deals on Corruption Charges (africommons.wordpress.com)
- Accused Uganda ministers resign (bbc.co.uk)
- Analysis: Rocky start for Uganda’s oil sector (danielberhane.wordpress.com)
- Oil in Kenya? (sahelblog.wordpress.com)
Brazil had another reason to celebrate its May 1 national Labor Day bash. The new reason was the start-up of first oil at the mega Tupi field in the Santos basin. This first extended well test (EWT) of the subsalt formations began producing at a rate of 14,000 b/d of oil and should peak around 30,000 b/d, operator Petrobras says.
Petrobras has not reckoned the size of the BM-S-11 reserves beyond its initial estimates of 5-8 Bbbl of recoverable light oil. The amount, however, was considered staggering enough to inspire President Luiz Inacio Lula da Silva to declare that “God is Brazilian.”
…with a seven-year offshore drilling ban in effect off of both coasts, on Alaska’s continental shelf and in much of the Gulf of Mexico — and a de facto moratorium covering the rest — Obama tells the Brazilians:
“We want to help you with the technology and support to develop these oil reserves safely. And when you’re ready to start selling, we want to be one of your best customers.”
Obama wants to develop Brazilian offshore oil to help the Brazilian economy create jobs for Brazilian workers while Americans are left unemployed in the face of skyrocketing energy prices by an administration that despises fossil fuels as a threat to the environment and wants to increase our dependency on foreign oil.
We have a lot of oil off our shores, too. The politically correct position goes something like this: sure, we’ve got huge reserves. But we have no idea if we have enough to make a difference.
But as the Brazillians have taught us, you don’t know for sure until you drill. Meanwhile:
Posted on May 10, 2011 by Steve Maley
Your President has been telling you things that simply aren’t true. Things like “We can’t drill our way out of our energy problems.” Or “Oil and gas are the fuels of the past.” Or “The U.S. consumes 25% of the world’s oil, but controls only 2% of the world’s reserves.”
Well, that last one may be technically true, but it is used to convey a falsehood. In a post called The Big Energy Lie (Dec. ’09), I attempted to explain the deception. In this post, I’ll attempt to show you graphically in terms that the lay person should understand.
KEY CONCEPT #1: “Reserves” are not “Inventory”
This graph depicts the history of U.S. oil reserves and production over the last 25 years. In 1986, reserves were estimated to be nearly 27 billion barrels. In 1986, we produced 8.7 million barrels a day, or an annual total of 3.2 million barrels. The ratio of reserves to production is 8.5 years — often incorrectly reported in the press with alarm: “We have only 8.5 years of reserves left! We’re running out of oil!”
If this were true, we’d have run slap out of oil in 1995. The dashed line on the graph shows the cumulative amount of oil produced since 1986. Sure enough, by 1995 we had produced over 27 billion barrels, and we still had reserves in the ground of over 22 billion barrels.
Fast forward to 2010: we’re still producing 2 billion barrels a year, and we still have over 20 billion barrels in the ground. In fact, we’ve produced 58 billion barrels since 1986, over twice the 1986 reserve total.
Well, not really.
Imagine if you managed a shoe store. On January 1, inventory shows you have 10,000 pairs of shoes on hand, and you sell 500 pairs per day. Would you forecast that you would be completely out of shoes in 20 days?
Only if you can’t replenish supply. (Or if you’re a
former community organizer really crappy manager.)
In oil and gas, reserves are replenished by drilling new wells. (Reserves can be added other ways, too, but the ultimate key is drilling.) By drilling, “resources” are upgraded to the much more restrictive and valuable category “reserves”. And the U.S. has plenty of resources to draw from. We should be encouraged by the fact that, even with a period of persistently low product prices and relatively low drilling activity from 1986 to 2004, the reserve base has only declined by a little over 20% in 25 years.
KEY CONCEPT #2: “Reserves” are only estimates.
Oil and gas reserves often cannot be estimated with a great deal of precision. Even if the recoverable quantity were known accurately, by definition reserves must be economic to produce. That means that changing economic conditions (especially changes in oil and gas prices) will effect the estimated reserve quantity. When prices are higher, wells can be produced that would otherwise be plugged.
Bottom line, reserve estimates change all the time.
The dark green bars show the rate of oil production over the 25 years. The gold bars show the year to year change in reserves. Production causes reserves to decrease, but new additions from drilling can offset production. Reserves can also be revised — up or down — due to geologic and engineering studies, or changes in economics as described above.
One more graph — the “Reserve Life Index”, or Reserves to Production Ratio. We saw that it is often misinterpreted to represent how many years of production remain. Our national R/P ratio has grown over the last 25 years, perhaps a reflection of better technology or higher prices.
There you have it. Our relatively low reserve number is not an indication that “we’re running out of oil!”, it’s merely a wake-up call that we need to get busy and shore up our domestic supplies. The only thing we are running low on is the political will to do it.