Comments by Jean Laherrère

"'Knowledge, not petroleum, is becoming the critical resource in the oil business,' the author writes in this firsthand account of how technology is stretching the bounds of finitude" [Jonathan Rauch in The Atlantic Monthly, January 2001]
Rauch's article is a mixture of traveling experiences at drilling sites and technical promotional papers from service contractors. It is not a scientific paper. It is a mixture of some real facts, wrong interpretations, omissions and wishful thinking. It is a typical mixture where everyone can find something to please him and also to upset him.

The article is mainly US-oriented. For example,

"The world has burned about 820 billion barrels of oil since the first strike at Oil Creek, Pennsylvania, in 1859."
Drake drilled the first oil well in the US but not in the world, as oil was found and drilled before 1859. All the fields discussed in this paper are in the US.

"According to the Energy Department, the average cost of finding new oil has fallen from $12-$16 a barrel in the 1970s and 1980s to $4-$8 today."
The average drilling cost per foot has varied with the cost of services which varied with the wellhead price; it went from $60/ft in 1978 to $110/ft in 1982, $60 again in 1987 and $110 in 1997. What is important is the number of barrels found per exploratory foot and everyone knows that this is down. Increase in discovery ratio means that more drilling is carried out close to production as the petroleum basin matures. The success ratio in development drilling is several times the success ratio in exploration.

Most of the progress in technology is in unconventional reserves, such as, for example, with the Austin Chalk with horizontal drillings, or in the rate of production. This is why the depletion rate of new oil wells and even moreso new gas wells (over 50%/a in the GOM) is several times the depletion rate of old wells. To believe in the miracles of technology is hard to do when looking at the disasters of the presidential election, because punched cards (obsolete in Europe for more than 20 years) or the loss of the Mars Climate Orbitor (instructions sent by NASA in Newtons when Lockheed designed the computer programme in pounds) or the flop of the Y2K bug.

"William L. Fisher, a prominent petroleum geologist at the University of Texas at Austin, has found that in theory about 70 percent of the oil in an average reservoir should be recoverable; at present the average well actually drains about half that amount, and often a good deal less. "What we now understand," Fisher told me recently, "is that owing to the complexities of reservoirs, there's a lot of oil unrecovered in existing reservoirs."
Geology is the prime parameter (shape of the pore giving the porosity and the permeability) and it cannot be changed, as recovery varies from 3% to 85%. There is no way to change a poor reservoir into a good one. Furthermore the average recovery of present production fields is well over 35%. Ghawar reserves are estimated to have a recovery factor of 60%.

"'The end of the oil age," says Julian West, a senior director at Cambridge Energy Research Associates, "is not going to come because we run out of barrels." West is a good person to ask about the errors of the 1970s and 1980s. I believe I was the first person to call the peak of UK North Sea production," he told me in a telephone interview from his London office. "This was in 1981, and I called it for 1982." And how, I wondered, did he do? "It hasn't peaked yet."

Wrong: there are two peaks in the UK production, corresponding to the two peaks of discovery. If the annual discovery is shifted by 11 years, it fits with the annual production peaking in 1985 close to 1 Gb/a, going down to 0.7 Gb/a around 1990 and peaking again a little over 1 Gb/a in 1999.

"Something cheaper and cleaner, perhaps the hydrogen-based fuel cell, will come along, and the oil age will end with large amounts of oil left unwanted in the ground."

Wishful thinking, without any proof, as hydrogen is not a source!

"Knowledge, not petroleum, is becoming the critical resource in the oil business; and though the supply of oil is fixed, the supply of knowledge is boundless."

Just words. Knowledge has not prevented the decrease of oil discovered. As far as I am concerned, the more I know, the more I know that I do not know!