Wednesday, February 20, 2013

Oil Investment Sinkhole Problem -- The Oil Drum

I'll post the link to this story, but I'm too far behind to post comments or thoughts. So, just the link; read at your leisure. From The Oil Drum:
At least part of problem is that Saudi Arabia is reaching limits of various types. One of them is inadequate water for a rising population. Adding desalination plants adds huge costs and huge energy usage, but does not increase the standards of living of citizens. Instead, adding desalination plants simply allows the country to pump less water from its depleting aquifers.
To some extent, the same situation occurs in oil and gas fields. Expensive investment is required, but it is doubtful that there is an increase in capacity that is proportional to its cost. To a significant extent, new investment simply offsets a decline in production elsewhere, so maintains the status quo. It is expensive, but adds little to what gets measured as GDP.
The world outside of Saudi Arabia is now running into an investment sinkhole issue as well. This takes several forms: water limits that require deeper wells or desalination plants; oil and gas limits that require more expensive forms of extraction; and pollution limits requiring expensive adjustments to automobiles or to power plants.
There are plenty of comments that could be made, but again, I'm too far behind to do much more than just post the link. 


  1. A couple of flawed logic points in their presentation.

    The first one that sticks out is doing a comparative on the increase in fossil fuel use by Saudi Arabia due to the desalination of water. It is expensive and is starting to limit their ability to export more oil. That is all true but then they try to imply this kind of situation to what is happening in the more arid shale plays in the US with the expense of handling the flow back of salt water meaning osmosis treatment or injection wells. It is a apples oranges comparison and it all becomes pretty confusing and looks pretty superficial with no statistics to back it up.

    The second is the apparent or intended lack of knowledge or recognition of enhanced oil recovery like what is taking place in the Permian Basin.

    The Oil Drum is all about the peak oil falsehood and it has little relevance today with the oil and gas revolution taking place in the US.

    For some they will never give up on their old false beliefs. Too bad they refuse accept that a big change has taken place.

    1. Thank you. I agree. I appreciate your comments. I just don't have time to respond to everything. I thought this article was particularly poor, even for The Oil Drum.