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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: see clearly now who wrote (25225)	7/26/2006 9:31:41 AM
From: Wharf Rat	Respond to of 541761

Costs explode at Shell Canadian venture By Carl Mortished, International Business Editor SHELL is facing a cost explosion in the expansion of the Athabasca Oil Sands Project, a mining venture that extracts oil from bitumen deposits in the Canadian province of Alberta. The first phase of expansion, intended to add 100,000 barrels daily to the current 155,000 barrel per day output was budgeted at C$7.3 billion (£3.6 billion) only a year ago. It is now expected to cost as much as C$11 billion, according to estimates published by Western Oil Sands, Shell’s partner in the project. Message 22602589 ====================== With prices high, you say, hundreds of billions of barrels of oil from the tar sands of Canada and from the heavy-oil fields of Venezuela become economical to produce. Right again, though this is not conventional oil we’re talking about, but materials that have to be transformed into synthetic petroleum using energy-intensive processes. Again, the real question is, at what rates? Canada is currently extracting a million barrels a day from the tar sands; Venezuela is pulling a little over half that amount from the Orinoco belt. These numbers are expected to climb—and then level off. Why? Because the process of producing synthetic oil from these low-quality hydrocarbon sources is constrained by physical factors that just do not respond much to economic stimuli. Canada needs lots of fresh water and natural gas to make oil from the tar sands, and both are in short supply. The best published forecasts say that, regardless of the price of oil, flow rates there will max out at about three to five million barrels per day by 2025—a generous amount in terms of the benefit to Canada’s economy. But this is not nearly enough fuel to satisfy the US habit of over 20 million barrels per day—and crucially, it’s not enough to make up for expected declines from the world’s giant and supergiant conventional oilfields once the latter begin their inevitable declines—as they are doing now. There are only about a hundred of those big fields that, collectively, yield roughly half the oil extracted today. Nearly all are old (found in the 1940s through the 1970s), and we’re seeing that, with the newer water-flooding recovery methods, when decline comes it can hit unexpectedly and with catastrophic swiftness—as it did in the Yibal field in Oman, which peaked at 250,000 barrels per day in 1997 and is already down to less than 80,000 b/d. Message 22602269