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Excellent News, Smithers!

More good news for energy diversification: Tullow Oil PLC and Royal Dutch Shell PLC have struck it big off the coast of French Guiana. The WSJ reports:

“The importance of this result cannot be overstated,” said Oriel Securities analyst Richard Rose. If drilling on these adjacent prospects is successful, Tullow might be sitting on 3.5 billion barrels of gross oil resources, which could boost the value of the company by around a third from its current share price, he said.

For perspective, the U.S. strategic petroleum reserve is 697 million barrels. French Guiana’s coast offers safe oil – good oil – and good tidings too. As we mentioned with the Canadian oil sands pipeline, increasing supply in the western hemisphere helps lessen American dependence on far away oil in bad places. Even news that Venezuela’s reserves could be twice as large as once thought is good news long term for the US; the oil will be there when Chavez has moved on.

America’s geopolitical good luck seems to be continuing in the 21st century.  With very large deposits in Canada, the Gulf, Mexico, Venezuela and offshore Brazil, the US looks to have the most stable and secure oil supplies of any major world power.  Throw in new reserves here and the vast natural gas resources we keep finding, and the US energy picture seems to be getting brighter all the time.

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  • Stephen Clark

    Nicely played. Still chuckling at your headline for this piece.

  • Jacksonian Libertarian

    It’s interesting that you mention the strategic petroleum reserve, as set up this reserve can only supply 1 million barrels a day of our 18 million barrel usage, and that for only ~700 days (not very strategic). I think we should sell all that oil and use the money for capital investment in the retorts, mining equipment, etc… To develop the 2 Trillion barrels of shale oil of the green river basin in Wyoming, Utah, and Colorado. This would provide a bottomless supply of true strategic value, which could be expanded to provide energy independence if so needed or desired.

  • Toni

    Here’s to the wonderful wildcatters who keep finding oil where noone previously thought to look!

    Think about it. Nobody has ever seen an oilfield. Oilfields lurk thousands of miles below the earth’s surface, and sometimes under a mile or two of seawater as well. To find these well-hidden underground pools is a technological feat. That feat must be preceded by an act of human imagination, by explorers whose minds boldly go where no drill has gone before.

    Is that hokey? I think too many people take for granted the imagination, technology and multibillion-dollar risks the industry takes to find new sources of oil to fill their gas tanks.

    It’s risky because (conspiracy theorists notwithstanding) oilmen don’t control the price of oil. They can invest their billions and watch the price fall by half, or worse, have the investment expropriated by a loon like Chavez. Most of the world’s richest oil territory is owned by the state, in the MidEast, much of Africa, in Mexico and Venezuela and Alaska and North America’s East and West Coasts. Or it’s controlled by crooks, as in Russia, the world’s largest exporter.

    So we depend on the risk-takers who venture ever farther into the deep Gulf of Mexico or untapped territory off the West African coast or — now — off the South American coast. (Pumping oil offshore is safer than onshore where it’s prey to villains like the Sudanese rebels. Or Chavez.)

    My grandfather was a roughneck on some of the world’s first offshore wells, in Lake Maracaibo in Venezuela in the 1930s, and I covered oil as a journalist for a couple of decades. I saw oil plummet from ~$40 a barrel in 1981-82 to $9 in 1986. Some 400,000 Americans lost their jobs, more than steelworkers and autoworkers combined in the early 1980s recession. Nobody cared.

    Oil companies and their workers exercise skills and take risks outsiders don’t appreciate. I wish they did.

    Here endeth the paean.

  • Paul

    Though the bulk of Toni’s post on wildcatters is certainly correct, I must add one minor point: I, and many others, including Plutarch, have seen oil fields. Mine were in Kuwait and Iraq; there were places in which, from the air, one could see that the oil literally bubbles up out of the ground. These areas were once considered poisonous wastes. Times change.

  • Toni

    Paul, yes, I know. In 1859 Col. Drake drilled the first oilwell in Pennsylvania in an area of oil seeps. Now I doubt any seeps exist worldwide because everyone knows black gold lurks underneath.

    But seeps are only evidence of a field beneath. Nobody has eyeballed the pockets in underground rocks where dinosaurs and vegetation died and produced petroleum.

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