Monday, November 19, 2007

Brazil's Big Oil Find Challenges Peak Theory

ExxonMobil and other energy majors may be right about peak oil.

As they have long argued, it seems that the world isn't running out of oil; rather, the world is running into the resource, only it's the wrong kind, meaning more costly and difficult to extract than the petroleum that producers have grown accustomed to exploiting.

Brazil apparently proves the point; and we're not referring to the country's embrace of environmentally questionable sugarcane-based ethanol.

State-run Petrobras announced a massive discovery that challenges geologists' notions about peak oil--the theory that we are running out of usable resources--and maybe even the origin of oil.

On November 8, Petrobras announced that it has found between 5 billion and 8 billion barrels of light oil and gas at the Tupi field, 155 miles offshore southern Brazil in the Santos Basin, an area the company shares with Britain's BG Group and Portugal's Galp Energy. Tupi is the world's biggest oil find since a 12 billion-barrel Kazakh field was discovered in 2000, and the largest ever in deep waters.

Petrobras executives say Tupi may be the first of a number of new, Brazilian "elephants," an oil industry term for giant fields containing more than a billion barrels apiece.

Production will reportedly begin at a rate of about 100,000 barrels a day. But Petrobras could increase the outpit to as a million barrels a day before 2020—more than the American biggest field in Alaska's Prudhoe Bay.

Petrobras presently pumps 1.8 million barrels daily from its Brazilian fields.

Tapping the Tupi elephant is a truly daunting task. The field lies approximately 4.5 miles beneath the ocean's surface, beneath thousands of feet sand and rock, and a massive layer of sub-surface salt.

Brazil's big oil find not only flies in the face of peak oil theory; the ultra-deep discovery conflicts with the generally accepted idea that petroleum is formed from dead organic matter--the so-called biogenic theory of petroleum formation that was first proposed by a Russian scientist almost 250 years ago.

In the 1950s, a handful of Russian scientists began questioning this traditional view and proposed instead that petroleum could form naturally deep inside the Earth. According to the "abiogenic" theory, petroleum might seep upward through cracks formed by asteroid impacts to form underground pools.

The abiogenic theory could account for the presence in some locations of presumed deep deposits of light, or onventional, crude oil beneath heavy crude deposits. The Dead Sea, for example, a land-locked salt lake separating Israel and Jordan, is believed by some geologists to be sitting atop huge salt domes containing both heavy and conventional crude oil deposits.