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No Easy Barrels

by Archives October 30, 2007

This month’s high oil prices are just the beginning of a time where paying $90 or more per barrel will be considered normal. Increasing demand for oil and gas is only one part of the story: we have hit a time when the scarcity of available energy becomes a driving factor.
Scattered throughout the world are a few vast reserves of oil, although much of them are considered too costly to reach without increasing the cost to the consumer.
This month, a new era in energy production was reached. The biggest industrial project in Europe was completed off the coast of Northern Norway and beneath the Arctic Ocean.
Norwegians have braved the unforgivable weather and started drilling directly on the sea floor. They cool the gas, turn it into a liquid, feed it into a network of pipelines and ship it off to the eastern United States. These newly available reserves under the Arctic Ocean are predicted to supply the eastern United States with 10 per cent of its energy demands in the coming years. The Norwegian project is the first to reach reserves so far off the coast and in such deep water.
After losing its reserves in the Sakhalin-2 oil and gas project to the Russian energy giant Gazprom earlier this year, Royal Dutch Shell has turned its eye to northern Alberta’s tar sands.
Although both Syncrude and Suncor are the major companies operating in the area, Shell will be researching new ways to tap into the resources deep under ground in the coming years.
The drying up of projects in the North Sea and in Alaska has also forced companies to scramble for new and untapped resources. Alberta has the biggest proven reserves outside of Saudi Arabia and the provincial government has greatly encouraged investment in this area
According to a recent study, research and development costs in oil and gas have tripled in the past seven years.
The combination of growth in Asia and the falling inventories of crude oil in industrialized countries will continue to push companies to develop oil and gas projects in areas where it was once thought impossible.
The increasing costs of research and development, political instability in major oil producing regions in the world, and increasing consumption will continue to keep the price of oil high.

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