One reason Saudi Arabian policy kept the price of oil around $25 a barrel was to discourage investment in alternative energy:
Beginning in the mid-1970s and during the years that followed, Saudi Arabia, as the de facto leader of OPEC generally worked to keep oil prices low normally in the $18-$22 per barrel range. Fearing that high oil prices could hurt global growth, reduce demand for Saudi oil by encouraging conservation and alternative energy development... (Journal of Energy Security, December 14, 2011)For the last eight or so years oil has been over $80 a barrel, and sometimes significantly over. At these higher prices energy firms small and large have invested billions of dollars developing hydrocarbon deposits that were too risky and costly when oil was selling for under $50 a barrel.
Billions have been invested in energy research projects, from genetically modifying algae for oil production to hydraulic fracturing and horizontal drilling.
The shale gas and shale oil boom of the last eight years is part of this story. It wasn't one or two inventions that launched the shale production boom but dozens and then hundreds of small innovative advances to speed the drilling process, more accurately follow shale seams further and further, lower extraction costs, reduce and recycle water and chemical use and costs, and improve transportation and processing. Each month drilling speeds and yields increase slightly, as costs fall and the estimated size of recoverable hydrocarbons increases.
Here is a recent snapshot of the story in Texas from the Wall Street Journal:
One of the state's oldest oil fields, the Permian Basin in West Texas, is booming again, thanks to advanced technologies such as hydraulic fracturing and horizontal drilling. And Permian oil output shows no signs of stopping at its current 1.7 million barrels a day.Not far from the Permian Basin (by Texas standards) is Eagle Ford, a large south Texas shale gas and oil play. Eagle Ford oil production is projected to hit 1.5 million barrels a day this month, up from 358 barrels a day in just 2008! I draw the 358 number from this May 2014 Motley Fool post:
The Eagle Ford’s expansion has played out at a remarkable pace. In 2008, output from the entire field consisted of a single Petrohawk well which produced 358 barrels of oil equivalent per day, or boepd. Today, Eagle Ford output now tops one million boepd.
To put that figure into perspective, only six other fields in the world have ever hit that one million barrel milestone. And based on projections by Benteck Energy, production is expected to surpass 1.5 million boepd by 2018.The 8th "Jaw-Dropping Fact" may be that the 1.5 million a day predicted for 2018 arrived in 2014. Each year oil production in Eagle Ford has grown significantly faster than predicted the year before.
An even bigger story of hydrocarbon extraction technology can be found in Alberta, Canada in the vast oil sands. An amazing story in The Economist (Sept. 6, 2014) explains a range of new extraction technologies being developed for oils sands extraction. Already over half of Canadian oil sands extraction no longer the requires massive open pit mines (shown in the picture). Instead, for 53% of oil sands production, steam is injected deep underground to melt the oil and push it to the surface.
Other oil sands extractions technologies mentioned in the article:
- Suncor, an Alberta firm, found that adding oil-based solvents to steam increases recovery while reducing the amount of water that has to be heated by 15%. Suncor will begin commercial production within a year ...
- Imperial Oil, based in Calgary, has replaced steam altogether by injecting solvents under high pressure but at much lower temperatures ...
- Suncor began building facilities in Alberta to test melting bitumen with microwaves. It will insert a microwave-transmitting antenna into a horizontal borehole with the circumference of an arm but the length of a football pitch. ...
- Germany’s Siemens is developing a system that floods a thick copper cable with an electrical current to create an alternating magnetic field to melt bitumen ...