March 28, 2017

I REMEMBER WHEN EXPRESSING DOUBTS ABOUT “PEAK OIL” GOT YOU CALLED A SHILL FOR EXXON: New Crude Found in UK Waters.

“Peak oil” decriers must be used to feeling foolish at this point, but their folly continues (and will continue) to be exposed by discoveries of new oil supplies. The latest example comes to us courtesy of the North Sea waters off the shore of the UK’s Shetland islands, where the oil exploration firm Hurricane Energy claims to have found the country’s biggest new offshore reserve of extractable oil in more than a dozen years. . . .

Many more wells will need to be drilled before we can get a reliably accurate estimate of how much oil Hurricane has discovered, but this is a very good start and comes as something of a lifeline for Britain’s offshore oil industry. North Sea oil supplies made the UK a net exporter of crude in the 1980s, but since then the region’s output has fallen considerably as fields have matured and new discoveries have failed to make up that difference. The collapse in crude prices over the past two years was especially hard on the industry, whose operating costs are among the highest in the world.

In the face of all of this, the UK has been using every tool in its possession to cajole investors to continue to scour its waters for reserves like the one Hurricane just found. And while the road ahead doesn’t exactly look promising, there is at least one reason for Brits to be hopeful: North Sea operating costs have fallen 45 percent in recent years. If that trend continues and exploration keeps yielding valuable new discoveries like this latest one, there might yet be life for Britain’s offshore oil and gas industry.

I also remember when Barack Obama said we couldn’t “drill our way out of” high gas and oil prices.

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