A new political approach
The Oil & Gas Journal editorial (Jan. 5, 2004, p. 17), "A new political approach," speaks of the "unpopularity" of the oil and gas industry—something that can't be denied—and asks, "What to do?"
It's high time that we picked ourselves up and got off the defensive. We must consider new approaches to addressing the politics of energy lest we lose out to our critics. The oil and gas industry has a good record in stretching oil supplies and in planning and developing new energy sources. We need to tell people what we do. A campaign directed to lay audiences embodying the following theme would be a good start:
Oil men and women have been in the business of conservation for years.
To us conservation means "squeezing" as much oil out of each petroleum reservoir as possible. It means saving energy by operating more efficiently and using less oil and gas today than we did yesterday.
We conserve oil when we produce oil. Conservation means calculating the maximum efficient rate of production so that ultimate production from each oil field and each gas reservoir is maximized. Natural gas may be reinjected into the producing horizon to maintain reservoir pressure and thereby increase ultimate oil production. Water may be injected to sweep oil reservoirs and increase ultimate recovery. Oil reservoirs may be heated to encourage the flow of oil into the well bore.
Every additional barrel of oil that we can ultimately extract from a reservoir and the energy that we can save by operating tankers, pipelines, and refineries more efficiently means more oil and gas for future generations.
The world's reserves of oil and natural gas may appear limitless because our long history of oil and gas production and the success we have had in exploring for and finding new reserves in ever more hostile environments. The truth is, however, petroleum reserves are finite. The world's petroleum reserves will eventually top out and then begin a slow inexorable decline to ultimate exhaustion. It won't happen tomorrow. But it will happen. Mankind will eventually exhaust its geological legacy.
Oil folks are acutely aware that, unlike the claim of the diamond advertiser, "Oil is not forever."
With us, energy conservation is a creed. It has to be.
Is it with you?
The oil and gas industry cannot remain detached from its customers and defend its interests successfully. We both have a responsibility to future generations to conserve and stretch energy supplies. We have a common interest in assuring reliable energy supplies. Both we and our customers want energy priced at reasonable levels but not to the point of encouraging profligacy.
We need to emphasize the congruency of interests between ourselves and our customers.
Thomas S. Wyman
Palo Alto, Calif.
H2 and fuel cells
With great interest, I read your commentary on SUVs published in OGJ (Jan. 5, 2004, p. 15). Society needs to address SUVs for their safety risks to passenger cars as well as to SUV drivers and passengers. I wish that SUVs could be viewed not only from the point of view of SUVs themselves but also from a transportation system perspective. We have an SUV and a subcompact at home. When I drive our subcompact, I am afraid of being hit by an SUV or a truck. When I drive our SUV, I am afraid of hitting a car or having the SUV roll over. Luckily, so far, none of these things has happened. Your proposal of a safety score adjusted by vehicle weight is a step in the right direction.
Michael Wang
Naperville, Ill.
Reserve reductions
Shell's 20% markdown of "reserves" was a crash waiting to happen. First, "thermal equivalence" of gas and oil makes no sense. These markets are not denominated in btus. In addition, gas costs much more to transport, by pipe line or LNG ship, making gas at the wellhead worth even less compared with oil.
Second, proved reserves of oil or gas result from an investment decision. Before they sign off on it, engineers, bankers, and investors have taken a good hard look at estimates of the well's production, and the point where the current operating costs rise to equal the price. At this point, the well shuts down regardless of how much is still in the ground. The cumulative production is the reserve. It is quite different from "probable" or "possible" reserves, and is not to be added to them.
But there is one mistake applying to all of them, most recently in the Wood MacKenzie report last week: "Reserves are finite. The more that has been found the less that remains to be found." We have been hearing this for over a century, during which oil and gas production keep rising. The statement is forever repeated, but something is wrong with it.
M. A. Adelman
Massachusetts Institute of Technology
Cambridge, Mass.
G. C. Watkins
Aberdeen
