This set of speaker notes introduces the subject, which is the topic of a panel discussion for the 2002 Offshore Technology Conference. Participants include;
Mr. Claude Mandil; Chairman, Institut Francais du Petrole (IFP)
Mr. B John Sheets; Project Manager, DeepStar
Dr. Kate Moran, Director, Atlantic Canadian Petroleum Institute
Dr. Bill Lawson; Manager, National Petroleum Technology Office, U.S. Department of Energy
Mr. Marcos Assayag; Petrobras Deepwater R&D Program Coordinator, ProCap 3000
Dr. David Ellix; Managing Director, Industry Technology Facilitator
Dr. Keith Millheim; Manager; Operations, Technology & Planning, Anadarko
Mr. Richard D'Souza, Vice President Deepwater Technology, Halliburton
A secure world economy depends upon reliable access to reasonably priced energy. Achieving this objective requires a consistent and steady amount of ‘over-supply’ and continual application of innovative technology, both of which present challenges. Global oil consumption in 1970 was 46 million barrels per day. In 2001 it was 76 million per day. According to results published by Cambridge Energy Research Associates in their "Global Oil Trends 2002" report, by 2031 the demand will exceed 120 million per day. From where will these barrels come? While alternate energy sources may hold hope for the future, clearly fossil fuels will be important for many years. Looking more specifically at the U.S. picture, U.S. crude oil production accounted for more than half of the world total as late as 1952. However by 1970 U.S. consumption was 15 million barrels per day and production was 9.6 million, for a 36% shortfall. At that point, the marginal pricing of oil, which for so long rested with the Gulf Coast of Texas, moved to the Persian Gulf. To capitalize on their newly acquired pricing power, many producing nations in the Middle East nationalized their oil companies. Posted crude oil prices at Ras Tanura in the Persian Gulf rose to more than $11 per barrel, significantly above the $1.80 per barrel that prevailed unchanged from 1961 to 1970. Despite this run-up in price, by 2001 U.S. consumption was up to 20 million barrels per day, with production at 5.8 million, for a 71% shortfall.
The U.S. is the world's number 3 producer behind Saudi Arabia with a current production of 8 million barrels per day - supplying 10% of the world demand, and number 2 Russia at 6.7 million. During a February 10, 2002 segment of the television program 60 Minutes, Lord Browne of BP, in addressing a question concerning U.S. energy independence, stated that with only 3% of the world's reserves, it is just not possible. The question is does the US really want to rely on Iran, Iraq, and other politically unstable regions to make up the short fall? On November 13, 2001 the Chairman of the Board of Governors of the Federal Reserve System, Alan Greenspan stated " as economic policymakers....., it is essential that we do not lose sight of the policies needed to ensure long-term economic growth. One of the most important objectives of those policies should be an assured availability of energy.