222 PETROLEUM TECHNOLOGY, ECONOMICS, AND POLITICS
an oil company, these challenges and costs may deter their widespread use.
The timing of peak oil is also difficult to estimate because new
sources of oil could be increasingly more remote and costly to
exploit, including offshore production of oil in deep-water and
ultra deep-water. Worldwide, industry analysts report that deepwater (depths of 1,000 to 5,000 feet) and ultra deep-water (5,000 to
10,000 feet) drilling efforts are concentrated offshore in Africa, Latin
America, and North America, and capital expenditures for these
efforts are expected to grow through at least 2011. In the United
States, deep-water and ultra deep-water drilling, primarily in the
Gulf of Mexico, could reach 2.2 million barrels per day in 2016,
according to EIA estimates. However, accessing and producing
oil from these locations present several challenges. At deep-water
depths, penetrating the earth and efficiently operating drilling
equipment is difficult because of the extreme pressure and temperature. In addition, these conditions can compromise the endurance
and reliability of operating equipment. Operating costs for deepwater rigs are 3.0 to 4.5 times more than operating costs for typical
shallow water rigs. Capital costs, including platforms and underwater pipeline infrastructures, are also greater. Finally, deepwater
and ultra deep-water drilling efforts generally face similar environmental concerns as shallow water drilling efforts, although some
deep-water operations may pose greater environmental concerns
to sensitive deep-water ecosystems.
It is unclear how much oil can be recovered from nonconventional
sources. Recovery from these sources could delay a peak in oil production or slow the rate of decline in production after a peak. There
is disagreement and much speculation about the decline rate and
disagreement concerning the significance of the role these nonconventional sources will play in the future. However, IEA estimates of
oil production have conventional oil continuing to comprise almost
all of production through 2030.
The development and widespread adoption of technologies to
displace oil will take time and effort, an imminent peak and sharp
decline in oil production could have severe consequences. The
technologies we examined currently supply the equivalent of only
about 1% of U.S. annual consumption of petroleum products, and
the United States Department of Energy projects that even under
optimistic scenarios, these technologies could displace only the
equivalent of about 4% of annual projected U.S. consumption by
an oil company, these challenges and costs may deter their widespread use.
The timing of peak oil is also difficult to estimate because new
sources of oil could be increasingly more remote and costly to
exploit, including offshore production of oil in deep-water and
ultra deep-water. Worldwide, industry analysts report that deepwater (depths of 1,000 to 5,000 feet) and ultra deep-water (5,000 to
10,000 feet) drilling efforts are concentrated offshore in Africa, Latin
America, and North America, and capital expenditures for these
efforts are expected to grow through at least 2011. In the United
States, deep-water and ultra deep-water drilling, primarily in the
Gulf of Mexico, could reach 2.2 million barrels per day in 2016,
according to EIA estimates. However, accessing and producing
oil from these locations present several challenges. At deep-water
depths, penetrating the earth and efficiently operating drilling
equipment is difficult because of the extreme pressure and temperature. In addition, these conditions can compromise the endurance
and reliability of operating equipment. Operating costs for deepwater rigs are 3.0 to 4.5 times more than operating costs for typical
shallow water rigs. Capital costs, including platforms and underwater pipeline infrastructures, are also greater. Finally, deepwater
and ultra deep-water drilling efforts generally face similar environmental concerns as shallow water drilling efforts, although some
deep-water operations may pose greater environmental concerns
to sensitive deep-water ecosystems.
It is unclear how much oil can be recovered from nonconventional
sources. Recovery from these sources could delay a peak in oil production or slow the rate of decline in production after a peak. There
is disagreement and much speculation about the decline rate and
disagreement concerning the significance of the role these nonconventional sources will play in the future. However, IEA estimates of
oil production have conventional oil continuing to comprise almost
all of production through 2030.
The development and widespread adoption of technologies to
displace oil will take time and effort, an imminent peak and sharp
decline in oil production could have severe consequences. The
technologies we examined currently supply the equivalent of only
about 1% of U.S. annual consumption of petroleum products, and
the United States Department of Energy projects that even under
optimistic scenarios, these technologies could displace only the
equivalent of about 4% of annual projected U.S. consumption by