Chevron Nigeria Limited (CNL) recently announced to spend 8 billion U.S. dollars on projects to reduce gas-flaring in Nigeria, joining its peers of world oil majors in tapping into alternative resources and adopting new energy developing technologies.
Through this innovation drive, Chevron wanted to stop traditional oil drilling model in its ages-old oilfields in Nigeria, aiming to make full use of the gas produced along with crude, as well as to avoid Nigerian government’s fines against the environmental-unfriendly method of gas flaring.
The change seems to be a response to the pressure from Nigerian government and oil communities, who have been demanding for oil majors’ care of local environment for years.
But economic feasibility of natural gas under current high international oil prices lays a more important backdrop for Chevron and its peers to tap into news technologies to implement such projects.
Solution to gas flaring is not a young technology. Schlumberger, one of the world’s leading oil service and technology providers, could do a perfect job on this many years ago.
In the era of high oil prices, natural gas, which used to be a by-product of crude production and could be converted into a highly profitable commodity, now becomes attractive to those oil giants who run the oilfields throughout the world.
The conversion also happens to other alternative resources, for instance, the oil sands.
Oil shale and oil sands are widely regarded as the most possible resources to offset the decline of conventional oil reserves in the world.
According to statistics, for oil sands in Canada’s Alberta alone, the three major oil sands deposits, including Athabasca, Peace River and Cold Lake deposits, contain about 1.7 trillion barrels of bitumen in-place, comparable in magnitude to the world’s proven reserves of conventional petroleum. With current technology, about 10 percent of these deposits or about 170 billion barrels are considered to be economically recoverable at aprice of 60 U.S. dollars per barrel, giving Canada’s oil reserves second in the world only to Saudi Arabia.
As international oil prices keep skyrocketing, more potential of this giant reserve will be explored and developed, because the profit margin will also go up.
However, risk always exists for the mass development of such technologies and unconventional resources, as too much speculation has been pinned on the current price hike of international oil market. Because if the current high oil prices collapses and slumps to certain low, it will likely lead to devastating losses to such projects, which usually are very expensive with much labor involved.
Some oil importing countries have tried to find way out of this dilemma. The governments are usually suggested to give favorable policy and quota for highly risky technological research, and also
finance unconventional oil reserve to shoulder corporate entities’ burden on this matter.
In the meantime, like Chevron has indicated with its recent announcement, international oil giants also increased their input in technology innovation and development of unconventional fossil energy resources.
Putting these factors together, analysts predict that a synergy will be formed to paint a rosy picture for the development of oil shale, oil sands and technologies like solution to gas-flaring.