Squeezing the Last Drop of Oil

Tuesday, January 31, 2006

A story by Steve Rosenbush in BusinessWeek Online describes efforts to recover abandoned oil:

Until a few years ago, few oil companies bothered to extract every last drop from their fields. That might seem surprising, given the ever-rising price of what the theme song from TV's Beverly Hillbillies so eloquently described as "Texas tea.”

Yet most oil wells still have a fair amount of life in them. That's because it's relatively easy to extract the first 20% or 30% of a field's capacity. After that it becomes progressively more difficult and expensive to tap the remaining reserves. "That's why for every barrel we produce, there are two more in the ground," says Jeff Johnson, founder and CEO of Fort Worth (Tex.)-based Cano Petroleum (CFW).

Johnson, 41, a former finance executive, is betting that he can make a fortune extracting those stubborn reserves buried beneath the plains of Texas and
Oklahoma. . . .

But many people, Johnson included, believe that humanity has burned through roughly half of its oil reserves. This theory of "peak oil" suggests that a 200-year oil epoch is about half over, and that prices of oil will only rise from now on. Rising demand and dwindling reserves will keep prices well above the level that makes advanced drilling techniques worthwhile, Johnson says.