These are lousy times to be in the peak oil cult.
In December, U.S. oil exports hit a record of 3.6 million barrels per day, thanks in part to soaring domestic petroleum production.
Last year, domestic natural gas production averaged 69 billion cubic feet per day, a record, and a 33% increase over the levels achieved back in 2005. That year, Lee Raymond, the famously combative former CEO of ExxonMobil, declared that "gas production has peaked in North America."
Why has the U.S. oil and gas sector recovered? How is it that last year, U.S. oil production rose by 790,000 barrels per day, the biggest annual increase since U.S. oil production began in 1859? How could Raymond, the leader of one of the worlds most sophisticated companies, be so wrong?
The answer: innovation. Over the past century or so, oil and gas drilling has been transformed from an industry dominated by hunches and wildcatters to one that is more akin to the precision manufacturing that dominates aerospace and automobiles.
The convergence of a myriad of technologies — ranging from better drill rigs and drill bits to robotic rigs and nanotechnology — is allowing the oil and gas sector to produce staggering quantities of energy from locations that were once thought to be inaccessible or bereft of hydrocarbons.
Advocates of renewable energy like to point out that in 2012, some $270 billion was spent globally on "clean energy." But spending on oil and gas exploration dwarfs what is spent on renewables. Last year alone, global drilling expenditures totaled $1.2 trillion, nearly 4.5 times the amount spent on alternative energy. Trillions more were spent transporting, refining, and delivering oil and gas to consumers.
The results of all that spending can be seen in the numbers: Between 1949 and 2010, oil and gas companies drilled more than 2.6 million wells in the U.S.
Over that same period, they reduced their dry holes drilled from 34% to 11%. And the percentage of dry holes being drilled continues to fall.
Todays hydrocarbon hunters are so precise that they can drill wells that are two miles deep, turn their drill bit 90 degrees, drill another two miles horizontally, and arrive within a few inches of the targeted pay zone. The technical prowess of the drilling sector has been proved twice this month with announcements of major discoveries in the Gulf of Mexico.
Anadarko Petroleum and its partners found a huge field in whats known as the Lower Tertiary trend, containing as much as 3.7 billion barrels of oil equivalent.
The well was drilled to a depth of 31,000 feet below the ocean floor in 5,800 feet of water.
A few days later, Chevron announced a similar find in the Lower Tertiary with a well that was drilled to about the same total depth.
In the wake of the Deepwater Horizon disaster, the offshore oil and gas sector has repeatedly been demonized. Never mind that the industry is conducting the marine equivalent of the space program.
A bit of history: In 1947, the oil industry drilled its first offshore oil well out of the sight of land. The Kermac 16 well, located off the Louisiana coast, was drilled in 20 feet of water.
Back in 1947, the billions of barrels of oil in the Lower Tertiary may as well have been located on the dark side of the moon. The industry simply did not have the technical ability to tap all that energy.
Today, companies like Anadarko, Chevron, Petrobras, and yes, BP, are routinely drilling in water depths of 6,000 feet or more.
They are leasing drill ships costing $600,000 or more per day because the global economy demands the super-high-density transport fuels that can be refined from crude and the super-clean heating and electricity that can be derived from natural gas.
In 1929, the economic historian Abbott Payson Usher wrote that "The limitations of resources are relative to the position of our knowledge and of our technique."
The limits of available resources "recede as we advance," he added, "at rates that are proportionate to the advance in our knowledge."
The advances in knowledge that are occurring in the oil and gas sector are allowing us to keep energy cheap and abundant.
And thats very good news. We wont hit peak oil until we hit peak imagination.
Original Source: http://news.investors.com/ibd-editorials-viewpoint/040113-649947-peak-oil-cult-is-proved-spectacularly-wrong.htm