Wednesday, June 15, 2011

Huge Oil Discovery In The Middle East

Saudi Arabia? Nope that has already been picked over. The "new" oil find is in Israel.

The old energy order in the Middle East is crumbling with Iran and Syria having left the Western fold and others, including Saudi Arabia, the largest of them all, in danger of doing so. Simultaneously, a new energy order is emerging to give the West some spine. In this new order, Israel is a major player.

The new energy order is founded on rock – the shale that traps vast stores of energy in deposits around the world. One of the largest deposits – 250 billion barrels of oil in Israel’s Shfela basin, comparable to Saudi Arabia’s entire reserves of 260 billion barrels of oil – has until now been unexploited, partly because the technology required has been expensive, mostly because the multinational oil companies that have the technology fear offending Muslims.
Of course you should read the whole thing for details but the essence is that if this oil can be exploited it will put a lid (depending on demand of course) on what can be charged for oil. In any case immediate fears of an oil shortage are put off a little longer. And if the Wave Engine works out it could extend that "little to fear" era by 50 or 100 years. Long enough to develop what ever comes next without requiring a crash program.

Speaking of offending Muslims. I wonder if they would be offended if the price of oil declines by half? It would be good to see that proposition tested in the real world.

Cross Posted at Classical Values


sykes.1 said...

Shale oil and tar sands require oil to be around $100/bbl, or so, in order that it can be profitably exploited. If the price goes to $50/bbl, only Saudi Arabia will benefit.

A number of years ago, oil fell to around $10/bbl. Saudi Arabia continued to produce oil, and many older wells in Texas were shut down and concreted.

M. Simon said...

True that. But the price only needs to be kept at $70 a bbl to bankrupt Iran. Saudi can get by at $60.

This is based on the requirement to hold the "nation" together.

So yes. The Saudis can produce at $10 a bbl. They can not survive on that.