This post is a summary of a conference call for bloggers hosted by the American Petroleum Institute (API) on Friday, May 15th, 2009, from 12 to 1 pm. The conference call was set up as a Q & A session where questions from numerous bloggers were fielded by Robert Ryan, the Vice President of Global Exploration at Chevron. Other participants that fielded some questions were Justin Higgs, News Media Advisor (Chevron), Mark Kibbe, Federal Relations Director (API), and John Felmy, Chief Economist (API). The following is an abridged version of the transcript, focusing on some of the more interesting questions and answers. A complete transcript of the conference call and recording of the call can be found here.

Recently, I visited Chevron's Kern River Heavy Oil field, near Bakersfield California, as a guest of the American Petroleum Institute. Kern River is an extremely old field, discovered in 1899. The oil flows a bit on its own (API=13), but really needs to be heated to be easily extracted or to be shipped by pipeline. After more than a hundred years of pumping, most of the available oil has been extracted--a total of a little over 2 billion barrels has been extracted. The additional amount that can be extracted will depend on the price of oil and how well Chevron can minimize costs.

The site produces about 80,000 barrels a day from 8,000 producing wells, meaning that on average, each well produces about 10 barrels of oil a day. In order to make money with this type of operation, Chevron must be very efficient in everything it does--reusing equipment whenever possible, using the best techniques possible to find the remaining pockets of oil, and prioritizing the workload of the employees, based on which activities are most likely to produce a profit, and which activities are not cost effective.

In the recent past, production has been declining at 2% or 3% a year. Chevron's goal in the near future is to hold the decline rate to 1% per year. No one knows how much additional oil can profitably be produced, but rough guesses were in the 200 to 500 million barrel range. This range equates to 10% to 25% of the oil produced to date as possibly being economically available for extraction.

In this post, I will tell you a little about what I learned on my trip, and also offer some thoughts on whether heavy oil is likely to be a panacea for peak oil.

Locations of concern include coastal waters such as those near Florida; the Outer Continental Shelf (OCS) (beyond state coastal areas); and the Arctic National Wildlife Refuge (ANWR).

The views in this article are my own, particularly the peak oil views. Many of the comments about technical issues are based on discussions with the American Petroleum Institute (API). I recently participated in an API bloggers conference phone call on the subject of "Exploration and Production." We talked about offshore drilling and ANWR. A listing of the people involved can be found here, and a transcript of the call can be found here.

US natural gas production has been flat for a number of years. We keep hearing that US production is expected to begin declining sometime in the next few years, but it doesn't seem to happen. While it is not obvious from most published data, the reason production remains level is because unconventional gas production has been rising at the same time that conventional production has been declining. In this post, I will look at unconventional natural gas, since it plays such a pivotal role.