This is part I of a guest post by Jean Laherrère, long term contributor to The Oil Drum. Jean worked 37 years for TOTAL on exploration and production of oil and gas, and since his retirement has worked tirelessly to analyse the world's oil & gas data and developments.

Leonardo Maugeri is an economist who worked for ENI since 1994, where he is currently on a sabbatical leave. He is also a senior fellow at Harvard University. In October 2009 he wrote an article in Scientific American entitled "Squeezing More Oil From the Ground: Amid warnings of a possible "peak oil," advanced technologies offer ways to extract every last possible drop”, which is now found with another title: “Another Century of Oil? Getting More from Current Reserves”. At the time, I wrote some comments on The Oil Drum in response: “Comments on Squeezing more oil from the ground by L. Maugeri Scientific American October 2009”

Recently, Maugeri published a new working paper, "Oil the Next Revolution: The uprecedented usurge of oil production capacity and what it means for the world". I again disagree with L. Maugeri’s stance that oil production capacity is surging, because production capacity data is completely unreliable, based on guesses and not on real measurements. Only oil production data should be used for forecasting purposes; his forecast on non conventional oil is also flawed. L. Maugeri has a poor understanding of the accuracy of oil data and his statements are in my view political and not scientific. His paper does not deserve to be on the website of Harvard University, a centre for science.

Below the fold are my comments on Maugeri's Oil Revolution discussion paper.

I wrote last time about the projected pipelines that are being anticipated to take advantage of increased production from the oil sands in Alberta, Canada, with the intent that I would use that to lead into a review of the oil sands operation itself. However, Gail has raised the issue of the proposed reversal of the pipeline (Line 9) that runs from Sarnia in Ontario to Montreal so that oil would flow to the Suncor refinery in Montreal, rather than the current flow, which runs the other way. (Sarnia is right by Detroit). The pipeline reversal is planned to continue beyond Montreal, to include reversing the flow of a supply pipeline from Portland, Maine so that the oil from Alberta might also supply northern New England. The project has been called “The Trailbreaker” and had been postponed two years ago when demand declined.

The overall question of the relative role of exports and imports on the Canadian oil supply equation was also raised in comments on the previous post. As a result, I am going to look a bit more into the overall Canadian picture and particularly that in the East Coast, and will postpone the oil sand piece a week (sorry Neil). To begin, it helps to look at the current projects that Enbridge has in mind for pipelines.

The Ozark pipeline, which is shown running from Cushing to Wood River was closed on Friday, September 30, when the pipeline was found to be exposed as it ran across the bottom of the Mississippi River. It carries around 240 kbd and the shut down is precautionary, since there has been no leak detected.

Art Berman commented, in regard to my last post on the oil and gas reserves in offshore Alaska, that at one time companies looked for an estimated 1 billion barrels in reserves before they would consider starting down the long road to bringing them to market. With the rising price of oil, that number may have declined a little but for natural gas, a similar need for a long-term assured market is currently potentially raising barriers to progress. As I mentioned in that post, there is a considerable sum involved, not just in acquiring the leases for the sites but in all the preparatory work needed before the first drill even hits the surface. Even after the wells have come in, the hydrocarbons must still be moved down to the customer and as the Trans-Alaska Pipeline System (TAPS) showed, it takes time, money, and a considerable commitment before that connection can be made.

One of the recent changes that I noted a couple of posts ago is that more of the reserve in the North Slope is now known to be natural gas rather than oil. With the current relative natural gas glut in the contiguous United States, that reduces the immediate market and the potential current price that the gas could bring in. This, in turn, slows lease development. But times change and with an increase in natural gas demand there will be a growing demand with time. One can also see an increased future need for natural gas in Alberta, where it helps in the production of the heavy oils from the shallow sands around Fort McMurray. And that brings us to the current controversy over the building of another pipeline, this time for natural gas, down from the Arctic.

The following is a guest post by Simon Dyer, of Canada's Pembina Institute. The Pembina Institute believes that while oil sands extraction has many issues, it can be done in an environmentally sustainable way. In the end, they advocate a moratorium on new project approvals until 2011, new regional environmental groups and some additional environmental controls, as described in their publication Taking the Wheel. Increased CO2 emissions might be handled through purchase of carbon emissions credits and through improvements in production efficiency. While the oil sands aren't great, with some adjustments, they may still be an acceptable solution. The comments to this post are helpful in understanding the complex situation. Don't miss them!

By Simon Dyer, Oil Sands Program Director,
The Pembina Institute

The oil sands are an issue of global importance. As conventional sources of crude oil are depleted, unconventional sources of oil, such as the bitumen found in oil sands, play a larger role in offsetting declining conventional production. The Canadian oil sands are the second largest proven oil reserve after Saudi Arabia.¹