My dad tells me there’s a lot of oil left in the ground. So explain to me why Exxon Mobil is buying up other companies to pad their own oil and natural gas reserves to meet their one-for-one replacement quota?
The oil game is all about replacing what you pump out of the game. Without finding new oil reserves or acquiring other companies, eventually you will run out of fuel to sell. A company with nothing to sell isn’t going to last very long.
So you’d think a company like Exxon Mobil, the world’s largest publicly traded oil company should have no problem replacing the 6.3 million barrels of oil it refines every day. After all, they earn between $5 billion and $10 billion per-quarter, and the planet is a big place. But it turns out that for every 100 barrels of oil pumped out of the ground, they’re only replacing 95. It’s not a huge deficit, but as time goes on the gap is sure to widen. Not good for our petro-economy.
There is an upside however. For every 100 barrels-equivalent of natural gas Exxon pumps out, they find or have acquired 158 barrels. Natural gas is the least-refined fuel, mostly made up of methane, and while it has its own drawbacks its almost certainly a better short-term solution than sticking it out with oil. Exxon has managed to maintain its 1:1 quota for 17-straight years, but last year it was the purchase of natural gas producer XTO Energy that allowed them to make that quota.
What happens when they run out of places to drill, and companies to buy? Nothing good, I’d wager.
Source: Wall Street Journal
Chris DeMorro is a writer and gearhead who loves all things automotive, from hybrids to HEMI’s. You can follow his slow descent into madness at Sublime Burnout.
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Makes that CNG Civic look pretty good, I think.
Sounds like direct evidence that we’ve past Peak Oil. Even with all the resources at their disposal this monster of a company is losing its supply.
How about this for evidence…the Saudis (Aramco,an oil company) are building a 3.5 MW solar array?! WTF…what about all that cheap plentiful oil they’re always bragging about?
http://www.rechargenews.com/energy/solar/article244786.ece?WT.mc_id=rechargenews_rss
Running faster to stand still…
What the oil companies don’t announce via press release is just how many fields are declining due to depletion. Every year the global industry loses approx. 4 million barrels per day through depletion, which means we have to find 20 million barrels per day of new production over the next 5 years just to replace what’s been lost!
From upstreamonline.com, in today’s newsfeed:
“North Sea on-year output takes a dive
North Sea oil output will fall by 8.6% in March from a year earlier, illustrating the gradual drop in supply from the home of the Brent benchmark used to value two thirds of the world’s oil.”
http://www.upstreamonline.com/live/article244864.ece
Chris – In a sense, your dad is right. There IS plenty of oil left in the ground.
Getting to it, however….