By Alan Caruba
It's not getting much news coverage, but the Associated Press had a story on November 9th that "a monster offshore oil discovery and promising fields near the find could help Brazil join the ranks of the world's major exporters...."
There's lots of oil to be found in and offshore South America. The new field called "Tupi" is significant, not just for the size of its estimated reserves of some eight billion barrels, but because it is "light crude", the most favored type. Initial production is anticipated to exceed 100,000 barrels a day. Petroleo Brazileiro SA will start pumping in 2010 or 2011.
Brazil intends to keep the oil as a nationally owned commodity and not sell it off to foreign international oil players. Considering that the major Big Oil companies combined own only about 4.8% of the world's reserves, this is not good news for them, but oil is sold in a global market and Big Oil does not set the price.
Indeed, I doubt they are too happy about oil flirting with $100 a barrel because the more it costs the consumer, the less the consumer wants to buy it. Granted, we all need gasoline for the car, oil to heat the house, but if people decide to switch to natural gas for heating purposes or buy a hybrid car, that just cuts into future profits. Affordable gasoline and oil is their objective.
The Tupi field, by the way, "lies under 7,060 feet of water, almost 10,000 feet of sand and rocks, and then another 6,600 thick layer of salt." That, my friend, is a hell of a lot of drilling, but the payoff is going to be worth it.
There's lots and lots more oil to be found, but like Tupi it is going to be more costly to find it and then to extract it.
It's worth noting that Brazil's oil reserves currently rank it 17th in the world. Add in Mexico's oil reserves and the oil tar fields of Canada, and there's going to be plenty of oil in the North and South American continents to meet our needs for a long time to come. The wild card is Venezuela whose dictator's ravings are part of the geopolitical reason the price of oil is rising.
Now if we can only get those idiots in Congress to open up Alaska's ANWR where America has billions of untapped barrels of oil and to permit exploration of the 85% of the Continental Shelf they have declared off-limits, Americans might actually have a smile on their face when they pull into the gas station.