Re: oil crises.

[dmschanoes <dmschanoes@xxxxxxxxxxxxx>]

----- Original Message -----
From: "Devine, James" <jdevine@xxxxxxx>
To: <PEN-L@xxxxxxxxxxxxxxxx>
Sent: Monday, March 08, 2004 8:14 PM
Subject: Re: [PEN-L] oil crises.


(a civil conversation)

> DMS:  But Iraq is not a high cost producer of oil, having a
> cost of production approximately
> equal to Saudi Arabia, the low-cost producer.

JD: I have heard otherwise from other sources.
____________________________________________
>From the US Energy Information Agency

http://www.eia.doe.gov/emeu/cabs/iraq.html

Iraq's oil development and production costs are amongst the lowest in the
world (perhaps $3-$5 billion for each million barrels per day), making it a
highly attractive oil prospect. However, only 17 of 80 discovered fields
have been developed, while few deep wells have been drilled compared to
Iraq's neighbors. Overall, only about 2,300 wells reportedly have been
drilled in Iraq (of which about 1,600 are actually producing oil), compared
to around 1 million wells in Texas for instance. In addition, Iraq generally
has not had access to the latest, state-of-the-art oil industry technology
(i.e., 3D seismic, directional or deep drilling, gas injection), sufficient
spare parts, and investment in general throughout most of the 1990s.
Instead, Iraq reportedly utilized sub-standard engineering techniques (i.e.,
overpumping, water injection/"flooding"), obsolete technology, and systems
in various states of decay (i.e., corroded well casings) in order to sustain
production. In the long run, reversal of all these practices and utilization
of the most modern techniques, combined with development of both discovered
fields as well as new ones, could result in Iraq's oil output increasing by
several million barrels per day