WOR 1 Living with the oceans. A report on the state of the world’s oceans | 2010

Fossil fuels

Fossil fuels

> Oil and natural gas are the key resources powering industrial societies. But deposits are dwindling and prices are rising. For this reason oil companies are turning their attention to resources which were previously thought too difficult and expensive to tap: the oil and gas deposits deep in the oceans. Already, more than a third of the oil and gas extracted worldwide comes from offshore sources

Reliance on oil and gas

Without natural gas, oil and coal, our world would stand still. Scarcely a car, a train or a ship would be seen. Computers would shut down and the lights would go out in most offices. Today’s industrial nations are almost entirely dependent on fossil fuels, and energy consumption around the world has risen by about 70 per cent over the past three decades. The International Energy Agency (IEA) in Paris estimates that consumption will increase by at least another 50 per cent by 2030. The greatest consumers are the USA, China and Russia, but here too the demand for energy will continue to escalate.
The growing demand and increasing prices can be expected to fuel interest in the oil and gas deposits buried deep in the oceans, previously considered too expensive to extract.

Formation and exploration of fossil fuels

Gas and oil form in the sea over a period of millions of years, as the remains of animals and plants sink to the ocean floor. Combined with particles flushed from the land, they are buried and compressed into layers of sediment several kilometres thick on the ocean floor. Aided by the Earth’s pressure and temperature conditions, bacteria convert the biomass into precursor substances from which hydrocarbons are ultimately formed. These hydrocarbons can permeate certain layers of rock and sediment as they move up towards the surface, in a process called migration. In some cases they become trapped in impermeable layers of rock, which is where the actual deposits are ultimately formed. Depending on the ambient conditions, oil or natural gas develops. Today’s sources of fossil fuels are between 15 and 600 million years old. During this period the continental plates shifted, transforming oceans into landmasses, with the result that mineral deposits can be found both on land and at sea. Oil and gas are usually found where vast layers of sediment cover the ocean floor.
These days seismic equipment is used to prospect for new reserves. This equipment generates sound waves which are reflected back from the layers of rock and sediment in the ground. From the sound waves geologists can estimate whether the layers could contain oil or natural gas. At sea the sound waves are generated by what is known as an airgun, which works with compressed air. The echoes reflected back are received via hydrophones on the ocean floor or the research vessel.

7.1 >  Extraction costs of conventional oil by type and region according to IEA and Petrobras estimates (enhanced oil recovery = improved oil production in mature oil fields). © maribus (after the German Federal Institute for Geosciences and Natural Resources, BGR) 7.1 > Extraction costs of conventional oil by type and region according to IEA and Petrobras estimates (enhanced oil recovery = improved oil production in mature oil fields).

The future of oil lies in our oceans

Since industrial oil extraction began in the mid-19th century, 147 billion tonnes of oil have been pumped from reserves around the world – half of it during the past 20 years. In 2007 alone, oil consumption worldwide reached a total of about 3.9 billion tonnes. There is no doubt that extraction will soon be unable to keep pace with annually increasing needs. Experts anticipate that in the next 10 years so-called “peak oil” will be reached, the point at which the world’s oil supplies go into irreversible decline.
Currently the conventional oil reserves – i.e. those which can be recovered easily and affordably using today’s technology – are estimated to be a good 157 billion tonnes. Of this amount, 26 per cent (41 billion tonnes) are to be found in offshore areas. In 2007 1.4 billion tonnes of oil, the equivalent of about 37 per cent of annual oil production, was derived from the ocean. The proportion of offshore production is therefore already relatively high. The most productive areas are currently the North Sea and the Gulf of Mexico, the Atlantic Ocean off Brazil and West Africa, the Arabian Gulf and the seas off South East Asia.
For some years now the trend has been towards drilling in deeper and deeper water. In 2007 oil was extracted from 157 fields at depths of more than 500 metres. In 2000 there were only 44 such fields. Of these, 91 per cent are situated in the so-called Golden Triangle in the Atlantic between the Gulf of Mexico, Brazil and West Africa. While the output of the relatively shallow waters of the North Sea (average depth 40 metres) will reduce in the coming years, production is likely to increase elsewhere, particularly in the Golden Triangle, off India, in the South China Sea and the Caspian Sea off Kazakhstan.
The deeper marine areas therefore harbour additional potential for the future. Experts estimate that the offshore trend will accelerate as oil becomes increasingly scarce. The downside here is that extraction is complex and expensive. For instance, extraction from fields at great depths requires floating production and drilling vessels, or pumping stations permanently mounted on the ocean bed.

Reserves and resources “Reserves” are mineral deposits which have been accurately measured and which can be extracted economically using current technology. In contrast, "resources" are mineral deposits which are geologically proven, but which are not currently feasible for economic extraction, and also those deposits which have not yet been ascertained with certainty, but which can reasonably be expected to occur based on the geological characteristics of the area.

Offshore gas prospects

The consumption of natural gas is also steadily growing. In 2007 global consumption was a good 3 trillion cubic metres, about 520 billion cubic metres more than in 2001. As a comparison, the average German house-hold uses about 3500 cubic metres of gas each year. The greatest consumers of natural gas are the USA, which accounts for about a quarter of world gas consumption, followed by Russia, Iran, Japan and Germany.
Occurrences of natural gas are very unevenly distributed around the globe. As far as onshore deposits are concerned, almost three quarters of the world’s reserves are concentrated in the Commonwealth of Independent States (CIS) and the Middle East. Offshore it is a slightly different story. The frontrunner is the Middle East, which harbours considerably more gas in the ocean floor than in its land-based reserves.
The South Pars/North Dome field located on the Iranian border with Qatar in the Persian Gulf is considered the world’s largest reserve of natural gas, with an estimated 38 trillion cubic metres. This amount is phenomenal considering that the total reserves of natural gas worldwide are thought to be 183 trillion. Other potentially important offshore regions are the North Sea, the Gulf of Mexico, Australasia, Africa and the CIS states, along with the Golden Triangle where gas is also produced as a by-product of the oil industry.
The North Sea is still the most important gas-producing area, but it will be overtaken by other regions in the years to come. Extraction will pick up in the Middle East in the near future, as well as off India and Bangladesh, Indonesia and Malaysia.
Offshore gas production of 65 trillion cubic metres currently accounts for a good third of the worldwide total, and this figure will continue to rise. Between 2001 and 2007 it grew by just under 20 per cent, of which about a quarter each came from the North Sea and Australasia, and about 15 per cent from the Gulf of Mexico and the Middle East. As with oil, the trend is clear: offshore production is growing more strongly than onshore production. Drilling operations are also moving into greater water depths. The Cheyenne gas field in the Gulf of Mexico currently holds the record, producing from a depth of 2740 metres.

Getting gas across oceans: Liquefied natural gas

Liquefied natural gas (LNG) plays a crucial role in humankind’s conquest of the sea. It is cheaper to ship cooled and liquefied natural gas across the oceans in huge tankers than through pipelines. LNG already accounts for a quarter of today’s global trade in gas. In future, natural gas is more likely to be moved by ship than overland through pipelines. On land it is cheaper to use pipelines of up to about 3000 kilometres in length than to liquefy the gas and transport it by sea. On the seabed, however, pipelines are uneconomical from the first metre onwards. Shipping the liquefied natural gas from the offshore extraction plant to the land is much more cost-effective.
An LNG plant liquefies natural gas by cooling it to about minus 160 degrees Celsius. This process consumes large amounts of energy and contributes significantly to the cost of the LNG transport chain. Nonetheless, it is clear that the LNG proportion of the natural gas trade will substantially increase in future. The market is expected to grow by 8 per cent annually over the next 15 years, and to expand more strongly than the pipeline gas trade. Several liquefaction facilities are already in operation.
Recently an LNG plant began operations in Norway, liquefying gas from the Barents Sea. First the natural gas is pumped from the “Snø-hvit” (“Snow White”) gas field to dry land at Hammerfest where it is processed. The first LNG facilities will also soon be built directly over the gas fields off the West African coast. Tankers will be able to berth on the spot.

7.2 > Geographic distribution of conventional oil reserves 2007 onshore and offshore by region. © maribus (after the German Federal Institute for Geosciences and Natural Resources, BGR) 7.2 > Geographic distribution of conventional oil reserves 2007 onshore and offshore by region.

The Arctic region, a special case

As the Arctic sea ice melts as a result of climate change (Chapter 1), hopes are growing among Arctic nations of tapping the oil and natural gas deposits in the northern polar regions. Current scientific studies suggest that the area harbours substantial resource deposits. It is estimated that about 30 per cent of undiscovered gas and 13 per cent of undiscovered oil can be found in the marine areas north of the Arctic Circle. According to scientists, the considerable gas deposits are located mainly in Russian waters. In contrast, the relatively small quantities of oil are hardly likely to impact greatly on world oil production.
As yet, nobody can say whether or when extraction will begin in the Arctic, especially as various legal questions have yet to be clarified (see Chapter 10). Also, production is not yet viable in these undeveloped areas as prospecting will require complex and expensive operations using icebreakers.

7.3 >  Geographic distribution of conventional natural gas reserves 2007 onshore and offshore by region. © maribus (after the German Federal Institute for Geosciences and Natural Resources, BGR) 7.3 > Geographic distribution of conventional natural gas reserves 2007 onshore and offshore by region.

The finite nature of oil and natural gas

What is certain is that the extraction of oil and natural gas from the world’s oceans will increase in future. The technology is already well-established, but the costs involved are still much higher than for onshore or shallow water production. As the world’s reserves of oil and gas run short and prices increase, however, hitherto unprofitable sources will become more economic to exploit. Offshore fields will be able to contribute significantly to meeting the future energy needs of our industrial society.
Nobody knows for certain how long the global reserves and resources of oil and gas will last – particularly as it is difficult to predict future consumption trends. For example, from today’s perspective, resources of natural gas will probably be adequate to ensure supply well into the second half of this century. But if natural gas is used to power motor vehicles or generate electricity in power stations, the reserves could be exhausted much more quickly. Textende