It’s all about energy, cost, and international competition

Marita Noon

We are in an economic war—and it is bigger than Republicans and Democrats battling over tax increases and spending cuts. It is global. The stock market has gone up and down, based on news of Europe’s financial solutions one day, and demise the next. Their success or failure impacts the global economy—including the United States. The various troubled countries: Portugal, Italy, Ireland, Greece, and Spain are often referred to as the PIIGS. While there are myriad reasons for their difficulties, one not discussed on the nightly news is their lack of natural resources. By comparison, the BRIC countries—those with growing economies: Brazil, Russia, India, and China, are rich with resources, which they maximize.
America has an abundance of natural resources, yet our policies keep them locked up. We can’t drill in the Gulf. ANWAR is off limits. Mining is nearly impossible due to regulations. “Endangered species” threaten existing supplies.
Meanwhile resource discoveries are being made and developed the world over. Last week, Repsol announced a new discovery in Argentina—estimated to be more than 900 million barrels of oil. The oil shale find is reported to be Repsol’s largest ever. Argentina’s potential has attracted investment from both majors and independents. Argentina’s rising energy consumption and higher prices make Repsol’s success especially welcome, representing a potential windfall for the country. Argentina is not crying.

On October 20, a “giant” gas discovery was announced off the coast of Mozambique. It is reported that the results of the exploration well “exceed pre-drill expectations and confirm the Rovuma Basin as a world-class natural gas province.” Then, one week later, word came out that the find was 50% greater than originally estimated with up to 22.5 trillion cubic feet of gas. Estimates are expected to increase. Infrastructure, including LNG facilities, will have to be built to support the recent exploration successes with the natural gas expected to be brought to the market in 2018.

The day before the original Mozambique “giant” discovery announcement, it was reported that companies such as ExxonMobil would invest $100 billion to develop and upgrade oil fields in Iraq. The investment is expected to up Iraq’s oil production to at least 6.8 million barrels of oil a day by 2017—making Iraq one of the world’s largest producers of crude oil. Also, on October 19, reports came out saying that the North Sea Statoil discovery is bigger than originally estimated with a potential of 2.6 billion barrels of oil equivalent—which would make it the third-largest find ever made on the Norwegian shelf. Production is expected to begin by 2018. One day earlier, October 18, service provider Odebrecht announced plans to triple its revenues over the next three years. In support of Brazil’s vast deepwater oilfields, the company is spending $5 billion in equipment, from drilling ships and floating oil platforms to pipeline-laying vessels. Odebrecht says: “This year we should [have] revenues of about $500 million and we are going to double that next year, and be at $1.5 billion by 2013.” This, all in the past couple of weeks. Read rest of column here: News New Mexico

It’s all about energy, cost, and international competition