by Alfred Nassim

24-04-07

Sir, Your prominent report (April 19), which began "Iraq could hold almost twice as much oil in its reserves as had been thought", should have been given some sort of a health warning.
Most readers don't know that IHS, the consultancy that conducted the study into Iraq's resources, owns CERA, the consultancy that has been giving optimistic forecasts of the world's oil reserves. It forecast in 2002 that gas production in the US would increase by 15 % by 2010 and it has since declined by 4 % -- most gas wells there deplete in 12 months now. Nor do most readers know that the clients of IHS are the very same people who would like to get their rigs on to Iraqi soil.

The use of language such as "oil production" is inaccurate when referring to non-renewable resources. Oil is extracted, not produced. Advanced extraction methods such as "horizontal drilling" do not increase "production" -- they merely speed up depletion and ensure that when it approaches it is sudden, and not gradual as with conventional drilling.
If in any doubt, witness what is happening with Cantarell in Mexico: the world's second most prolific oil field is declining by 20 % annually. Nevertheless, CERA believes Mexico's oil extraction will remain level until 2015.

The fact is that the media are being massaged by a steady drip of "good news" on the energy front.
Each drop -- the hydrogen economy, clean coal and, more recently, ethanol -- serves merely to confuse us and to distract us from the big picture.

Alfred Nassim, Ryde, Isle of Wight.



Source: The Financial Times