The major oil fields in the Gulf region have pumped more than half their oil, which is the point at which production usually begins to decline, one expert tells the Wall Street Journal.
"The easy oil is coming to an end," says Alex Munton, a Middle East analyst for the Scottish energy consulting firm Wood Mackenzie. Meanwhile, global oil consumption jumped by 2.8 percent last year, thanks to fast-rising demand in China and India — the second biggest increase in the past 30 years. With oil production in the West barely rising, the world is increasingly dependent on the OPEC countries, especially Saudi Arabia.
So will this skyrocketing demand and dwindling supply lead to disaster? Not if the Saudis can tap their reserves of "heavy oil," which is abundant but incredibly difficult to pump. The U.S. Geological Survey estimates there are three trillion barrels of heavy oil in the world, enough to last us another 100 years at current usage levels — but only if we can get at it. Chevron is spearheading a new project in Saudi Arabia to pump steam into the thicker oil in the Wafra oil field, thinning the oil and making it pumpable. If the risky procedure works, it could help provide access to a rich new source of oil.
The bad news, though, is that the Chevron project is so expensive, that it'll be hard for the company to turn a profit even if it does work. So one way or another, look for oil to become much more expensive, and more of a precious resource, in the years to come. [WSJ]