Are we really too late??

'Too late’ for ANWR oil exploration - Simmons
05 May 2008 23:01 [Source: ICIS news]

HOUSTON (ICIS news)--Lack of equipment and infrastructure are greater obstacles to drilling for oil in the Arctic National Wildlife Refuge (ANWR) than political resistance, energy investor and author Matthew Simmons said on Monday.

“It’s too late for ANWR,” said the chairman of Simmons & Company investment firm and author of Twilight in the Desert, a 2005 book expounding the peak-oil concept.

“There are not enough rigs, and we don’t know what we’d find up there,” he told ICIS from the sidelines of the Offshore Technology Conference (OTC) in Houston.

With crude oil prices hitting $120/bbl in futures trading on Monday, escalating global demand for energy has led some industry executives and politicians including US President George Bush to renew calls for drilling in the protected 19m-acre (79,318-square-km) area.

Environmentalists and many Democrats oppose the idea of drilling in the wildlife sanctuary.

Demand for natural gas is forecast to grow as chemical and energy producers search for cleaner feedstock alternatives.

But Simmons played down the role natural gas will have as a feedstock in the future, saying the infrastructure needed to extract and process it was “in a worse shape than with oil.”

“What we need to do is figure out how to back natural gas out as a feedstock for electricity,” he said.

Aged infrastructure will be the biggest problem facing the oil and gas industry in the coming years, Simmons said during a presentation at the OTC.

He called the decaying steel at the world’s oil and gas wells, refineries and pipelines “an evil more dangerous than depletion” and said infrastructure concerns, along with decreasing oil supply, would drive traditional energy prices even higher.

“The supply of oil and gas has low likelihood of growing,” he told the audience during his presentation. “Prices have a much higher likelihood of growing.”

Simmons estimated it could cost as much as $150,000 bn to completely renovate the world’s oil and gas infrastructure, adding that number could increase as commodity prices, especially steel, continue to climb.