Crude Oil Production Costs to Fuel Increasingly High Oil Prices

Each and every day, the world's supply of fossil fuels is decreasing. As the supply of crude oil and natural gas decreases, these resources become more difficult to retrieve from their underground reservoirs.

There is new technology being developed constantly in the areas of tertiary oil recovering and enhanced petroleum recovery. Since, these processes cost companies more per barrel of oil produced than traditional methods, the increasing difficulty of producing petroleum products is one of the reasons for the increased price per barrel of oil and cubic square foot of natural gas. Enhanced petroleum recovery methods are going to increase in their importance to all of the world's consumers continually into the future and especially over the next couple of years, because these processes will directly effect the amount of petroleum products produced annually and the cost of those products. Some of the most common enhanced petroleum recovery systems include; floods of the oil bearing formations and new drilling methods.

The theory behind CO2 floods and water floods of the oil bearing formations is that as the petroleum products are produced from a formation the pressure with in the formation is decreased which lessens the force which pushes the oil and natural gas toward the well bores, so by adding gas or water to the formation the pressure can be increased. The CO2 and water is injected back into the oil bearing formations through the use of injection wells. The water used in a water flood project is most generally the water that is produced from the formation with the oil, which is simply cleaned and returned back to the formation from which it is produced.

Steam floods or hot water floods are used to increase the temperature in formations that contain heavy and thick oils so that the oil will flow better. This leads to an easier recovery of the crude oil. Steam floods have been used for several years and are how the oil near Bakersfield, California, is produced.

Horizontal drilling is just one of the newer drilling methods used in the production of crude oil. There are many types of drilling methods and companies are constantly completing experimental drilling projects. Some companies have even developed methods of mining underneath the formations and allowing gravity to pull the oil down to the mine shaft. These projects are helping these companies develop more efficient ways to produce crude oil and ways to produce crude oil that could not be produced in a profitable manner before. These projects cost millions of dollars which also increases the cost per barrel of oil and decreases profit margins for the oil companies.

As crude oil becomes harder and more expensive to produce the cost per barrel of oil will also have to increase in order to allow oil production companies to make a profit through the production of crude oil. New technology development, enhanced recovery methods and experimental drilling projects will affect the cost of crude oil over the next several years.