World Demand for Crude Oil and Exploration Techniques

Increasing world demand for crude oil supply steadily influences increasing crude oil prices recent historical highs. In October of 2008, the price of crude oil traded on the commodity mercantile exchange in New York City reached above ninety dollars a barrel (42 U.S. gallons) for the first time. 1 The organization of the Petroleum Exporting Countries (OPEC) including Iran, Iraq, Kuwait, Saudi Arabia and Venezuela co-ordinate a unified production and price for the sale of crude oil, however frequently reported members cheat regarding production output. 2, 3 Non -OPEC oil producers account for sixty percent of the worlds oil (In 2006, non-OPEC nations produced approximately 47.5 million bpd (barrel per day - 42 U.S. gallons 6) including United States, Canada, Mexico, China, Norway and Brazil. 5 Actual price of crude bought and sold determine by commodity markets around the world including the New York mercantile exchange, based upon world demand, and potential risk against interruption of output production, especially in the regions of the middle east (regarding geopolitical worries 4) and weather concerns stopping production or delivery. Also, price of crude oil change reflects the risk or action of terrorism preventing or curtailing oil production or delivery. Furthermore, price of crude oil is in U.S. dollars, any devaluation of the U.S. currency against other currencies around the world, mercantile exchange traders adjust the price of crude oil higher reflecting current currency exchange rate policy or risk of currency exchange rate change. 4 Alarming U.S. Government data underscores declining crude oil inventory supply insufficient to meet demand (Expected during the fourth quarter of 2008, world oil consumption projected to be 1.8 million barrels per day above fourth quarter 2006 levels 8): United States oil inventories approximately four percent below last year's data, gasoline stocks down seven percent from the 2006 totals, and warehouse supply of crude oil in Oklahoma for the delivery of trade on the New York Mercantile Exchange reflects nineteen percent decrease level from last year. Also, current news events regarding tension between Turkey and Iraq possible disrupting production or transportation of crude oil incrementally reflects a risk for higher crude oil price. 7

According to the U.S. Energy Department of Energy Information Agency (EIA) global consumption of crude oil estimated increase by 2.5 million pbd (per barrel day) from 2006 - 2008. As result the EIA expects OPEC and Non-OPEC nations respectively foresee increasing crude oil production by 1.2 million (OPEC) and 1.5 million bpd (Non-OPEC) anticipating higher demand. 5 Unfortunately, unforeseen events by geo-political events, terrorism and greater than expected demand for crude oil could greatly influence supply and price, more than current oil production.

Recent price increases crude oil above ninety-dollars a barrel signal possibility OPEC may hold formal meeting sometime in November 2007, regarding increasing output production to facilitate lower price. 7

During past ten years, Per Arne Bjerkum dean at the Faculty of Technology and Science at the University of Stavanger (Norway) and researchers Paul Nadeau and Statoil developed a theory called Golden Zone. The Golden Zone a location underground where temperatures range between 60 and 120 degree Celsius and ninety percent of the world's oil and gas reservoirs expected to be found. The Golden Zone provides a tool oil companies utilize, more efficient exploration. During exploration when underground temperature measure above 120 degree Celsius finding oil and gas is not likely. According to Mr. Bjerkum, an area underground temperature measure below 60 degree Celsius discovery of oil is a poorer quality because the quality of the oil is heavier containing bacteria. 9

Satellite Imaging Corporation (Houston, Texas) provides satellite images to guide oil and gas exploration discoveries. Interpreting the satellite images provide geophysical and seismic information (As a result of tectonic earthquakes or explosions seismic wave travels through the Earth. Seismic studies help locate oil reservoirs. 13). Also, geographic information includes global positioning system (GPS). The use of orthorectified satellite image: "it provides insight on the selection of areas plan 2D or 3D seismic surveys for an exploration drilling program as well as aiding in the process of environmental and operational safety hazards (natural hazards including earthquakes, floods and volcanic eruptions important factors when considering pipeline corridor planning. Also, anticipating potential landslides caused by excessive precipitation or human deforestation 12) to minimize the HSE (The Health and Safety Executive - Ensuring risks in the workplace are properly controlled 10) risks. There is currently no other technology that matches or exceeds the capabilities of remote sensing and its necessity in the oil industry." 11

References:

1) Crude Oil futures surpass $90 a barrel for first time - http://www.9news.com/rss/article.aspx?storyid=79300

2) The Organization of the Petroleum Exporting Countries (OPEC) Brief history -

http://www.opec.org/aboutus/history/history.htm

3) Understanding OPEC: Cheaters Never Win - http://seekingalpha.com/article/32217-understanding-opec-cheaters-never-win

4) Oil price volatility reflects credit uncertainty: Opec -

http://www.straitstimes.com/Latest+News/Money/STIStory_168794.html

5) Non-OPEC Oil Production - http://www.cfr.org/publication/14554/

6) Barrel (unit) - Wikipedia - http://en.wikipedia.org/wiki/Barrel_(unit)

7) Crude Oil Tops $90 Per Barrel - http://news.ino.com/headlines/?newsid=101920070018

8) Short - Term Envergy and Winter Fuels Outlook - http://www.eia.doe.gov/emeu/steo/pub/

9) New Theory Predicts Location of Oil And Gas Reserves - http://www.sciencedaily.com/releases/2007/10/071020082836.htm

10) Health & Safety Executive - http://www.hse.gov.uk/aboutus/index.htm

11) OI and Gas Exploration and Production - http://www.satimagingcorp.com/svc/exploration.html

12) Natural Hazards and Disaster Assessment and Management - http://www.satimagingcorp.com/svc/natural_hazards.html

13) Seismic Wave - http://en.wikipedia.org/wiki/Seismic_wave