In an April 3 interview with BBC Newsnight, Venezuelan President Hugo Chavez said he would ask OPEC to set $50 a barrel as the long term level.  That statement has been widely reported in the press, but the reason for that price has not.  Acccording to the interview:

He will have added clout at this OPEC meeting. Analysis by the US Department of Energy (DOE) - seen by Newsnight - shows that at $50 a barrel Venezuela - not Saudi Arabia - will have the biggest oil reserves in OPEC.

Venezuela has vast deposits of extra-heavy oil in the Orinoco. Traditionally these have not been counted because at $20 a barrel they were too expensive to exploit - but at $50 a barrel melting them into liquid petroleum becomes extremely profitable.

The DOE report shows that at today's prices Venezuela's oil reserves are bigger than those of the entire Middle East - including Saudi Arabia, the Gulf states, Iran and Iraq.

Venezuela's deposits alone could extend the oil age for another 100 years.

The DOE estimates that the Venezuelan government controls 1.3 trillion barrels of oil - more than the entire declared oil reserves of the rest of the planet.

He will ask the OPEC meeting in June to formally accept that Venezuela's reserves are now bigger than Saudi Arabia's.

It should be pointed out that Canada also has comparable reserves, somewhat larger, if all of their oilsands oil is counted.  Methods used for extracting the oil in Venezuela do not sound quite as difficult as those used for the Canadian oilsands.  As pointed out in the second resource, the quantity that may be currently extracted is much less than indicated by Chavez, but larger than has been deemed recoverable by Canada. Canada claims about 180 billion barrels, while Venezuela, in a 1987 estimate claimed 267 billion barrels of recoverable oil.  One wonders how much oil will actually be produced in Venezuela due to the extremely poor record it has in estimating its future production and the continued unrest in the country.  The present political climate between the US and Venezuela, also questions whether the US could count on receiving much of this oil.  My thought on this is that I encourage them to produce as much oil as possible as that will tend to reduce the price of oil and make other sources more accessible.  The world probably can depend on increasing expensive existing sources for the next five years and trying to predict beyond that is too dependent on the political climate.    Prices could go down if the political climate in Nigeria and Venezuela were stabilized.  Iran and Iraq could contribute more, but probably not enough to make shortfalls in the other two countries.  Supplies are there but the price and availability are too uncertain.

Chavez rules out return to cheap oil, bbc.co.uk, April 3, 2006
WHAT FUTURE FOR EXTRA HEAVY OIL AND BITUMEN : THE ORINOCO CASE, World Energy Organization, undated (apparently Jan. 3, 2004)

Technorati tags: oil, heavy oil, energy, technology

Comments

[Cervus]

We need to develop as many domestic energy sources as possible. Even if Chavez *does* somehow manage to fix OPEC prices, that level is still high enough to make people search for cheaper alternatives. CTL is economical at that level.

What worries me more is what he's doing with all that oil money.

[amazingdrx]

Good thing Bush has made such good friends of Venezuala and Canada, eyyh? Hehehey.

Ooo oo ee eee ahh ahh. That's some smart chimp in chief alright!

Actually the simian simpleton has made it imperative that we go to oil alternatives with his saudi/big oil smooching policies, unknowingly helping the energy revolution. Yer doin' a heckuva job bushie.

Electric car power costs the equivalent of 75 cents per gallon. Compare that with 3, 4, 5 dollar gas, ethanol or diesel from coal will follow it right up the steep curve.

So the best alternative to halt global climate disaster, renewable electricity is the most cost effective, in part thanks to Bush foreign policy of making enemies of almost every nation that exports oil to US.

[Daniel Johnston]

People who advocate a move to heavier-type oils need to realize that more CO2 tends to be created in their production. Producing oil from oil sands is already threatening Canada's Kyoto targets. If this is our answer to the oil peak - we need to have a better one for global warming.

[jlw]

"If this is our answer to the oil peak - we need to have a better one for global warming."

You mean building cities on stilts isn't good enough?

[Cervus]

DRX:

When I can buy an electric car that has a 300+ mile range and will charge fully in a few minutes, let me know.

[Dbe2200]

Chavez should be careful what he wishes for. He might get it. $50/b oil makes Canadian oil sands, US shale oil, and many alternative sources economic. Sustained high oil prices will stimulate massive investment in wind, solar, geothermal, nuclear, biofuels from algae, other biomass, and greater efficiency in buildings and transportation. Come to think of it, it is in our long term interest to have short and medium term sustained high oil prices. Come on Hugo, get the price up to $75/b and keep it there for a year or two. In ten years no one will want your tar.

I appreciate the intelligent discussion of different points of view on this board....with one exception. I wish the moderator could install an ignore function.

[bean]

The spot price of crude yesterday was over $66 and hasn't been below $55 since (last spring? I can't remember.) If Venezuela isn't producing full bore now, then they must be stuck with below-market contracts (isn't Chavez giving Cuba cheap oil?) or have already eviscerated their oil industry by trying to re-nationalize it. Either way it suggests that those billions of barrels of Orinoco aren't weighing too heavily on the market.

[Dbe2200]

Actually, I doubt Chavez will be able to exploit it. He will need foreign money and technology. Funny, I don't see many oil companies lining up to invest in Venzuela right now.

[amazingdrx]

It's coming cervus. Thanks to the Hitachi and A123 nano tech lithium ion batteries.

5 minute charge to 90% capacity. The Hitachi battery is going into a test vehicle thanks to Toyota, and the MIT/A123 battery is going into one being built in Nevada.

Mass production for DeWalt power tools should bring the cost of the A123 battery down.

All the news is linked on my site. 300 mile range? 7.5 kwh= 1 gallon of gas=50 miles of driving with the latest technology.

45 kwh of battery storage? 50 to 60 of the new power tool batteries ought to do that, actual performance of the new 36 volt power tools will tell the tale.

2.2 pounds per battery x 60 batteries= 126 pounds, 110 pounds for the motor and controller. Chucking the engine, transmission, exhaust, fuel systems from a suitable vehicle, say a Toyota camry will save maybe 300 pounds or more off the vehicle weight.

Replaced by under 300 pounds of batteries, motor, and electronics. That should do it.

And charged up by your own solar and wind electricity? Almost free driving, once the renewable power pays for itself, maybe 4 to 5 years.

[amazingdrx]

"...those billions of barrels of Orinoco aren't weighing too heavily on the market."

That's the result of unregulated insider manipulation of oil futures trading. It does not reflect any sort of "free" market.

Chavez and the other oil dictators would be kicked right out given US, Japanese, and European conversion to electric vehicles powered by renwable electricity. China will be close behind, and might in fact manufacture most of the vehicles, given the dead ass response in Detroit to real (forget gogreenseeyellow)progress of any kind.

You wanna fight like bushie to give gaaawd's own freedom to all those oppresed by oily corporate feudalism? Like saudi land? Well neoconman invasion, occupation, and nation building isn't working. This will.

And guess what? Duuhbya has solar power and a geothermal heat pump on the ranch in crawdad. Hehehey.

[amazingdrx]

Oh yeah, and if you want to drive further than 300 miles without a recharge, add a recharge lane to the highway sytem. The vehicle picks up power by induction from coils under the road surface.

This would be excellent for long haul trucks and buses.

[Khebab]

Aa pointed out by bean and Dbe2200, Venezuela is probably far from the 22% recovery rate that would put the URR from tar sands around 267Gb as claimed by the DOE. Their recovery rate is probably more around 10%. The recovery rate gets higher if surface mining can be used but I believe that in-situ recovery methods have to be applied in Venezuela.

[Jim from The Energy Blog]

I personally believe that a price of above $60/bbl is more likely than a $50/bbl price due to the uncertainty of production and this scenario is likely to continue for as long as I can imagine.

Besides A123, keep an eye on Altairnano to bring our a production lithium-ion battery. They have been very active in signing agreements for building and marketing their batteries--Electro Energy (US) Advancead Battery Tech. (China) and Impro (S. Korea). They also have (or are?) building a prototype production facility to provide batteries for evaluation.

I have an ignore button and can edit individual comments, but don't choose to use either, except to get rid of extremely foul language or advertising that some try to put in comments. I do wish that you would try to make contructive comments and not bash anyone (even if they deservea it).

[Michael Cain]

And charged up by your own solar and wind electricity? Almost free driving, once the renewable power pays for itself, maybe 4 to 5 years.

While I agree that the end state will involve much greater use of electricity for personal transportation, I am less convinced that highly distributed power generation is going to get installed on a sufficient scale quickly enough to be important early on. A considerable amount of the electricity used will be provided by large centralized generators over the grid. There will be limits to how rapidly the added generating capacity can be ramped up, particularly if the emphasis is on renewables. Handling conventional growth in demand due to population increase and economic expansion by itself requires the addition of several thousand 2.5 MW windmills per year. And there are lots of demands already "in the pipeline" for new generating capacity: potential natural gas shortages and expiring licenses for all nuclear plants to name two.

[amazingdrx]

Sorry Jim, will try to restrain my combatative nature.

Will check those other companies. DeWalt power tool line that is coming out soon will be a good real world test for these batteries.

My take on slow rollout and small mw range wind as well as dustributed power from small scale wind and solar: If war production in WW 2 was aproached with a we can't do it big enough or fast enough so let's just accept out fate? The axis powers might have won.

If that is our attitude this time around, global climate disaster may swallow up life as we know it. My point is this. at the start of the war who could have envisioned millions of jeeps, trucks, planes, tanks, ships, radar, the atomic bomb all acomplished by the american people?

[Harvey D.]

Isn't suistained high price for oil(up to $100+/barrel) exactly what is required to accellerate the transition to cleaner PHEVs and EVs? Our USA/Canada politicians would be taken off the hook and would not have to raise fuel taxes. They could just keep on blaming others to get re-elected.

Eventually fuel taxes will have to be transfered on other forms of energy. Quebec Province has already started with a 50% dividend from Quebec-Hydro + 15% sales tax. The good thing is that it is clean local Hydro power (98+%) and the money stays home instead of going to you know where.

[Vitalis]

Dear Sir/Madam/pastor
good day in the nameof the lord.
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i am now a mokry of people it the result poverty, iam from a family of 5 children and our father is geting old and old and he has tried by training us in secondry school i in paticular has alread finished secondry school and have been planing to go further but because of lack of money i coudnot fulfill my dreem but i believe that the spirit of god is in u and u will help me nomatter how small it may look.
Pls i am on my knees begging because i know what iam now, yes iam now a begger ofcause yes poverty has made me a begger because poverty suppresess, it oppresess i am one of the victims and god knows why .
Pls god will keep on blessing u as u look into this my mail and do something about it i donot have any thing to offer or give is only that can reward you in abuntant pls i need further my education just to help my family out of poverty that is all my aim in this life is to help my father because he has tried for us even in this old age because he promised us that he will trian us to the highest level of education but due to secuptances beyond his control he coudnot ibelieve that sa long as god is alife he will raep what he sow from me ,i have been trying engaging my self inkind of business just like selling pure water , shoes and snacks to rise money for education all i could rise is (15000niara)only it is in my acout in all state trust bank in Aba Abia State and now it has been forded and will soon re_open if you like ask any body you like.
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You can contact me thruogh this my email address.
Thanks And remain bless in Jesue name.
yours faithfull,
Vitalis