For 35 days.
Except for decline in other fields.
The huge news today is that Chevron, Norway's Statoil, and Devon Energy have jointly discovered our collective salvation in the "Jack 2" deepwater oil platform in the Gulf of Mexico. CNN, Fox, and ABC have all been carrying this as the top story all day.
MSNBC and CBS have relegated it below the much more significant story of the Crocodile Hunter Steve Irwin's death--where it belongs.
Before we discuss conspiracy theories of why this news is coming out now, let's first look at the facts in the absence of cable-news hype. This larger field, of which Jack 2 is just a small part, may someday yield between 3 and 15 billion barrels of recoverable crude. It won't even start to produce oil until 2013, if everything goes according to schedule. Then, it (the entire tertiary GOM zone) may eventually produce 400,000 barrels per day. That's about how much Mexico's Cantarell field declined in production this year. And how much it will decline next year. And the year after. Ultimately, 3 billion barrels of oil will fuel the world--at current consumption levels--for about 35 days.
Did I forget to mention? Chevron first confirmed Jack 2's viability in 2004. They've known all along the expected size of the field's reserves, and this figure has long been part of Peak Oil calculations. In fact, the 6000 barrel per day flow rate of the test well was finalized and published in May of this year. There is absolutely no new information about this event to surface in the past three months. So why all the hype now?
One theory--and I should be the first to admit that I cannot prove motive or intent here--is the upcoming November election. Lower gas prices equal less anti-incumbent sentiment--while this may help the Republicans the most, it also helps the incumbent Democrats who are also facing stiff re-election challenges in light of their failure to propose any viable energy policy alternatives. And this Jack 2 "discovery" is not the only place where the pre-election market manipulations are taking place. None of the drawdown from the Strategic Petroleum Reserve over the past year has been replaced. Oil majors and refineries are skewing their refining output away from diesel and heating oil and towards gasoline in an effort to keep gas-price hysteria from leading to new regulations or investigations. And there is negative price pressure based on some "hurricane season speculators" dropping their positions. All taken together and it looks to me like gas prices will remain stable or fall slightly for the next few months, then begin another round of significant increases. The more pertinent question is this: will such temporary manipulation have the intended effect of keeping the incumbents in power, or will the post-election counter swing make Peak Oil itself a front page story?