Venezuela may have twice as much of oil as was estimated previously

President Obama’s offshore drilling plan has casted a question into my mind: Is there any other region in the world from which the U.S. can import oil and gas in the longer term in stable manner? The U.S. is importing huge amount of oil from Canadian tar sands and this seems to be inconvenient to many environmentalists. The Middle East crudes are bound to political instability and transportation issues. Obama seems to put a lot of efforts into solving these problems lying in the energy strategy. But the conclusion to me seems to be clear in that these supply structures are not going to be easily changed.

Recently, scientists from US Geological Survey (USGS) have reported that the Venezuela’s Orinoco belt region holds twice as much of petroleum as previously thought. They estimated this area may contain 513 billion barrels of oil which is technically recoverable while the previous estimate was 235 billion barrels. They mentioned it was the largest accumulation ever assessed by USGS. For comparison, Saudi Arabia has 264 billion barrels even though one may argue that Saudi may have more potential. It was also reported that Venezuela’s government is seeking for the investments from foreign companies while it has been mired in contractual disputes with former American partners.

Source: USGS

It is true that the Venezuelan oil is heavy and viscous bitumen similar to Canadian tar sands which requires further processing. When we look into EROEI (Energy Returned On Energy Invested), it can be found that the Middle East oil has EROEI estimates ranging about from 8 to 30 (i.e. to recover 8 to 30 barrels of oil, we need to put 1 barrel of oil as of energy.) while the EROEI of the oil from the tar sands range from 1.5 up to 3. On top of that, there is no need to reiterate the environmental issues related to tar sands production.

However, even though governor Arnold Schwarzenegger banned carbon-dirty fuels like oils from tar sands, which will not prevent tar sands’ synthetic oil from being pumped to the U.S. eventually. The U.S. oil demand could diminish but the supply is also collapsing from domestic or Mexico. The synthetic crude oil from Canadian tar sands looks increasingly ripe and the Middle East crude is getting more expensive. These facts indicate that Venezuelan oils are certainly to be sold to the U.S. anyway in the near future.

Cheap oil and gas price had been a blessing to the U.S. And there would not be a dramatic change in the oil and gas supply structure even though there could be a new emerging player like Venezuela. Obama’s new plan for domestic drilling or the “inconvenient truth” that the U.S. imports enormous oil from Canadian tar sands seem to be another indications that shows we need a drastic change in this oil consuming infrastructure.



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