True North

Brazil has announced the find of a huge oil reserve that will place it among the top nations for future oil production. The new field may contain as much as 33 billion barrels. It will take years to begin production, but it will eventually decrease pressure on the oil markets:

Brazil has discovered what could be the third biggest oil reserve in the world, according to the head of the country’s National Petroleum Agency.

The deep-sea find by state-run oil firm Petrobras could yield 33 billion barrels in reserves.

Further tests are required to assess the scale of the find, off the coast of Rio de Janeiro, but analysts say it could have significant implications.

Brazil announced sizeable new gas and oil discoveries last year as well.

The economy of oil production requires more expensive surveys in deeper water.  Most of the areas on land have already been checked where possible, as well as in shallower waters.  With technology improving and prices rising, it becomes much more feasible to conduct test-drilling in deep seas, and more oil will be found.

The expense is considerable, however.  Even with improved geological analysis, test holes only succeed at about a 40% rate.  The costs for test holes in deep-sea locations can run $80 million or more, which means that the aggregate cost for a single successful hole is about $200 million.  And that’s just to find it and cap it for production, which adds more to the cost.  It’s not cheap, and the reward has to eventually outstrip the investment in time and money.

Will Peak Oil eventually arrive?  Presumably; crude oil is not a renewable resource.  However, we have a lot more places to explore, as Brazil proved.  As technology improves and the economics of exploration become more supportive, that date may move significantly into the future.

Cross-posted at Hot Air.