Nigeria is in panic mood. Both in the public and private sector, every administrator is worried about the economy and the solvency of governments at all levels. The economy is virtually on a free fall and a look at the immediate future does not particularly inspire hope.
Refinery
Last week, the price of Brent Crude, Nigeria’s major export product, sank to its lowest in seven years, trading briefly below $70 per barrel. In the past three months, the product has lost almost 40 per cent of its value in the international oil market.
The latest fall was induced by the failure the Organisation of Petroleum Exporting Countries (OPEC), to agree on production cuts following consistent fall in the price oil.
OPEC’s decision meant that the oil market remained flooded with OPEC members alone accounting for about 30 million barrels per day in supply. A curb by OPEC could have reduced supply especially with Russia, one of the three largest suppliers willing to work with the league.
But, Saudi Arabia, the largest oil producer in OPEC and second in the world was on a war path and would not accept any production cut. The targets of the Saudis’ anger are the Shale oil and gas producers in North America.
For the Arab nation, the plan is simple: Let the price fall to an extent that it becomes uneconomical for shale producers to continue pumping oil into the international market.
Currently, the cost of producing a barrel of oil in Saudi Arabia is put at $10 per barrel while in countries like Nigeria, Iran and Venezuela the cost is about $25pb. But for shale producers the cost is about $45pb and so the breakeven price for shale producers is around $65pb.
Armed with a cash reserve of over $741 billion and a surplus of $15billion from its last fiscal year, the Saudis are ready for a fight but, sadly, most of its allies in OPEC are not and that includes Nigeria.
Origin of shale oil
According to 2012 Oil Shale and Tar Programmatic information centre, the term oil shale generally “refers to any sedimentary rock that contains solid bituminous materials (called kerogen) that are released as petroleum-like liquids when the rock is heated in the chemical process of pyrolysis. Oil shale was formed millions of years ago by deposition of silt and organic debris on lake beds and sea bottoms.
“Over long periods of time, heat and pressure transformed the materials into oil shale in a process similar to the process that forms oil; however, the heat and pressure were not as great. Oil shale generally contains enough oil that it will burn without any additional processing, and it is known as “the rock that burns”.
“Oil shale can be mined and processed to generate oil similar to oil pumped from conventional oil wells; however, extracting oil from oil shale is more complex than conventional oil recovery and currently is more expensive. The oil substances in oil shale are solid and cannot be pumped directly out of the ground.
“The oil shale must first be mined and then heated to a high temperature (a process called retorting); the resultant liquid must then be separated and collected. An alternative but currently experimental process referred to as in situ retorting involves heating the oil shale while it is still underground, and then pumping the resulting liquid to the surface.
“While oil shale is found in many places worldwide, by far the largest deposits in the world are found in the United States in the Green River Formation, which covers portions of Colorado, Utah, and Wyoming. Estimates of the oil resource in place within the Green River Formation range from 1.2 to 1.8 trillion barrels.
“Not all resources in place are recoverable; however, even a moderate estimate of 800 billion barrels of recoverable oil from oil shale in the Green River Formation is three times greater than the proven oil.
Refinery
Last week, the price of Brent Crude, Nigeria’s major export product, sank to its lowest in seven years, trading briefly below $70 per barrel. In the past three months, the product has lost almost 40 per cent of its value in the international oil market.
The latest fall was induced by the failure the Organisation of Petroleum Exporting Countries (OPEC), to agree on production cuts following consistent fall in the price oil.
OPEC’s decision meant that the oil market remained flooded with OPEC members alone accounting for about 30 million barrels per day in supply. A curb by OPEC could have reduced supply especially with Russia, one of the three largest suppliers willing to work with the league.
But, Saudi Arabia, the largest oil producer in OPEC and second in the world was on a war path and would not accept any production cut. The targets of the Saudis’ anger are the Shale oil and gas producers in North America.
For the Arab nation, the plan is simple: Let the price fall to an extent that it becomes uneconomical for shale producers to continue pumping oil into the international market.
Currently, the cost of producing a barrel of oil in Saudi Arabia is put at $10 per barrel while in countries like Nigeria, Iran and Venezuela the cost is about $25pb. But for shale producers the cost is about $45pb and so the breakeven price for shale producers is around $65pb.
Armed with a cash reserve of over $741 billion and a surplus of $15billion from its last fiscal year, the Saudis are ready for a fight but, sadly, most of its allies in OPEC are not and that includes Nigeria.
Origin of shale oil
According to 2012 Oil Shale and Tar Programmatic information centre, the term oil shale generally “refers to any sedimentary rock that contains solid bituminous materials (called kerogen) that are released as petroleum-like liquids when the rock is heated in the chemical process of pyrolysis. Oil shale was formed millions of years ago by deposition of silt and organic debris on lake beds and sea bottoms.
“Over long periods of time, heat and pressure transformed the materials into oil shale in a process similar to the process that forms oil; however, the heat and pressure were not as great. Oil shale generally contains enough oil that it will burn without any additional processing, and it is known as “the rock that burns”.
“Oil shale can be mined and processed to generate oil similar to oil pumped from conventional oil wells; however, extracting oil from oil shale is more complex than conventional oil recovery and currently is more expensive. The oil substances in oil shale are solid and cannot be pumped directly out of the ground.
“The oil shale must first be mined and then heated to a high temperature (a process called retorting); the resultant liquid must then be separated and collected. An alternative but currently experimental process referred to as in situ retorting involves heating the oil shale while it is still underground, and then pumping the resulting liquid to the surface.
“While oil shale is found in many places worldwide, by far the largest deposits in the world are found in the United States in the Green River Formation, which covers portions of Colorado, Utah, and Wyoming. Estimates of the oil resource in place within the Green River Formation range from 1.2 to 1.8 trillion barrels.
“Not all resources in place are recoverable; however, even a moderate estimate of 800 billion barrels of recoverable oil from oil shale in the Green River Formation is three times greater than the proven oil.
No comments:
Post a Comment