Ultra-Deepwater Gulf of Mexico Oil and Gas: Energy Return on Financial Investment and a Preliminary Assessment of Energy Return on Energy Investment

Assessing Global Long-Term EROI of Gas: A Net-Energy Perspective on the Energy Transition

Natural gas is expected to play an important role in the coming low-carbon energy transition. However, conventional gas resources are gradually being replaced by unconventional ones and a question remains: to what extent is net-energy production impacted by the use of lower-quality energy sources? This aspect of the energy transition was only partially explored in previous discussions. To fill this gap, this paper incorporates standard energy-return-on-investment (EROI) estimates and dynamic functions into the GlobalShift bottom-up model at a global level. We find that the energy necessary to produce gas (including direct and indirect energy and material costs) corresponds to 6.7% of the gross energy produced at present, and is growing at an exponential rate: by 2050, it will reach 23.7%. Our results highlight the necessity of viewing the energy transition through the net-energy prism and call for a greater number of EROI studies.

Proper Use of Technical Standards in Offshore Petroleum Industry

Ships for drilling need to operate in the territorial waters of many different countries which can have different technical standards and procedures. For example, the European Union and European Economic Area EU/EEA product safety directives exclude from their scope drilling ships and related equipment onboard. On the other hand, the EU/EEA offshore safety directive requires the application of all the best technical standards that are used worldwide in the oil and gas industry. Consequently, it is not easy to select the most appropriate technical standards that increase the overall level of safety and environmental protection whilst avoiding the costs of additional certifications. We will show how some technical standards and procedures, which are recognized worldwide by the petroleum industry, can be accepted by various standardization bodies, and how they can fulfil the essential health and safety requirements of certain directives. Emphasis will be placed on the prevention of fire and explosion, on the safe use of equipment under pressure, and on the protection of personnel who work with machinery. Additionally considered is how the proper use of adequate procedures available at the time would have prevented three large scale offshore petroleum accidents: the Macondo Deepwater Horizon in the Gulf of Mexico in 2010; the Montara in the Timor Sea in 2009; the Piper Alpha in the North Sea in 1988.

The implications of the declining energy return on investment of oil production

Declining production from conventional oil resources has initiated a global transition to unconventional oil, such as tar sands. Unconventional oil is generally harder to extract than conventional oil and is expected to have a (much) lower energy return on (energy) investment (EROI). Recently, there has been a surge in publications estimating the EROI of a number of different sources of oil, and others relating EROI to long-term economic growth, profitability and oil prices. The following points seem clear from a review of the literature: (i) the EROI of global oil production is roughly 17 and declining, while that for the USA is 11 and declining; (ii) the EROI of ultra-deep-water oil and oil sands is below 10; (iii) the relation between the EROI and the price of oil is inverse and exponential; (iv) as EROI declines below 10, a point is reached when the relation between EROI and price becomes highly nonlinear; and (v) the minimum oil price needed to increase the oil supply in the near term is at levels consistent with levels that have induced past economic recessions. From these points, I conclude that, as the EROI of the average barrel of oil declines, long-term economic growth will become harder to achieve and come at an increasingly higher financial, energetic and environmental cost.