Middle East oil countries should increase production of heavy oil as oil prices remain higher and improved technology makes it easier, those attending an industry conference in Bahrain were told.
Bahrain's oil minister, Abdulhussain Mirza, told the Heavy Oil World MENA conference that heavy oil reserves in the region were estimated at 1 trillion barrels, or 28% of total world reserves, but historically accounted for little more than 10% of production.
The vast reserve demonstrates the importance of heavy oil as a future energy source, one that cannot be overlooked and, therefore, companies that position themselves early in the heavy oil business are likely to win the game, Mirza said, according to local news reports.
Bahrain recently signed an agreement with Mubadala Development, an Abu Dhabi state-owned firm, and Occidental Petroleum of the U.S., to boost heavy oil production in the Awali field, one of the oldest in the region and Bahrain's only oilfield.
Using advanced oil recovery technology and developing the heavy oil sectors of the field could double or triple its production from 32,000 barrels a day currently, Mirza said.
Heavy crude oil is distinguished from light crude oil because it does not flow as easily due to a higher specific gravity. Oil sands and natural bitumen, which don't flow at all, are also included in this definition.
Production and refining of heavy crude costs more than recovering and processing light crude. Production of heavy oil from oil sands in Canada's Alberta province has an estimated break-even point of $35 a barrel, Mirza noted. But Bahrain's heavy oil could be recovered at a cost of between $8 and $9 a barrel, he said.
Oil prices in recent weeks have fluctuated in a range of $70 to $80 a barrel, which OPEC officials have declared an ideal range.
Heavy oil will be a savior to the ever-increasing demand for fossil fuels from the developing nations, Mirza was quoted as saying.
The national oil companies of Bahrain, Kuwait and Saudi Arabia were represented at the Bahrain conference, as well as multinational oil giants Total and Chevron. Saudi Arabia plans to develop heavy crude deposits and to refine the oil for domestic use, saving more of the light crude for export.
By Darrell Delamaide for Oilprice.com who offer detailed analysis on Oil, alternative Energy, Commodities, http://oilprice.com/Finance/Economy/ target=new>Economics and Geopolitics. They also provide free Geopolitical intelligence to help investors gain a greater understanding of world events and the impact they have on certain regions and sectors. Visit: http://www.oilprice.com