The business news feeds are all quivering with the news of BP’s TURBO (truly unbelievable, really better overall) oil find in the Gulf of Mexico. Honestly, the myopia and level of misunderstanding of oil by the media is even worse regarding oil than it’s grasp of climate change, which is really saying a lot.

Two of the least offensive examples:

Giant oil find by BP reopens debate about oil supplies:

BP has reopened the debate on when the “peak oil” supply will be reached by announcing a big new discovery in the Gulf of Mexico which some believe could be as large as the Forties, the biggest field ever found in the North Sea.

The strike comes days after Iran unveiled an even larger find of 8.8bn barrels of crude oil, and the moves have encouraged sceptics of theories which say that peak production has been reached, or soon will be, to hail a new golden age of exploration and supply.

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BP itself believes that Tiber is bigger than the prospect on the nearby Kaskida field found in 2006, which has around 3bn barrels of oil reserves in place, while industry experts said Tiber might be as large as Forties, which has 4bn barrels.

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However, exponents of peak oil theories said the BP find would not fundamentally change the longer-term supply-and-demand picture. “The International Energy Agency said in its 2008 report that the world needed to find six new Saudi Arabias to meet the growing demand for oil in the future,” said Jeremy Leggett, chairman of the renewable power company Solarcentury, and a key peak energy specialist.

“This [BP] find is welcome but its not going to take concerns away at a time when existing fields are depleting faster than expected and the new discoveries have a very long lead time.”

Leggett pointed out that it would take many years for BP to bring any Tiber fields onstream, pointing out that the huge Kashagan find in the Caspian Sea, in which BP has sold its stake, was meant to produce its first oil in 2005 but is now targeting 2013 as a start-up date.

BP’s Tiber Find May Signal Oil Revival in U.S. Gulf of Mexico:

London-based BP said today it identified a “giant” prospect called Tiber more than six miles (9.7 kilometers) beneath the surface of the Gulf. The find confirms there are more large reservoirs of crude off the coasts of Louisiana and Texas, said Matt Snyder, lead analyst for Gulf of Mexico research at consulting firm Wood Mackenzie Ltd. in Houston.

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BP, whose partners at Tiber are Petroleo Brasileiro SA and ConocoPhillips, said its discovery may hold 3 billion barrels of crude and natural gas. Of that total, the companies may be able to extract the equivalent of 450 million barrels of oil, said Leta Smith, a director at IHS Cambridge in Houston. At current prices, that amount of oil would be worth more than $30 billion.

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“The question is what is the quality of the reservoir, what is the quality of the oil, whether it will flow and what will be the cost of getting it out,” said Ross, a former BP chemist. “A lot of technology has yet to be developed that will be necessary to exploit this discovery.”

In summary:

• Current world consumption is still about 31 billion barrels of oil per year.
• The rate of discovery of recoverable oil (not the much larger “oil in place” figure) is still well below annual consumption, as it has been since the early 1980’s. You don’t need a PhD in queuing theory to understand that such a situation eventually leads to a supply-induced restriction, unless demand declines first and at a quicker rate.
• These ultra deep water fields are expensive to produce and slow to bring online. Therefore, don’t expect these Gulf finds to help alleviate the oil crunch that we’re headed for in 2011/2012, the one that the IEA and others have been talking about for some time.
• The only reason that BP and other oil companies are looking for oil miles below the surface of the Gulf of Mexico is that the fundamental issue of peak oil–production from cheap sources can no longer meet demand–is true. If that weren’t true, then one would have to assume BP, Exxon, et al. haven’t a clue how to run their corporations.
• Never forget that what we care most about is flow rates, not absolute reserve levels. This is why peak oil is defined as the maximum rate of production, much to the annoyance of the people who don’t understand (or don’t care to understand) it. In the case of ultra deep water fields, we’re most likely looking at long production lives and (relative to the amount of recoverable oil) low production rates. This means that such finds won’t do much, if anything, to change the date of peak oil (which I still think is likely to happen around 2011), but they will decrease the post-peak slope (assuming that demand doesn’t decline ahead of production). The more production capacity we have post-peak, the more flexibility we have in how we adjust to a supply-induced peak. In that limited sense these finds are good news.
• The probability is quickly increasing that one of the memes I hear endlessly, the quaint notion that “peak oil will save us from global warming”, is not merely wrong, as I’ve pointed out many times, but is, in fact, backwards–we’re finding out that the climate change mess is so bad that we’ll have to force ourselves to dramatically reduce our burning of oil and coal, which will trigger a decline in demand that keeps the oil wolf from our door. (Of course, we’ll be so busy trying to extinguish the house fire we’re trapped in that not many people will notice how “lucky” we are.)