Last Updated Nov 19, 2010 12:58 PM EST
The loss of BP's Macondo well was itself inconsequential in terms of its potential to deliver oil to the world markets, the group said. What's significant is the slowdown effect the disaster had on deep water drilling, especially if it's expected to constitute 29 percent of new capacity by 2015, they said.
The real impact of Macondo may be from the impact of project delays as a result of new legislation, tighter controls or more inspection of deepwater installations.The report found an average six-month delay to deepwater projects would reduce future space capacity from 3 million barrels per day to 2 million barrels a day by 2015. Their point isn't to press for more oil exploration, but for the UK government to speed its transition to a low-carbon economy.
Interestingly, fossil fuel advocates have made similar arguments, without all of the peak oil talk, about the potentially devastating effects that delays to deepwater drilling would have on the industry. Their concerns, which were raised after the Obama administration placed a moratorium on deepwater drilling in U.S. water, centered more on financial impacts, such as job losses, and less on future oil capacity.
That doesn't mean future supply isn't on their minds. Iain Conn, chief executive of BP refining and marketing cut to the nitty gritty in a speech to engineering college graduates this week.
There was a good reason why the Macondo well was being drilled in the first place. It's because the world badly needs the oil and gas that reside beneath the seabed of the Gulf of Mexico, the Atlantic and other oceans in order to meet inexorably growing energy demand.Translation: Rigs like the Deepwater Horizon, which was drilling the Maconod well, will continue to push drilling depths because oil and gas exploration companies have to. The days of easy-to-access oil are gone.
The majority of world oil reserves are to be found in OPEC countries. However, even if OPEC did not restrain supply, the demand for oil continues to rise and in order to replace depleted reserves and supply that growth, it is still projected that many new sources of oil and gas are presently required. So the international energy industry is having to explore in ever more far-flung and difficult places including the frontiers of the deep seas and oceans.
Photo from Virgin