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Best guess


So recently there was a big and important announcement. Or else it wasn’t. Maybe it was small. We’ll really only know when we get there. The announcement in question? That there is, supposedly, 25.5 billion barrels of oil in the West Orphan Basin.

Estimating the size of oilfields, even when you have plenty of information, is a fascinating effort.

Initial reservoir estimates on the Hibernia field were much lower than the amount of oil that it turned out the field actually contained — but those were the original public estimates of the companies involved, who had, you have to admit, a vested interest in using the lowest numbers possible to cut the best deal they could for developing the project.

Even before the project reached first oil, there were plenty of insiders saying that the original reservoir numbers were not so much false as they were low-balled.

Likewise, there are reasons why the provincial government, in releasing the number 25.5 billion barrels, could be picking its spot in a range of possibilities with its own particular intent. (The government tossed out a few other numbers, too — one, that the field might contain as few as 10 billion barrels, the other, that it might hold as many as 39 billion barrels. All, of course, are based on the same amount of admittedly limited data.) Right now, the work doesn’t show how much of that oil might be recoverable, nor does it show where the oil actually is. That’s all something that oil companies would have to establish with additional future exploration.

So why “go big”?

The field in question is about to be put up for bids, and the government obviously wants oil companies to commit to doing as much work as possible in exchange for oil leases in the area. As well, there’s the issue of general business and public confidence: the better the numbers are, the more positive the outlook, the better chance that citizens of the province will feel comfortable continuing to spend money on cars and clothes and homes.

But as issues as disparate as the cod biomass before the cod crisis, Muskrat Falls construction costs and provincial government budgeting have shown us in the past, depending on estimates is a mug’s game — even when those estimates are only looking a year into the future, let alone decades.

And depending on estimates that are based on extremely limited data?

Well, the term mug’s game is far too kind.

Remember where we were all told oil prices would be by now?

Exactly. Often, oil finds lurk beneath salt domes, and in this case, beneath a salty sea as well. So it’s probably fair enough to take the latest big announcement with the requisite grain of salt.

Estimating the size of oilfields, even when you have plenty of information, is a fascinating effort.

Initial reservoir estimates on the Hibernia field were much lower than the amount of oil that it turned out the field actually contained — but those were the original public estimates of the companies involved, who had, you have to admit, a vested interest in using the lowest numbers possible to cut the best deal they could for developing the project.

Even before the project reached first oil, there were plenty of insiders saying that the original reservoir numbers were not so much false as they were low-balled.

Likewise, there are reasons why the provincial government, in releasing the number 25.5 billion barrels, could be picking its spot in a range of possibilities with its own particular intent. (The government tossed out a few other numbers, too — one, that the field might contain as few as 10 billion barrels, the other, that it might hold as many as 39 billion barrels. All, of course, are based on the same amount of admittedly limited data.) Right now, the work doesn’t show how much of that oil might be recoverable, nor does it show where the oil actually is. That’s all something that oil companies would have to establish with additional future exploration.

So why “go big”?

The field in question is about to be put up for bids, and the government obviously wants oil companies to commit to doing as much work as possible in exchange for oil leases in the area. As well, there’s the issue of general business and public confidence: the better the numbers are, the more positive the outlook, the better chance that citizens of the province will feel comfortable continuing to spend money on cars and clothes and homes.

But as issues as disparate as the cod biomass before the cod crisis, Muskrat Falls construction costs and provincial government budgeting have shown us in the past, depending on estimates is a mug’s game — even when those estimates are only looking a year into the future, let alone decades.

And depending on estimates that are based on extremely limited data?

Well, the term mug’s game is far too kind.

Remember where we were all told oil prices would be by now?

Exactly. Often, oil finds lurk beneath salt domes, and in this case, beneath a salty sea as well. So it’s probably fair enough to take the latest big announcement with the requisite grain of salt.

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