Oil conference examines shady oilfield production practices

Oil companies may be artificially inflating their automobile fuel production numbers

Earlier this month, the Association for the Study of Peak Oil held its yearly conference in Austin, Texas. Among the many topics discussed was the rise of oil production and the economic ramifications of such developments. The overarching purpose of the event was to answer one important question: What is the future of oilfield production?

This blog has spent a significant portion of time examining the growth of domestic oilfield production. The IEA predicts the United States will become the world's number one producer in the relatively near future, and we have examined the claims of a number of analysts asking if that is a particularly good thing. Many of those concerns were brought up during the conference.

Two presentations that kicked off the conference expressed concern over the fact that some producers may be inflating their numbers by lumping together several different forms of liquid hydrocarbons and calling it oil. This may allow some companies to benefit financially, but it produces an inefficient energy source, particularly used to fuel automobiles. As the nation constantly frets over gas prices, harming the effectiveness of fuel cannot be tolerated.

An article in Oilprice.com that covered the event disparages the practice and those who conduct it.

"Natural Gas Plant liquids are useful mainly as a feedstock for petrochemicals and propane heating, but are only marginal use in transportation fuels," the article says. "Adding refinery processing gains as a source of energy is disingenuous as the refining simply breaks down the oil in smaller molecules which take up more volume and hence give the impression that we have more 'oil' products after refining. The truth is the energy remains the same before and after refining and we have simply 'inflated' the liquids so they take up more barrels."

Ultimately, oil companies have the responsibility to produce efficient oil while maintaining their honesty about its effectiveness. Instead of conducting shady practices to inflate numbers, investing in oilfield equipment to improve operational efficiency can help companies improve their numbers without compromising their own integrity.