Paper: "Oil: The Next Revolution"

Just started reading "Oil: The Next Revolution - THE UNPRECEDENTED UPSURGE OF OIL PRODUCTION CAPACITY AND WHAT IT MEANS FOR THE WORLD". The thesis:

Quite unnoticed, a big wave of oil production is mounting worldwide, driven by high oil prices, booming investments, private companies’ desperate need to restore their reserve, and the misguided but still prevalent perception that oil must become a rare commodity.

Here are some of the highlights so far:

• Consider Iraq. Despite its long history as a producer, the country is largely untapped as far as oil development is concerned, according to the assessment made by the IOC’s awarded re-development contracts between 2009 and 2011 (see Section 3). Since production began at the dawn of the twentieth century, only 2,300 wells (both for exploration and production) have been drilled there, compared with about one million in Texas.7 A large part of the country, the western desert area, is still mainly unexplored. Iraq has never implemented advanced technologies, like 3-D seismic exploration techniques, or deep and horizontal drilling and hydraulic fracturing, to find or tap new wells. Of more than eighty oil fields discovered in the country, only about twenty-one have been partially developed. Given this state of underdevelopment, it is realistic to assume that Iraq has far larger oil reserves than documented so far, probably about 200 billion barrels more. These numbers make Iraq, together with a few others, the fulcrum of any future equilibrium in the global oil market.
• According to Barclays’ Upstream Spending Review, 2012 might represent a new all-time record since the 1970s in terms of E&P investments, with a conservative estimate of slightly less than $ 600 billion.
• That initial [Mitchell Energy] experiment was the catalyst for the U.S. natural gas revolution, which went unnoticed and underestimated for many years even though its results were already clear. It is worth remembering this underestimation, because it seems to be happening again with shale oil.

It seems like the $/btu spread between natural gas and oil will close, by rising natural gas prices (at least high enough to incentivize the replacement of existing production) and falling oil prices. If you look at the price charts, you'll see that both of these trends are already in motion.