Graph of Oil Production Costs

Oil comes from many sources — onshore oilfields like those in the Middle East and Texas, offshore and deepsea wells such as those operating in the North Sea and Gulf of Mexico, arctic drilling in Alaska, Canada’s tar sands, etc. Production costs vary greatly, depending on the difficulty of extraction. Saudi Arabia has the world’s lowest-cost oil (under $10/bbl.); in their huge conventional oilfields, instead of pumping, they inject seawater underground to force up the oil into collection wells, and it’s then piped to separators to remove the water. The world’s oil needs can’t be fulfilled with cheap oil alone because there isn’t enough of it. For example, about a third of global consumption comes from expensive offshore and deepsea production. Below is a graph showing late-2015 average costs for various types of production:



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