The HUGE problem with Venezuela’s oil

This piece of land in Venezuela holds one of the largest known deposits of oil in the world.

There’s almost five times as much oil here as the entire United States.

But when Trump invaded the country in January, and offered that oil on a silver platter to some of the biggest oil companies in the world, they were not really enthusiastic, to say the least.

And one reason for this is hiding in this graph.

It turns out Venezuela’s oil is, by pretty much all measures, just the absolute worst.

To understand why, we need to know that there’s no such thing as an “ordinary barrel of oil”.

Everything from the chemical composition to what it can be used for to how much it’s worth changes dramatically based on where the oil comes from.

Even when the barrels come from the same country.

Like, for example, Venezuela.

The first large quantities of oil were discovered there at the start of the 20th century, in the western part of the country.

It was so abundant that in 1922, one oil well experienced a blowout, a massive explosion of oil from the top of the well, which showered the surrounding town with almost a million liters of oil over nine days, reaching 40 meters into the sky.

This event, covered by media around the world, put Venezuela’s oil on the map.

Big oil companies like Gulf, Shell and Standard Oil flocked into the country, quickly turning it into one of the biggest oil producers and exporters in the world.

Then in the 1980s, another region with vast reserves of high-value oil was discovered in the east.

But those reserves were soon overshadowed by a much larger discovery in the middle of the country.

The Orinoco belt.

An estimated 1.

2 trillion barrels of oil.

“It’s the largest accumulation of hydrocarbons that there is.

” That’s Luis Pacheco.

He worked at Venezuela’s national oil company PDVSA for 17 years.

This huge deposit caught the attention of then-President Hugo Chávez – we’ll come back to him later.

He decided to bet big on all that new oil in the Orinoco belt.

But there’s a catch with that 1.

2 trillion number.

In reality, only around 250 billion of that can ever come out of the ground.

“Most of the oil will be left underground, okay? At least under present technology, okay?” “But why so much?” “Because of physics is a b*tch, okay? Physics is a b*tch.

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” Let’s go back to all those different types of oil.

The first way to distinguish them is how light or heavy they are.

Lighter oils are more liquid, making them easier to extract when they’re underground.

The process is often simple: you drill a hole into the ground, and thanks to the geologic pressure underneath, out flows the oil.

That’s the process for some of the biggest and most productive oil reservoirs in the world, inlcuding many in the United States and Saudi Arabia.

But the oil in Venezuela’s largest deposit isn’t just heavier.

It’s way over here, on the extra heavy side of the spectrum.

“And this all has to do with the chemical composition of what’s inside.

Molecules become as you can make it heavier and heavier, the molecules become larger and larger and larger.

And if you continue that idea, you end up with coal.

” That’s Erich Muller, a chemical engineering professor.

He grew up and worked in Venezuela for over ten years.

“These crudes are extremely heavy to the point where if you have them.

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if you get some in a beaker or something and you flip the beaker around, nothing happens.

It looks like a tar.

” Canada produces a lot of its oil from oil sands, which have a similar consistency.

And some big deposits there sit pretty close to the surface, so they can simply be dug out of the ground.

But when these extremely heavy crudes are far underground, getting them out is a lot more complicated.

One method is to inject steam next to the reservoir, increasing the temperature to liquify the crude oil enough for it to be pumped out.

Another method, the one that was used in Orinoco, is to inject lighter substances like Naphtha directly into the reservoir to make it less sticky.

“Of course, all these secondary processes are expensive.

” And that’s just getting it out of the ground.

The next step is doing something with it, and for that you need to refine it.

“It’s basically an enormous exercise in separations and conversion.

You break things down, and then you find groups of molecules which are useful.

And then you start converting them or adding things to it or chemically transforming them into something that can later be fed into a chemical plant or burned as fuel.

” Refining lighter oils is relatively simple.

You can put them in a distillery, and separate out the useful parts without too much hassle.

Extremely heavy oils like those in Venezuela require a lot more work.

First, they need to be upgraded, which means processing them into oils that can actually flow through the pipelines in heavy oil refineries.

And then, there’s another important difference.

“A lot of people don’t realize that you don’t get the same stuff out of every barrel of oil.

You get different stuff.

” That’s Deborah Gordon.

She’s been researching the emissions that come from different types of oil and gas for over a decade.

“You know, Saudi barrel or a West Texas Intermediate barrel will make more, say, gasoline or petrol and jet fuel, which are right now the big demand parts of where this economy goes on oil.

” And that means they can fetch a higher price for each barrel.

“And these extra heavy barrels in Venezuela, Canada, they make more asphalt, roofing products, heavy fuel oil, bunker fuel for ships.

” Much less valuable uses.

And there’s one more way in which each barrel of oil is different.

And that’s how much emissions each one produces over its entire lifecycle.

This is where the graph I showed you earlier comes in.

Those emissions come from all the processes that go into extracting the oil, moving it, refining it, shipping it around the world, and then turning it into all the petroleum products the world wants.

But one of the biggest problems comes right at the start, and that’s from methane.

“Methane is over 80 times more powerful as a greenhouse gas than CO2 is.

So you don’t want either of them in the atmosphere, but you would much less prefer having methane in the atmosphere right now.

” Some reservoirs, like the Orinoco basin, have lots of natural methane mixed in with the oil underground.

When the oil is extracted and processed, all that methane needs to go somewhere.

An easy way to deal with this gas is to burn it, in a process called flaring, which turns it into CO2.

But those methane flares need to be maintained.

And right now, Venezuela’s oil industry is not in a good state.

“You have wells that are not safely closed.

You have pipelines that are broken.

You have equipment that is not shut off properly.

You have things that aren’t maintained.

Think of like your own house with your stove.

Like if you don’t have it completely off… if I open a valve, gas is going to come out.

And so that’s what’s happening all over Venezuela.

” So while there’s no such thing as “good” oil, when you tally up all the emissions produced from Venezuela’s different types of oil, it’s clear that it’s… “… the highest-emitting barrel for the lowest price on the market.

” So it’s easy to see why these guys weren’t excited to start extracting all this oil.

But even if Venezuela’s oil was great, there’s another big problem with Trump’s ambitions to take control of the country’s resource.

And that’s the country’s long and complicated relationship with foreign oil companies.

They’ve already been kicked out of the country twice: once in 1976 when Venezuela nationalised its oil industry, taking over the assets and operations of almost all companies there.

And again by Hugo Chávez, the charismatic socialist leader elected in 1998.

He then took it a step further, and cleared the country’s oil industry of any foreign workers or influence.

That left Venezuela without the expertise needed to keep everything going, and the country’s production, and infrastructure, quickly began to deteriorate.

It also left foreign oil companies feeling that any investment could very easily go to waste.

“That’s where the reluctance comes in.

If I am going on this marriage, will I be happy in 10 years’ time or not?” One reason Trump might still be so interested, despite all these downsides, is China, a key rival that Trump is keen to undermine.

After US oil companies lost their footing in Venezuela, China became the biggest importer of Venezuela’s extra heavy crude.

The oil, used for asphalt, became a key supply for China’s extensive road building.

With the US now in control of Venezuela’s exports, China will probably have to get most of that oil elsewhere.

But geopolitics aside, it doesn’t seem like a good move right now to go after this emissions-heavy oil.

Of course, future technology could reshuffle the cards, and make Orinoco’s oil more appealing.

“One real innovation that Canada has been thinking about, which is would be transformational.

It has been this idea of using these microbes underground or using other nanotechnology to actually convert the heavy oil underground and turn it into light oil and gas.

” These would be much easier to extract, taking less energy, and therefore less emissions too.

But even big picture solutions like these need a fully functional oil industry.

And that’s something Venezuela simply doesn’t have right now.

“If you need a decade of investment to turn this back on, what’s the market going to want a decade from now? Does it even want this extra heavy oil? It’s unclear that it will.

” So what do you think should happen with all that oil in the Orinoco Belt? Let us know what you think in the comments below, don’t forget to subscribe and check out our channel for more video’s like this.