Firms Turn To Drilling Heavy Oil  

Hubbert theory says that as it gets harder to find light, sweet crude oil suppliers are forced to exploit less economic reserves like deep water, polar and heavy oil. In Alaska, they have started pumping heavy polar oil - once they start going offshore from Alaska in search of heavy sour crude, we'll know we're at the bottom of the barrel.

PRUDHOE BAY, Alaska - BP and ConocoPhillips are betting that heavy oil in Alaska will result in a big payoff.

Heavy oil - which has the consistency of thick molasses instead of olive oil - lies in sandstone above the huge reservoir of North Slope light oil that has been flowing down the trans-Alaska pipeline since 1977. With that reservoir being drawn down, the companies are turning to hard-to-pump heavy oil to extend the life of the oil fields.

Viscous oil makes sense because of increases in worldwide oil demand, said Phil Flynn, senior energy analyst for Alaron Trading Co., a Chicago-based futures brokerage firm.

"These alternative fuels that we thought just a few years ago would never be profitable to get out of the ground, at $50 a barrel it is," Flynn said. "We are going to find more and more situations where we are going to squeeze every barrel out of the ground." The companies describe their joint effort as unprecedented. So far, they've spent over $1 billion on heavy oil and are putting millions more into the effort.