- Summary: Chevron Corp. is testing a new steam extraction technique to extract heavy oil from Saudi oil fields. Heavy oil has more impurities than light oil and requires more expensive refining. Chevron has used steam extraction in the US and Indonesia, and it is also used in the Canadian tar-sand deposits. The Saudis now want to see if it will work in the more porous rock in the Middle East. If successful, it would significantly increase Saudi Arabia's stated oil reserves of 260 billion barrels of recoverable reserves. Chevron's project will cost an estimated $300 million; Occidental Petroleum is preparing to spend $2 billion on a similar project in Oman. "Three years ago, the U.S. Geological Survey estimated the world has more than one trillion barrels of heavy oil, mostly in Canada, Venezuela and elsewhere in the Western Hemisphere... But some experts believe the amount of heavy oil in the Middle East has been underestimated because of the focus on the giant deposits of light oil in the region."
- Comment on related stocks/ETFs: Positive for Chevron (NYSE:CVX), Occidental (NYSE:OXY) and other companies with expertise in stream extraction.
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