Big Oil Companies to Spend Billions on Middle East Oil (CVX, XOM, BP, RDS-A)

Producing oil from the vast deposits of the Middle East is getting more expensive. A lot more expensive. Big oil companies like Chevron Corp. (NYSE: CVX), Exxon Mobil Corp. (NYSE: XOM), BP plc (NYSE: BP), and Royal Dutch Shell plc (NYSE: RDS-A) are likely to spend $40 billion in 2013 to install enhanced oil recovery technologies to fields in Kuwait, the United Arab Emirates, and even Saudi Arabia.

Much of the oil remaining in the reservoirs is too thick to pump out with installing expensive recovery techniques like pumping in steam to soften the oil so that it will flow more smoothly. Chevron is considering spend $40 billion by itself over the next 25 years on a system that uses steam to recover 5 billion barrels of oil from a field on the border between Saudi Arabia and Kuwait, according to Bloomberg.

Chevron expects to make a final decision on the steam project by 2013, and to have steam-assisted production available on the whole field by 2017.

As one representative to the World Petroleum Congress from the UAE put it, “The days of easy oil are over. In order to maximize the potential, we have to have enhanced oil recovery.” The huge cost of these enhancements not only means that oil is harder to get, but that it will cost more. Probably a lot more.