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Peak Oil (was "petroleum geologist explains US war policy")

Although on the otherhand this Russian Billionaire suggests that Putins actions could raise production up to 12 million barrels per day. Maybe he is right although theres no indication of when this could happen by, and he may just be getting overexcited by the tax breaks that were announced.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aqtQRcVtmj2k

Anybody prepared to speculate as to how low the price of oil could fall back to if more data emerges that people are starting to cut back on its use?

Also will we actually see directly visible oil shortages when demand starts to exceed supply, or will the pricing mechanisms obscure this? I know that in practice it doesnt really matter whether you cant get the oil because it doesnt exist or because you cant aford it, but it will change the nature of what the masses start getting angry and protesting about, and who they blame?
The 12m bbls/day contrasts with recent statement by a Lukoil Executive which indicated that '9m bbls/day was the most he would see in his lifetime'. My own view is to treat the 12m figure with caution as Russia does not seem particularly welcoming to western investment at present and without such investment the extra would be a 'tall order'. Even with the investment, projects on this scale in remote regions take 6 to 8 years to 'first oil'.

I saw a post today, either in Euan's Oil Drum paper or subsequent comments that there are probably lots of potential buyers priced out at current $126/bbl who will come back in should prices fall which would tend to put some kind of floor on the price. In the meantime China is adding 20k new vehicles per day to their roads and India is ramping up production of a car retailing at around $2500 (which at that price is probably not that fuel efficient). All these extra vehicles require additional fuel (plus the embodied energy associated with their manufacture).

Euan has used the CERA figure of 4.5% global decline rate in his paper; Schlumberger uses 8% and Matt Simmons 10%. The 4.5% decline rate allows for some growth within existing fields to offset some of the steeper declines which sounds reasonable. Even 4.5% on 80m bbls/day (discounting tar sands which don't currently decline) is a big number - 3.6m bbls/day. In other words the industry has virtually to bring online a new Iran every year or a Saudi every 2-1/2 years to offset decline in mature oilfields. This factor, together with flat output in Russia and steep decline in Mexican output is going to make it hard to grow production from current levels.

With regard to consumption patterns we could stay with $126 oil and full employment or slump to $50 oil with 10% unemployment (these are only hypothetical examples). In either case there will be a sizeable number of would-be oil consumers who can't afford it - the individuals impacted will be different in each scenario but the end result for the oil market is similar i.e. enforced demand destruction.
 
Oil trading on watchdogs' radar after price rises

Oil prices ended a volatile week almost $10 below their record $135 levels as the Financial Services Authority joined a worldwide investigation into the potential price manipulation of crude.

The City's financial watchdog formally joined forces with the US Commodity Futures Trading Commission this week to look into whether the oil market is being illegally rigged. The CFTC, the FSA and ICE Futures Europe will require traders to provide daily information on positions they have taken in the oil futures market.

The FSA also admitted that they had been passing information on to the CFTC since 2006 "to assist in the detection of the potential abuses or manipulative trading practices that involve trading in related contracts on UK and US derivative exchanges".

This news came as a number of analysts voiced their concerns over oil prices, which rose above $135 a barrel for the first time last week.

Oil is heading for a sharp correction, according to analysts at Lehman Brothers, who liken the spiralling price to the dotcom boom and bust of 2001.
....
"A rebound in the dollar, speculation about US interest rate hikes and the announcement by the CFTC of measures to enhance the oversight of energy futures markets may be seen as potentially stemming future investment flows into energy and other commodities," said Antoine Halff of Newedge USA.

http://www.guardian.co.uk/business/2008/may/30/commodities.oil1
 
Opinion: Jim Crow Energy Policies

The Washington Times, 30 May 2008

Roy Innis

The U.S. civil rights revolution of the 1950s and '60s was one of the greatest social and political liberations in history. It gave African-Americans and other minorities new opportunities and new levels of success in virtually every walk of life.

But today we face unprecedented new challenges to indispensable but often neglected rights enunciated in our Declaration of Independence: "That all men are endowed by their Creator with certain unalienable rights; that among these are life, liberty, and the pursuit of happiness."

These fundamental rights are under assault in subtle, often insidious ways. Sometimes it is with the best of intentions, by good people who don't realize they are impairing other people's rights, hopes and dreams. At other times, it is by people who are willing, even determined, to sacrifice individual rights in the name of a proclaimed threat or greater common good.

One critical challenge involves restrictions on access to energy and economic opportunity - and thus on liberties and rights - in the name of protecting the environment.

Energy is the master resource of modern society. It transforms constitutionally protected civil rights into rights we actually enjoy: jobs, homes, transportation, health care and other earmarks of life, liberty and the pursuit of happiness. With abundant, reliable, affordable energy, much is possible. Without it, hope, opportunity, progress, job creation and civil rights are hobbled.

Laws and policies that restrict access to America's abundant energy drive up the price of fuel and electricity. They cause widespread layoffs and leave workers and families struggling to survive, as the cost of everything they eat, drive, wear and do spirals higher. They roll back the progress for which civil rights revolutionaries like the Rev. Martin Luther King struggled and died.

They create unnecessary obstacles to the natural, justifiable desire of minority Americans to share in the American Dream. They prevent us from resolving conflicts through compromise and impose needless and unfair burdens on our poorest families. These regressive, energy-killing laws and policies deny minority and other poor families a seat at the energy lunch counter and send us to the back of the economic bus.

The Congress of Racial Equality and I care deeply about our environment. But we also care about having jobs, and affordable food, heat and transportation. We care about impoverished Third World families achieving their dreams.

We want to know that the environmental values we cherish really are threatened the way environmental activists say they are. And we want to know that the solutions they advocate really will safeguard those values, at reasonable cost, without creating enormous new problems, like global grain shortages.

Today, unfortunately, these common-sense requests are under assault by activists who want to eliminate fossil fuels, base public policies on unfounded ecological scare stories, and stifle debate by attacking anyone who challenges their assertions.

More: http://www.washingtontimes.com/news/2008/may/30/jim-crow-energy-policies/?page=1
 
I won't deny that there's a component of market speculation driving the current spike. But the market has sod all to do with prouction rates, which still refuse to climb above its ~75mb/day plateau that it's been on for the last 3 years.

Secondly, Roy Innis is the Chairman of the Congress of Racial Equality, not an energy/oil analyst. He states that America has plenty of oil and it's those darned politicians preventing us from taking it out of the ground. No Roy, I'm sorry, production rates have big geological and technical limits. The politics have little effect on the USA's ability to pump its own oil.

America's 'abundant energy' includes solar energy that could be captured with solar thermal, with no groundbreaking or difficult technology, in the middle of barren and unproductive deserts - enough to produce electricity for every American. That's the sort of big move the politicians should make.
 
I won't deny that there's a component of market speculation driving the current spike. But the market has sod all to do with prouction rates, which still refuse to climb above its ~75mb/day plateau that it's been on for the last 3 years.

Which is because the Saudi's don't see any reason to step up production, and the fact that there's not enough facilities to process the extra crude anyway... More refineries are unlikely to be built because most countries don't want more refineries. They're an environmental/pr hazard...
 
That Roy Innis thing is a brilliant rhetorical joke. Will be a set text for students of English and Propaganda to giggle over, I wager.

That'd be Roy Innis, trustee of the Hudson Institute; the Republican who stood as a Democrat in New York, then joined the Right-of-Sensible Libertarian Party.
 
Which is because the Saudi's don't see any reason to step up demand, and the fact that there's not enough facilities to process the extra crude anyway... More refineries are unlikely to be built because most countries don't want more refineries. They're an environmental/pr hazard...

Saudi's step up production, you mean :)

Western countries with active green lobbies might not like building new refineries, but that's not going to stop the rest of the world. ie. China.
 
... But the market has sod all to do with prouction rates, which still refuse to climb above its ~75mb/day plateau that it's been on for the last 3 years.

Where do you get your junk numbers from - the Oil Drum?

May 29, 2008
By F. William Engdahl

[....]

World Oil Demand Flat, Prices Boom…

The chief market strategist for one of the world’s leading oil industry banks, David Kelly, of J.P. Morgan Funds, recently admitted something telling to the Washington Post, “One of the things I think is very important to realize is that the growth in the world oil consumption is not that strong."

One of the stories used to support the oil futures speculators is the allegation that China’s oil import thirst is exploding out of control, driving shortages in the supply-demand equilibrium. The facts do not support the China demand thesis however.

The US Government’s Energy Information Administration (EIA) in its most recent monthly Short Term Energy Outlook report, concluded that US oil demand is expected to decline by 190,000 b/d in 2008. That is mainly owing to the deepening economic recession. Chinese consumption, the EIA says, far from exploding, is expected to rise this year by only 400,000 barrels a day. That is hardly the "surging oil demand" blamed on China in the media. Last year China imported 3.2 million barrels per day, and its estimated usage was around 7 million b/d total. The US, by contrast, consumes around 20.7 million b/d.

That means the key oil consuming nation, the USA, is experiencing a significant drop in demand. China, which consumes only a third of the oil the US does, will see a minor rise in import demand compared with the total daily world oil output of some 84 million barrels, less than half of a percent of the total demand.

The Organization of the Petroleum Exporting Countries (OPEC) has its 2008 global oil demand growth forecast unchanged at 1.2 mm bpd, as slowing economic growth in the industrialised world is offset by slightly growing consumption in developing nations. OPEC predicts global oil demand in 2008 will average 87 million bpd -- largely unchanged from its previous estimate. Demand from China, the Middle East, India, and Latin America -- is forecast to be stronger but the EU and North American demand will be lower.

So the world’s largest oil consumer faces a sharp decline in consumption, a decline that will worsen as the housing and related economic effects of the US securitization crisis in finance de-leverages. The price in normal open or transparent markets would presumably be falling not rising. No supply crisis justifies the way the world's oil is being priced today.


Big new oil fields coming online

Not only is there no supply crisis to justify such a price bubble. There are several giant new oil fields due to begin production over the course of 2008 to further add to supply.

The world’s single largest oil producer, Saudi Arabia is finalizing plans to boost drilling activity by a third and increase investments by 40 %. Saudi Aramco's plan, which runs from 2009 to 2013, is expected to be approved by the company's board and the Oil Ministry this month. The Kingdom is in the midst of a $ 50 billion oil production expansion plan to meet growing demand in Asia and other emerging markets. The Kingdom is expected to boost its pumping capacity to a total of 12.5 mm bpd by next year, up about 11 % from current capacity of 11.3 mm bpd.

In April this year Saudi Arabia's Khursaniyah oilfield began pumping and will soon add another 500,000 bpd to world oil supply of high grade Arabian Light crude. As well, another Saudi expansion project, the Khurais oilfield development, is the largest of Saudi Aramco projects that will boost the production capacity of Saudi oilfields from 11.3 million bpd to 12.5 million bpd by 2009. Khurais is planned to add another 1.2 million bpd of high-quality Arabian light crude to Saudi Arabia's export capacity.

Brazil’s Petrobras is in the early phase of exploiting what it estimates are newly confirmed oil reserves offshore in its Tupi field that could be as great or greater than the North Sea. Petrobras, says the new ultra-deep Tupi field could hold as much as 8 billion barrels of recoverable light crude. When online in a few years it is expected to put Brazil among the world's "top 10" oil producers, between those of Nigeria and those of Venezuela.

In the United States, aside from rumors that the big oil companies have been deliberately sitting on vast new reserves in Alaska for fear that the prices of recent years would plunge on over-supply, the US Geological Survey (USGS) recently issued a report that confirmed major new oil reserves in an area called the Bakken, which stretches across North Dakota, Montana and south-eastern Saskatchewan. The USGS estimates up to 3.65 billion barrels of oil in the Bakken.

These are just several confirmations of large new oil reserves to be exploited. Iraq, where the Anglo-American Big Four oil majors are salivating to get their hands on the unexplored fields, is believed to hold oil reserves second only to Saudi Arabia. Much of the world has yet to be explored for oil. At prices above $60 a barrel huge new potentials become economic. The major problem faced by Big Oil is not finding replacement oil but keeping the lid on world oil finds in order to maintain present exorbitant prices. Here they have some help from Wall Street banks and the two major oil trade exchanges—NYMEX and London-Atlanta’s ICE and ICE Futures.

http://www.lavalnews.ca/articles/TLN1611/editorial161105.html
 
That Roy Innis thing is a brilliant rhetorical joke. Will be a set text for students of English and Propaganda to giggle over, I wager.

That'd be Roy Innis, trustee of the Hudson Institute; the Republican who stood as a Democrat in New York, then joined the Right-of-Sensible Libertarian Party.


Worryingly, one of Roy's colleagues at the Hudson Institute is its director of economic policy studies, a.k.a. Rupert Murdoch's representative on earth, Irwin Stelzer.

However, here is Irwin in the Sunday Times: Two cheers for the blessing of high oil prices
 
The major problem faced by Big Oil is not finding replacement oil but keeping the lid on world oil finds in order to maintain present exorbitant prices.

Ahha thats the funniest things Ive read for a long time.

The Saudi stuff is more interesting. If they can get that capacity online, and it isnt offset too much by decrease from other Saudi fiends, it will be help quite a bit in the short-term, will provide a little time & wiggle room.

Also if they increase exports when it comes online, it rather confirms that they have been running without much spare capacity recently, otherwise why wait till then? Im sure the current price of crude is uncomfortable even to them, they know what a recession can do for demand.

This recent story says the field isnt pumping yet:

http://uk.reuters.com/article/oilRpt/idUKL259030920080525

And yeah I dont deny that speculation plays a part in the current price, and yes there is plenty of profiteering. But I firmly believe that oil companies & nations would not get away with engineering the crisis on their own, if it meant prices went so high that there was a global recession. Lots of powerful people would be harmed by this, the system will be harmed, so Id expect theyd be put under extreme pressure to lay off if the problem were that easy to rectify.
 
OK it seems there is some wrangling going on in regards the north sea, over whether Total build a big pipeline that will meet government objectives, but help totals competitors. Silly headline for this story, as reserves would actually be preserved if the larger pipeline doesnt happen:

http://www.guardian.co.uk/business/2008/jun/01/oil.france

Meanwhile more data on Russia, exports are down and production down slightly, but production this year still expected to end up higher than last:

http://www.tehrantimes.com/index_View.asp?code=169989

Rise in Russia's oil export duty, but as this appears to be linked to price of oil this is hardly surprising:

http://en.rian.ru/russia/20080601/108988326.html

In the press the narrative appears to have moved away from supply issues, and towards possible market manipulation & speculation causing the high prices, with various financial authorities launching investigations. I welcome this as I want to know how much of a role this has played in the price rise, although I wont be surprised if not much really happens and its just posturing by the authorities to make them be seen to be doing something. There seem to be an increasing number of reports predicting a sharp oil price correction, and I guess I would be foolish to rule this out. From what I remember of recent years there is always quite a lot of price fluctuation anyway, some of it seasonal and related to demand.
 
Where do you get your junk numbers from - the Oil Drum?

The EIA - Energy Information Administration. The figure is authoratative. Total liquids has risen over the same period to 87mb/day. That increase is almost entirely due to non-petroleum sources - eg. biofuels, tar sands, coal-to-oil, natural gas-to-liquids etc.

Can this rise be sustained? What would the effect of declining crude production be on the ability of these alternatives to fulfill demand? Are there systemic limits to the production of these alternatives? Important questions.
 
Are there systemic limits to the production of these alternatives? Important questions.

Well, did I not read on this very thread that tar sands have a return on energy invested of less than 1.1 and in some cases less than 1? They're a way of turning Canadian gas into petrol for the US.
 
*hand waggle* - it's hard to get a definite answer on that one. It's certainly a very poor EROEI.
 
The EIA - Energy Information Administration. The figure is authoratative. Total liquids has risen over the same period to 87mb/day. That increase is almost entirely due to non-petroleum sources - eg. biofuels, tar sands, coal-to-oil, natural gas-to-liquids etc.

Can we have a link?
 
Engdahl now believes in the Russian hypothesis that oil is not a "fossil fuel" but is produced underground by unknown materials, conditions and forces deeper down in the Earth's core.

http://en.wikipedia.org/wiki/F._William_Engdahl

How Wikipedia really works

calex04.gif
 
Yes, I already know Engdahl's point of view on oil generation.

I wasn't informing you. I was informing other readers that Engdahl takes a position that is so far in the minority that it casts doubt on his grasp of reality and on anything else he says.

It's nearly as damning as believing that the Sun is made of ferrite, as you do.

Other readers of this thread will have found this information about your source useful, Marlin.

It was laptops fondness for using Wikipedia as a reference that I was ridiculing,

I have no such fondness.

The fact that that time, being short of time, the allegation I posted was merely the first to show up in a search and the pithiest becomes irrelevant, given that it is in fact true.

given much of it's content is controlled by a cabal of eco-crackpots like him.

Cool! New Conspiracy Theory!

I note that the climate change denier whose blog you link to in support of your Kewl New WikiKonspiracy Theory describes Benny Peiser as "a prominent UK scientist" - and makes Peiser's supposed expertise central to his argument about editing of wiki pages.

Like you, this blogger wouldn't know science if it walked up to him and slapped him.

Benny Peiser is a social anthropologist. Social anthropology is a discipline invented by those who objected to sociology getting too quantitative and too scientific: some would say, by sociologists who demanded the right to waffle.

Peiser holds a post in the department of sport and exercise at Liverpool John Moores University. (Joke about PE teachers deleted.) His actual professional publications are:

  • B. Peiser and J. Minten (2003) Soccer Violence. In: Reilly, T. and Williams, M. (eds), Science and Soccer II, London: E & FN Spon, pp. 230-241
  • B. Peiser and T. Reilly (2004) Environmental Factors in the summer Olympics in historical perspective. Journal of Sports Science 22(10) 981-1002B.
  • T. Reilly and B. Peiser (2005) Seasonal Variations in Health-related Human Physical Activity, in press

Not, in fact, then, a "leading scientist". Just someone with a bee in his bonnet about climate change.
 
The US Government’s Energy Information Administration (EIA) in its most recent monthly Short Term Energy Outlook report, concluded that US oil demand is expected to decline by 190,000 b/d in 2008. That is mainly owing to the deepening economic recession. Chinese consumption, the EIA says, far from exploding, is expected to rise this year by only 400,000 barrels a day. That is hardly the "surging oil demand" blamed on China in the media. Last year China imported 3.2 million barrels per day, and its estimated usage was around 7 million b/d total. The US, by contrast, consumes around 20.7 million b/d.

That means the key oil consuming nation, the USA, is experiencing a significant drop in demand. China, which consumes only a third of the oil the US does, will see a minor rise in import demand compared with the total daily world oil output of some 84 million barrels, less than half of a percent of the total demand.
from those figures, chinese demand is expected to rise by around 6% in a year, but that's dismissed as a 'minor rise', and 'hardly the surging oil demand blamed on china in the media' whereas US demand is expected to decrease by around 1% and that's described as 'a significant drop in demand'.

the predicted US drop in demand also being less than half the rise in Chinese demand - 190,000 b/d drop in US demand compared to a 400,000 b/d rise in chinese demand.

ok so the increase in chinese demand amounts to only around 0.5% of global production, but that's still going to have an effect when production is already pretty much maxed out.
 
North Sea could see second oil boom due to huge unexplored reserves

By Andy Bloxham
05/06/2008

The rising price of oil could spark a second North Sea exploration boom to drain previously inaccessible reserves which experts estimate could run to 30 billion barrels.

The amount of fuel still left in the oilfields could be the equivalent of all that has been extracted since they were first exploited in the 1970s; enough to last another 44 years.

Experts explained that the high price of oil meant that it was now financially viable for firms to invest the vast sums required to remove it from depths and pressures that were previously too expensive.

Academics said up to 300 more fields around the British coasts could also bear fruit, as large areas of the UK's coast have never been fully examined.

Industry giants like BP and Shell are unlikely to do the work, though, as the 'new' fields are smaller, which means they are easier for smaller firms – with lower overheads – to move in and exploit.

The claims came as First Minister Alex Salmond, of the Scottish National Party, reiterated his demands for Scotland to get a share of increased North Sea oil taxes in a letter to Prime Minister Gordon Brown.
...
The SNP believes the industry has covered up the extent of oil reserves to avoid greater taxation.

Professor Alex Kemp, a petroleum economics expert at Aberdeen University, said: "The remaining reserves could be 20 to 22 billion barrels equivalent and on optimistic estimates could be over 30. So there still is a substantial amount left."

Professor Peter Odell, of Erasmus University in the Netherlands, said: "It's not quite as much as we've used already but it's not far short."

Last month, an independent British firm called Dana Petroleum announced it had found a new North Sea oilfield at a place called West Rinnes.

http://www.telegraph.co.uk/news/207...oil-boom-due-to-huge-unexplored-reserves.html
 
PS: Here's a report on how Wikipedia's zealots control content by plainly dishonest methods.

http://network.nationalpost.com/np/...e/2008/04/12/wikipedia-s-zealots-solomon.aspx

I'm well aware of the editing irregularities and power struggles at wikipedia. I don't trust it unless there's a linked source (which it's getting much better at, these days)

Now, here's the raw EIA data you were after.

http://www.eia.doe.gov/emeu/international/oilproduction.html

The two important sets are

Total Oil Supply [Includes Crude Oil, Natural Gas Plant Liquids, Other Liquids, and Refinery Processing Gain]
All Countries, Most Recent Annual Estimates, 1980-2007

and

Crude Oil Including Lease Condensate
All Countries, Most Recent Annual Estimates, 1980-2007

(which is the critical one)

The figures for 2005-2007 are
2004 72,512.48 kbpd
2005 73,806.86
2006 73,538.77
2007 73,274.08

a rise of just ~700kbpd, although trending downwards over the last 3 years

When "NGPL, and Other Liquids, and Refinery Processing Gain" are added to the mix, we get the larger rise in overall production

2004 83,124.28 kbpd
2005 84,631.48
2006 84,597.11
2007 84,600.64

A rise of ~1500kbpd total, and therefore a rise of ~800kbpd non-crude oil production over that period.

Now, if Crude production goes into steeper decline, the big question is: Can Non-Crude production increase fast enough to maintain supply? And is there a production ceiling similar to the one we're seeing for Crude, and if so, how high is it?
 
... ok so the increase in chinese demand amounts to only around 0.5% of global production, but that's still going to have an effect when production is already pretty much maxed out.

But, as was pointed out in the very same article, a number of big new oil fields are scheduled to come online in 2008 to meet increased global demand.

In April this year Saudi Arabia's Khursaniyah oilfield began pumping and will soon add another 500,000 bpd to world oil supply of high grade Arabian Light crude. As well, another Saudi expansion project, the Khurais oilfield development, is the largest of Saudi Aramco projects that will boost the production capacity of Saudi oilfields from 11.3 million bpd to 12.5 million bpd by 2009. Khurais is planned to add another 1.2 million bpd of high-quality Arabian light crude to Saudi Arabia's export capacity.

So increased output from Saudi Arabia alone is more than adequate to meet growing Chinese demand.

“One of the things I think is very important to realize is that the growth in the world oil consumption is not that strong."

http://www.lavalnews.ca/articles/TLN...ial161105.html
 
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