For the past many years energy security has been one of the key factors that determined China's political as well as economic relations with other countries, especially with oil-rich countries in Africa and South America. The statistics currently used by China show that the volume of the country's oil resources is 106.9 billion tons, and natural gas 53 trillion cubic meters. Experts have corrected the above figures with various coefficients and determined that China's recoverable oil reserves stand at 13 billion to 16 billion tons and natural gas at 10 trillion to 15 trillion cubic meters. [4] This is a shocking fact showing that China's energy situation is much worse than previously thought. And so China will have to find energy sources from abroad other than in Russian and Central Asia.
http://www.energypulse.net/cen...d=766
1 ton = ~7.2 barrels depending on specific gravity of product
World Petro Energy Overview
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texasoil
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'Experts' don't know squat about China's energy reserves. See my earlier post. BP used to be fairly knowledgeable in some areas. The Chinese have never (and will never) publish reserves figures like we are used to getting. Their long term plan is to use those of other countries, reserving their good quality oil for when other sources have been exhausted.
China will buy on the market and buy reserves in the ground using hard currency we Occidentials pay them for manufactured goods they will make with the billions of people they have and will have unemployed as they modernize factories and agriculture(again with our investments). They realize that if they do not 'recycle' the cash from manufactured goods back into the hands of people (rich oil Sheiks) who will invest it in hedge funds who will fund more manufacturing plants, they would have an real big current account surplus, be pressured to float their currency to a stronger level--which would reduce demand for their manufactured goods, lead to unemployment--and end up worse off. Far better long term to buy oil and save their indigenous resources. Their population bulge in the future is shrinking quickly as the effects of the 'one child' policy kicks in, and in 25 years they will be dropping in workforce numbers. Chinese manufacturing will be modern, high energy efficiency, high tech, and heavy (energy intensive) manufacturing will be growing in India, Packistan, Indonesia, which have tremendous population growth to put to work.
Occidentals have such short visions of time, and are so narrowly focused.
China will buy on the market and buy reserves in the ground using hard currency we Occidentials pay them for manufactured goods they will make with the billions of people they have and will have unemployed as they modernize factories and agriculture(again with our investments). They realize that if they do not 'recycle' the cash from manufactured goods back into the hands of people (rich oil Sheiks) who will invest it in hedge funds who will fund more manufacturing plants, they would have an real big current account surplus, be pressured to float their currency to a stronger level--which would reduce demand for their manufactured goods, lead to unemployment--and end up worse off. Far better long term to buy oil and save their indigenous resources. Their population bulge in the future is shrinking quickly as the effects of the 'one child' policy kicks in, and in 25 years they will be dropping in workforce numbers. Chinese manufacturing will be modern, high energy efficiency, high tech, and heavy (energy intensive) manufacturing will be growing in India, Packistan, Indonesia, which have tremendous population growth to put to work.
Occidentals have such short visions of time, and are so narrowly focused.
A Leopard Can't Change Its Spots
Tom Miles MOSCOW (Reuters) - Police seized vital computer servers during an eight hour raid on the Moscow headquarters of Russia's YUKOS oil firm on Saturday, the company said, a move that could halt a fifth of Russia's oil output.
Up to 40 plainclothes police entered the steel and glass office block in south central Moscow in the early afternoon and Interior Ministry special forces in gray fatigues and black berets stood guard and cordoned off the building.
"The investigative actions are being undertaken as part of a criminal case into fraud and tax evasion by entities controlled by YUKOS," a spokeswoman for the general prosecutor's office told Reuters.
Although it pumps more oil than Libya, YUKOS is in crisis: its founder Mikhail Khodorkovsky is on trial for fraud and tax evasion, it faces tax bills of almost $7 billion -- half to be paid within days -- and a court has frozen its bank accounts.
Many stock market dealers see YUKOS's troubles -- and its founder's trial -- as Kremlin punishment for Khodorkovsky's political ambitions. The firm's shares have lost more than half their value since early April this year.
YUKOS has already said its legal battles could disrupt its output of 1.72 million barrels a day, and spokesman Alexander Shadrin warned the seizure of computer servers in Saturday's raid could bring production to an abrupt halt.
"Our central dispatch unit responsible for oil production is in this building. Confiscating servers means damaging the coordination of production in our core regions (in Siberia). This means output may stop as soon as today," Shadrin said.
Despite YUKOS's massive output, a halt would be unlikely to affect Russia's status as the world's number two crude oil exporter. The national pipeline firm has said it could easily make up YUKOS's lost supplies from other producers.
MURKY DEALS
But the raid only deepens the uncertainty surrounding the future of YUKOS and Khodorkovsky. With the Kremlin widely seen as being behind the legal onslaught, analysts watch President Vladimir Putin closely for clues about the company's fate.
But besides saying last month that he had no interest in seeing YUKOS go bankrupt, Putin has given very few pointers. He spent Saturday at the horse races with fellow leaders from the ex-Soviet Commonwealth of Independent States. Continued ...
© Reuters 2004. All Rights Reserved.
Up to 40 plainclothes police entered the steel and glass office block in south central Moscow in the early afternoon and Interior Ministry special forces in gray fatigues and black berets stood guard and cordoned off the building.
"The investigative actions are being undertaken as part of a criminal case into fraud and tax evasion by entities controlled by YUKOS," a spokeswoman for the general prosecutor's office told Reuters.
Although it pumps more oil than Libya, YUKOS is in crisis: its founder Mikhail Khodorkovsky is on trial for fraud and tax evasion, it faces tax bills of almost $7 billion -- half to be paid within days -- and a court has frozen its bank accounts.
Many stock market dealers see YUKOS's troubles -- and its founder's trial -- as Kremlin punishment for Khodorkovsky's political ambitions. The firm's shares have lost more than half their value since early April this year.
YUKOS has already said its legal battles could disrupt its output of 1.72 million barrels a day, and spokesman Alexander Shadrin warned the seizure of computer servers in Saturday's raid could bring production to an abrupt halt.
"Our central dispatch unit responsible for oil production is in this building. Confiscating servers means damaging the coordination of production in our core regions (in Siberia). This means output may stop as soon as today," Shadrin said.
Despite YUKOS's massive output, a halt would be unlikely to affect Russia's status as the world's number two crude oil exporter. The national pipeline firm has said it could easily make up YUKOS's lost supplies from other producers.
MURKY DEALS
But the raid only deepens the uncertainty surrounding the future of YUKOS and Khodorkovsky. With the Kremlin widely seen as being behind the legal onslaught, analysts watch President Vladimir Putin closely for clues about the company's fate.
But besides saying last month that he had no interest in seeing YUKOS go bankrupt, Putin has given very few pointers. He spent Saturday at the horse races with fellow leaders from the ex-Soviet Commonwealth of Independent States. Continued ...
© Reuters 2004. All Rights Reserved.
Crude Headed Higher on Lots of Bad News
SA says it might not raise production as promised in August.
SA and Iran say they are happy with present prices.
Iraq pipelines bombed and exports more than halved to 975kbpd.
Yukos faces bankruptcy for $7b worth of back taxes.
http://biz.yahoo.com/rb/040705/markets_oil_2.html
SA and Iran say they are happy with present prices.
Iraq pipelines bombed and exports more than halved to 975kbpd.
Yukos faces bankruptcy for $7b worth of back taxes.
http://biz.yahoo.com/rb/040705/markets_oil_2.html
Looks like high fuel prices are finally starting to make a substantial dent in SUV sales. Down by 20% since January.
This should begin to slow fuel demand growth but auto companies who rely on SUVs for a great part of their profits are going to get hurt.
More upward pressure on oil is coming from the white collar Nigerian oil union threatening to go on strike.
This should begin to slow fuel demand growth but auto companies who rely on SUVs for a great part of their profits are going to get hurt.
More upward pressure on oil is coming from the white collar Nigerian oil union threatening to go on strike.
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texasoil
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Auto company sales and profits have peaked for this cycle. Availablity of negative interest money from the Fed has fueled insane financing deals (zero interest) in which folks could trade in a 2 year old with 'underwater' loan, wrap the negative equity in the new loan and still lower monthly payments. That door is slamming closed and sales of pickups and SUV's are going to be a very ugly sight.
Sunday (July 4th), traveled from Houston to Lake Charles and return for celebration--traffic was the LIGHTEST I have seen on any day in the last 15-20 years. You could run on cruise control without another vehicle within 400 yards!!
Demand IS elastic
Sunday (July 4th), traveled from Houston to Lake Charles and return for celebration--traffic was the LIGHTEST I have seen on any day in the last 15-20 years. You could run on cruise control without another vehicle within 400 yards!!
Demand IS elastic
Questions Raised About Saudi Crude Reserves
Established fields nearing the end of the road.
Saudi officials refuse to allow independent 3rd party reviews of reserves.
New development hindered by lack of foreign capital because of political reasons.
http://arizonaenergy.org/News&...e.htm
Saudi officials refuse to allow independent 3rd party reviews of reserves.
New development hindered by lack of foreign capital because of political reasons.
http://arizonaenergy.org/News&...e.htm
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texasoil
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Look-- the oil companies have done a lousy job of marketing. Look at what food conglomerates have done. $0.04 worth of puffed rice, in a $0.20 box, sells for $4.00. Artificially flavored (or even unflavored) water sells in plastic bottles for $3/qt=$12/gal--and stuff just as good is practially free from the faucet here. All about getting the right message across.
Oil is a mineral not food so the two can't be directly compared though it could be said that we are eating oil in the sense that the rice was fertilized by some petroleum based product.
Gasoline is a necessity unlike bottled flavoured water. However, some lame brains do fill their Neons with premium gas because they think it makes their car run better. I daresay that you could easily sucker some people if you came out with "miracle low carb health gasoline" and charged $5 a gallon. There is no shortage of suckers in this country.
In that vein, Chris Mathews refered to a poll conducted in the last few days that revealed 50% of those Americans surveyed still believe SH was responsible for the 9/11 attacks. What were you saying about "getting the message across" and "puffed rice"?
Gasoline is a necessity unlike bottled flavoured water. However, some lame brains do fill their Neons with premium gas because they think it makes their car run better. I daresay that you could easily sucker some people if you came out with "miracle low carb health gasoline" and charged $5 a gallon. There is no shortage of suckers in this country.
In that vein, Chris Mathews refered to a poll conducted in the last few days that revealed 50% of those Americans surveyed still believe SH was responsible for the 9/11 attacks. What were you saying about "getting the message across" and "puffed rice"?
What Do New Deep Water Finds Amount To?
LONDON, July 8 (Reuters) - The world's untapped deepwater oil reserves could more than triple existing deep offshore discoveries over the next 20-30 years at attractive profit margins, according to a study released on Thursday.
Oil consultants Wood Mackenzie and Fugro Robertson said new finds could swell deepwater reserves by 114 billion barrels from 50 billion now.
Reserves on that scale match remaining proven reserves onshore in Iraq, the world's second largest oil province after Saudi Arabia.
In addition, deepwater natural gas reserves could also jump more than threefold from 28 billion barrels to 96 billion, the report said.
Deepwater exploration has grown in importance for oil majors amid worries on the world oil market about tight spare output capacity and instability in Middle East producer countries.
The concerns have helped lift U.S. oil prices at times this year to $40 a barrel.
Industry estimates are that proven world oil and gas reserves have risen sharply over the past two decades.
BP in its annual statistical review estimates total onshore and offshore oil reserves at 1,148 billion barrels at the end of 2003, up from 723 billion barrels 20 years ago.
Natural gas reserves were 1,105 billion barrels, up from 583 billion barrels at the end of 1983.
Wood Mackenzie said deepwater exploration offered some of the industry's best returns and Mexico could become one of the top five deepwater sources, joining Angola, Brazil, Nigeria and the U.S. Gulf of Mexico.
Mexico's deepwater reserves, defined by the study as at least 400 metres below sea level, could amount to 40 billion barrels, said Andrew Latham of Wood Mackenzie. Perhaps two-thirds of that would be oil, he said.
"Most of the key deepwater plays should continue to achieve attractive returns ranging from around 12 percent to around 20 percent on a full-cycle basis," the report said.
Latham said low finding costs, driven by high success rates and large discovery sizes, boosted returns, but he said it could take three decades to discover all potential new reserves.
"We're seeing about 200 exploration wells a year being drilled in deep water and they're adding about five billion barrels of oil a year," Latham said.
"So you can see that to get to that 100-odd billion that we're talking about, there's at least another 20 years of exploration needed."
The study identified Brazil's state energy company Petrobras <PETR4.SA> as the leading deepwater firm by value, closely followed by BP (BP) and Shell (SHEL) .
"ChevronTexaco (CVX), ExxonMobil (XOM), Petrobras, BP and Shell all hold similar upside value in their deepwater acreage," Wood Mackenzie said.
It said the mid-sized companies that stand out as having particularly attractive exploration acreage positions included Devon (DVN), ConocoPhillips (COP), Kerr-McGee (KMG) and Murphy (MUR) .
114bb possible reserves/30bb yearly consumption = 3.8 years worth of oil.
Oil consultants Wood Mackenzie and Fugro Robertson said new finds could swell deepwater reserves by 114 billion barrels from 50 billion now.
Reserves on that scale match remaining proven reserves onshore in Iraq, the world's second largest oil province after Saudi Arabia.
In addition, deepwater natural gas reserves could also jump more than threefold from 28 billion barrels to 96 billion, the report said.
Deepwater exploration has grown in importance for oil majors amid worries on the world oil market about tight spare output capacity and instability in Middle East producer countries.
The concerns have helped lift U.S. oil prices at times this year to $40 a barrel.
Industry estimates are that proven world oil and gas reserves have risen sharply over the past two decades.
BP in its annual statistical review estimates total onshore and offshore oil reserves at 1,148 billion barrels at the end of 2003, up from 723 billion barrels 20 years ago.
Natural gas reserves were 1,105 billion barrels, up from 583 billion barrels at the end of 1983.
Wood Mackenzie said deepwater exploration offered some of the industry's best returns and Mexico could become one of the top five deepwater sources, joining Angola, Brazil, Nigeria and the U.S. Gulf of Mexico.
Mexico's deepwater reserves, defined by the study as at least 400 metres below sea level, could amount to 40 billion barrels, said Andrew Latham of Wood Mackenzie. Perhaps two-thirds of that would be oil, he said.
"Most of the key deepwater plays should continue to achieve attractive returns ranging from around 12 percent to around 20 percent on a full-cycle basis," the report said.
Latham said low finding costs, driven by high success rates and large discovery sizes, boosted returns, but he said it could take three decades to discover all potential new reserves.
"We're seeing about 200 exploration wells a year being drilled in deep water and they're adding about five billion barrels of oil a year," Latham said.
"So you can see that to get to that 100-odd billion that we're talking about, there's at least another 20 years of exploration needed."
The study identified Brazil's state energy company Petrobras <PETR4.SA> as the leading deepwater firm by value, closely followed by BP (BP) and Shell (SHEL) .
"ChevronTexaco (CVX), ExxonMobil (XOM), Petrobras, BP and Shell all hold similar upside value in their deepwater acreage," Wood Mackenzie said.
It said the mid-sized companies that stand out as having particularly attractive exploration acreage positions included Devon (DVN), ConocoPhillips (COP), Kerr-McGee (KMG) and Murphy (MUR) .
114bb possible reserves/30bb yearly consumption = 3.8 years worth of oil.
Kudos to VimyJ and texasoil for some factual information regarding what is going on with the world's energy supply. Africa is definitely going to be one of the next hotspots in the world. It will be interesting to see how our transportation changes over the next 20-30 years, as oil becomes less and less attainable. Better start investing in gun powder. 
Another Nation Joins the Ranks of Crude Importers?
Published on Friday, July 9, 2004 by Melbourne Indymedia
Australian oil production declining fastby liamj
The latest global oil production data from the Energy Information Agency (USEIA 2004) includes a significant revision for Australian production. The EIA now estimates that in 2003 Australian oil production fell by 18%, and that in the first four months of this year it is down by 15% in comparison to the same period last year.
This is bad news in anyone’s book, worse than older Geoscience Australia and Australian Bureau of Agricultural & Resource Economics estimates. Geoscience Australia estimated that, “Australian stocks of crude oil (in the ground) will be exhausted in 8 (now 5) years if the current rate of production is maintained and there is no discovery of new reserves” (GA 2001a). There have been no significant discoveries in Australia since that time.
The ABARE study, conducted by Woodside Energy p/l Managing Director John Akehurst, said: “Projections by Australian Government forecasting agencies indicate that Australia is facing a rapid decline in liquid petroleum production over the next decade. Liquids self-sufficiency is expected to decline from an average of 80-90% over the past decade to less than 40% by 2010.” (Akehurst 2002)
Before reflexive Pollyanna’s leap to defend the ‘limitless bounty as our birthright’ fantasy, I’ll quote J.Williams, CEO of Geosciences Australia, testifying to House of Reps commitee last year: “Turning now to petroleum, just to add to our submission, the situation with production to reserves ratio, which was around 11 in the submission, has now deteriorated considerably down to five, which means that our indigenous supplies of liquid crude oil resources are certainly deteriorating. That raises questions of petroleum security and the like” (HoR SCIR 2003).
Australian oil production declining fastby liamj
The latest global oil production data from the Energy Information Agency (USEIA 2004) includes a significant revision for Australian production. The EIA now estimates that in 2003 Australian oil production fell by 18%, and that in the first four months of this year it is down by 15% in comparison to the same period last year.
This is bad news in anyone’s book, worse than older Geoscience Australia and Australian Bureau of Agricultural & Resource Economics estimates. Geoscience Australia estimated that, “Australian stocks of crude oil (in the ground) will be exhausted in 8 (now 5) years if the current rate of production is maintained and there is no discovery of new reserves” (GA 2001a). There have been no significant discoveries in Australia since that time.
The ABARE study, conducted by Woodside Energy p/l Managing Director John Akehurst, said: “Projections by Australian Government forecasting agencies indicate that Australia is facing a rapid decline in liquid petroleum production over the next decade. Liquids self-sufficiency is expected to decline from an average of 80-90% over the past decade to less than 40% by 2010.” (Akehurst 2002)
Before reflexive Pollyanna’s leap to defend the ‘limitless bounty as our birthright’ fantasy, I’ll quote J.Williams, CEO of Geosciences Australia, testifying to House of Reps commitee last year: “Turning now to petroleum, just to add to our submission, the situation with production to reserves ratio, which was around 11 in the submission, has now deteriorated considerably down to five, which means that our indigenous supplies of liquid crude oil resources are certainly deteriorating. That raises questions of petroleum security and the like” (HoR SCIR 2003).
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texasoil
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The Aussies has LOTS of economically recoverable oil shale just waiting for the POLITICAL will to develop them. The last serious oil shale plant was shut down by 'environmental protests' from small town 5 miles away. Not that anything had happened, or would, but they protested that IT COULD,so NO WAY were they going to have that horrible 'development' in their pristine (read EMPTY) environment. There is a good reason that 95% of Australia is virtually uninhabited and >50% cannot be inhabited without trucking in food and water. Tain't nothin there.
Nigerian labor strife will shortly be calmed. The pragmatic Dutch will sort it out. The imperious British were/are the cause--the very nerve of the locals insisting on being considered, and paid a fair wage--next they will want a seat in the House of Lords and all!
Russia's oil giant Yukos will not be driven into bankruptcy, but Putin WILL begin to collect the legal taxes they ducked. About time businesses and super wealthy robber barons there were called to task on their theivery.
Me, I'm more appaled every day by the present administration's lack of energy policy--the squandering of TIME in dealing with the horrible waste of natural gas as power boiler fuel, lax fuel economy regs, etc. Nat'l gas prices will likely see $5-6/MMBtu (twice last year's price) into the pipeline next year and for several more years. Double that at your home. LNG import terminals--Not in MY back yard thank you say most folks---let them use fuel oil to heat and cook--save the gas for us folks down her ein the south.
Until we have a real shift in political will to deal with rampant energy consumption, the price/cost will continue to escalate--who benefits--the super wealthy--that's who. The top 0.0001% of U.S. taxpayers who AVERAGE more than $20 MM/yr in reported taxable income. Sound estimates of unreported income are 5 times the reported amounts, and much of the non-reporting is perfectly legal because of special tax breaks for super wealthy slipped into a plethora of major legislation the last 2 decades.
We dumb idiots deserve what we get--we act so stupid when we vote--listening to the sound bite adds on tv instead of researching the real records of actions of the candidates.
Nigerian labor strife will shortly be calmed. The pragmatic Dutch will sort it out. The imperious British were/are the cause--the very nerve of the locals insisting on being considered, and paid a fair wage--next they will want a seat in the House of Lords and all!
Russia's oil giant Yukos will not be driven into bankruptcy, but Putin WILL begin to collect the legal taxes they ducked. About time businesses and super wealthy robber barons there were called to task on their theivery.
Me, I'm more appaled every day by the present administration's lack of energy policy--the squandering of TIME in dealing with the horrible waste of natural gas as power boiler fuel, lax fuel economy regs, etc. Nat'l gas prices will likely see $5-6/MMBtu (twice last year's price) into the pipeline next year and for several more years. Double that at your home. LNG import terminals--Not in MY back yard thank you say most folks---let them use fuel oil to heat and cook--save the gas for us folks down her ein the south.
Until we have a real shift in political will to deal with rampant energy consumption, the price/cost will continue to escalate--who benefits--the super wealthy--that's who. The top 0.0001% of U.S. taxpayers who AVERAGE more than $20 MM/yr in reported taxable income. Sound estimates of unreported income are 5 times the reported amounts, and much of the non-reporting is perfectly legal because of special tax breaks for super wealthy slipped into a plethora of major legislation the last 2 decades.
We dumb idiots deserve what we get--we act so stupid when we vote--listening to the sound bite adds on tv instead of researching the real records of actions of the candidates.
Oil from shale is expensive and highly polluting. These problems can and eventually will have to be overcome as there is simply no practical alternative. However, this goes to underline the subtheme of this thread that the era cheap oil is coming to a close.
Nigeria is a friggin' mess. The whole region is. AQ has reportedly made west Africa its next target and US special forces are already operating in the area on the behalf of the tin pot dictatorships.
The administration does have an energy policy called O.I.L. (Operation Iraqi Liberation) which is the first of the large scale resource wars. Pretty hamhanded policy but policy nonetheless.
PS Thanks for the props guys. Oil is the life blood of modern civilization and we live in an era that will be heavily influenced by the pursuit and control of the black gold. The economy of the US is directly affected and dependent upon oil. The treasury prints money based on the world using the greenback to buy oil which is how the US economy is able to continue operating despite huge deficits and debt. The stakes for the US are enormous.
PPS Michael Jackson and Kobe need those tax breaks. How would they and Kennyboy Lay be able to afford competent defense teams without them?
Nigeria is a friggin' mess. The whole region is. AQ has reportedly made west Africa its next target and US special forces are already operating in the area on the behalf of the tin pot dictatorships.
The administration does have an energy policy called O.I.L. (Operation Iraqi Liberation) which is the first of the large scale resource wars. Pretty hamhanded policy but policy nonetheless.
PS Thanks for the props guys. Oil is the life blood of modern civilization and we live in an era that will be heavily influenced by the pursuit and control of the black gold. The economy of the US is directly affected and dependent upon oil. The treasury prints money based on the world using the greenback to buy oil which is how the US economy is able to continue operating despite huge deficits and debt. The stakes for the US are enormous.
PPS Michael Jackson and Kobe need those tax breaks. How would they and Kennyboy Lay be able to afford competent defense teams without them?
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texasoil
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The energy situation is manageable if politicians want to--there are more than enough great engineers and managers who can and will deal effectively with the technical issues. Economics? When incremental oil production investment costs are$15,000/Bbl/day--with 20 year production expectation--as it does for heavy oil in Venez, Canada, North Sea, Siberia, deep GOM, that capital recovery alone means $4/Bbl in capital costs alone. Shorter production lifetimes in some once promising frontier areas (deep GOM?) means much higher capital cost per Bbl. Likewise--higher interest rates also drive up costs.
All this givesOPEC (SA) leverage to raise the price. Production investments and costs are so low in the middle east as to be insignificant once the wells are on stream.
All this givesOPEC (SA) leverage to raise the price. Production investments and costs are so low in the middle east as to be insignificant once the wells are on stream.
It's quite ironic albeit logical that OPEC is modeled after the Texas Railway Commission, an organization which performed exactly the same function, namely, to control the price and availability of oil.
All the Saudis have is oil and that oil is a finite resource. Once it's gone, it's back to herding goats. This is a powerful weapon for terrorists. Dollars to doughnuts, AQ is planning to cut some Saudi pipelines.
All the Saudis have is oil and that oil is a finite resource. Once it's gone, it's back to herding goats. This is a powerful weapon for terrorists. Dollars to doughnuts, AQ is planning to cut some Saudi pipelines.
Have We Reached Peak Oil Already?
Why 2004 Will Be Remembered as the Year World Oil Production PeakedBy Keith Miller Mr. Miller, who holds a Ph.D. in history, is a Member of the Council of Energy Advisors, auspices Gerson Lehrman Group (New York City).
Mr. Hubbert, we should have listened. In 1957 M. King Hubbert (1903-1989) predicted in a publication of the American Petroleum Institute, Drilling and Production Practice (p. 17), that the peak of world oil output would come "about the year 2000." And it has. As Richard A. Kerr stated in "The Next Oil Cirisis Looms Large--and Perhaps Close," Science 281 (21 August 1998): "the gush of oil from wells around the world will peak at 80 million barrels per day, then begin a steady, inevitable decline . . ." (p. 1128).
That prognostication, by way of a paraphrase of a report of the Paris-based International Energy Agency (IEA), was not expected to come true, however, until sometime between 2010 and 2020, but I believe that the world's oil production peak has been reached in recent weeks. Why? The answer derives from Tim Appenzeller's "The End of Cheap Oil," National Geographic 205 (June 2004): demand for oil globally is "now 80 million barrels a day, [and] continues to grow, . . ." (p. 90). And, from Bhushan Bahree's "OPEC Is Likely to Lift Ceiling of Its Oil Production by 11%," Wall Street Journal (3 June 2004) comes the following: "a world market now consuming 80 million barrels daily" (p. A2). The implication is crystal clear--if the people on planet earth are now consuming 80 million barrels per day--some 29 billion barrels per year--then we must be at the peak in world oil production, as forecast by the IEA back in the spring of 1998, information utilized by Kerr in his article. And, then too, we're back to Hubbert!
But can we accept the predictive worth of the Hubbert Curves, being bell-shaped for plotting the rise, peak, and then inevitable decline of a nonrenewable and finite resource, such as oil? Yes, we can, because the Hubbert model has already been successful in giving the year for the peak oil output in the lower 48 states, as of 1970. Furthermore, the author is not alone in stating that the peak for world oil production was to come in 2004. J. D. Moody, a former president of the American Association of Petroleum Geologists, has designated the same year 2004; see John D. Edwards, "Twenty-FIrst-Century Energy: Decline of Fossil Fuel, Increase of Renewable Nonpolluting Energy Sources," in Petroleum Provinces of the Twenty-First Century, ed. Marlan W. Downey, Jack C. Threet, and William A. Morgan, AAPG Memoir 74 (Tulsa: American Association of Petroleum Geologists, 2001), p. 28. Moreover, one Colin J. Campbell, forty years and more in the oil industry, holding a doctorate in geology from the University of Oxford, then having worked for Texaco as an exploration geologist, next for Amoco as its chief geologist in Ecuador, gave 2003 as the peak year for global oil. See for that his "Accessible Oil Reserves Are Running Out," in Opposing VIewpoints: Energy Alternatives, ed. Helen Cothran (San Diego: Greenhaven Press, 2002), p. 28:
The lines of discovery, consumption, and extraction are bearing down on one another and will inevitably cross, probably in the year 2003; at that point, the world will pass its peak production of oil, meaning that more than half of the world's finite supply of conventional oil [easily producible] will have been extracted and consumed.
We, the peoples of the world, per Campbell's prediction, prolonged the inevitable by only one year! There are other indirect indications of the truth of my assertion and that of Moody's, three of which are presented next. Matthew R. Simmons, chairman and CEO of Simmons & Company International (Houston, Texas), being a major energy-investment bank (dating from 1974), with Mr. Simmons too on the National Petroleum Council, as of the 2000-2001 year, states in his "2003's Constant Surprises May Not Be Finished," World Oil (February 2004): "Despite exceptionally high oil prices for the fourth consecutive year no serious surge in oil supplies resulted" (p. 23). And, second, from "Inventory Data Help Oil Claw Back Some Losses," Financial Times (1 July 2004): "Ali Naimi, Saudi Arabian oil minister, said he believed oil prices were fair [at $35.00 per barrel] and saw no reason either to raise or lower production from current 9.1 m [million] barrels a day" (p. 29). The fact really is that even Saudi Arabia, the one country in the world, which at present supposedly has some excess capacity for increased production, has little leeway for additional output either. Thirdly, as Bruce Stanley reports in "OPEC to Cover for Lost Exports," Philadelphia Inquirer (17 June 2004): Russia and Norway, the second and third leading exporters of oil, after Saudi Arabia, "could do little to help" (p. C2).
Burgeoning demand globally has brought upon us the peak then. Ponder, if the reader will, an excerpt from an editorial in the Financial Times, headed, "Is There a New Floor Price for Oil?" (July 2, 2004):
the latest surge in oil prices has been driven by demand far more than previous oil-price spikes that were caused by supply constraints or fears, such as the 1974 Arab oil boycott, the 1979 Iranian revolution, the 1991 Gulf war and supply problems in 2000 following the 1998 oil-price crash. Nor has the growth in oil demand been confined to booming China and ever-profligate America. The global economic recovery is spurring oil demand in Latin America, India and Europe [p. 12].
A little boy in the story for children has the temerity to point out the emperor actually had no clothes. We are in much the same condition in terms of oil and its peak. Only a very few of us, including myself here, are bold enough to speak out. Namely, that with world oil production at the apex of the Hubbert Curve there is nowhere to go but down! What that means can be expressed in a twofold manner. One, that while oil is not running out (at least yet), it will never be so abundant in the future as to be cheap. That amounts to both a challenge and an opportunity. What would they be? Specifically, while making use of the dwindling supplies of conventional oil worldwide, as best we are able, turn to alternative sources of energy more so than in the past, for they will become, if not already, increasingly cost-effective vis-a-vis oil.
http://hnn.us/articles/5997.html
Mr. Hubbert, we should have listened. In 1957 M. King Hubbert (1903-1989) predicted in a publication of the American Petroleum Institute, Drilling and Production Practice (p. 17), that the peak of world oil output would come "about the year 2000." And it has. As Richard A. Kerr stated in "The Next Oil Cirisis Looms Large--and Perhaps Close," Science 281 (21 August 1998): "the gush of oil from wells around the world will peak at 80 million barrels per day, then begin a steady, inevitable decline . . ." (p. 1128).
That prognostication, by way of a paraphrase of a report of the Paris-based International Energy Agency (IEA), was not expected to come true, however, until sometime between 2010 and 2020, but I believe that the world's oil production peak has been reached in recent weeks. Why? The answer derives from Tim Appenzeller's "The End of Cheap Oil," National Geographic 205 (June 2004): demand for oil globally is "now 80 million barrels a day, [and] continues to grow, . . ." (p. 90). And, from Bhushan Bahree's "OPEC Is Likely to Lift Ceiling of Its Oil Production by 11%," Wall Street Journal (3 June 2004) comes the following: "a world market now consuming 80 million barrels daily" (p. A2). The implication is crystal clear--if the people on planet earth are now consuming 80 million barrels per day--some 29 billion barrels per year--then we must be at the peak in world oil production, as forecast by the IEA back in the spring of 1998, information utilized by Kerr in his article. And, then too, we're back to Hubbert!
But can we accept the predictive worth of the Hubbert Curves, being bell-shaped for plotting the rise, peak, and then inevitable decline of a nonrenewable and finite resource, such as oil? Yes, we can, because the Hubbert model has already been successful in giving the year for the peak oil output in the lower 48 states, as of 1970. Furthermore, the author is not alone in stating that the peak for world oil production was to come in 2004. J. D. Moody, a former president of the American Association of Petroleum Geologists, has designated the same year 2004; see John D. Edwards, "Twenty-FIrst-Century Energy: Decline of Fossil Fuel, Increase of Renewable Nonpolluting Energy Sources," in Petroleum Provinces of the Twenty-First Century, ed. Marlan W. Downey, Jack C. Threet, and William A. Morgan, AAPG Memoir 74 (Tulsa: American Association of Petroleum Geologists, 2001), p. 28. Moreover, one Colin J. Campbell, forty years and more in the oil industry, holding a doctorate in geology from the University of Oxford, then having worked for Texaco as an exploration geologist, next for Amoco as its chief geologist in Ecuador, gave 2003 as the peak year for global oil. See for that his "Accessible Oil Reserves Are Running Out," in Opposing VIewpoints: Energy Alternatives, ed. Helen Cothran (San Diego: Greenhaven Press, 2002), p. 28:
The lines of discovery, consumption, and extraction are bearing down on one another and will inevitably cross, probably in the year 2003; at that point, the world will pass its peak production of oil, meaning that more than half of the world's finite supply of conventional oil [easily producible] will have been extracted and consumed.
We, the peoples of the world, per Campbell's prediction, prolonged the inevitable by only one year! There are other indirect indications of the truth of my assertion and that of Moody's, three of which are presented next. Matthew R. Simmons, chairman and CEO of Simmons & Company International (Houston, Texas), being a major energy-investment bank (dating from 1974), with Mr. Simmons too on the National Petroleum Council, as of the 2000-2001 year, states in his "2003's Constant Surprises May Not Be Finished," World Oil (February 2004): "Despite exceptionally high oil prices for the fourth consecutive year no serious surge in oil supplies resulted" (p. 23). And, second, from "Inventory Data Help Oil Claw Back Some Losses," Financial Times (1 July 2004): "Ali Naimi, Saudi Arabian oil minister, said he believed oil prices were fair [at $35.00 per barrel] and saw no reason either to raise or lower production from current 9.1 m [million] barrels a day" (p. 29). The fact really is that even Saudi Arabia, the one country in the world, which at present supposedly has some excess capacity for increased production, has little leeway for additional output either. Thirdly, as Bruce Stanley reports in "OPEC to Cover for Lost Exports," Philadelphia Inquirer (17 June 2004): Russia and Norway, the second and third leading exporters of oil, after Saudi Arabia, "could do little to help" (p. C2).
Burgeoning demand globally has brought upon us the peak then. Ponder, if the reader will, an excerpt from an editorial in the Financial Times, headed, "Is There a New Floor Price for Oil?" (July 2, 2004):
the latest surge in oil prices has been driven by demand far more than previous oil-price spikes that were caused by supply constraints or fears, such as the 1974 Arab oil boycott, the 1979 Iranian revolution, the 1991 Gulf war and supply problems in 2000 following the 1998 oil-price crash. Nor has the growth in oil demand been confined to booming China and ever-profligate America. The global economic recovery is spurring oil demand in Latin America, India and Europe [p. 12].
A little boy in the story for children has the temerity to point out the emperor actually had no clothes. We are in much the same condition in terms of oil and its peak. Only a very few of us, including myself here, are bold enough to speak out. Namely, that with world oil production at the apex of the Hubbert Curve there is nowhere to go but down! What that means can be expressed in a twofold manner. One, that while oil is not running out (at least yet), it will never be so abundant in the future as to be cheap. That amounts to both a challenge and an opportunity. What would they be? Specifically, while making use of the dwindling supplies of conventional oil worldwide, as best we are able, turn to alternative sources of energy more so than in the past, for they will become, if not already, increasingly cost-effective vis-a-vis oil.
http://hnn.us/articles/5997.html
Cheney and Peak Oil
The following comes from a speech given by Cheney in 1999. Note his line, "Oil remains fundamentally a goverment business."
http://www.peakoil.net//Public...D.pdf
"In the April 2004 issue of the magazine the Middle East I found a statement that Vice- President d!ck Cheney had made in a speech at the London Institute of Petroleum Autumn lunch in 1999 when he was Chairman of Halliburton. A key passage from his speech was: “That means by 2010 we will need on the order of an additional fifty million barrels a day.”It suggested that he was fully aware of the issue of peak oil. A full text of the talk had been available on the website of the Institute of Petroleum, but has now been removed (wwww.petroleum.co.uk/speeches.htm). Nevertheless, further research did bring to light a printed version, dated 24.08.00, as follows:d!ck Cheney: “From the standpoint of the oil industry obviously - and I'll talk a little later on about gas - for over a hundred years we as an industry have had to deal with the pesky problem that once you find oil and pump it out of the ground you've got to turn around and find more or go out of business. Producing oil is obviously a self-depleting activity. Every year you've got to find and develop reserves equal to your output just to stand still, just to stay even. This is as true for companies as well in the broader economic sense it is for the world. A new merged company like Exxon-Mobil will have to secure over a billion and a half barrels of new oil equivalent reserves every year just to replace existing production. It's like making one hundred per cent interest; discovering another major field of some five hundred million barrels equivalent every four months or finding two Hibernias a year. For the world as a whole, oil companies are expected to keep finding and developing enough oil to offset our seventy one million plus barrel a day of oil depletion, but also to meet new demand. By some estimates there will be an average of two per cent annual growth in global oil demand over the years ahead along with conservatively a three per cent natural decline in production from existing reserves. That means by 2010 we will need on the order of an additional fifty million barrels a day. So where is the oil going to come from? Governments and the national oil companies are obviously in control of about ninety per cent of the assets. Oil remains fundamentally a government business. While many regions of the world offer greet oil opportunities, the Middle East with two thirds of the world's oil and the lowest cost, is still where the prize ultimately lies, even though companies are anxious for greeter access there, progress continues to be slow."
Smoking gun?
http://www.peakoil.net//Public...D.pdf
"In the April 2004 issue of the magazine the Middle East I found a statement that Vice- President d!ck Cheney had made in a speech at the London Institute of Petroleum Autumn lunch in 1999 when he was Chairman of Halliburton. A key passage from his speech was: “That means by 2010 we will need on the order of an additional fifty million barrels a day.”It suggested that he was fully aware of the issue of peak oil. A full text of the talk had been available on the website of the Institute of Petroleum, but has now been removed (wwww.petroleum.co.uk/speeches.htm). Nevertheless, further research did bring to light a printed version, dated 24.08.00, as follows:d!ck Cheney: “From the standpoint of the oil industry obviously - and I'll talk a little later on about gas - for over a hundred years we as an industry have had to deal with the pesky problem that once you find oil and pump it out of the ground you've got to turn around and find more or go out of business. Producing oil is obviously a self-depleting activity. Every year you've got to find and develop reserves equal to your output just to stand still, just to stay even. This is as true for companies as well in the broader economic sense it is for the world. A new merged company like Exxon-Mobil will have to secure over a billion and a half barrels of new oil equivalent reserves every year just to replace existing production. It's like making one hundred per cent interest; discovering another major field of some five hundred million barrels equivalent every four months or finding two Hibernias a year. For the world as a whole, oil companies are expected to keep finding and developing enough oil to offset our seventy one million plus barrel a day of oil depletion, but also to meet new demand. By some estimates there will be an average of two per cent annual growth in global oil demand over the years ahead along with conservatively a three per cent natural decline in production from existing reserves. That means by 2010 we will need on the order of an additional fifty million barrels a day. So where is the oil going to come from? Governments and the national oil companies are obviously in control of about ninety per cent of the assets. Oil remains fundamentally a government business. While many regions of the world offer greet oil opportunities, the Middle East with two thirds of the world's oil and the lowest cost, is still where the prize ultimately lies, even though companies are anxious for greeter access there, progress continues to be slow."
Smoking gun?
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The last U.S.president who tried to do the right thing on energy was Jimmy Carter--and he lasted one term. Since then, no one has the guts to face the issue--or the federal deficits, unfunded Fed Pension liabilities, unfunded corporate pensions, unfunded Social Security liabilities, etc. The ultra-rich get richer, the 'upper and middle class' get fewer in number and less 'upper', and eveybody else sinks farther down toward abject poverty. Since this 'great experiment' was founded, and until a decade or two ago, the middle and upper middle class was growing and really improving their lot in life. The number of abject poor was shrinking, and low income people were getting better food, medical care, and education that enabled them and their children to climb up. The energy shortage that is upon us will ravage all save the ultra-rich--who will buy up the capital goods and productive capacity in bankruptcies for $0.05 on the dollar and start yet another cycle of wealth concentration. The only deviation from this oft told tale has been the explosive emergence of intelluctual capital and tremendous amount of money it generated (Microsoft, Apple, Dell, etc.) The ultra-wealth cannot allow that dispersion of wealth and increase in middle class economic power to continue unchecked--their class prospers most when panic, fear, disillusionment are pervasive.
Who ALLOWED Delta airlines to accumulate unfunded pension liabilities equal to 4 times their entire market value--and still declare profits and pay dividends and interest on borrowed money? Note--every Delta shareholder would have to cough up 4 times the value of their Delta stock and give it to the company pension fund to bring it to fiscal solvency. Talk about an underwater stock!!
Who ALLOWED Delta airlines to accumulate unfunded pension liabilities equal to 4 times their entire market value--and still declare profits and pay dividends and interest on borrowed money? Note--every Delta shareholder would have to cough up 4 times the value of their Delta stock and give it to the company pension fund to bring it to fiscal solvency. Talk about an underwater stock!!
Great post Texas.
In reference to my Cheney post, it could be said that now he is in control oil has become a goverment enterprise. Talk about letting the fox into the hen house. If you read the entire article, it is astounding that Cheney in effect lobbied oil co.s to become lobbiers. What I wouldn't give to know what was said during those secret energy meetings. You know Iraq was certainly discussed as Cheney alluded to it in 1999.
Remember Ford's "Win" buttons? The economy was already screwed.
In reference to my Cheney post, it could be said that now he is in control oil has become a goverment enterprise. Talk about letting the fox into the hen house. If you read the entire article, it is astounding that Cheney in effect lobbied oil co.s to become lobbiers. What I wouldn't give to know what was said during those secret energy meetings. You know Iraq was certainly discussed as Cheney alluded to it in 1999.
Remember Ford's "Win" buttons? The economy was already screwed.
Oil Breaks $41
OPEC's decision to up production by 500kbpd does little to ease CL price.
Caught a snippet on the news last night of another Iraqi pipeline cut.
http://biz.yahoo.com/ts/040716/10171637_2.html
Caught a snippet on the news last night of another Iraqi pipeline cut.
http://biz.yahoo.com/ts/040716/10171637_2.html