World Petro Energy Overview

[VimyJ]

Sorry to sound alarming but forwarned is forarmed.

http://www.canada.com/national...age=2

[VimyJ]

China:

http://www.washingtontimes.com...r.htm

Beijing, China, Jul. 7 (UPI) -- China's oil imports will increase by 30 percent this year, and high demand over the next two years will help keep world oil prices high, energy experts said.

A Chinese oil official said the country's oil needs had been revised upward from a government estimate only two months ago, Radio Free Asia reported Tuesday.

Tian Chunrong, senior engineer at state-owned refining company Sinopec, said the country's oil imports could reach 120 million tons in 2004, while oil consumption would top 300 million tons.

Energy experts told RFA that Beijing's heavy investment in infrastructure would continue to fuel oil needs, and efforts to cool the economy would not decrease oil demand in the next year or two.

China's domestic oil production has not kept pace with its expanding economy, forcing Beijing to import oil. Power shortages have created demand for diesel generators and fuel to run them, and a surge in private ownership of cars has increased demand for motor fuel.

India:

http://www.financialexpress.co...64147

India’s imports during April-June 2004-05 registered a sharp growth of 30.69 per cent at $22,434.16 million against imports valued at $17,166.42 million in the first quarter of 2003-04. This was mainly due to a 44.69 per cent increase in oil imports during the period which rose to $6,622.05 million against imports worth $4,576.74 million in the comparable period of the previous fiscal.

[VimyJ]

A Sunday Read.

http://www.thestar.com/NASApp/...72154

[VimyJ]

http://biz.yahoo.com/rb/040728/markets_oil_8.html

[VimyJ]

A must read article.

Questions regarding the SA oil supply.

Damage occuring to SA fields as they try to back up talk with action.

http://beacon1.rjf.com/researc...1.pdf

[texasoil]

I helped design some water flood and sufrace production facilities for this field. They have been waterflooding for almost 20 years to keep formation pressure up so they do not have to 'pump' the oil up. The 'bottle brush' drilling is a common technique widely used to clean up the bore surface of the water injection wells and increase their acceptance rate. No matter how carefully one filters and treats the water used for injection, some material eventually gets through and tends to plug the injection well. Clean up is a simple and low cost procedure.

SOME early water flood activity in SA used salt water from a higher formation and merely 'dumped' it down hole into the lower oil formation. Unfortunately, that water was chemically incompatible with the rock in the oil formation and permanently plugged those injection wells. Much higher technology employed today.

BTW, even at the lowest estimate of remaining reserves, there is over 30 years life in the field at present rate.

We must remember today's 'high' oil price is strictly a politically supported one, and does not represent the average selling price, or relate to the true cost of discovering and bringing incremental production to market. There is LOTS of oil economically available (over time) at less that $30/Bbl.

[VimyJ]

Russia forced Yukos to take 1 mbpd of production off the world market and oil is at $43.34 as I write.

There is a demand component. Of that, there can be no doubt. Supplies are tight.

[VimyJ]

Texas, looks as if Ghawar is past its prime. The water cut is increasing dramaticly. We'll never know what the real data reads because they are SA state secrets.

http://home.entouch.net/dmd/ghawar.htm

[maxnix]

Interesting read about the decline in North Slope production, and the increasing use of high sulfur Basra Light and Venezuelan oil in refined products for WA, OR and northern CA.

http://seattletimes.nwsource.c....html

[VimyJ]

The crunch is coming. There will be increasing pressure to develope the Anwr field.

[VimyJ]

The Russian Bear being bearish. $60 CL futures.

http://www.economist.com/agend...62353

[Jesda]

I'm glad I ignored this thread.

[PalmerWMD]

Ryan, plz dont make me close this thread.Name calling is never acceptable here.

[VimyJ]

I'm glad I ignored this thread.

Jes, there is a wealth of information on this thread regarding the life blood of modern civilization. Ignore it at your peril. Forewarned is forearmed.

Do you you how much oil the US consumes per day?

How much of that oil comes from OPEC?

What are the reserves of US crude and what is their condition?

How much crude does the US import?

What are the major upward pressures on the price of crude?

Who is the largest foreign crude supplier to the US?

What nation is the second largest producer of crude oil?

The answers to these and many other questions can be found on this thread.

[VimyJ]

http://www.thestreet.com/_tscs....html

[VimyJ]

Where do you come down in the war against terrorism?

I am all for a united Western front against Islamic terrorism. The invasion and occupation of Iraq is about controling what remains of the world's conventional crude oil reserves.

The bushies clearly want a client state that won't mess with the flow of oil and, just as importantly, in what currency the world oil trade is conducted. Iraq, as you recall, refused to deal in greenbacks using the $E instead.

Unforetunately, the "Pax America" plan seems to be incredibly naive. Iraqi oil was supposed to pay for the whole adventure yet conditions are such that Iraq is pumping crude at levels below those prior to the invasion and no oil from the north is getting out at all because of sabotage to pipelines, etc. Iraq has been completely destabilized and insurgent/resistance/Islamic forces see conditions ripe for formenting terror and instability so that they might gain the power that was so ruthlessly denied them by the former Ba'athist regime. SH knew how the game is played in that region.

The end result is that there is more terrorism in the region than before and the "Free Iraq" will be tormented by it until a new despotic regime emerges (e.g. Shia theocracy) which will institute the very methods of control formerly used by the Ba'athists. I suppose the bushies won't really care what type of regime comes to power as long as they don't mess with the oil supply and it continues to be sold in US$.

I could go on but there is the war on terror and then there is the "War on Terror." The former I agree with but the latter is a bunch of BS yet still intimately tied to the overall world petro energy overview

[VimyJ]

Note that the article makes only passing reference to increased crude imports. The reference to inventories compares this year to last year yet not to historical norms that clearly show crude stockpiles are still much lower than normal. The writer also fails to mention that most of OPEC cannot even reach their production quotas or that China and India are also bidding on oil to feed their ever increasing demand needs or that conventional production from NA and the North Sea is declining fast. Terrorism is indeed a part of the current price of crude but so is demand on a tight supply situation.

Time for these "old school" analysts to start looking at the wider world, IMHO. The 1990s ended 4 years ago.

http://money.excite.com/ht/nw/....html

[VimyJ]

http://www.energyinst.org.uk/index.cfm?PageID=948

[VimyJ]

CL opened today above $44.

The cheap oil is gone.

[texasoil]

Vimy is absolutely correct that 'cheap oil' is gone forever. Until very recently, it has been valued by 'the market' a just high enough to economically justify the capital investments needed to find and produce future oil (the incremental barrel.) Today, there is an apparent shortfall in deliverability at last years price of $28/Bbl. Oil companies were not able to economically justify additional exploration and producing equipment expenses at those prices and the current tax environments. Besides, iif they could 'talk up' the reserves figure and defer exploration costs, current 'profits' would be higher and executive bonuses would soar--and they did. Shell got caught because they put out different numbers than their partners in a major field, and someone yelled TILT!. Now however, the 'cat is out of the bag', and stock analysts have egg on their face for not asking the right questions. Oil companies will redirect money from the current very high profits back into exploration and production facilities as fast as they can. The present $40+ oil price will not hold unless the strength of the dollar continues to decline. There is LOTS more economically recoverable oil available at $30/Bbl than last years planning number of $20/Bbl @ 18% ROI. Interest rate expectations play an extremely important role in evaluating oil exploration and production. The net present value of future oil production is drastically lowered by inflationary expectations. Now that economic meltdown from run-away inflation seems very unlikely, more moderate discount factors (expected inflation rates + real returns) will drop, and present day investments for future production will look much more attractive.

The real limitation is not actual oil available, the issue is 'how much under what economic assumptions?' Uncertainty (political, economic, regulatory, war, etc.) increases the 'risk premium' that is included in all the economic evaluations. Enough uncertainty shuts off the investment until prices rise enough, or things stabilize enough for the economic evaluations to make sense again.

[VimyJ]

Or you do what the majors have been quietly accomplishing: buying back their shares because they see how hugely undervalued they are given the end of the cheap oil and rising world demand on thin supply.

One of the major reasons Iraq was invaded was to prop up the greenback. The US is able to print money based upon global oil sales conducted in US currency. Iraq was dealing only in E$ before the invasion and Russia is seriously considering it. SA will have to take notice but they are in a bind because they have so much money tied up in the US. Can you say run away inflation? If that move away from the US$ ever comes to pass, the US will be utterly crushed by its foreign and domestic debt.

[DAEDALUS]

Oil is not the only thing weighing on the dollar. I think the dollar will break through support levels in the next few years, and go lower against the euro than it has ever been. Those with speculative tendencies might be interested in foreign currency CDs right now. Get them in euros, Aussie $, or even renminbi as a longshot lottery ticket.

[VimyJ]

Oil is not the only thing weighing on the dollar. I think the dollar will break through support levels in the next few years, and go lower against the euro than it has ever been. Those with speculative tendencies might be interested in foreign currency CDs right now. Get them in euros, Aussie $, or even renminbi as a longshot lottery ticket.

Should the greenback break through support levels as you reasonably suggest and the E$ becomes the dominant global currency then my doomsday scenario becomes even more likely.

The Loonie would probably be a good hedge as there are up to 1 trillion barrels of oil in the oil sands. It has already appreciated 25% in the last few months against the greenback.

The present administration is under assault on all fronts. Their "smash and grab" energy policy has been a complete failure and the economy is not in recovery to put it mildly.

[texasoil]

The U.S. is well blessed with other energy sources. Of course we can always build nuclear power plants, and should. The real big need is for alternative sources of transportation fuels--gasoline, diesel, and jet.

Electric ( hybrid) autos and busses will eventually make a dent there--say 10% max of our total oil demand over 10 years. Nuclear power plants--max capability of saving another 10% max possible, 5% realistic maximum savings of our oil and natuural gas--over a 20 year period. Advanced coal conversion to liquid fuels--maybe 5% of oil demand over 20 year period--limited by industrial capacity to construct plants. Advanced gas-to-liquid (GTL) plants may enable another 5% oil savings over 15 years, but where will the gas come from? overseas! so put this alternative at 2% max savings.

Oil from shale COULD be the big source, but the CO2 emissions issue from that conversion process is a real technical and economic challenge. There is also a major (fatal?) difficulty with water availability in the oil shale regions. Coal to liquids will probably have better economics and it is economically feasible to ship coal to conversion sites and duck the real water shortage obstacle in shale conversion.

ALL of the 'viable' alternate sources of transportation and power generation energy require massive capital investments. The size of the effort means it will take at least 2 decades of 'war effort' level of dedication to reduce our dependence on imported oil by 25%.

Let me say again--it will take 20 years of balls-to-the-walls effort from our entire industrial capacity to build the facilities for alternate energy sources needed to replace 25% of the imported oil. IF the investment required could be held to 'only' $100,000/daily Bbl (7-8 times today's oil development costs), to replace 3 MMB/d will require $300 TRILLION, or $1.5 trillion/year for 20 years (today's dollars). That is 15% of our entire GDP--just in DIRECT investment activity in additional energy production. If the usual economic multiplier of 5-7 is used ($1 in additional direct investment triggers another $5-7 in ancillary/supporting activity) we are talking about DOUBLING the total U.S. economy to meet this 25% reduction of oil imports in 20 years!

Anyone who really thinks this is going to happen with the present political climate is nuts.

Reality is we are going to suck up harder to the middle east rulers.

[texasoil]

I missed a decimal place in the above analysis--sorry. Annual investment required is only $1.5 Billion/yr. Still a very large number to put on top of present on-going investments, but very achievable--if we demand it.

[texasoil]

I was REAL foggy this morning and simply could not keep trackof decimal places ( did the numbers on a SLIDE RULE!

simple formLets see here--if for $100,000 investment we can develop 1 B/d of alternative capacity (that's 365 B/yr,) AND that company accepts a 10% ROI, then capital charges alone are 100,000/365 =about $27/Bbl of synoil. Now, it's gonna take another $10-$30/Bbl in operating and maintenance costs to run the facility, so the alternative oil will have to sell for at least $37-57/Bbl, assuming the resource is free. This is right in-line with the best GTL product transfer prices ($35/Bbl) today.

We import say 10 million B/D, or 3,650,000,000 B/yr. If we collected $10/Bbl of imports, that would give us $36.5 Billion/yr to invest in alternative energy source development. At $0.1 million/bbl/D of capital cost, the new oil tax would fund development of 365,000 B/D of alternative energy production capacity each year. In 10 years, we would have reduced our import needs by 1/3. Are we willing to pay an additional 23 cents per gal of oil today to fund this development? That's about a 10% average price increase at the retail level. It looks very attractive--which is why I believe OPEC will significantly reduce prices next year--to destroy the apparent attractiveness of alternative energy source development.

[VimyJ]

Some nice number crunching there, Texas. Slide rule? Whoa!

Quote » It looks very attractive--which is why I believe OPEC will significantly reduce prices next year--to destroy the apparent attractiveness of alternative energy source development. [/quote]There's the rub for the OPEC: They have no extra capacity with which to increase supply. The additional crude they are shipping is heavy sour crude that few refineries have the ability to process. The CL so in demand is becoming more scarce. One of only three refineries capable of handling this sour crude (BP) is down after a fire in the last couple of days. (A friend of mine was driving through NW Indiana and saw another refinery there on fire! So much for the excess of gasoline.)

Only a heavy recession will decrease demand (and therefore price) and the present administration seems hell bent on delivering that for us.

Change is coming and there is not much at all that can be done about it. Think of the $200 billion being wasted on a foolish energy project in the ME at this time. Iraq's former 2.5mbpd would be still be diluting price if someone hadn't clumsily stuck his foot in a steel trap (or is it a tar pit) from which it looks like the only escape is to chew off the trapped appendage.

[VimyJ]

Iranian oil industry executive interviewed.

http://www.abc.net.au/pm/content/2004/s1172404.htm

[VimyJ]

Unrest in S. Iraq has closed Iraq's southern oil terminal.

Yukos' 1.7mbpd in peril.

[VimyJ]

This article echos much of what I have described in the course of this thread.

http://bellaciao.org/en/articl...=2475