User 161473

Pay Attention to Oil Decline Rates

Jim,

Another good article!

When we talk about technology in the oil business it usually revolves around technology to get the oil out of the ground faster. We have gotten much better at bringing production up from new wells quickly. Additionally, much of the technology is involved in keeping production from declining. I think most people are under estimating the decline rates by a wide margin. This issue has the potential to catch people off gaurd. Look at Cantrell and the North Sea. As you mentioned Saudia Arabia has gone from 3% to 13%....what happens when you get to 20%-30%.

Thanks,
Don

The Brightest Stars in the Commodities Boom, Part I

Mark,

You always have good comments.

I wanted to say a few things about coal. One thing you didn't mention(at least I think you didn't mention) was the price of Nat Gas which is the direct competition for coal. As nat gas prices go up, so will demand for coal as utitilities switch to the cheapest generation input further pushing up prices.

I think everyone is starting to realize that all energy sources are interconnected(oil, gas, coal) When we have shortages of one it pushes up the price of others. Currently oil companies are having a difficult time in finding new places to drill where the hurdle rate makes sense. At some point they are going to have to start drilling or buying other energy companies. If you look at a coal company as an energy company such as an oil company is an energy company, you could come up with higer valuation. I know this is kind of twisted logic especially when you look at earnings but here is an example. Peabody(BTU) has more reserves in the ground than Exxon does in terms of BTU's. The market cap of Exxon is $450 billion vs. $20 billion for Peabody. Every year Exxon's production is declining with not much hope of ever stopping it. Would XOM be willing to pay $30 billion (50% premium) to double it's reserves in terms of BTU's? What should we value future coal reserves if believe worldwide oil production will start to decline soon?

Thanks,
Don

Saudi Oil Meeting Scenarios

Jim,

Good comments. You presented a few scenarios for prices over the next 6 months to a year. I like to look at these things in terms of probability. What is the likelihood that the Saudi's will convince the rest of the world of their oil reserves, what is the likelihood that demand will reduce enough worldwide to push prices down, what is the likelihood of a conspiracy of short sellers led by Saudi Arabia pounding on prices. All of these things are possible but none are likely. Everyday we consume about 86 million barrels. Day in and day out. Matt Simmons was asked about production possibilities around the world such as deep water and the arctic. He said it is unlikely we will ever have enough drilling rigs to make a difference and who wants to live in the arctic.

Thanks,
Don

Investing Into the End of the Hydrocarbon Age

Jim,

Another good article. The amount of money that is going to go to oil exploration over the next ten years is going to be astronomical. Matt Simmons thinks it will be over a trillion dollars which the bulk of it going to maintaining the current infrastructure. How many solar panels could we produce with a trillion dollars? How many wind turbines, geothermal plants, ect with a trillion dollars? At what point do we start to view the entire energy complex different?

Global Net Oil Exports in Decline

Hi Jim,

I pretty much agree with your comments about ELM. Overall the ELM will prove to be correct, it is just a question of timing. Jeff and Khebab have done a good job with this model because it has raised awareness of the issue. You mentioned the production coming online in 2008 form the megaprojects website, you have to concede probably 40% of supposed production gets delayed. What is scary about the megaprojects website is there is not much coming on line after 2011. Should you value energy assets to production levels out 3 years?

Is the Peak Oil Theory Valid?

Pety,

I am blown away. With that model you should go short oil

The Tellurium Supernova Has Erupted

Mark,

Great Article!

I have a question for you. How does thin film efficiency hold up over time vs. silicon cells. I have heard over time (epecially in very hot climates) thin film warps and the efficiency goes down. I would appreciate any thoughts on this.

Thanks

Brother, Who Can Spare Another Dime for Oil?

Philip,

I have read some of your other articles and you seemed to be convinced the only reason oil is this high is becuase of specutlators. For three years world wide oil productions has remained flat even though billions have been spent. Specualtors are in this market for a reason. This is not a tempory problem and specuators along with all natural buyers may never go away.

Here is a list of people who think we have a problem with production, all of these people think we will never get above 100 millon barrels a day, most think we won't even get above 90:

1)Jim Mulva (CEO Conoco Philips)
blog.foreignpolicy.com...

2)Christophe de Margerie (CEO Total)
www.davidstrahan.com/b...

3)Jim Buckee (CEO Tailsman Energy)
www.energybulletin.net...

4)Faith Brohil (Chief Economists IEA)
energybulletin.net/313... and independent.co.uk/news... www.davidstrahan.com/b...

5)Salad Al-Huseni (Former Head of Production Saudi Aramco)
www.davidstrahan.com/b... Listen to audio
www.nytimes.com/2005/0... Page 8

6)James R. Schlesinger (Former Head of CIA)
globalpublicmedia.com/... trascript U.S. senate committee

7)Franco Barnabe (CEO of ENi Italy)
www.greatchange.org/ov...
sandersresearch.com/in...

8)Mike Bowlin(Former CEO of ARCO)
www.energybulletin.net...
www.oregonpublichealth...

9)Helge Lund (CEO Statoil Norway)
www.dn.no/forsiden/ene... need to change to english

10)Shokri Ghanem (CEO Libyan NOC)
www.energycompass.com/... click on the presentation

11)Jeroen Van der Veer (CEO Shell Oil)
www.energybulletin.net...

12)John Hess (CEO Hess Energy)
www.pennenergy.com/dis...

13)Rick Wagoner (CEO General Motors)
www.energybulletin.net...

14)Robin West (CEO PFC Energy)
www.davidstrahan.com/b... Listen to audio

15)Richard Branson (Virgin)
www.davidstrahan.com/b... Listen to audio

Two Explanations for Surging Oil Prices

Hi Fred S,

Here are some website addresses for documentation of these people’s thoughts on possible production limits. It is fairly easy to look on Google to find if any of these people have ever made comments about production limits. One of the websites is from David Strahan who is a reporter in the U.K.. Another good website is www.energybulletin.net....

I wasn't trying to give a fair and balanced arguement. There are hundreds more nay-sayers than the people who believe we have a production problem, the list would be huge. If we had more people that believed in peak oil we would see a fundamental shift in energy policy....and it is starting to happen

1)Jim Mulva (CEO Conoco Philips)
blog.foreignpolicy.com...

2)Christophe de Margerie (CEO Total)
www.davidstrahan.com/b...

3)Jim Buckee (CEO Tailsman Energy)
www.energybulletin.net...

4)Faith Brohil (Chief Economists IEA)
energybulletin.net/313... and independent.co.uk/news... www.davidstrahan.com/b...

5)Salad Al-Huseni (Former Head of Production Saudi Aramco)
www.davidstrahan.com/b... Listen to audio
www.nytimes.com/2005/0... Page 8

6)James R. Schlesinger (Former Head of CIA)
globalpublicmedia.com/... trascript U.S. senate committee

7)Franco Barnabe (CEO of ENi Italy)
www.greatchange.org/ov...
sandersresearch.com/in...

8)Mike Bowlin(Former CEO of ARCO)
www.energybulletin.net...
www.oregonpublichealth...

9)Helge Lund (CEO Statoil Norway)
www.dn.no/forsiden/ene... need to change to english

10)Shokri Ghanem (CEO Libyan NOC)
www.energycompass.com/... click on the presentation

11)Jeroen Van der Veer (CEO Shell Oil)
www.energybulletin.net...

12)John Hess (CEO Hess Energy)
www.pennenergy.com/dis...

13)Rick Wagoner (CEO General Motors)
www.energybulletin.net...

14)Robin West (CEO PFC Energy)
www.davidstrahan.com/b... Listen to audio

15)Richard Branson (Virgin)
www.davidstrahan.com/b... Listen t

Two Explanations for Surging Oil Prices

Great article!!!!

Here is a list of people who think we have a problem with production, all of these people think it will be very difficult to get above 100 millon barrels a day, most think we won't even get above 90:

1)Jim Mulva (CEO Conoco Philips)
2)Christophe de Margerie (CEO Total)
3)Jim Buckee (CEO Tailsman Energy)
4)Faith Brohil (Chief Economists IEA)
5)Salad Al-Huseni (Former Head of Production Saudi Aramco)
6)James R. Schlesinger (Former Head of CIA)
7)Franco Barnabe (CEO of ENi Italy)
8)Mike Bowlin (Former CEO of ARCO)
9)Helge Lund (CEO Statoil Norway)
10)Chokri Ghanem (CEO Libyan NOC)
11)Jeroen Van der Veer (CEO Shell Oil)
12)John Hess (CEO Hess Energy)
13)Rick Wagoner (CEO General Motors)
14)Robin West (CEO PFC Energy)
15)Richard Branson (Virgin)
16)Vagit Alekperov (CEO Lukoil)