OilFinder

International Energy Association: Forced to Eat Their Optimistic Data on Future Oil Supply?

Their ability to produce 12 million barrels/day is very recent, being contingent upon projects completed just this year and last. But since demand is weak with the recession, to date they haven't NEEDED to produce that much.

The peak oil crowd loves to crow about Saudi's inconsistent production, but what they conveniently forget is that the Saudis are the swing producer. When demand goes up, they produce more. When demand goes down, they produce less. After the 1985-86 oil price crash they reduced production down to a measly 4 million bpd. That did not mean they were "past peak," they simply turned off the spigots in response to an oversupply of the stuff. Today, they aren't going to churn out 12 million bpd just for the sake of churning out 12 million bpd. In a market like this, they wouldn't be able to find buyers for all that extra oil - at least not without crashing the price of oil and pissing off their fellow OPEC members, neither of which they care to do.

On Nov 11 06:47 PM OFWHAP wrote:

> @Oilfinder
>
> At what point has Saudi Arabia ever produced 12.5 million barrels
> per day? They have been SAYING that they plan to produce that for
> 2009, but I have yet to find data that they have ever produced numbers
> that high.

International Energy Association: Forced to Eat Their Optimistic Data on Future Oil Supply?

That is only true for fields *past* their peak, and it is 5.1%, not 6%:
www.worldenergyoutlook...
^
Page 2:
"Based on data for 580 of the world's largest fields that have passed their production peak, the observed decline rate - averaged across all fields and weighted by their production over their whole lives - is 5.1%"

Not all fields are past their production peak.


On Nov 11 04:25 PM William Davison wrote:

> If current field depletion is 6% a year as the IEA has forecast and
> current conventional crude production is about 72mbd, then your 18.3mbd
> new supply is wiped out in 5 years and your 25mbd in 7 years. <br/>
>
> On Nov 11 01:37 PM OilFinder wrote:

International Energy Association: Forced to Eat Their Optimistic Data on Future Oil Supply?

@ OFWHAP and Tony,

Let's assume you're right and the Saudis are lying about how much oil they have. Let's say their claim of 700 billion barrels total oil resources is a complete fabrication. As as aside, that 700 Bbbl figure is from 2004 - thanks to increased recovery technology they're now thinking they can eventually bump that up to 900 Bbbl:
www.arabianoilandgas.c.../

But let's ignore that. Let's say their P1 reserves of ~260 Bbbl are actually more like their P3 reserves. That is, their total oil recoverable resources are 260 billion barrels instead of 700 billion barrels. What does this say about former Aramco engineer Saleri's claim in my link above?

Do the math.

12 million barrels/day = 4.38 billion bbl per year.
4.38 billion bbl for 50 years = 219 billion bbl.

Notice that is still 41 billion bbl less than our assumed P3 reserves of 260 billion bbl. So, the Saudis could pump 12 million bpd nonstop for 50 years and still have a Libya's worth of oil left over. And this assumes their production would be constant. If, as is likely, periods of slow demand force them to pump less for a while, this will only extend the time in which they are capable of pumping 12 million bpd, and delay their depletion. Maybe the last 10-20 years of this 50-year time span we might see them finally go into some declining state, probably gradually. And again, this is a pessimistic scenario.

There is also a lot more worldwide refining capacity for sour and heavy crudes than you think, nor is it a particularly new phenomenon. Most of the oil drilled from California's Kern County oil fields starting 100+ years ago has been 14-17 gravity oil - heavy stuff. Your typical North Slope crude has been 20 degree sour crude. Most oil from Venezuela going back to the 50's has been heavier grades of oil. And so on. Recently, prices of sour and heavy grades of crude have been rising relative to sweeter and lighter crude because of an excess of refining capacity geared toward refining such oils. Refiners are paying a relative premium for these oils just to keep their refineries going.

If all you do is read Matt Simmons and the ASPO website, you are going to be disappointed when world and Saudi oil production does not begin to crash when you expected it to.

@Willdebeest,
Yes, it is true that many of these new oil sources will be more expensive than in days past. However, claims of $100 prices as a requirement for Brazilian oil and Alberta oil sands are little more than peak oil hype. Petrobras has repeatedly told us their sub-salt fields will be profitable at $40:
www.laht.com/article.a...

As for the oil sands, the day when they have to spend gob of money ripping up the earth to extract the stuff will eventually be history:
www.edmontonjournal.co...
This will likely bring down costs, too.

We may not see $10 oil any time soon, but the world economy is not going to crash with $40-$70 oil, and such a price will bring us a lot more oil.

The Global Oil Scam: 50 Times Bigger than Madoff

You are correct, Phillip, in that there is no shortage of oil, nor will there be any shortages of oil for the foreseeable future. Read my last post here:
seekingalpha.com/artic...

International Energy Association: Forced to Eat Their Optimistic Data on Future Oil Supply?

The IEA is not being pessimistic on future oil supply.
Once you start adding up production plans you'll see why:

1. Iraq - Proudction will increase from the current 2+ million barrels/day to around 10 million barrels/day by 2020. That's at least +7 million barrels/day in new supply.
www.ft.com/cms/s/0/5bc...

2. Brazil - Production will increase from the current 2+ million barrels/day to around 5.7 million barrels/day in 2020. This does not include discoveries made and gone into production in the interim, of which there will be many:
www.thaindian.com/news...

So far we're at +10.5 million barrels/day

3. Angola - Figures from already-announced plans show an increase in production by 1.2 million barrels/day by 2015. This does not include discoveries announced in the interim or recent discoveries whose production plans have yet to be made.
www.reuters.com/articl...

So far we're at +11.7 million barrels/day in new supply.

4. Saudi spare capacity is currently around 4 million barrels/day:
www.thenational.ae/app...
And the former chief reservoir engineer at Saudi Aramco says they can sustain 12-14 million barrels/day output for 50 years:
www.saudi-us-relations...

So we're now at + 15.7 million barrels/day in new supply. Conservatively.

5. Canadian oil sands production will double by 2020. This is an addition of 1.6 million barrels/day:
www.bloomberg.com/apps...

Subtotal is now 17.3 million barrels/day in new supply by 2020.

6. Non-Nigerian West African coast. Recent discoveries off the coast of Ghana and Sierra Leone indicate a large new oil province opening up. The Ghana discovery will begin production late next year. There *will* be other discoveries in this area. Let's assume 1 million barrels/day production from this province by 2020.
www.ogj.com/index/arti...
blogs.wsj.com/environm.../
investors.hyperdynamic...

Subtotal is now 18.3 million barrels/day in new supply by 2020.

I could go on with more examples. Reaching 20 million barrels/day by 2020 would be easy. I might even get to 25 million barrels/day, especially if we make some reasonable assumptions about new discoveries off the coast of Brazil and Angola.

Now, what about declines?

Let's be extremely pessimistic and assume production from Mexico, the UK and Noway falls to ZERO. This loses you about 7 million barrels/day, but we're still ahead by at least 11 million barrels/day. At this point you would have to lose the entire production of Russia to get to a measly +1-2 million barrels/day, but of course that won't happen. And production from the UK, Norway and Mexico won't fall to zero, either.

I could write a much longer exposition on this, but you get the point. The IEA is not being optimistic. Heck, they might even be *pessimistic*.

Peak Oil: Still Headed for a Train Wreck

Where did my post(s) go?

Peak Oil: Still Headed for a Train Wreck

Oops, sorry for the duplicate post.

Unemployment Claims: Watch the Distortions

"The advance number of actual initial claims under state programs, unadjusted, totaled 480,178 . . ."

Nice way to mislead, Karl. Notice to readers: He is citing the UNADJUSTED number. Any good economic statistian knows there are seasonal variations in employment and other economic indicators which need to be taken into account for, otherwise you will get rises and falls which don't really reflect underlying economic conditions. By ignoring this fact and continuing to cite the UNADJUSTED numbers you are misleading your readers.

Petrobras: More Transparency Would Be Nice

OK here we go.

www.rigzone.com/news/a...

The test began on April 25. Production was suspended on July 6, and was resumed on September 5. By my count that's only 106 days of production.

264,000 / 106 days = 2,490 barrels/day. Not a big difference I suppose.

However, your article says they're processing the "first" 264,000 barrels. Does that mean *all* of the oil produced cumulatively through last Thursday? Or perhaps it was just the oil produced until the well was suspended? Or maybe some of the oil produced through some arbitrary date in September? That's not clear.

Also, if they had an equipment problem for the first 2+ months I would assume it wasn't producing at top capacity.

Petrobras: More Transparency Would Be Nice

Back in July Petrobras had an equipment failure at the production test well. Aparrently this was the fault of the manufacturer and production from the well had to be suspended for a couple months while they fixed it:
in.reuters.com/article...
About a month or so ago they resumed the test.

Natural Gas: Worst Investment Ever?

Almost nothing.

On Oct 07 08:31 AM hcm wrote:

> This is a geopolitical question. What happens to the price of NG
> if there is war with Iran?

More Oil Drawn Down: Gasoline Consumption Rises

This time last year gasoline and oil consumption were dramatically reduced by 2 major Gulf hurricanes. You can't compare the two.

How Much Natural Gas Remains in the USA?

Mark Anthony wrote:

"I believe we are facing a looming North American natural gas crisis. The currently known reserve is going to run out in 10 years."

BTW, I'm not usually a betting man, and I'm even less so a person who would want to make a 10-year bet, but I will bet you $5,000 that prediction will turn out to be wrong.

How Much Natural Gas Remains in the USA?

I think I'll just repeat what I wrote in Fitzy's thread.

1. Chesapeake Energy CEO McClellan doesn't just say the Haynesville shale will eventually produce 250 TCF of gas, he's actually guessing the thing will eventually churn out 1.5 quadrillion cubic feet;
www.rigzone.com/news/a...
>> "We think in time it will become the largest gas field in the world at 1.5 quadrillion cubic feet," he added. <<

I have reason to believe that. Somewhere recently I saw a log of a well drilled all the way down in southern Mississippi or Southern Alabama (I forget which) which encountered the Haynesville formation. It was quite deep down there (IIRC it was around 18k feet down), and there's no guarantee it will be as gas-prone as the area in NW Louisiana and NE Texas. Nonetheless, the fact that this thing extends much farther to the south and east than everyone is currently assuming tells me its reserve sizes are likely to get bigger over time.

2. There will be other Haynesville shales. Petrohawk is now telling us the Eagleford (or Eagle Ford) shale in southern Texas is looking as good as the Haynesville:
www.ogj.com/display_ar...
And like the Haynesville, the Eagleford extends a lot farther than these localized areas these companies are talking about. In Louisiana this shale - an Upper Cretaceous shale - is also called the Eutaw shale. Yes that's correct, this shale goes all the way over to Louisiana, and Mississippi too. My evidence can be found on the stratigraphic chart of page 4 of the following document:
www.lgs.lsu.edu/deploy...

3. Forget about the methane (natural gas) hydrates. While nice, what's more interesting is what's *below* the methane hydrates - usually lots of methane (natural gas) and often oil too. Methane hydrates are often formed by methane gases in undersea formations seeping to the surface where they solidify upon encountering cold waters. There is a large collection of methane hydrates in an area off the coast of the Carolinas:
marine.usgs.gov/fact-s...
^
"A pair of relatively small areas, each about the size of the State of Rhode Island, shows intense concentrations of gas hydrates. USGS scientists estimate that these areas contain more than 1,300 trillion cubic feet of methane gas, an amount representing more than 70 times the 1989 gas consumption of the United States. Some of the gas was formed by bacteria in the sediments, but some may be derived from deep strata of the Carolina Trough. The Carolina Trough is a significant offshore oil and gas frontier area where no wells have been drilled. It is a very large basin, about the size of the State of South Carolina, that has accumulated a great thickness of sediment, perhaps more than 13 kilometers. Salt diapirs, reefs, and faults, in addition to hydrate gas, may provide greater potential for conventional oil and gas traps than is present in other east coast basins."

Keep your fingers crossed that Obama and Salizer allow drilling off the coast of the Carolinas. I bet there's lots of goodies down there.

4. Finally, in addition to the Haynesville and Eagleford shales, there will be other large shales discovered that no one has poked any holes into yet. This is not just true of the US but also Canada, Mexico and the rest of the world for that matter. I have this one shale in mind in Utah and Nevada which, according to one thing I read, is a huge, thick shale with a very high organic content in parts. I'd be willing to bet this is another Haynesville, but no one's tested it yet.

In addition, there are many in Canada such as the aforementioned Horn River Shale, as well as many in the US yet to be explored extensively.

Fisking Scientific American on Peak Oil

>> "The treatment of California and Alberta in particular in the Sci-Am article was so misleading as to be a textbook example of statistical and polemical obfuscation. California oil production peaked in 1986 at over 1.2 Mb/day and is now at half that rate. To lead the reader into thinking that something new is coming for California is quite the dereliction of journalistic duty. Alberta has billions of bbls of oil but would that stop, for example, a US politician from claiming we can increase flows of tar sand oil quite alot, from Alberta? No, but one would have expected something better than a politician's approach to a real problem from a magazine that uses the word Science in its title." <<

1. Production from Alberta's tar sands is indeed north of 1 million barrels/day and will easily exceed California's peak production of 1.2 million barrels/day, if it already hasn't. So yes, even when talking about flow rates rather than reserve sizes, it is more than fair to compare the two.

2. There may well be more in store from the state of California, and it may arrive sooner than you think. I'm not sure it will enable California match its 1986 production rate, but on the other hand, even if technological innovations can let an otherwise declining area maintain constant production for an extended period of time, that in itself is testament to what technology can accomplish.

At any rate, some items from the oil fields of the Golden State to watch out for:
stocks.investopedia.co...
^
"An interesting exercise would be to extrapolate this discovery to the entire 1.1 million acres that Occidental has in California. A starting point to do that would be to find out how much acreage the six wells cover. Occidental wouldn't disclose this but when one analyst guessed it at 10% of the total, management would only say that the reserve acreage was "much smaller."

Obviously, there are many unknowns but it is safe to say that this is a multi-billion barrel discovery, and if a find like this could sit unknown for more than 100 years in a worked over area like California, just imagine how much else is out there."

----------------------...

And this, which should interest those familiar with North Dakota's Bakken shale play:
www.ogj.com/index/arti...
^
"Denver independent Venoco Inc. sees 2010 as the year it begins to exploit California’s Miocene Monterey shale in earnest and believes more than 10 billion bbl of original oil in place exist on its onshore acreage.

The Monterey shale play is only now emerging, but the formation may hold the largest shale resource in the US with 300 billion bbl in place, said Timothy Marquez, Venoco chairman and chief executive officer. Monterey holds more than 2 billion bbl on its leases, Venoco estimated.

Venoco, which began geologic studies on the Monterey 4 years ago, has now amassed 200,000 prospective acres and is still leasing onshore. The package includes offshore leases held by production from other formations or not producing and nonproducing onshore acreage."

Stay tuned, :-)