Joan, I am not sure the hydrocarbons landscape is as grim as that. I was led to believe that at $30/barrel, very large reserves of Canadian tar sands become profitable sources of hydrocarbons. Furthermore, I also believe that we are burning, flaring or reinjecting natural gas down hole in huge quantities, and if the industry can see a floor of $30/barrel, these can be converted to liquids or even transported in LNG vessels cost effectively. Last, I believe that the Germans during world war II used to the Fischer Tropsch process to convert coal (of which various estimates are around 500 years of supply) to liquid hydrocarbons, the SouthAfrican have survived an embargo on this process (Sasol), and today, a number of improved versions of this process exist. I actually think that the Opec cartel is keeping a ceiling of $30 on crude so as to prevent the development of these technologies rather than from the "good of their heart", since above $30/barrel, these technologies will be deployed and cut into Opec share of the market.
If these are correct, one can take the position that indeed $30 is the ceiling of crude and Opec will keep it bound between $25 and $30 if it can, and the market may bring it back down to $10, if Opec discipline starts and develop "cracks".
Zeev
Zeev |
