John that is true - the collapse in crude oil prices in '97/'98 precipitated the current shortage by discouraging exploration spending. i would contend however that even the current revival in capital spending will only put a minimal dent in the supply shortage. as a matter of fact, the petro geology of the whole planet is pretty accurately mapped by now, and there can be no doubt that there are no more major (>100m. bbl) and giant(>500m. bbl.)oil fields left to be discovered. at the moment we have a race going on whereby smaller and smaller fields are brought on-line, a process that is insufficient to effectively replace what is being used up. at current consumption/discovery rates, approximately 1 of every 4 barrels consumed is being replaced.
the only major oil producing region in the world where a reasonable slice of capacity could be added by capital spending of about $10-15 bn. is the Mid East, but even so, at current consumption growth rates this additional capacity (approximately 2m bbl/day) would be insufficient to meet demand within a year or two, and it would probably take 2 years to bring it into production, if the necessary work would be undertaken immediately (which incidentally is not the case).
here is a little overview of some of the bigger Norwegian fields which are past their Hubbert peak, and the rate at which their production has been declining (the Hubbert peak refers to the point at which 50% of a field's reserve has been pumped out - from that point onward, recovery progressively declines):
Field Peak Year Peak Production (b/d) Estimated Year 2000
Productio(b/d)
Statfjord * 1991 646,000 180,000
Gullfaks 1994 530,000 240,000
Oseberg 1994 502,644 280,000
Brage 1996 110,337 45,000
Ula 1992 133,000 20,000
as can be seen, the declines have been dramatic. the global Hubbert peak will be reached sometime between 2003 and 2007.
no doubt the oil companies will be blamed...-g- |
