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To: Gerald Walls who wrote (101693)	3/28/2000 5:39:00 PM
From: GVTucker	Read Replies (1) \| Respond to of 186894

Gerald, RE: I guess we'll just have to see. I personally have a hard time believing that the OPECers would not maintain their oil fields just because they're not pumping at that exact time. Miners put their mines in maintenance mode when they curtail operations. Are you saying that can't be done with oil fields? No, I'm saying that continual exploration is needed just to maintain a certain level of production. Individual wells' production declines over time. Other wells are needed in order to maintain production levels. Most of the OPEC nations have not had excessive cash flow recently. Some have not even maintained their existing production base (what you're referring to) and thus are seeing their capacity actually decline. Note that Iran is not in agreement with the 1.7mm bbl increase. That is because Iran cannot increase its production at all regardless. Reports say that the OPECers have decided to increase production by 1.7 million barrels per day without the approval of Iran. If so, this will increase the friction by breaking up the consensus and will encourage cheating. Of course, if you're right and the OPECers just turned off their pumps and didn't maintain them then they can't pump any more oil anyway. Actually, that 1.7mm bbls includes Iran. The ex-Iran increase is 1.452mm bbls. If you include the current level of production in excess of existing quotas, this translates to a real increase in OPEC production of about 250,000 bbls. And again, I'm not maintaining that OPEC hasn't kept up maintenance at existing wells (although for some members this is true). Instead, I primarily am saying that exploration in the Middle East has been minimal, and thus production capacity has declined with the normal decline rate of existing production. In addition, there's nothing OPEC can do about the near shortage of natural gas that will occur here this year. And it would take a little while to construct a pipeline from the Middle East to the US.