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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: Frank Pembleton who wrote (4146)	11/18/2001 5:12:57 PM
From: russwinter	Read Replies (1) \| Respond to of 36161

Yes, agreed that ultra low oil prices may be a temporary short term heroin fix for the world economy (and that seems to be what policy is all about these days), but does not come without an intermediate and long term cost. IMO oil needs to stay in the mid-20's and NG over $3 just for the complex to sustain itself. Even higher prices are necessary for long term corrective and substitution solutions. Ain't nothing good about these whipsaws. The geopolitical "challenge" of oil production, 72.0 mbd total Saudi Arabia: 8.6 mbd Iraq 2.6 UAE 2.5 Kuwait 2.0 Iran 3.5 Libya 1.4 Other ME 2.1 Total ME sources: 22.9 mbd or 31.9%, BUT 68% OF WORLD RESERVES Chokepoints: Strait of Hormuz at mouth of Persian Gulf: 15.4 mbd Bab el Mandeb at mouth of Red Sea: 3.3 Suez Canal: 3.1 Strait of Malacca, between Sumatra and Malaysa: 9.5 China * 3.2 mbd, consumption is 4.6: growing rapidly Japan no prod. consumption is 5.6 Note that Geo. Bush has had the following state leaders(buddies)to the White House in the last six months: Russia 6.2 Nigeria 2.2 Mexico 3.5 Other "secure" sources: US (NA) * 8.0 NA consumption is 23.6 mbd North Sea **** 6.0 Western Europe consumption is 14.4 Venz 3.3 * Not available to west as China will need that and more to support their economic engine. May use "dirty" coal. One of the last great unexplored fields is the South China Sea. China will go to war rather than let the west have more than a small percentage of the field. Has the greatest potential as a stop gap, with the Caspian Sea and fresh capital investment in antiquated infrastructure enabling increases in reserves and production. Is the Saudi "price war" about delaying this effort? * US production is in steady decline. Down 5% in 2000 and that was a GOOD year. **** North Sea production peaked early this year, and is now in decline. See Simmons October 18, 2001 report: simmonsco-intl.com