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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: quehubo who wrote (28766)	1/5/2004 6:07:53 PM
From: excardog	Read Replies (1) \| Respond to of 206316

Plan now for a world without oil By Michael Meacher Published: January 5 2004 4:00 \| Last Updated: January 5 2004 4:00 Four months ago, Britain's oil imports overtook its exports, underlining a decline in North Sea oil production that was already well under way. North Sea oil output peaked at about 2.9m barrels per day in 1999, and has been predicted to fall to only 1.6m bpd by 2007. Even the discovery of the new Buzzard field, the biggest British oil find in a decade, with a total of some 500m barrels recoverable, will not alter by much the overall picture of dwindling resources. This prospect would not be so bleak were it not that similar trends are now becoming manifest around the globe. The three main oil-producing regions are Opec, the former Soviet Union, and the rest of the world. According to papers presented at the latest annual meetings of the Association for the Study of Peak Oil, Opec's future production is expected to peak in 2020 at about 40-45m bpd. Under-production in the former Soviet Union in the 1990s has been followed by a new surge in east Siberia and Sakhalin. Together with new discoveries in the Caspian, this will yield a peak of about 10m bpd in 2010. Combining the models for Opec, the former Soviet Union and the remaining 40 or more major oil-producing countries puts ultimate world oil recovery - past and future - at some 2,200bn barrels, with production peaking at about 80m bpd between 2010 and 2020. To this may be added non-conventional oil and other liquids brought into commercial production by the rising price as oil becomes more scarce. These include oil from coal and shale, bitumen and derived synthetics, heavy and extra-heavy oil, deep-water oil, polar oil and liquids from gas fields and gas plants. These sources, though at very much greater cost, could provide an ultimate recovery of about 800bn barrels and might peak in 2050 at around 20m bpd. But the combined model suggests a peak from all sources of about 90m bpd around 2015. Today we enjoy a daily production of 75m bpd. But to meet projected demand in 2015, we would need to open new oilfields that can give an additional 60m bpd. This is frankly impossible. It would require the equivalent of more than 10 new regions, each the size of the North Sea. Maybe Iraq with enormous new investments will increase production by 6m bpd, and the rest of the Middle East might be able to do the same. But to suggest that the rest of the world could produce an extra 40m barrels daily is just moonshine. These calculations place the coming oil crunch some time between 2010 and 2015, perhaps earlier. The reserves in the world's super-giant and giant oilfields are dwindling at an average rate of 4-6 per cent a year. No more big frontier regions remain to be explored except the north and south poles. The production of non-conventional crude oil has already been initiated at enormous cost in Venezuela's Orinoco belt and Canada's Athabasca tar sands and ultra-deep waters. Yet no major primary energy alternative can replace oil and gas in the short-to-medium term. The implications of this are mind-blowing, since oil provides 40 per cent of all traded energy and no less than 90 per cent of transport fuel. But not only are the motor vehicle and farming industries dependent on oil, so is national defence. Oil powers the vast network of planes, tanks, helicopters and ships that provide the basis of each country's armaments. It is hard to envisage the effects of a radically reduced oil supply on a modern economy or society. Yet just such a radical reduction is staring us in the face. The world faces a stark choice. It can continue down the existing path of rising oil consumption, trying to pre-empt available remaining oil supplies, if necessary by military force, but without avoiding a steady exhaustion of global capacity. Or it could switch to renewable sources of energy, much more stringent standards of energy efficiency, and a steady reduction in oil use. The latter course would involve huge new investment in energy generation and transportation technologies. The US response to this dilemma is very striking. The National Energy Policy report prepared by Dick Cheney, US vice-president, in May 2001 proposed the exploitation of untapped reserves in protected wilderness areas within the US, notably the Arctic National Wildlife Refuge in north-eastern Alaska. The rejection of this extremely contentious proposal forced President George W. Bush, unwilling to curb America's ever-growing thirst for oil, to go back on White House rhetoric and accept the need to increase oil imports from foreign suppliers. It was a fateful decision. It means that, for the US alone, oil imports, or imports of other sources of oil, such as natural gas liquids, will have to rise from 11m bpd to 18.5m bpd by 2020. Securing that increment of imported oil - the equivalent of total current oil consumption by China and India combined - has driven an integrated US oil-military strategy ever since. There is, however, a fundamental weakness in this policy. Most countries targeted as a source of increased oil supplies to the US are riven by deep internal conflicts, strong anti-Americanism, or both. Iraq is only the first example of the cost - both in cash and in soldiers' lives - of facing down resistance or fighting resource wars in key oil-producing regions, a cost that even the US may find unsustainable. The conclusion is clear: if we do not immediately plan to make the switch to renewable energy - faster, and backed by far greater investment than currently envisaged - then civilisation faces the sharpest and perhaps most violent dislocation in recent history. The writer was UK environment minister from 1997 to June 2003

To: quehubo who wrote (28766)	1/5/2004 8:28:51 PM
From: profile_14	Read Replies (2) \| Respond to of 206316

I am still in the bear camp, thinking that the cold will not strike as severely or last as long and that the market is discounting a large bearish number on Thursday -- see Robry's data and also pipeline receipts as well as baseline demand/supply. The bullish draws will reappear on January 15 with the report reflecting colder weather. Until then it is a gamble either way, IMHO. The options expire the following day. The XLE is way overextended from its 200 day MA by about 4 points. It will retrace. The OIH is waiting for an excuse to pull back, despite the bullish weather news. I think it can go higher, but it needs a breather. I also think we may be at the top of a trading range given the rapid rise. Did nothing today. My little PBR is up 35% in a month. ABV nearly 17%. ADRs are moving fast. It is scarry.

To: quehubo who wrote (28766)	1/6/2004 8:15:59 AM
From: Ed Ajootian	Read Replies (3) \| Respond to of 206316

que, The point I have been making for the past year or so, and continue to believe, is that the former link of high O&G commodity prices to rig counts has been substantially loosened. There is still a link but not as strong as it was previously. But you are right nonetheless, and I will try to restrict my comments here to E&P stocks forthwith. Regarding E&Ps, I have two situations in mind that may appeal to you. I have the impression that you are a fairly short-term trader. One is Remington Oil (REM), either the stock or the Feb calls. They have 4 large impact wells that were due to have hit TD by year-end, one an appraisal well on that potentially massive salt dome discovery they made last year, and the others are "deep shelf" wells with large pre-drill reserve estimates. Also, they do very little hedging, so they are a good commodity price play. They will have paid down substantially all of their debt by the time they announce 4Q, it will be interesting to see what they decide to do with their excess cash that builds up from getting $6 gas for awhile. The stock seems to be holding up very well which implies to me that the TA is no worse than neutral. The other play is not a North American play at all, but is no less exciting IMO. That is FX Energy (FXEN). They just announced that they are about 3 weeks from getting to TD on their well targeting a huge gas reservoir in Poland. They have the cash to drill about 4 more wells. Some pretty bright folks think that the geology under Poland may be an extension of the North Sea geology.