Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Let's Talk About Our Feelings!!! -- Ignore unavailable to you. Want to Upgrade?

To: Grainne who wrote (95663)	2/6/2005 8:15:15 AM
From: epicure	Read Replies (1) \| Respond to of 108807

One view on oil: Oil in 2005. Although short term oil shortages are probable in 2005, they will not be caused by a depletion of oil resources. In 2003, seven new large scale oil projects were brought on line and another 9 projects were added in 2004. In 2005, up to 18 new projects will come on line. New drilling projects in Saudi Arabia promise to increase that nations capacity to more than 10 million Bl per day by the end of 2005. Assuming relative peace in Iraq, that nation's capacity should increase by 1.7 million Bl per day by 2006. Our conclusion. Producers will have the capacity to ship enough oil to cover growing world demand in 2005. Weather or not they will be able to get it to the consumer is another matter. Oil Beyond 2005. Unfortunately, we humans are running out of new large scale drilling projects. We might see 11 new projects in 2006 and another 3 projects in 2007. That makes 2007 a pivotal year. At this point (or perhaps we should say – by that year), existing worldwide well production will be dropping faster than new capacity is coming on-line. A study published by Petroleum Review points out that about a third of the world's oil production is currently coming from mature oil fields that have a projected production decline of four percent per year. Global production from existing wells is therefore contracting at a rate of over 1 million Bl per day every year. We should also note that approximately 70 percent of the world's oil now comes from basins that were discovered and drilled over 25 years ago. Although there will be enough capacity to satisfy demand in 2006, the excess of capacity over consumption will begin to shrink. A study by Exxon-Mobile shows that non-OPEC crude and condensate production will plateau by 2010 and begin to decline by 2017. Any new increase in oil production will have to come from Natural Gas Liquids, tar sands and shales, OPEC condensate, and OPEC oil wells. Will the discovery of new large scale oil projects save us? In 2000, there were 16 discoveries of 500 million Bl of oil, in 2001 there were 8 large scale discoveries, and in 2002 there were 3 such discoveries. In 2003 there were no large scale discoveries of oil. Furthermore, the rate of depletion has exceeded the rate of discovery since the 1980s. We consume more than 2 barrels of oil for every one found in a new discovery. Going forward, higher oil prices and recessionary economic activity will put a downward pressure on consumer demand. The Best Case scenario described in my book "Oil, Jihad and Destiny" assumes no disruptions occur from cultural conflict and a relatively modest annual increase in Middle Eastern production. In this scenario, reduced demand delays peak oil production until 2021. However, the Production Crisis described in "Oil, Jihad and Destiny" makes – according to most of my peers – a more realistic assessment of world oil production. Peak oil production occurs much sooner. That said, we should be aware that any qualified economic scenario will show that production, transportation and refining disruptions will cause transient oil shortages long before we humans have reached the theoretical peak of oil production. And it's all downhill from there.