Big oil firms tell consumers: use less fuel
washingtonpost.com
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Some comments on 18% from TOD. Not too many people pay attention to the export scene. See what Jeff Brown (Westtexas) has to say.
Dave Cohen on Thursday September 14, 2006 at 10:10 AM EST
At an OPEC seminar yesterday, Mr. Jum'ah of Aramco said the world had produced only about one trillion barrels, or about 18%, of the earth's producible potential of 5.7 trillion barrels of oil. "That fact alone should discredit the argument that peak oil is imminent, and put our minds at ease concerning future petroleum supplies," he said. The remaining 4.7 trillion barrels should be enough to last more than 140 years at current output rates, he said.
OK, I've stopped laughing. 5.7 trillion barrels of oil. "His [Ju'mah's] talk followed similar remarks by a senior Exxon executive this week. Spokesmen for Exxon and Aramco said they aren't coordinating their remarks." Why do they need to conspire when their agreement is complete?
Here's what I said about Cornucopians:
An excellent review of Cornucopian thinking is available in Perilous Optimism. Outside of thinking, what's going on? Kurt Cobb has an insightful view of the social role of the optimist.
It's much easier to tell people what they want to hear than to tell them what they need to hear. This is the first and most important advantage a cornucopian thinker has when arguing before any audience. No one really wants to hear that the future may be filled with turbulent change and personal insecurity.
Cobb's observation is obvious and correct.
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westexas on Friday September 15, 2006 at 9:39 AM EST
Export Land Revisited
In a January, 2006 post, I predicted a severe net oil export crisis this year.
As more EIA data were released, I later asserted that the decline in US petroleum imports this spring, combined with rising oil prices, was evidence of declining world oil exports. I was repeatedly challenged on this point by, among others, Robert Rapier and Halflin.
IMO, there are three key pieces of data that support my assertion:
(1) Richard Heinberg, reported--based on an industry source--that Ghawar was down by as much as 40% from last year's reported production of about 5 mbpd, and the EIA reports that Saudi crude + condensate production is down by 4.2% from 12/05 to 6/06 (annual decline rate of 8.4%);
(2) The WSJ ran an article, based on an internal Pemex report on the Cantarell Field, which suggested a worst case decline rate of about 40% per year (from about 2 mbpd last year) in production from the Cantarell Field. Recent media reports (a decline of 50,000 bpd per month) and recent Pemex reports suggest that something close to the worst case decline rate may be happening; and
(3) From 12/05 to 6/06, the EIA crude + condensate data show that net oil exports by the top 10 net oil exporters (based on estimated consumption) are declining at annual rate of about 9.2%.
I respectfully submit that the available data show that we did have declining world oil exports in the first half of the year. Futhermore, I see no reason for optimism on the export front for the second half of the year.
My assertion that we are past peak is only partly based on the HL data. The clincher for me is the reported declines in production in the large, old oil fields, and I think that is why so many analysts are too optimitic--they are underestimating the effect of these declines.
In simplest terms, we are trying to replace the production from fields that were producing about 1.0 to 5.0 mbpd with fields producing about 0.1 to 0.25 mbpd. Historically, trying to replace big fields with little fields has not been successful, and I don't expect it to be successful now.
I do have a request for Halflin. Precisely, what are you predicting? If you view your role as being the resident skeptic, how about dropping the sarcasm?
A copy of my post on yesterday's open thread follows. My comments from weeks past, provided by Halfin, are in bold.
"As I said last year, I expect that by the end of 2006 we will be in the teeth of a ferocious net oil export crisis."
From 12/05 to 6/06, the EIA crude + condensate data show that net oil exports by the top 10 net oil exporters (based on estimated consumption) are declining at annual rate of about 9.2%.
"So, I expect to see $100 oil this year, but I don't think that it will stay there--in the short term."
Granted, I may have guessed too high. My point was that the production downturn, in the short term, would not be enoough to cause permanently higher--$100 range--oil prices.
As I discussed earlier, I did not start expressing concern about net oil exports because of US import numbers. My concern was based on the HL analysis. The point I was making was the anomaly of lower US oil imports and higher oil prices. I suggested that the higher oil prices were primarily due to importers having to bid the price up, because of declining net oil export capacity worldwide. And I submit that the EIA's reported production decline by the top 10 net oil exporters support that premise.
For a number of reasons, oil prices are going to be all over the place, but IMO higher oil production will not be among those reasons.
Saudi Arabia is vastly more exposed to its largest field, Ghawar (more than 50% of production last year), than Texas was to its largest oil field, East Texas (about 7% at peak).
Look at the number of "coincidences." SA starts declining as predicted by the HL method and Texas model. Heinberg reports a decline in Ghawar production when Ghawar gets close to where Yibal (same reservoir, same drilling practices) started crashing. SA starts importing fuel oil, and we get reports of a shortage of natural gas. Finally, SA, just like Texas, starts a frantic drilling program (all the while saying that they are cutting back on production "voluntarily").
Again, the reason the HL method works is that we find the big fields first. And I don't know how much more clearly I can say this--the big fields are almost certainly all declining.
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AlanfromBigEasy on Friday September 15, 2006 at 6:01 AM EST
The Saudis are bringing two "last resort" fields back into production. Manifa has excessive levels of vanadium, which poisons those expensive platinum catalysts and another with large amounts of H2S gas, It leaked in the 1980s, killed some people and forced the evac of a town. Shut down then, now reopened. NOT POPULAR
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