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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Think4Yourself who wrote (45867)	6/3/1999 4:16:00 PM
From: Tomas	Respond to of 95453

Downhill from here. Norwegian oil production is about to peak by Maarten van Mourik, Field Economics and Production Forecasting The timing is in the next year or so, or even in the next five years in some views. But at what level remains almost as uncertain as it has been for the last 25 years. Oil prices, oil company incomes and the whole upstream business depend on the balance between oil demand supply which in turn sets the price. Yet even in one of the world's most thoroughly documented countries, Norway, the discrepancies in short term forecasting are large enough to make a significant difference to global market balances. The Norwegian budget figures out this month show a peak at 3.75 Mbd (including gas liquids), about 500 Kbd higher than most evidence suggests. Norwegian oil production has been rising to unprecedented heights in the past few years to some 3.2 Mbd of crude in 1997. This made the Norwegian Petroleum Directorate ever more optimistic of the future of oil production. In 1995, peak production was expected to be around 3.5 Mbd in 2001. In 1997 (the last long term rethink of resources and production), the expectations ranged between 3.2 and 4.4 Mbd in 2001, with a base value of 3.6 Mbd. And the original 1999 budget expected some 3.9 Mbd in 2001. The U.S.Energy Information Administration expects 4.1 Mbd in 2005. But now the country is struggling to maintain production above 3 Mbd. Reserves replacement is faltering and 1998 production was higher than replacement. The NPD is now thinking more of 2.8-2.9 Mbd of crude production this year plus some 200 Kbd of natural gas liquids. In the revised national budget for 1999, published on May 10, the government has adjusted its estimate of 1999 oil and NGL production downwards by some 362 Kbd. It claims that 180 Kbd is due to its commitment to the OPEC cuts. The other part of the loss is due to fields coming off peak and falling faster than expected. What is more, most fields are delayed and well over budget. Another deflator is the 1998 government edict to postpone a number of new projects by a year to ease the pressure of high investments on the domestic economy. The oil price then collapsed and so the market itself corrected the investment plans. The chances are that the forecast peak will definitely not be reached. One reason is that oil price planning levels of $10-12 dollar per barrel will stay in place despite higher actual prices. Despite all these obstacles, the Oslo government believes the targets are possible, thus forecasting a massive 19% production hike in 2000 from 1999 levels. Whatever the peak, there is argument too about decline rates. The EIA hopes for 2 Mbd in 2020 and the NPD hopes for at least 1 Mbd from improved recovery. Without something new or without a deep water boom, decline could be much faster. The latest budget figures show a faster decline rate than previously expected. New production associated with the additional recovery is now moved off to after 2008.