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Joo Rip Gwa Rhhee
Joined: 25 May 2003
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 Posted: Tue Jul 05, 2005 3:45 am Post subject: Is There Plenty Of Oil? |
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JULY 11, 2005
NEWS: ANALYSIS & COMMENTARY
Is There Plenty Of Oil?
First came Holstein, then Mad Dog, and soon, Thunder Horse. Atlantis will join them next year. The four giant oil fields, operated by BP PLC (BP ) and located under thousands of feet of water off the coast of Louisiana, are just beginning to pump their first barrels. At their peak rates later in the decade, they'll produce some 500,000 bbl. per day, an amount akin to floating a small Middle Eastern country such as Syria or Yemen into the Gulf of Mexico. "Add them together, and it's a massive step change," says David Eyton, BP's vice-president for deepwater in the Gulf. "The investment we're making will more than offset declines we're seeing in Alaska and the Continental Shelf."
It may seem today as if the world is running out of oil. The price of crude has hovered around $57 a barrel, in part on fears of a supply crunch in the fourth quarter. Chevron (CVX ) and China National Offshore Oil are battling for control of Unocal (UCL ). The Senate on June 28 passed the latest version of an energy bill stuffed with $18 billion in tax incentives to encourage energy production. Even legendary oilman T. Boone Pickens is predicting $3-a-gallon gasoline within a year. The national average now: a pricey $2.22.
No doubt, the energy industry is in a precarious position. Two decades of falling prices in the 1980s and '90s discouraged investment. With many of the easy-to-find fields already on the map, big oil producers have been forced to look for new sources in ever-more-hostile environments: not just under thousands of feet of water but also across frozen tundra and in countries rocked by political unrest. As a result, production has risen sluggishly in recent years, while energy demand, particularly from the booming China and India, has exploded. Last year global oil consumption rose 3.4%, to 80.7 million barrels per day, the largest volume increase since 1976.
From that snapshot the oil situation doesn't look good. But there's little reason to assume that the next five years will simply see a continuation of current trends. Thanks to a combination of higher prices, increased exploration and production spending, and improved technology (page 32), oil supplies are poised to grow much faster than they have in recent years. Cambridge Energy Research Associates (CERA), a respected energy consultant, sees 20 or more major new fields coming on line each year through 2010. Altogether those fields could boost worldwide production capacity 15%, from 87.9 million barrels per day to 101.5 million by the end of the decade, CERA estimates. As a result, supply should exceed demand by 7 million bbl. per day, a huge leap from the current cushion of 1 million bbl. That should take pressure off prices. "OPEC countries have the potential, and [most] are increasing production," says Peter Jackson, a CERA researcher. "Non-OPEC production has increased at quite a lick compared to the 1990s."
ALL OVER THE MAP
Where is the new supply coming from? Pretty much across the globe. After hiking its exploration-and-production expenditures by 50% since 2000, to $12 billion a year, Exxon Mobil Corp. (XOM ) expects to add more than 1.2 million bbl. per day of new supply by 2007 from 27 projects, including ones off the coast of Angola and Russia's Sakhalin Island. Chevron Corp. expects its Big Five fields in West Africa, Australia, the Gulf of Mexico, and Kazakhstan to generate 800,000 more bbl. per day by 2009 -- a third of its current production. "We've got that pretty well mapped out," says Chevron Vice-Chairman Peter J. Robertson. "Projects are more complex now. They take a little longer. There's still plenty of oil in the world."
Not everyone agrees, of course. For starters, CERA's projections don't take into account the possibility of political instability, natural disasters, or other unforeseeable events that are facts of life in the oil business. What's more, despite all the new fields coming on stream, some experts argue that they won't be enough to compensate for the declining output of existing fields, which are being depleted at a rate of 5% per year. Since 1960 only four super-giant oilfields have been found outside the Middle East -- in China, Russia, Mexico, and Alaska -- and all except China's Daqing field are in steep decline. "Discovery size is going down," says J. Robinson West, chairman of consultant PFC Energy. "Decline rates are a problem."
Even mighty Saudi Arabia's ability to increase output substantially has come into question. The world's biggest oilfield, Saudi Arabia's Ghawar, has been producing for more than 50 years and is showing signs of age, with increasing amounts of water leaking into the oil, according to technical papers by Saudi Aramco engineers cited in a new book, Twilight in the Desert.
Certainly, global energy producers are struggling to clear all sorts of hurdles as they respond to rising demand. The number of rigs drilling for oil and gas worldwide is up 35% since the start of the decade, to 2,500. That's putting pressure on the prices of oil-field services. Operating costs at major oil companies now average $13.75 a barrel, a 33% increase since 1999, according to brokerage firm A.G. Edwards Inc. (AGE ). Even CERA believes that oil production could hit a plateau around 2020. If that happens, the world economy could face a major setback. Fuel prices would soar and energy-dependent sectors would be seriously crimped. Opening new reserves can be painstakingly complex and slow. BP's operations in the Caspian Sea illustrate the challenges. The company and its partners first signed a production-sharing agreement for the 5-billion-bbl.
Azeri-Chirag-Gunashli field there in 1994. Discovered by the Soviet Union in the 1970s, the Baku crude is relatively easy to tap. The hard part: agreements to build, and then building, a $3.2 billion pipeline to carry the oil to tankers in the Mediterranean Sea. That took years of negotiations with the governments of Azerbaijan, Georgia, Turkey, and neighboring states. The first crude began flowing through the pipeline last month. By 2008 the project should reach its peak capacity of 1 million bbl. per day.
Moreover, much of the new supply expected in the next few years will come from what the industry calls "unconventional sources" -- fields that require additional technologies to harvest their hydrocarbons. These include heavy- sulfur oil that must undergo additional refining before it can be turned into fuels, as well as coal-bed methane fields, where oil and natural gas is drilled within coal deposits. Two other potential energy strikes are tight sands and shale oil, where rock must be fractured using high-pressure water or chemicals to loosen up the reserves. Another major source: offshore deepwater fields.
CANADA COUP?
Unconventional fields cost more to develop than traditional ones do, but their potential is huge. Estimates of the reserves trapped in Canada's oil sands, where oil is mined like coal from big deposits, top 175 billion bbl. -- larger than those of Iran or Iraq. Producers such as Suncor Energy Inc. (SU ) and Imperial Oil Ltd. (IMO ) are expected to spend $38 billion over the next 10 years there, taking already fast-growing production in the country from 1 million barrels per day to 2.6 million.
Such sources will account for 30% of all supplies in 2010, up from just 10% in 1990, according to CERA. ExxonMobil figures the world contains some 7 trillion bbl. of heavy oil, oil sands, and shale-oil reserves alone, an amount roughly equal to those of all conventional reserves. If just 20% of those were recovered, ExxonMobil figures that would top the 1 trillion bbl. of conventional oil produced on the planet to date. If numbers like that prove to be accurate, today's worries over oil supplies could seem like a distant memory in just a few short years. Let's hope the optimists are right.
By Christopher Palmeri, with Peter Coy in New York |
ttp://www.businessweek.com/magazine/content/05_28/b3942038_mz011.htm |
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brento1138
Joined: 17 Nov 2004
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| Posted: Tue Jul 05, 2005 3:55 am Post subject: Re: Is There Plenty Of Oil? |
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I wonder if the current rises in oil are more about 'worries about supply' than the actual supply vs. demand. If so many people in the US government own oil shares, oil companies, etc, then don't they profit everytime the price of oil rises? Hasn't the Bush family and others in the administration made a fortune in the last couple of years?
Everytime Bush bombs a middle eastern country, and the price of oil goes up, doesn't that actually benefit the big businesses in the United States that somewhat influence the government??? I wonder how much money is being made off the wars in Iraq and Afghanistan (long term: lots, short term: a bit).
So, I really wonder ... are we in a crisis? Or are there just people out there who want to make lots of money? Or both? |
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Derrek
Joined: 15 Jan 2003
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| Posted: Tue Jul 05, 2005 5:34 am Post subject: |
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I don't mind high gasoline prices since I only drive a little scooter.
I think it's crazy how so many people back home (and here, for gosh sakes) drive SUVs around. I hate SUVs. They fill up lanes, parking spaces, eat gas, and more.
My boss at work said it best when we were driving to my school for my interview, "I like SUVs because I can look down on other people. I like it when other people are lower than me."
The more the rich have to pay to fill their SUVs with gas, the more I laugh.
I hope we get some more alternative sources of fuel soon. Or at least more backing for some we already have. |
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The Bobster
Joined: 15 Jan 2003
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| Posted: Tue Jul 05, 2005 6:53 am Post subject: |
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| Derrek wrote: |
| I don't mind high gasoline prices since I only drive a little scooter. |
Translation : I only care about things that happen in the world if they affect my tiny corner. That's what being a Republican is all about. |
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Derrek
Joined: 15 Jan 2003
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| Posted: Tue Jul 05, 2005 8:29 am Post subject: |
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| The Bobster wrote: |
| Derrek wrote: |
| I don't mind high gasoline prices since I only drive a little scooter. |
Translation : I only care about things that happen in the world if they affect my tiny corner. That's what being a Republican is all about. |
Wow... sort of sounds more like an argument a dove would make. |
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The Bobster
Joined: 15 Jan 2003
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| Posted: Tue Jul 05, 2005 9:23 am Post subject: |
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| Derrek wrote: |
| The Bobster wrote: |
| Derrek wrote: |
| I don't mind high gasoline prices since I only drive a little scooter. |
Translation : I only care about things that happen in the world if they affect my tiny corner. That's what being a Republican is all about. |
Wow... sort of sounds more like an argument a dove would make. |
However ... it is what YOU actually DID say.
And it is an accurate reflection of rightwing ideology, not only about this issue but a host of others. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Tue Jul 05, 2005 9:39 am Post subject: |
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| Derrek wrote: |
| I don't mind high gasoline prices since I only drive a little scooter. |
High gas prices affect everything from produce to consumer goods to restaurant prices. |
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Joo Rip Gwa Rhhee
Joined: 25 May 2003
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| Posted: Tue Jul 05, 2005 4:44 pm Post subject: Re: Is There Plenty Of Oil? |
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| brento1138 wrote: |
I wonder if the current rises in oil are more about 'worries about supply' than the actual supply vs. demand. If so many people in the US government own oil shares, oil companies, etc, then don't they profit everytime the price of oil rises? Hasn't the Bush family and others in the administration made a fortune in the last couple of years?
Everytime Bush bombs a middle eastern country, and the price of oil goes up, doesn't that actually benefit the big businesses in the United States that somewhat influence the government??? I wonder how much money is being made off the wars in Iraq and Afghanistan (long term: lots, short term: a bit).
So, I really wonder ... are we in a crisis? Or are there just people out there who want to make lots of money? Or both? |
Since high oil is very bad for the economy much more money is lost over the wars than is made. Most of the businesses that influence the government are worse off when oil prices are high.
If oil were 20 dollars a barrel the Dow and the Nasdaq would each probably be 20%- 30% higher than they are today. |
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Manner of Speaking
Joined: 09 Jan 2003
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| Posted: Tue Jul 05, 2005 10:55 pm Post subject: |
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That article misses the point. The issue is not whether or not the world will run out of oil, it's when the world will run out of cheap, easy to produce oil. Canadian tar sands oil is, and always will be, very expensive to produce. This article describes the situation better:
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The Scenario:
The world has effectively run out of oil – the cheap, easy to produce kind that is. The price of oil has risen so high that the average family can no longer afford to fill their cars up with gas. Our roads lay empty. The machines that produce our goods run on oil that is too expensive to buy, so the products we are all used to buying – from packaged food to clothes to video games – are no longer being seriously manufactured and those that do exist cost a small fortune. Our nation is in virtual shock, attempting to adjust to this new lifestyle. The economy comes to a halt and millions lose their jobs. Rumours abound that our allies are preparing to go to war to get more of the black stuff that has ground our way of life to a halt.
The Likelihood: ��The important thing to note, is that nobody, (with a few fringe exceptions), claim Peak Oil won't happen,�� PeakOil.com administrator Aaron Dunlap says. ��We argue about when it will happen.��
Dunlap is a technology consultant and an energy news publisher who lives in Houston, Texas. He is also one of the people that helps to run PeakOil.com – a website that provides anyone who is interested in learning more about the decline of oil with information on that very subject. For the past few years, Dunlap has been educating himself and others on the impact of what he believes is the inevitable – the end of the oil age as we know it.
Not that everyone is as strong a believer as he is. ��The problem with hydrocarbon depletion issues like Peak Oil, is that the sound byte describing it is more than 15 seconds long,�� he explains. ��As unsettling as it is, this ��seconds long�� barrier to understanding prevents many from ��getting it��. It is perhaps the most important issue on our radar save none. If the thoughts and predictions of some very well informed, serious scientists are correct... we have a problem which overshadows almost everything else.��
Everyone is wary of the rising price of gas at the pump, and some probably even showed some concern over the historic and record high price of oil a few weeks ago (nearly $60 US a barrel). We all know that oil is a finite resource, in that it cannot be pumped from the ground for eternity. At some point, the pumps will have nothing left to pump and the world will no longer have what has somehow become our most important resource. Some believe when that day comes, the end of modern civilization will be nigh.
Dunlap takes the more educated view. ��Peak oil does not speak to the ��End of Oil��,�� he explains patiently. ��We probably will never see the actual last barrel. Peak oil is about the halfway point.�� Which is where he says we are right now and if not now, then very, very soon. Author Ken Deffeyes wrote in his book Beyond Oil that the world will reach this point on Thanksgiving 2005. Others say we surpassed the point of Peak Oil years ago.
So what, exactly, is Peak Oil? Perhaps PeakOil.com��s main page explains it best: ��Peak oil theory states: that any finite resource, (including oil), will have a beginning, a middle, and an end of production, and at some point it will reach a level of maximum output.
"Oil production typically follows a bell shaped curve when charted on a graph, with the peak of production occurring when approximately half of the oil has been extracted. With some exceptions, this holds true for a single well, a whole field, an entire region, and presumably the world. The underlying reasons are many and beyond the scope of this primer, suffice to say that oil becomes more difficult and expensive to extract as a field ages past the mid-point of its life.��
The page goes on to list some sobering statistics: ��The amount of oil discovered in the US has dropped since the late 1930s. 40 years later, US oil production had peaked, and has fallen ever since. World discovery of oil peaked in the 1960s, and has declined since then. If the 40 year cycle seen in the US holds true for world oil production, that puts global peak oil production, right about now; after which oil becomes less available, and more expensive. Today we consume around 6 times as much oil as we discover.��
Which is bad news no matter which way you roll the dice. The question on everyone��s mind is when Peak Oil will occur. The US Geologic Survey says 2030. The Association for the Study of Peak Oil says 2007. And then we have Ken Deffeyes who says it will happen in the fall of this year.
Aaron Dunlap suggests the actual date of Peak Oil might be less important than what is done before that point is reached. ��Professor Deffey's point is perhaps even more ominous than peak oil itself. That there is a point in time preceding peak oil, where we lose the ability to steer clear of the most potent consequences of midpoint oil production; and that this happens long before the actual peak. A sobering thought.��
More sobering might be how casually the world is dealing with the oil problem. Plans to reduce emissions and find alternative energy sources have not even passed the debate stage. And the media still treat Peak Oil and its inevitable consequences like theories from doomsday theorists, despite the evidence from studies and scientific reports. In this day and age, Michael Jackson is a more pressing concern to the average North American than Peak Oil.
No surprise, says Dunlap. ��The business as usual attitude is pervasive throughout our world. As my father likes to say, ��what you are doing today, is most likely what you'll be doing tomorrow.���� So what happens when there is no tomorrow? What happens when suddenly, one day, our roads are empty and our neighbourhoods are divided as average citizens fight over a dwindling supply of personal resources?
There are all sorts of doomsday predictions about anarchy and nuclear war, but Dunlap warns against falling into that particular trap. ��The problem with making predictions is that the further into the future you try and predict, the worse your predictions tend to be. Unexpected things can and do happen. This applies to predictions of Armageddon and to predictions of utopia. The real question here should be, 'Do nations fight over scarce resources?' A brief study of western civilization's history provides the answer. At the end of the day, I'm much more worried about how my fellow humans will react to oil depletion, than of depletion itself. Be aware of depletion. Be afraid of how our world will react to it.��
He elaborates: ��Let me ask you a question. What sounds more reasonable to you: That humanity will band together like never before in history, and confront our collective energy challenges for the benefit of all humanity? Or that people & nations will compete with one another just like they always have throughout history, up to and including going to war against each other over resources?��
While you��re thinking about that, consider his next point: ��The only possible argument against armed conflict developing, are those which suppose some oil substitute will emerge to replace oil and avert the consequences of peak oil. Oil is simply an amazing power source & manufacturing feedstock. So amazing in fact, that all other energy sources currently in use pale by comparison in every category.��
Dunlap says waiting for the magic bullet of a great and holy alternative energy source is probably not a productive exercise. ��We can't even seem to make nuclear fission breeder programs work. Hydrogen takes more energy to produce that it delivers. All of solar & wind technologies can be rolled up in a tiny fraction of our global energy budget. It's not that these alternatives are bad energy sources; it's that oil is such a great source that by comparison they look bad.��
So what��s the average person to do to avoid this coming cataclysm? ��This depends on your individual situation,�� Dunlap says. ��For the average person, I'd set a list of priorities: 1) Get out of debt. 2) Get out of debt. 3) Get out of debt. We won't be conserving or recycling our way out of this situation, and absent some new breakthrough in energy technology, we can expect economic consequences as oil prices climb higher & higher. If you feel the need to build a bunker and stockpile supplies go right ahead... but don't go into debt to do so.��
His advice for those planning to buy an SUV is equally as succinct: ��Go right ahead. SUV's are not the problem.�� If Aaron comes across as being a little bitter and jaded, well, maybe he is. He has done his homework and fully believes that Peak Oil is the inescapable destiny of our modern world. He says it was a hard lesson to learn, but favours having he knowledge of Peak Oil over his days as an ignorant daydreamer.
"If I gotta choose between this and the Matrix... I choose the Matrix," he says, quoting the popular movie. "As far as I'm concerned, Peak Oil should be headline news every day. And although I do miss my ignorance in some ways... you can't go home again."
Still, it is only natural for humankind to resist believing in something that affects them in so many negative ways. There are those who have made careers attempting to debunk Peak Oil. Perhaps they know something Aaron doesn��t, but Mr. Dunlap didn��t come to his position flippantly, either.
��It can be easy to dismiss some crackpot Internet conspiracy theories. But when noted geologists like Colin Campbell, investment bankers like Matt Simmons and oil insiders like T. Boone Pickens take this seriously... I'm all ears. Dr. Richard Smalley, Director of Rice University's Nano Technology Lab and winner of the Nobel Prize in chemistry for discovering nanotubes & buckey balls, thinks Peak Oil is very real. Lee Raymond of Exxon thinks it's real. So does the US Department of Energy. Representative Bartlett thinks so too.�� After hearing from sources like that, Dunlap came to his own educated opinion. ��Peak oil is headed this way, and not a soul on Earth can hide from it.��
It��s enough to make certain people want to pack up their belongings and move up into the mountains. Dunlap has some advice for them too: ��My advice is to practice first. You are not Grizzly Adams and this is not Little House on the Prairie.�� As the end of this oil age approaches, he suggests you might want to think practically and pack light: ��Bring a gun and a shovel... you'll need both.��
http://www.somethingcool.ca/feature119.htm
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Hater Depot
Joined: 29 Mar 2005
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| Posted: Wed Jul 06, 2005 12:14 am Post subject: |
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There is obviously only a finite amount of oil. It will run out eventually, no matter what ingenious technology we devise to extract it. The only real questions are how long it will take for oil to become prohibitively expensive, whether we have renewable alternatives when it does, and what happens if we don't.
http://freedomfromoil.com/ |
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Butterfly
Joined: 02 Mar 2003
Location: Kuwait
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| Posted: Wed Jul 06, 2005 12:47 am Post subject: |
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| Derrek wrote: |
I don't mind high gasoline prices since I only drive a little scooter.
I think it's crazy how so many people back home (and here, for gosh sakes) drive SUVs around. I hate SUVs. They fill up lanes, parking spaces, eat gas, and more.
My boss at work said it best when we were driving to my school for my interview, "I like SUVs because I can look down on other people. I like it when other people are lower than me."
The more the rich have to pay to fill their SUVs with gas, the more I laugh.
I hope we get some more alternative sources of fuel soon. Or at least more backing for some we already have. |
It's pretty cool to find myself in agreement with you. I don't give a shoyte about rising oil prices where car users are concerned but I think we tend to forget that almost everything we use is made from fossil fuel in some way or another. |
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mindmetoo
Joined: 02 Feb 2004
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| Posted: Wed Jul 06, 2005 5:19 am Post subject: |
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They've long argued that when oil hits $55 that is the magic number when all kinds of alternative energy sources become profitable. As the above poster says, the low hanging fruit is going to run out. The other problem is you just can't turn on the tap for the oil sands and off shore sources. It takes a lot of time to start exploiting them. There isn't an oil man alive that doesn't remember the last two times oil topped out, loads of money was sunk into the oil sands, alternative energy, etc. only to have oil to drop in a couple years to record lows.
First step is to convince investors that they won't take a bath this time around.
And then there is new refiner capacity you have to build. In the short term, as in ohhhh 5 or 10 years, there won't be much forcing the price of oil down... |
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Derrek
Joined: 15 Jan 2003
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| Posted: Wed Jul 06, 2005 5:37 am Post subject: |
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| Kuros wrote: |
| Derrek wrote: |
| I don't mind high gasoline prices since I only drive a little scooter. |
High gas prices affect everything from produce to consumer goods to restaurant prices. |
Agree with you 100%.
I hate paying more too, but the silver lining to all of this is that it is bringing the issue of alternative fuels into the spotlight. |
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Wrench
Joined: 07 Apr 2005
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| Posted: Wed Jul 06, 2005 6:24 am Post subject: |
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I worked in a the 2nd largest industrial park in North America. Believe it or not North America has more oil then the middle east. The problem is that its extremly hard to extract. Infact USA has more then enough oil for its needs but as I said there is a huge problem with extractions. Just to let you know the Oil sand in Alberta contain more oil then most of the middle east has combined. I seen some pretty nifty technology at work extracting the crude. All I got to say that we don't need the middle east, North America has more then enough oil.
Last edited by Wrench on Wed Jul 06, 2005 6:32 am; edited 1 time in total |
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endofthewor1d
Joined: 01 Apr 2003
Location: the end of the wor1d.
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| Posted: Wed Jul 06, 2005 6:28 am Post subject: |
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| The Bobster wrote: |
| Derrek wrote: |
| I don't mind high gasoline prices since I only drive a little scooter. |
Translation : I only care about things that happen in the world if they affect my tiny corner. That's what being a Republican is all about. |
not just republican. that's what being the endofthewor1d is all about as well. |
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