RE: Some more info on oil

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-----Original Message-----
From: Glenn Morton [mailto:glennmorton@entouch.net]
Sent: Friday, January 28, 2005 10:36 AM
To: 'Don Winterstein'
Cc: 'asa@calvin.edu'
Subject: RE: Some more info on oil

Good questions.

Let's take the quota issue first.

First off the OPEC quota has been at 27 million for quite a while. The
Dec. 10th meeting they left the quota in place but they all shook hands
and agreed to quit over producing and cut their production by 1 million
per day.

"At a meeting in Cairo December 10, the Organisation of Petroleum
Exporting Countries left its official output quota of 27 million barrels
per day (bpd) unchanged but agreed to scale back surplus production."
http://www.channelnewsasia.com/stories/afp_world_business/view/124613/1/
.html
accessed 1-28-05

But, they actually didn't do it, which is not surprising given their
need and greed for money.

"IEA said world oil supply averaged 84.4 million b/d in December, down
by 45,000 b/d from November, with supplies from the Organization of
Petroleum Exporting Countries level at 29.5 million b/d."
http://ogj.pennnet.com/articles/article_display.cfm?Section=ONART&C=GenI
n&ARTICLE_ID=219642&p=7
accessed 1-28-05

This tiny cut and the price of oil started rising in mid-December.
Go look at
http://www.wtrg.com/daily/oilandgasspot.html to see that the price of
oil has been rising since early December.

The actual cuts this year have been only 800,000 bpd. Do you understand
what a small percentage of world production that is? 1%. I won't say
that that hasn't helped lift the prices, it has, but it is a small
investment in their economic betterment. If they can sell 100 bbl at
$40 they get $4000. But selling 99 bbl at $49 yields $4851, almost a
quarter more! And if Ghawar is really on an 8% decline as some say,
then the decline in that field alone (400,000 bbl/d) will cover half of
the one percent reduction in production over the next year. The average
decline in a deepwater field is 20% per year. At that kind of rate, it
won't take long to cover that 1% reduction.

Here is documentation for my claim above
http://www.fromthewilderness.com/free/ww3/082304_million_depletion.shtml

The first line in that report says it all. That is 1 million bbl/day per
year. We have to replace that. 2 years ago it was only 500,000 bbl/day
per year decline. The treadmill gets faster.

When you ask how OPEC is doing it depends upon what you mean.
Financially they are doing quite well thank you. They are all producing
more oil than they used to--they have been producing at maximum rate.
They are producing at an unsustainable rate which will cause us problems
down the road. But if you mean are they finding new oil, the answer is
no. In 2003 here are the discoveries of the really big fields (the only
ones that really count)

     "Operators reported 46 discoveries of 100 million boe or greater in
2003, five more than in 2002. The largest was Iran's giant Lavan
gas-condensate find of 6 tcf in a Paleozoic reservoir beneath Lavan
Island, the year's only billion barrel find."
     "Eight other finds of more than 500 million boe came in, three in
Brazil and one each in Angola, China, Malaysia, Sudan, and VietNam.
Those in China and Viet Nam were gas-condensate finds, and the rest were
oil dominant."
     "Seventy percent of 2003's major discoveries were in more than 200
m of water, and 65% were in more than 1,000 m of water. Overall, 64% of
the 100 million boe-plus resources discovered were in deep water."
"Global Trends Study Foresees no short-term Liquids Output Shortfall,"
Oil and Gas Journal, Nov. 15, 2004, p. 42

Note that there werre no oil discoveries in the major OPEC countries.

HEre is the same report for the year earlier--only one OPEC discovery in
Venezuela but Venezuela is producing below quota.

        "In 2002, there were only two giant discoveries (i.e., exceeding
500 million barrels of oil equivalent). These were Kikeh, an oil
discovery offshore Sabah in east Malaysia, and Tomoporo 9, an oil and
gas discovery in Venezuela's Maracaibo Basin. Eight other discoveries
are likely to exceed 200 million barrels of oil equivalent: Dhjirubai 1
and 3 (gas) in India, Dorado (gas and condensate) in Venezuela,
Cachalote (oil and gas in Brazil, Usan, Doa and Bolia (all oil and gas
in Nigeria, and Ca Ngu Van (oil and gas) in Vietnam." Anonymous, "Report
Finds Most New Oil around the World comes from Old Fields," First
Breaks, Nov, 2003, p. 11-13, p. 12

and there were 2 major discoveries in OPEC countries in 2001
            "In 2001, the giant discoveries i.e. over 500 million
barrels of oil equivalent were Io(gas) and Titanichthys (gas/condensate)
both in Australasia; Day (gas/condensate) and Kushk (oil) both in Iran;
Bonga South West (oil/gas) in Nigeria; Khazzan (gas) in Oman and
Rakushechnoye (gas) in Russia. During 2002, appraisal of the Buzzard
field (oil) discovered in the UK in 2001 indicated that this might be a
giant field." "Statistics Show 2001 Was No Vintage Year for Discoveries
and Production World-Wide," First Break 20:9 Sep. 2002, p. 537

I won't bore you but the same yearly report says no OPEC discoveries of
giant size in 2000.

>From a discovery perspective, they aren't doing well and most people
don't believe that the reserves they report are accurate. "It is
obviously absurd to imagine that Iraq, for example, has increased its
reserves fourfold since 1980,' says Campbell, 'when much of the time it
was at war or embargoed.'" cited by Paul Roberts, The End of Oil,
(Boston: Hougthton Mifflin, 2004, p. 49

Once again, slept tight in you warm house tonight!
Received on Fri Jan 28 15:36:52 2005