Posts tagged “oil production”
Oil Demand Shift
From 2000 the increasing industrialization of the developing world has been the primary catalyst driving the demand for global crude oil. Among non-OECD nations, China and India have led the charge, with Chinese oil demand growing at a torrid 6.7% per annum rate and India’s oil demand growing at 4.0% per annum. Overall non-OECD demand for oil has increased at a comparable rate of 3.6% per annum, with the Asia/Pacific region growing oil demand at roughly 2.7%. Developed nations, however, have seen diminishing oil demand with a negative -.04% per annum growth rate.
As I shall point out, the decline in OECD oil demand is not enough to offset the rising demand for oil from the developing world, so the net result going forward will be an increasing supply/demand imbalance. My analysis points to an increasing deficit — gap in global wellhead oil supply — to meet demand. CONTINUE»
As a result of the hydraulic fracturing (fracking) revolution, US oil and natural gas production have been rising for several years. According to the Energy Information Administration (EIA), US oil production has risen by 27% over the past 5 years.
In reviewing the data for individual states, I came across some interesting trivia. So I decided to put together a little quiz. The data source is the EIA. A table showing the Top 15 states with the highest percentage increases in oil production follows the quiz. Answers are at the end.
1. Which state had the largest percentage increase in oil production over the past 5 years?
b. North Dakota
Let’s build upon last week’s long-term bullish case for crude oil. Much has been said about, “Global Peak Oil” production in the last few years, and probably for good reason. We know that U.S. crude oil production peaked in the early 1970s just as Mr. King Hubbert predicted back in the late 1950s.
But, is peak global oil production just around the corner?
Energy industry analysts believe that global oil production will peak sometime between 2015 and 2025. That sounds like a fairly broad range. However, the reality is that it’s a fairly short timeframe in geologic time that does not even register a notch, and it’s rapidly coming upon us.
(Read More: Five Misconceptions About Peak Oil)
I’m not a forecaster, but I have studied oil supply and demand for the last 20 years, and I do believe that global crude oil production has reached a plateau, and may very well peak sooner than we think.
Why? For one thing, on average, the global natural decline rate of producing wells is roughly 7% plus or minus 1% or 2%. That means production has to grow at least 8% a year to register a net positive increase.
A few years ago, I made the observation that the best thing that could happen to mitigate against some of the potentially severe consequences of peak oil was for oil prices to rise, and remain high in the years before oil production peaked. That would have the effect of encouraging conservation, as people adapted to a world in which oil is no longer cheap. High oil prices would also incentivize oil production, which would have the effect of preventing steep declines in global oil production — which some had predicted would lead to severe economic crisis or possibly economic collapse.
We have certainly seen both conservation and increased oil production, but I have been really surprised by some of the details of how it has happened.
For example, as oil prices raced to $100, consumption in the US and Europe declined as I expected. But consumption in all developing regions increased sharply — so much so that the net impact was for global consumption to increase.
(Read More: Petroleum Demand in Developing Countries)
I didn’t expect this; rather I expected that we would see oil consumption decline across the board.
Increased Domestic Oil & Gas Production, Declining Demand and Shrinking Imports
The American energy revolution is starting to come into focus. Technological breakthroughs in shale gas and tight oil production are poised to make the United States — not Saudi Arabia — the world’s largest producer of crude oil as early as the end of the decade, according to the latest World Energy Outlook published by the International Energy Agency (IEA). The IEA’s analysis found that the United States could even be a net exporter of oil by 2035, a position the United States has not been in since the 1940s, when it had one of the world’s few developed oil industries.
At the same time, U.S. demand for crude oil is in decline and its crude oil imports are shrinking. Higher fuel efficiency standards in U.S. vehicles have contributed largely to depressed demand, with U.S. oil imports falling from 56 percent of total consumption to 46 percent between 2008 and the end of 2011, according to the U.S. Energy Information Agency. By 2035, the United States could be importing less than 2 million barrels a day, down from more than 8 million barrels today, according to the IEA. (Read More: Top 15 Sources for U.S. Crude Oil Imports in 2011)
A new report from the International Energy Agency (IEA), a group made up of 28 nations, says that the United States will surpass fossil fuel giants Russia and Saudi Arabia as the world’s largest oil producer by the year 2017.
The United States is closer than many think to true energy self-sufficiency, says the annual long-term report, contrasting sharply with previous IEA numbers that suggested that Saudi Arabia would remain the world’s top oil producer until at least 2035. (Read more: Hofmeister: Surging Demand and Flat Production Equals High Oil Prices)
Can Oil Supplies Grow Fast Enough to Keep Prices in Check?
I, along with my editor Sam Avro, recently conducted a broad-ranging interview with John Hofmeister, former President of Shell Oil and currently the head of Citizens for Affordable Energy, a non-profit group whose aim is to promote sound U.S. energy security solutions for the nation. In the first part of this interview Mr. Hofmeister spoke of A Difficult Decade Ahead For Oil Prices and Supplies. In the second, he set forth an Energy Plan for America. In the current installment, he discusses the events responsible for the explosion in the price of oil over the past decade.
Developing Demand and Depleting Supplies
I prefaced my question with my own view that the explosive growth in oil prices mostly boiled down to new demand outstripping new supplies, which resulted in loss of spare capacity. Some have suggested that the real culprit is a massive influx of financial players into the oil markets, so I was curious to get Mr. Hofmeister’s views on the factors behind the escalation in oil prices over the past decade. CONTINUE»
Potential for Expansion of Global Oil Production
I, along with my editor Sam Avro, recently conducted a broad-ranging interview with John Hofmeister, former President of Shell Oil. The topics touched upon included future oil supplies and prices, climate change, U.S. energy policy, and topics familiar to R-Squared Energy readers such at Peak Lite and the Long Recession.
I will present this interview in a series of stories covering some of the various topics. In this first story, I will discuss Mr. Hofmeister’s detailed answer to the question, “What do you feel is the potential for expanding global oil production, and the time frames?”
Readers my recall that I have put forth a pair of hypothesis with respect to future oil production and prices. One is called Peak Lite. (See also: Five Misconceptions About Peak Oil)
INCREASED ENERGY INDEPENDENCE? The U.S. has met 83 percent of its energy needs this year through June, according to the Department of Energy
Oil production in the United States rose last week to levels not seen since January 1997, helping the country to reduce dependence on foreign sources of crude as it continues to implement the drilling and fracking technologies needed to increase daily oil output. (See also: Are President Obama’s Policies Causing U.S. Oil Production to Rise?)
Reports from the Energy Department released this week show that overall crude output in the U.S. rose 3.7 percent to 6.5 million barrels per day by the week of September 21, a trend that has continued since the country met 83 percent of its annual energy needs from the beginning of the year through June. Should domestic oil production continue at its current rate, the United States will enjoy 2012 as its most self-sufficient year since 1991.
Saudi Arabia’s per capita oil consumption is higher than the U.S. and most developed countries
Long known as perhaps the most oil-rich country in the world, Saudi Arabia’s dwindling crude oil deposits could see that nation become an oil importer in less than 20 years, according to a a report compiled by Citigroup Inc.
With the country’s peak rates of electricity production growing at up to eight percent per year and with oil and its derivatives used to generate about 50 percent of the power used by its own citizens, the bank warns that Saudi Arabia could find itself without the crude oil needed to keep its young and relatively wealthy population stocked with energy, forcing it to import the fuel from other nations as soon as the year 2030.