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Posts tagged “oil production”

By Robert Rapier on Mar 9, 2008 with no responses

Slow Squeeze

I have been thinking a lot lately about the impact of $100+ oil prices on the world economy. Like many others, I am trying to work out the probable implications – for the overall economy, for the U.S. economy, for the energy sector, for my personal finances, and for the average person. I believe we have entered an era of permanently higher oil prices, because 1). Supply and demand are in a very tight balance; and 2). OPEC has been very disciplined about keeping a tight reign on supplies. I just don’t see demanding falling enough, nor supply growing enough, to make a major change in the status quo. In the course of doing a little research, I ran across… Continue»

By Robert Rapier on Jan 17, 2008 with no responses

API Year End Statistics

The API has released their year end report on consumption, and some of the results were quite interesting. They held a blogger call today to discuss the results, but I got tied up and couldn’t make it. If they post a transcript, I will check it out and may excerpt some portions. The summary of the statistical report may be found here, and the press release discussing the report is here. But here is the press release in full: U.S. fuel production at record-high in 2007, demand flat – API WASHINGTON – U.S. fuel production reached a record high in 2007 as refinery capacity expanded for the 11th straight year, API data show. U.S. crude oil production also rose in… Continue»

By Robert Rapier on Jan 14, 2008 with 3 responses

Debunking Matt Simmons

I don’t suppose this essay is going to make me any new friends, but what’s good for Vinod Khosla is also good for Matt Simmons. A couple of years ago, I took on Vinod Khosla because I felt like he was unduly influencing energy policy in the wrong direction. I pointed out a number of incorrect comments from him that I felt called into question his understanding of the issues upon which he was pontificating. I had no personal animosity toward Mr. Khosla, and in fact we have communicated numerous times over the past couple of years. He has even offered to put me to work in the biofuels industry. So, definitely no hard feelings exist between us. He believes… Continue»

By Robert Rapier on Jan 12, 2008 with no responses

A New Peak Looms

The bandwagon of those who insist that world oil production has peaked has really filled up in the past six months. Even big names like Matt Simmons threw caution to the wind and declared that May 2005 was the all-time world peak in oil production. His logic (besides two years of flat production data)? If you look at the numbers and you follow what’s going on starting with Mexico’s giant Cantarell field which is now in a very serious state of decline and then you look at the North Sea and you see just the UK and Norway, it’s pretty obvious to me that those three areas alone could actually decline by between 800,000 and 1 million barrels a day… Continue»

By Robert Rapier on Jan 3, 2008 with no responses

Saudi Aramco Delays Khursaniyah

It never ceases to amaze me just how quickly people can develop amnesia. Take the case with oil production in Saudi Arabia. A year ago, their production was declining. A number of people argued that this was because they were experiencing an irreversible, involuntary, geological decline. My position was always that the evidence looked to me like they were managing their production to keep oil prices high, and that they had spare production. By March of 2007, their production had stopped declining, which was supportive of my theory. After all, if their decline was involuntary, how can we explain that production suddenly flat-lined, and remained steady for the next 10 months? Furthermore, in March I said that I expected Saudi… Continue»

By Robert Rapier on Dec 12, 2007 with no responses

Rank the Top 10 Oil Stories of 2007

While I intend to write a post covering the top energy stories of 2007, Platts is asking for reader input on the top oil industry stories of 2007: The top 10 oil industry stories of 2007 A lot of the listed stories would make both lists. I list my Top 10 below that I submitted to Platts. The first few were easy, but I had a hard time picking between the last three or four. My top 10 oil industry stories of 2007: Oil soars, reaches close to $100 for WTI Spare capacity dwindles, supply/demand balance tightens; Peak Oil theory gets more attention Climate change rapidly moves up the list of the world’s concerns; US Senate votes for mandatory GHG… Continue»

By Robert Rapier on Nov 26, 2007 with no responses

The OPEC Showdown

It has been clear for some time that OPEC members are deeply split over whether $100 oil is good for them in the long-term. Saudi Arabia, having been in this game a long time, probably understands better than most the effect that high oil prices will have. While short-term gains will be great, ultimately economies will falter and demand for their product will be destroyed. Iran and Venezuela, on the other hand, probably couldn’t care less whether the U.S. economy chokes on these prices. The Financial Times covers the impending showdown: Opec rivals in sequel to oil production drama The Opec summit show is over and the performers have left town. But the preparations for Act Two, the meeting of… Continue»

By Robert Rapier on Nov 18, 2007 with no responses

How Would You Manage Saudi’s Reserves?

Too often people try to interpret comments or actions from Saudi Arabia, without attempting to understand the issues from their perspective. I think it is a useful exercise to ask whether their specific actions or comments make sense; 1). From the Saudi perspective, and 2). In the context of the market. For example, when Saudi said that they were having trouble finding buyers for their crude in the spring of 2006, I don’t simply look at the price and dismiss those comments as lies (as many did). I do a bit of digging. And when I uncovered that OECD crude inventories were high and rising at the time, that Iran said essentially the same thing at the same time, that… Continue»

By Robert Rapier on Nov 5, 2007 with no responses

$100 Oil This Week

It hasn’t gotten all that much media coverage yet, but it is looking more and more like Mexico has taken a Katrina-sized hit that has devastated Tabasco. I had to go to The Irish Times for this: Government offers aid to Mexico A week of heavy rains over Mexico caused rivers to overflow, drowning at least 80 per cent of the swampy, oil-rich state of Tabasco. Much of the state capital, Villahermosa, looked like New Orleans after Hurricane Katrina, with murky water reaching to second-storey rooftops and desperate people waiting to be rescued. There has been some mainstream media coverage, but so far the MSM is largely asleep at the wheel. Another story that emphasizes how this disaster has impacted… Continue»

By Robert Rapier on Oct 28, 2007 with no responses

Saudi Production Management

A friend recently pointed me to a 2003 paper that attempts to explain the reasoning behind Saudi Arabia’s behavior with respect to their oil fields. This sort of managed production has always been my counter-argument to those who believe Saudi has peaked and production there is coming down involuntarily. This doesn’t prove that they haven’t peaked, but there is certainly another viable explanation for them reducing production. Here is what I was sent: The fact that they [Saudi] have not raised production despite high oil prices is not surprising, see article in attachment that you may find interesting. Below I quote one of their conclusions: If a negative demand shock affects the crude oil market, the difficulties faced by Saudi… Continue»