PEAK OIL AND ENERGY CRISIS NEWS ARCHIVES

PEAK OIL AND ENERGY CRISIS NEWS ARCHIVES

Current Peak Oil and Energy Crisis News
2008

Earlier Peak Oil And Energy Crisis News
2006/5/4/3/2

2007

"Gazprom, it turns out, has too many customers, and too little gas. The surprising Achilles' heel of Gazprom is that it produces only about 550 billion cubic meters (bcm) of gas—just enough to supply its own domestic market. It relies on cheap imports from to meet the majority of its other commitments to customers in Europe, amounting to nearly 80bcm. And since only Gazprom's foreign customers pay full market value, it's the company's exports which make up the bulk of Gazprom's revenues—$21 billion for the second quarter of 2007 alone. Now those nations on which Gazprom's profits rely—including Turkmenistan, Uzbekistan and —are beginning to cut their own deals with big new customers like . The deals are in turn becoming an existential threat to Gazprom, one of 's most valuable strategic levers of power. Russian control of a quarter of Europe's gas supplies is a key plank of its foreign policy and renewed national pride; supply of cheap electricity and heat to Russian homes is a touchstone of the Russian government's credibility. Central Asia is now undermining both those fundamentals—and could threaten Vladmir Putin's petro-politics. Gazprom hasn't opened up a new gas field since 1991, and its existing fields are dwindling. A recent report by the Russian Industry and Energy Ministry warned that if the decline continued, Russia may be unable to service even its own domestic gas needs by 2010, and recommended doubling prices, a conservation move that has upset business and could also put a damper on economic growth. Meanwhile, Gazprom chairman Dmitry Medvedev—also first deputy prime minister and Vladimir Putin's anointed successor for the next presidential elections in March 2008—has announced a radical plan to revive the company's domestic production, investing $420 billion in exploration and new gas-production facilities. No threat is more potent than that of China's move into Turkmenistan. Last year China's President Hu Jintao signed a deal with the late Turkmen leader Sapurmurat Niyazov to buy 30bcm of Turkmen gas each year for the next 30 years, and finance a giant new gas pipeline to China's Xinjiang province."
Russia’s Big Energy Secret
Newsweek, 22 December 2007

"The peak oil theory claims that the world is depleting crude at 30 billion barrels each year, but adding just 10 billion in discoveries. Depletion is running at 4% a year, according to official numbers. However, statistics from the Middle East are in question, and peakists believe the depletion rate is closer to 6%. China's annual demand is growing at 0.4 million barrels per day (bpd). It may reach 8 million next year, or 9% of world output. Reports claim that China will see domestic oil production peak as early as 2015 with an annual output of 190 million tonnes."
Peak oil rapidly approaching, oil sands still waiting in the wings
Resource Investor, 17 December 2007

"We think that production has been peaking the last two or three years. It reached a peak, basically, in 2004 - that's why oil prices started rising - and the actual physical peak of total crude oil, gas liquids, and the synthetics, we think will probably occur in 2008. That some of these, remember these big, new non-OPEC production projects - Deep Water U.S. Gulf, Deep Water Brazil, and so on - that were expected to come on this year will be coming on next year. We may have an increase of 800,000 to a million barrels a day in total non-OPEC production next year as a consequence. We think that will be the all time total peak - it'll just be a little blip upward. And from then on, irreversibly slowly declining....of the order of 25% of all of the oil that is used is used solely to provide heat to generate steam for industrial operations or to generate electric power. And for that use there's much cheaper oil alternatives than the equivalent of $65-85 oil - in the form of coal and natural gas and nuclear - and that that fuel oil being burned for that low value use will be converted in refinery expansions which are being made now - convert that fuel oil to transportation fuel. After that has all been substituted, then, and most of the oil is being used for the high-value, special quality uses - transportation, raw material and home heating - it will require a higher price level to restrain consumption, and that's - we haven't done that work yet - but that's over this $65-85 a barrel range. And, during the next several years, it'll become clearer what level that may have to be - probably $85-100 plus....we have found that instead of growing at a historical rate of 2.5% a year, consumption has actually been essentially flat for three years because we've had prices in the $60-70 a barrel range. So, if we - we've eliminated all growth in consumption at the $60-70 range - if prices are above that, consumption - based on all the results we're seeing - will continuously decline."
Henry Groppe: IEA to blame for $100 oil spike
Global Public Media, 16 December 2007

"'An unexpectedly large jump in consumer prices last month suggested inflationary pressures haven't receded, and the Federal Reserve may have less latitude than markets believe to lower interest rates to cushion the economy. 'This is a much tougher monetary-policy environment than anything I experienced,' former Fed Chairman Alan Greenspan said in an interview Friday... Economists and the Fed have typically judged inflation trends by the core, not the overall, rate; food and energy prices, while highly volatile, don't tend to rise faster or slower than other prices over time. But Mr. Greenspan said that's no longer the case. 'The notion of core pricing is fading in importance as: One, food prices driven by increased long-term demand for meat and milk rise with the growth of China and other developing countries, and as; Two, global oil supply peaks lower and sooner than had been contemplated earlier,' he said."
How Inflation Hobbles the Fed
Wall St Journal, 15 December 2007

"Booming demand for energy from China and the Middle East will drive global oil consumption up 2.5 per cent next year despite the growing threat of a recession in America, according to the International Energy Agency (IEA). The Paris-based energy watchdog said yesterday that it expected global crude oil demand to grow by 2.1 million barrels a day in 2008, 200,000 barrels a day higher than its previous forecast. Demand next year is now expected to reach 87.8 million barrels per day, the report said. The revised IEA forecast contrasted starkly with predictions also made yesterday by the Organisation of Petroleum Exporting Countries (Opec) for growth of just 1.3 million barrels per day next year. The IEA, adviser on energy issues to 27 industrialised countries, brushed aside Opec’s claims that a slowdown in America, the world’s biggest economy, would trigger a slump in global crude demand. Its report emphasised the likelihood of continued robust demand from developing countries. 'Mature economies are only supporting actors in our global demand growth projections,' the IEA said. 'The bulk of 2008 demand growth remains within nonOECD countries, where regional growth patterns are expected to be similar to the past two years.'”
Buoyant China expected to lead growing demand for oil
London Times, 15 December 2007

"Although there is a huge amount written about the oil market, what is genuinely supporting the price of oil are the fundamentals. There is not enough spare capacity in the world and there has been increasing demand from certain areas, notably the U.S., China and India. This is not the fault of OPEC; it is not the fault of 'speculators'; it is not the fault of 'terrorists' and Middle Eastern governments. It is structural, it is the onset, however you see it coming - and this column does not think it is geological as such - of a peak in global oil production. Whether the peak is at the current figure of 85 million barrels per day or can sneak up to 95 million barrels per day over the next decade is neither here nor there. In historical terms we are on the cusp."
Peak Oil Passnotes: On the Cusp
Resource Investor, 14 December 2007

"The economies of many big oil-exporting countries are growing so fast that their need for energy within their borders is crimping how much they can sell abroad, adding new strains to the global oil market. Experts say the sharp growth, if it continues, means several of the world’s most important suppliers may need to start importing oil within a decade to power all the new cars, houses and businesses they are buying and creating with their oil wealth. Indonesia has already made this flip. By some projections, the same thing could happen within five years to Mexico, the No. 2 source of foreign oil for the United States, and soon after that to Iran, the world’s fourth-largest exporter....'It is a very serious threat that a lot of major exporters that we count on today for international oil supply are no longer going to be net exporters any more in 5 to 10 years,' said Amy Myers Jaffe, an oil analyst at Rice University. Rising internal demand may offset 40 percent of the increase in Saudi oil production between now and 2010, while more than half the projected decline in Iranian exports will be caused by internal consumption, said a recent report by CIBC World Markets. The report said 'soaring internal rates of oil consumption' in Russia, in Mexico and in member states of the Organization of the Petroleum Exporting Countries would reduce crude exports as much as 2.5 million barrels a day by the end of the decade....Fatih Birol, chief economist at the International Energy Agency in Paris, rated consumption growth among oil exporters as the second-biggest threat to meeting the world’s oil needs. 'It’s a big problem, and growing all the time,' Mr. Birol said. Internal oil consumption by the five biggest oil exporters — Saudi Arabia, Russia, Norway, Iran and the United Arab Emirates — grew 5.9 percent in 2006 over 2005, according to government data. Exports declined more than 3 percent. By contrast, oil demand is essentially flat in the United States. CIBC’s demand projections suggest that for many oil countries, including Saudi Arabia, Kuwait and Libya, internal oil demand will double in a decade. Factors contributing to the trend include increased industrialization, higher government spending and increasing personal consumption. According to a World Bank report, economic growth in the Middle East and North Africa has doubled since the 1990s, and Russia has done even better."
Oil-Rich Nations Use More Energy, Cutting Exports
New York Times, 9 December 2007

"Shell, the oil company that recently trumpeted its commitment to a low carbon future by signing a pre-Bali conference communique, has quietly sold off most of its solar business. The move, taken with rival BP's decision last week to invest in the world's dirtiest oil production in Canada's tar sands, indicates that Big Oil might be giving up its flirtation with renewables and going back to its roots. Shell and BP are among the biggest producers of greenhouse gases in the world, but both have been keen to paint themselves green through a series of clean fuel initiatives."
Big Oil lets sun set on renewables
Guardian, 11 December 2007

"BP is planing a return to the booming but environmentally controversial Canadian tar sands business with the creation of two joint ventures with Husky Energy worth an estimated $10 billion (�4.9 billion). Eight years after disposing of its assets in the region, BP said that it had bought a 50 per cent share in Husky’s Sunrise tar sands project near Fort McMurray, Alberta, and at the same time had sold Husky a 50 per cent share in its Toledo refinery in Ohio. The announcement represents a clear break with the past for Tony Hayward, BP’s new chief executive, whose predecessor Lord Browne of Madingley was an outspoken critic of costly oil sands developments. He sold off BP’s interests in Alberta in 1999, opting instead to focus on higher-risk but higher-return investments in countries such as Russia."
BP upsets Greenpeace with $10bn return to tar sands
London Times, 6 December 2007

"In a report published in by the United States National Academy of Sciences journal today, David Zhang, of Hong Kong University, has analysed a half millennium's worth of human conflict — more than 8,000 wars.... 'We are on alert, because this gives us the indication that resource shortage is the main cause of war.'"
Water shortages are likely to be trigger for wars, says UN chief Ban Ki Moon
London Times, 4 December 2007

"Congressional Democrats reached a compromise late Friday to boost automobile fuel economy by 40 percent, clearing the way for a House vote probably next week on an energy bill that Democratic leaders would like to send to President Bush before Christmas. The agreement came after House Speaker Nancy Pelosi reached an accord with Rep. John Dingell, D-Mich., a longtime protector of the auto industry that dominates his home state, to ease the impact of the new fuel economy requirements. 'A compromise has been reached on automobile fuel efficiency standards,' Dingell announced in a statement. Automakers would be required to meet an industrywide average of 35 miles per gallon for cars and light trucks, including SUVs, by 2020, the first increase by Congress in car fuel efficiency in 32 years."
Democrats Reach Deal on Energy Bill
Associated Press, 30 November 2007

"China is running out of fuel. Police are guarding petrol stations in several inland provinces to prevent fights, as shortages of petrol and diesel are causing huge queues of trucks, buses and cars."
Chinese tiger has nothing in tank
The Australian, 28 November 2007

"China urged local governments to set up an early warning system to ensure sufficient oil supplies at filling stations, which face shortages across the nation, the state-run Xinhua News Agency reported. The Ministry of Commerce ordered local authorities to monitor oil supplies and work out measures to cope with emergency shortages, Xinhua said yesterday. The report didn't elaborate on requirements for the warning system."
China Calls for Warning System to Ensure Oil Supplies
Bloomberg, 25 November 2007

"What better evidence of the daunting challenge that oil shale presents: Shell Frontier Oil & Gas, seen as the leader in the quest to free millions of barrels of oil in massive rock formations in a three-state area, doesn't expect to start commercial production any time soon. The company has been researching ways to tap the vast resource for more than a quarter century and has been running tests since 1996 on private land amid the sagebrush-covered hills and pinon pine and juniper forests of northwestern Colorado. And yet in July, Shell withdrew a state mining permit to start work on a federal research and development lease granted by the Bureau of Land Management. 'There were a myriad of factors,' Shell spokesman Tracy Boyd said. One was ongoing research and testing. The results could change what Shell will ask for in its permits for work on three 160-acre parcels of federal land approved by the BLM for demonstration projects. What isn't changing, Boyd said during a recent tour of Shell's research site, is the company's belief that the oil shale formations under western Colorado, eastern Utah and southwest Wyoming could help meet the nation's growing demand for energy....Federal and industry estimates peg the amount of oil trapped in the rocks from about 1 trillion to 1.8 trillion barrels, or three times the proven reserves of Saudi Arabia. Of that, roughly 800 million barrels are considered recoverable. The catch is extracting the oil from the rock, something that's been tried on and off for nearly a century. The shale, or kerogen, is a precursor that wasn't buried deeply enough or naturally processed long enough to complete the transformation to oil. Turning the shale to oil requires heating it: above ground after mining or, as Shell has done, in the ground, a process called in situ — 'in place.' 'There's talk about being the Saudi Arabia of oil,' said Jeremy Boak, project manager at the Colorado Energy Research Institute based at the Colorado School of Mines in Golden. 'It's probably never going to be the Saudi Arabia of oil shale production rates.' Significant commercial production could be 10 to 20 years away, Boak said. But if the economic, technical and environmental issues can be resolved, he said, oil shale could help bridge the gap until renewable or alternative energy becomes more common."
Oil shale won't impact fuel markets for decades
Associated Press, 22 November 2007

"A growing number of oil-industry chieftains are endorsing an idea long deemed fringe: The world is approaching a practical limit to the number of barrels of crude oil that can be pumped every day. Some predict that, despite the world's fast-growing thirst for oil, producers could hit that ceiling as soon as 2012. This rough limit -- which two senior industry officials recently pegged at about 100 million barrels a day -- is well short of global demand projections over the next few decades. Current production is about 85 million barrels a day.... The new adherents -- who range from senior Western oil-company executives to current and former officials of the major world exporting countries -- don't believe the global oil tank is at the half-empty point. But they share the belief that a global production ceiling is coming for other reasons: restricted access to oil fields, spiraling costs and increasingly complex oil-field geology. This will create a global production plateau, not a peak, they contend, with oil output remaining relatively constant rather than rising or falling. The emergence of a production ceiling would mark a monumental shift in the energy world. Oil production has averaged a 2.3% annual growth rate since 1965, according to statistics compiled by British oil giant BP PLC. This expanding pool of oil, most of it priced cheaply by today's standards, fueled the post-World War II global economic expansion.... Most of the world's biggest fields are aging, and production at them is declining rapidly. So, just to keep global production at current levels, the industry needs to add new production of at least four million daily barrels, every year. That need is roughly five times the daily production of Alaska, with its big Prudhoe Bay field -- and it doesn't assume any demand growth at all....Soaring energy prices have breathed new life into projects targeting 'nonconventional' oil, such as that trapped in sand or shale. But these sources can't be tapped nearly as quickly or inexpensively as the big oil finds of the past....As these uncertainties mount, there is growing hope that Saudi Arabia, which has about 20% of the world's oil reserves, would ride to the rescue if needed. Saudi Aramco, the national oil company, has embarked on an ambitious plan to increase its daily production by 30%, or three million barrels, early next decade, and thus reclaim the title of top producer from Russia. But Mr. Al Husseini, the former Saudi oil executive, now an independent consultant, said others aren't doing as much, leaving the world entirely dependent on Saudi Arabia to provide extra capacity. 'Everyone thinks that Saudi Arabia will pull us out of this mess. Saudi Arabia is doing all it can,' he says in an interview. 'But what it is doing, in the long run, won't be enough.'"
Oil Officials See Limit Looming on Production
Wall St Journal, 19 November 2007

"An Opec summit - only the third in the cartel's history - concludes in the kingdom today, and the Saudi government is keen to show off the flagship project to the world. Last week, it flew in more than 100 foreign journalists. Yet in the heart of the empty quarter to the south, Shell and other oil majors are searching in vain for new deposits. The Saudis opened up the region to overseas exploration in the 1990s when oil prices were barely in double figures. The empty quarter was hailed as one of the few big opportunities for the majors to get a foothold on the world's largest oil producer. Yet so far the appraisal wells have come up dry. No journalists were flown out to visit this particular area last week. 'Whether that's a sign the Saudis don't have as much oil as they say they do, we just don't know,' says Samuel Ciszuk of analyst Global Insight. The trip to Shaybah is part of a carefully choreographed public relations offensive to convince the world the Saudis can keep it supplied. 'Saudi Arabia is desperate to say they have things under control,' says Ciszuk...This month, the normally conservative International Energy Agency warned that the world faces an oil supply crunch over the next decade. It said that Opec, which currently produces about 40 per cent of the world's oil, will have to provide all of the one-third increase in global demand forecast by 2030 because production in non-Opec countries has peaked. Much of this burden will fall on Saudi Arabia. For the US in particular, the prospect of becoming even more reliant on Opec members like Saudi Arabia - with which relations are cooling - and Iran and Venezuela is unattractive. With developing nations' thirst for the black stuff showing no signs of abating, it's no wonder prices are poised to break the $100 mark."
Can Saudi square the oil circle?
Observer, 18 November 2007

"Next year, Saudi Aramco, the state oil company, plans to boost production by 250,000 barrels a day, one step in an effort to expand the kingdom's oil-production capacity to 12.5 million barrels a day from the 11.3 million barrels. The new production is part of a strategy that could ease market tension and is designed to preserve Saudi Arabia's ability to produce 1.5 million to 2 million barrels a day more than its actual output in the face of rising world oil demand, said a senior Saudi Oil Ministry official who spoke on condition of anonymity..... This field, Shaybah, was discovered in 1968. Thirty years later, technological advances that permit oil rigs to drill horizontally as well as vertically enabled Saudi Aramco to start exploiting the field by putting the rigs on stable salt flats and drilling under 500-foot dunes rather than through them. The kingdom is considering adding more production later. It isn't only the size of the Shaybah expansion that matters. It's the oil's extremely high quality. Most of the spare oil production capacity in Saudi Arabia is much thicker, lower-quality crude with high sulfur content, which relatively few of the world's refineries can handle. Although most of the new Saudi production that will be brought in over the next year is high-quality oil, later production increments will be forced to tap the kingdom's heavier crude reserves, Saudi Aramco said. To increase the market for those crude grades, Saudi Arabia is building or expanding refineries so that they will be able to process Arab heavy as well as Arab light crude oils.... This week, Saudi Oil Minister Ali al-Naimi reiterated pledges that Saudi Arabia would eventually deliver 1 million barrels of oil a day to China and keep the world well supplied. Some analysts said that could be difficult because many of Saudi Arabia's oil fields are old and in decline. The rate of natural decline in Saudi fields was slightly faster than anticipated this year, according to a Saudi strategist who spoke on condition of anonymity because he is not authorized to speak publicly on the subject. From 2005 to 2009, output from existing Saudi fields is expected to decline by 800,000 barrels a day. But Saudi Arabia's output capacity is about the same as it was 30 years ago."
Saudi Arabia Works the Vast Desert To Pump Out More High-Quality Oil
Washington Post, 17 November 2007

"Rising costs will temper production growth from Canada's vast oil sands, the country's national energy regulator forecast on Thursday, as it detailed its expectations for Canadian energy production over the next two decades. The National Energy Board expects production from the oil sands to rise to about 2.8 million barrels a day by 2015 from about 1 million barrels a day last year. The new estimate is down 200,000 barrels a day from a forecast the NEB released just last year because of the massive cost increases and labor shortages that have plagued major projects in the region. The forecast was cut 'in view of the rapid escalation of costs,' Bill Wall, an oil market analyst at the regulator, told reporters.... freeing the tar-like bitumen trapped in the sand and upgrading it to refinery-ready synthetic crude is technically challenging and expensive. New projects to tap the resource have all faced blown budgets. Most recently, Canadian Natural Resources Ltd said last month that its 110,000 barrel per day Horizon oil sands project was nearly C$1 billion ($1.02 billion) over budget, at C$6.8 billion, with less than a year left before work is complete. The NEB's study, a forecast of national energy supply and demand to 2030, said oil sands construction costs have risen 40 to 50 percent over the past two years as producers cope with higher steel and concrete costs, a shortage of engineers and skilled labor, and strained provincial infrastructure. The cost of adding a new barrel of synthetic crude production capacity now ranges between C$80,000 and C$100,000 a barrel. Those costs may also rise as governments move to restrict greenhouse-gas emissions, while profits are squeezed by tax hikes and the strengthening Canadian dollar. 'These challenges have slowed the pace of activity somewhat and a number of companies are reassessing the economics of their projects,' the regulator's report said."
Canada regulator says oil sands rush may slow
Guardian, 15 November 2007

"The key reason for Opec’s loss of control is the fact that its spare capacity, which acts as a buffer against unexpected events such as hurricane damage to oil platforms in the Gulf of Mexico or a jump in oil demand triggered by a cold snap, collapsed to a record low in 2004 and has barely recovered since. The cartel’s buffer dropped to just 1m b/d in 2005, down from about 5m b/d in 2002, according to estimates by the US energy department. During the late 1980s, Opec’s spare capacity stood at almost 10m b/d. To aggravate the problem, most of the spare capacity is now concentrated in low-quality heavy, sour oil, for which refining capacity is very limited. That means that the world petroleum market has no margin for error. Bassam Fattouh, of the Oxford Institute for Energy Studies, says that when the majority of Opec members produce at or close to their maximum capacity, the cartel has no influence on oil prices. ... At this weekend’s summit, Opec heads of state will stress that the group is investing to resolve the problem..... However, doubts about the plans are helping to keep the oil price high. While Opec promises a huge increase in its capacity, above what demand would probably require, it is unlikely that all the plans will ultimately be realised. The Saudi projects look likely to be on-stream on schedule but many in Venezuela, Iran, Iraq and Nigeria have rather less chance of materialising, according to industry analysts.Mr Naimi acknowledges that the investment situation in a number of Opec countries, including Iraq and Iran, is 'difficult' but says that the 'willingness' to invest is there. However, the IEA is also worried about the 'willingness and ability of the national oil companies to increase installed capacity once the projects now under construction have been brought on-stream.'”
Go with the flow? Opec examines the benefits of boosting capacity
Financial Times, 15 November 2007

"Shell is convinced that oil shale is no myth and that after years of secret research, it is close to achieving this oil-based alchemy....Shell declines to get too specific about how much oil it thinks it can pump at peak production levels, but one DOE study contends that the region can sustain two million barrels a day by 2020 and three million by 2040. Other government estimates have posited an upper range of five million."
Oil shale may finally have its moment
Fortune, 1 November 2007

"'Economics and politics will keep oil ticking over $100,' said Mark Spelman, energy expert at consultants Accenture. 'When economics are tight, geopolitics very uncertain, stocks low, winter approaching and we have a weak dollar, the oil price can only go up... the era of cheap oil is now dead.' Mr Spelman said that a dearth of supply was the primary problem, with the global economy needing a further two million barrels of oil a day in 2008 and another two million in 2009. 'Production is more concentrated than ever on West Africa, Russia and the Middle East,' he added. 'It's not clear that these major producing areas can just turn on the taps even if they have the political will.'"
'The era of cheap oil is dead': $100 a barrel is on the way
Independent On Sunday, 11 November 2007

"China has asked for a 30 percent increase in crude oil imports from Saudi Arabia for 2008 and also aims to raise imports from Iran, partly to feed two new refineries amid steady demand growth, trading sources said on Friday. Sinopec Corp, Asia's top refiner, wants to increase Saudi crude imports to 600,000 barrels per day for next year, up from this year's 460,000 bpd, a trading source close to the supply talks told Reuters. The supply pact, pending Saudi confirmation, would foster closer energy ties between Beijing and Riyadh, while maintaining the kingdom as China's top oil supplier."
China seeks 30 pct increase in Saudi oil imports
Reuters, 9 November 2007

"Pointing to a variety of political and technological constraints on energy investment, chief executives at two oil giants Thursday highlighted systemic limitations on the growth of the supply of oil, implying that there will be high oil prices for at least the medium term. BP PLC (BP) Chief Executive Tony Hayward predicted that medium-term oil prices will be in the $60-$80 range. 'For the medium term, it's very clear the era of cheap energy is behind us,' the recently installed CEO said in Houston, adding that it isn't clear how long the medium term will last. ConocoPhillips (COP) Chief Executive James Mulva had earlier told a New York financial conference that he doubted that world oil producers would be able to meet forecast long-term energy demand growth. The International Energy Agency, the energy watchdog for western economies, has projected 2030 world oil demand of 116 million barrels a day. But Mulva said he doesn't believe oil supply will ever exceed 100 million barrels a day. He didn't offer a price forecast. 'Demand will be going up, but it will be constrained by supply,' Mulva said. ' I don't think we are going to see the supply going over 100 million barrels a day and the reason is: Where is all that going to come from?'...Mulva effectively restated his stance from March, when he also highlighted the 100-million-barrel limit at the company's annual analysts' meeting in New York, citing the decline curve of existing fields and the effects of environmental regulation, which imply greater conservation."
Big Oil CEOs Point To Constraints On Supply Growth
CNN, 8 November 2007

"On the energy security, oil prices part, the numbers, one doesn’t need to be a big energy expert or anything: it’s just mathematics. I can tell you that we, in the next seven to eight years, need to bring about 37.5 million barrels per day of oil into the markets, for two reasons. One, the increase in the demand, about one third of it, and two thirds, there is a decline in the existing fields [and there is a need] to compensate for the decline. What we have done is that we have looked at all the projects in the Opec countries and the non-Opec countries, all the producing countries of the world, at the 230 oil projects, on a field by field basis, how much oil they will bring to the markets for the next five to seven years. And these are projects which are financially sanctioned projects. If they all see the light of the day in a timely manner, they will come up about 25 million barrels per day. So, 37.5 mlillion on the one hand, what is needed, and what we expect is 25 million barrels per day, and this is in the case of no slippages, no delays in the projects, and everything goes on time, which is very rare. So, there is a gap of 13.5 [sic] million barrels per day....The main issue here is that we think that, in the Opec countries, there are enough reserves. We are not sure if there is a political will to make something out of those reserves, but there are enough reserves as officially reported. However, as you rightly say, we are getting more pessimistic about non-Opec production....The main reason here is, this is very important to perhaps note, unlike the Opec countries, we think there are some geological problems in the non-Opec areas. This is not an investment issue, not a political issue, but it is more geology, because of a huge decline in the non-Opec countries....in unconventional oil, the Canadian tar sands, which is the most important one, will reach about three million [b/d] most probably in 2015, which is still only 3 per cent of the global oil production, which is still very small. So despite what some people think, I don’t think that unconventional oil will either replace the Middle East, or be a major way of addressing energy security. It makes some positive contribution, but it is very limited."
Transcript: Interview with IEA chief economist
Financial Times, 7 November 2007

"I believe oil prices are going up because the demand for oil outstrips the supply for oil. Oil is going up because developing [sic] countries still use a lot of oil. Oil is going up because we use too much oil, and the capacity to replace reserves is dwindling. That's why the price of oil is going up."
George W. Bush
White House Press Conference, 7 November 2007

"Oil prices hit a record high of $97 a barrel on Tuesday, but the next generation of consumers could look back on that price with envy. The dire predictions of a key report on international oil supplies released Wednesday suggest that oil prices could move irreversibly over the $100 a barrel threshold in the not too distant future, as the global economy faces a serious energy shortage....The agency is not known for alarmist warnings, and its World Energy Outlook is typically viewed by policy wonks as a solid indicator of global energy supplies. In a marked change from its traditionally bland, measured tones, the IEA's 2007 report says governments need to make urgent, bold decisions on energy policy, or risk massive environmental and energy-supply crises within two decades — crises and shortages that could spark serious global conflicts. 'I am sorry to say this, but we are headed toward really bad days,' IEA chief economist Fatih Birol told TIME this week. 'Lots of targets have been set but very little has been done. There is a lot of talk and no action.' .... As the world scrambles to boost energy supplies over the next two decades, an ever-greater percentage of its supplies of oil and gas will come from a dwindling number of countries, largely arrayed around the Persian Gulf, as the massive North Sea and Gulf of Mexico deposits are finally exhausted. That will leave the industrialized countries far more dependent on the volatile Middle East in 2030 than they are today, and the likes of Saudi Arabia, Kuwait and Iran will dictate terms to companies like ExxonMobil and Chevron, which increasingly operate as contractors to state-run oil companies in many producer nations."
Oil Prices: It Gets Worse
TIME, 7 November 2007

"The world's capacity to produce oil will fall well short of official forecasts, the chief executive of Total warned yesterday. In an unusually stark prediction for the head of one of the world's biggest oil companies, Christophe de Margerie, CEO of the French group, said it would be difficult to reach even 100m barrels a day. The International Energy Agency, the rich countries' watchdog, in its 'business as usual' projections, has said oil supply will reach 116m barrels a day by 2030, up from about 85m b/d today. The US government has a similar forecast of 118m b/d in 2030, including a relatively small contribution from biofuels. Mr de Margerie, however, said while forecasts could always change, '100m barrels [per day] . . . is now in my view an optimistic case'. He added: 'It is not my view: it is the industry view, or the view of those who like to speak clearly, honestly, and not . . . just try to please people.'...He was speaking at the Oil & Money conference in London, which had heard several other speakers warn of the limits to the expansion of oil output."
Total chief warns on oil output
Financial Times, 1 November 2007

"Abu Dhabi is struggling to produce enough natural gas to keep pace with a frantic growth in demand. Gas provides the fuel for power generation and water desalination in the United Arab Emirates. However, investment has lagged behind the pace of economic growth, according to Wood Mackenzie, the oil consultancy, which has a continuing research project on the region’s gas resources. 'Abu Dhabi is short of gas and it is particularly difficult in Dubai, where there is only one producing gasfield. It is insufficient to meet demand,' Colin Lothian, of Wood Mackenzie, said. According to the consultancy, the UAE consumes 1.9 billion cubic feet per day but will need six billion cubic feet per day by 2020 if it is to meet the power and water needs of an expanding population. Moreover, Dubai’s property boom is causing acute problems as demand for gas surges by 35 per cent in the summer, when air conditioning reaches peak consumption. Wood Mackenzie believes that the gas shortage will constrain economic growth if a solution is not found. 'One of the alarming aspects of this is that there are few alternatives to increasing domestic gas supply. Qatar has a moratorium on further gas developments to 2010,' Mr Lothian said. Dubai is heavily reliant on its sister emirate Abu Dhabi for gas supplies, but the latter has been forced to import fuel from Qatar. Much of Abu Dhabi’s gas is earmarked for reinjection in oil wells to maintain pressure and oil flow. 'Abu Dhabi is struggling. How long will it continue to bail out Dubai?' Mr Lothian asked."
BP offers Abu Dhabi green solution to chronic gas shortages
London Times, 31 October 2007

"Global oil production can go no higher than 100 million barrels a day, the head of Libyan oil policy and Chief Executive of Libya's National Oil Co. Shokri Ghanem said Tuesday. 'There is a ceiling or 100 million (barrels a day) and the world cannot continue to produce oil indefinitely,' Ghanem told an energy conference in London. Once that ceiling is reached, global oil production will start to decline, Ghanem said. He didn't specify where the data came from. According to the International Energy Agency forecasts, global oil demand through 2030 is set to reach 116 million barrels a day."
Libya Oil Head: Global Oil Output Can Only Reach 100 Million B/D
Dow Jones Newswires, 30 October 2007

"China's crude oil production will peak at about 190 mln tons by 2015, according to a report by the China News Service. The report cited Pang Xiongqi, professor at the China University of Petroleum, who also said that the country's natural gas production would peak at 120 bln cubic meters by 2035. China faces even more serious energy supply challenges once the peak has been passed, Pang said, and will be forced to spend more of its foreign currency reserves on increasingly expensive crude imports. Dwindling oil production could also lead to a further increase in the consumption of coal, putting more pressure on the environment, Pang said. "
China's oil production to peak in 2015 - report
AFX, 29 October 2007

"The hydrocarbon-rich Gulf countries are exploring the use of alternative and renewable energy resources, including coal, nuclear, solar, wind and hydrogen, says a leading industry expert. 'The vast majority of power generation projects in the Arabian Gulf are for power stations using conventional gas for their energy source,' said ESR Technology's group CEO David Weaver. ESR is one of the world's leading engineering, safety and risk management companies. 'But the region is struggling to find enough suitable gas to meet future power demands and the first signs are beginning to emerge of major investment in the region into alternatives,' he added."
Gulf countries eye alternative energy sources
Gulf Daily News, 28 October 2007

"Peak production of conventional oil came 30 months ago and although new production projects will come on stream in the next few years, they will have a hard time balancing the depletion from existing fields which various speakers placed at 4-5 percent a year and probably increasing. As a greater share of world production shifts to undersea production, which is expensive and is usually water flooded to get the oil out as quickly as possible, some believe the annual world depletion rate could increase to six percent or more. The most ominous development for countries such as the U.S., which must import most of its oil, is the emerging concept of 'peak exports' which was discussed by several speakers. Peak exports simply means that oil-producing countries are using more and more oil at home - leaving less to sell abroad. Moreover, sentiment is starting to develop in many nations that they must save some oil for future generations, not just sell it to the foreign devils as quickly as possible. This clearly means that major oil importers will face a shortfall in their ability to obtain oil many months or years sooner than they had been anticipating. The fall in the amount of oil available for purchase is likely to drop much more quickly than declines in production. When world oil exports fall, if they have not started doing so already, effects are likely to sharp and painful."
The Peak Oil Crisis: A Message From Houston
Falls Church News-Press, 25 October 2007

"So-called 'peak oil' is coming, but it doesn't have to be a disaster, Chevron Chief Technology Officer Don Paul said Wednesday.... At the Dow Jones VentureWire Alternative Energy Innovations conference in Redwood City, Calif., Paul said many people think the industry will hit this maximum level by 2020. 'The question is will there be peak oil? Yes,' said Paul, who also is a Chevron vice president. 'But will it be the disaster [some people] expect? I don't think it has to be. We have other ways of making fuel.' The remaining fuel could come from biofuels, oil from tar sands and coal, he said, adding that each of these potential sources has its challenges. With tar sands, the problem is the need to produce hydrogen, which is added to tar sands to produce fuels, he said. Converting coal into fuel brings up the problem of what to do with the carbon. Carbon-capture and sequestration technologies, which involve capturing emissions and storing them underground, have not been proven to work on a large scale, he said.... While there could be some technologies that could help solve the problem of capturing and sequestering large amounts of carbon, they won't do any good unless the infrastructure is in place to use them, he said. And to capture and sequester carbon from U.S. coal plants, 'you would need infrastructure the same size as the current natural-gas system, which took 100 years to build,' he said. 'That's a lot of pipes.' Biofuels also face a set a challenges, mainly the difficulty of growing the technology to large enough volumes to make a difference, Paul said. 'It's going to require a different operating business than someone operating a small plant out at a corn field,' he said. Paul said he is looking for technologies with the potential to produce at least as much as the total U.S. ethanol production today in one plant. On average, Paul estimates it takes 15 years to bring biofuel technologies to larger scales, he said. 'That will be a shock to some in the tech industry,' he said, adding that some entrepreneurs may not realize the challenges of building out larger plants and transporting the fuel to where it's needed. 'It's true that with startups, realism isn't always the first thing on the list -- but that's OK.'... even if all the challenges to biofuels and coal-based fuels are met, Paul said he doesn't expect they will ever displace oil because the demand for fuel is so great. 'You do hear, 'We're going to displace [oil],' he said. 'I don't buy it. If you look at [the demand], we're going to need every molecule.'"
Chevron CTO Says Peak Oil Won't Be a Disaster
Greentech Media, 25 October 2007

"World oil output has already peaked, and prices that have surged to record highs above $90 a barrel are a sign of things to come, said investor Boone Pickens, chairman of Dallas-based BP Capital LLC. Global production has peaked at 85 million barrels a day, Pickens, 79, said in an interview today at a Houston conference sponsored by the Association for the Study of Peak Oil & Gas, a non-profit think tank. Oil will rise to $100 a barrel before falling to $80 again, he said. Earlier this week, he said crude would reach $100 by year's end. 'As this unfolds, you're going to have to find alternatives that are going to do the job that oil is doing,' Pickens said. 'Everyone is going to have to come to grips with this in the next two or three years. People are going to have to figure it out.''
Global Oil Output Has Already Peaked, Pickens Says
Bloomberg, 19 October 2007

"Organization of the Petroleum Exporting Countries (OPEC) chief Abdalla Salem El-Badri said yesterday that the organization was 'concerned' at the recent surge in oil prices and was convinced that the current record high prices were not justified by the fundamentals. 'OPEC is doing all it can and is carefully watching developments in the oil market and has observed with concern the recent escalation in oil prices,' El-Badri said from Vienna. Yesterday, world oil prices hurtled to fresh record highs, striking over $88 per barrel in New York amid fears over tensions between Turkey and Kurdish rebels in crude producer Iraq.... 'OPEC cannot do much now,' Libya’s top oil official Shokri Ghanem told a news agency. 'OPEC did all that it can.' At its meeting in September, with oil a touch below $80, the OPEC agreed to boost output by 500,000 barrels per day (bpd) from Nov. 1 to soothe consumer concerns of tight supplies and costly fuel.... But oil is now closing in on the inflation-adjusted high of $90.46 seen in 1980, with investors citing rising tension between Turkey and Kurdish separatists in Iraq, robust oil demand growth, tight fuel stocks and a weak dollar."
We’re Doing All We Can: OPEC Chief
Arab News, 17 October 2007

"U.S. Energy Secretary Samuel Bodman said Friday that high crude prices are being driven by fundamentals, not speculators. 'It's clear we've got suppliers unable to keep up with demand,' Bodman said, in an interview on CNBC. 'That's what's driving prices.' Bodman added that tight oil output capacity means producers don't have the flexibility to easily increase supplies as they had in the past."
US Energy Secy: Oil Supply Unable to Keep Up with Demand
Schlumberger, 12 October 2007

"For decades, [Norwegian Oil Companies] Statoil and Hydro relied on the plentiful reserves on the Norwegian continental shelf for almost all their output; last year, that area off the country's north and west shores accounted for more than four-fifths of the two firms' production. That bounty has made this nation of just 4.6 million people rich. Government taxes on the country's oil business — Norway is the world's fifth largest exporter by volume — have helped bloat Norway's national pension fund to around $350 billion. But those good times couldn't last forever. With fields beginning to dry up, oil production has slid to 2.6 million bbl a day this year from 3.5 million six years ago, says John Olaisen, Oslo-based energy analyst at Carnegie, a Nordic investment bank....Many onshore reserves, which are relatively easy to exploit, are being depleted. So Big Oil is being forced offshore into increasingly complex projects, often at great depths and in harsh conditions."
Northern Might
TIME, 11 October 2007

"....production is not increasing but demand is. It sounds a bit obvious but the much vaunted hikes in output from companies such as Exxon [NYSE:XOM], ConocoPhillips [NYSE:COP], BP [NYSE:BP] and the rest have simply not materialised. They assured us that they would be producing extra barrels to sate the world’s ever growing desire for hydrocarbons but due to a series of “mishaps” and “project delays” those extra barrels have never arrived. Meantime a world addicted to oil (and gas) continues to consume even more. Since 2003 companies and countries have been telling us they would produce more 'organically' by finding new deposits, or by using technology, to get more out of existing proven reserves. Outside of the odd success story like Marxist Angola, they have palpably failed to do so.The free marketers - wrecking the world with their failed political ideology - told us that as oil and gas became more expensive this would trigger a wave of new output. It is the way the market works; we do not need communist rubbish such as 'planning.' Gosh no! The market would prevail. But it has not."
Peak Oil Passnotes: $100 Oil?
Resource Investor, 12 October 2007

"The third hard truth is that production of 'easy oil' (oil and gas that are relatively easy to extract) will not keep pace with the growing demand. At a time when demand for energy is surging, more and more of the world's conventional oil fields are going into decline. Many of the world's future resources are located in the Arctic, or offshore in deep water. Much is in the form of oil shale and oil sands - so-called 'unconventional' oil. All of these are more energy-intensive, difficult and costly to develop."
James Smith is UK chairman of Royal Dutch Shell plc
Firms 'need clear climate policies'
BBC Online, 8 October 2007

"I have a hard time seeing us get to 90 million barrels a day by 2020. I can see us getting there, but on a project-by-project basis, I don’t know the full quantitative impact that new developments in old fields will have. This is a major unresolved question. I don’t know anyone who really has studied and understands it … seeing us ever reaching 100 million barrels a day requires a major stretch on my part.... By 2015, we could get 3 million barrels a day from the oil sands, between 0.5 and 1.0 mmd/day from heavy oil in Venezuela, but none from the oil shale. By 2020, the Canadian oil sands could produce 4 mmb/day, with Venezuela’s heavy oil still in the same 0.5 to 1.0 mmb/day range and oil shale still at zero....growing net production additions is hard. It isn’t just the size of the resources but the rate at which we can develop them, which is again a function of quality of the resource and access to it."
Interview with Richard Nehring - President of Nehring Associates
ASPO-USA, 8 Oct 2007

"Output from the North Sea fell for the fifth month in a row in July, despite record oil prices, in a development that could increase concerns about the UK's growing reliance on imports from potentially volatile areas. The latest Oil and Gas Index from Royal Bank of Scotland showed total production of oil and gas averaged 2,088,083 barrels oil equivalent daily. This was down 10.3% on June and 17.9% on July 2006. The decline occurred in a month when operators traditionally take advantage of relatively good weather to complete maintenance work. Production of gas was badly disrupted after the 251-mile central area transmission pipeline was shut down after being damaged by a ship's anchor off Teesside on July 1. This brings in 20% of the UK's gas from the North Sea. Gas production fell 15% in the month to 5.026 billion cubic feet daily, down 20.7% on the year. Oil production averaged 1,203,164 barrels daily, down 6.5% on the month and 15.7% on the year. However, the fact that total production has been well down on both a monthly and annual basis in every month this year since March could trigger alarm bells about the state of the province."
Alarm bells ring about North Sea output
Herald (Scotland), 5 October 2007

"For many years, the idea that global oil production will soon start to fall, with potentially catastrophic economic consequences, has languished on the fringes of the environmental debate, with nothing like the recognition of climate change, and shunned by the industry itself. But when the history is written, 2007 is likely to go down as the year the issue of peak oil production went mainstream. In Cork, the former US energy secretary, James Schlesinger, used his keynote speech to tell delegates that they were no longer a tiny minority crying in the wilderness: 'You can declare victory . . . and prepare to take yes for an answer.' It was a bold claim, but true. Although most senior oil executives continue to deny publicly what is becoming more obvious by the month, the industry-wide 'omerta' is beginning to crack. Thierry Desmarest, chairman of Total, declared last year that production would peak in 2020, and urged governments to suppress demand to delay the witching hour. In Cork, the former Shell chairman, Lord Oxburgh, told me he expects demand to outstrip supply within 20 years, and that the oil price may well hit $150. He warned: 'We may be sleepwalking into a problem that is actually going to be very serious, and it may be too late to do anything about it by the time we are fully aware.'..A recent study by analysts John S Herold showed that the world's 230 biggest oil companies raised their upstream spending by 45% to more than $400bn in 2006, but that oil and gas reserves inched up by just 2%. There would have been no oil reserve growth at all without the inclusion of hard-to-produce bitumen deposits in Canada. The report concluded that peak oil has become part of the industry's long-term planning, and this would force oil companies to choose from four options: 'Try to become a dominant participant, find a niche operational talent, harvest assets, or liquidate quickly.'.... Organisation for Economic Cooperation and Development oil production has been falling since 1997, and it is now widely agreed that output in the world, outside the Organisation of Petroleum Exporting Countries (Opec), will peak by about 2010. This much is accepted even by those who reject the idea of an impending global peak, such as ExxonMobil's chief executive, Rex Tillerson, who told me recently that he expected no further output growth from non-Opec production beyond the end of the decade. This matters because there are severe doubts about the size of Opec's reserves, buttressed last year by the leak of internal documents from the Kuwait Oil Company (KOC). The paperwork revealed that although Kuwait has for two decades been telling the world it has about 100bn barrels of proved reserves, KOC's internal assessment was just 24bn, apparently confirming the widely held suspicion that the reserves of many Opec countries were inflated in the early 1980s, when members were vying for larger shares in the new quota system. In 2005, the consultancy PFC Energy briefed US vice-president Dick Cheney that, on a more realistic reading of Opec's reserves, its production could peak in 2015.... With the International Energy Agency (IEA) forecasting demand to rise by 2m barrels a day to almost 88m barrels a day by the end of this year, the most important question in the oil market is whether Opec's current production ceiling is entirely voluntary. Even if Opec can raise its production, oil consumption in member countries, particularly Iran and Saudi Arabia, is growing so fast that exports may soon start to fall in any case....The one Opec member with the capacity to raise its oil production dramatically - in theory at least - is Iraq, where for many years production was held below its natural potential by war with Iran and UN sanctions. The country's pivotal importance was recently recognised by IEA's chief economist, Fatih Birol, who warned: 'If by 2015 Iraqi production does not increase exponentially, we have a very big problem, even if Saudi Arabia fulfils its promises. The figures are very simple, there's no need to be an expert. The war it seems was not just 'largely about oil' as even Alan Greenspan, former head of the US Federal Reserve, now concedes, but all about deferring peak oil.The war it seems was not just 'largely about oil' as even Alan Greenspan, former head of the US Federal Reserve, now concedes, but all about deferring peak oil. But if so, the strategy has failed miserably...the amount of oil discovered each year has been falling since the mid-1960s, and amounts to just 9bn barrels a year, less than a third of annual consumption... Opponents of the idea claim that peak oil is not imminent because there remains lots of oil to be discovered in areas such as West Africa or the Arctic, where Russia, Canada, Denmark and Norway are now scrambling to establish territorial claims. These views are often justified by reference to a study of the world's potential oil resources produced by US Geological Survey (USGS) in 2000, which concluded that the industry could discover another 650bn barrels of oil by 2025. Since the amount of oil discovered each year has been falling since the mid-1960s, and amounts to just 9bn barrels a year, less than a third of annual consumption, this forecast has long been regarded as wildly optimistic by peak oil forecasters. But in another sign of how quickly the debate is moving, the USGS figure has also been discredited by oil industry experts at a private enclave held in Colorado last November - the Hedberg research conference on understanding world oil resources. It was organised by the American Association of Petroleum Geologists to try to resolve the wide range of estimates of future oil availability, and it was a closed-door affair, attended by technical experts from all the super-majors - ExxonMobil, Shell, BP, Total and Chevron - along with some of the biggest state-owned oil companies, such as Saudi Aramco.... According to Ray Leonard, a senior executive with Kuwait Energy Company, the experts challenged the USGS's optimistic assessments on the basis of their companies' more detailed proprietary data. Leonard says the majority opinion at the conference was that future oil discovery will total 250bn barrels - little more than a third of the USGS number. On the basis of that rough consensus, Leonard concludes that global oil production will peak and then plateau at between 95m and 100m barrels a day - bringing soaring oil prices - in around five years' time."
Slippery slope
Guardian, 3 October 2007

"Oil prices could top $100 a barrel by the end of next year and remain above that point for years to come, the chief economist of Canadian investment bank CIBC World Markets said Tuesday.Jeffrey Rubin said rising demand within oil-rich nations, such as Mexico, Venezuela and Saudi Arabia, will put pressure on global oil prices in the coming years. That, combined with the increased cost of pulling petroleum from reserves deep under the sea or wringing it out of oil sands in Canada, will keep oil prices high even if demand in the Western world remains constant.....Rubin said oil exports from OPEC countries, Russia and Mexico will likely decline by about 3 million barrels per day over the next five years. The biggest drop, he expects, will come from Mexico, a key U.S. supplier. 'Of the 3 million barrels, we're probably talking about 2 million barrels are going to come directly out of U.S. supplies,' he said. Rubin expects Mexican oil imports to the U.S. will dry up by about 2012. Some of that decline will be made up by imports from other parts of the world, but the lions' share - nearly a third of all U.S. oil imports - will come from Canadian oil sands, he predicted. But replacing relatively easy-to-refine liquid crude with petroleum from oil sands is certain to increase costs, he said. By the end of the decade, Canadian oil sands are likely to represent the world's largest source of new oil supplies, he said. 'We're basically replacing low-cost oil with high-cost oil,' he said."
CIBC economist sees $100 oil in 2008
CNN, 2 October 2007

"Royal Dutch Shell PLC Thursday signed a deal with OAO Tatneft , Russia's sixth-largest oil producer by volume, to develop a major tar sands project in Tatarstan, its home region, and paved the way for other potential projects. The deal follows an alliance signed by Shell in July with Russian state-controlled oil company OAO Rosneft for oil and gas production and refining in Russia and abroad. Under the agreement setting the principles of a strategic partnership, the two companies will devise a program for heavy oil development in Tatarstan, Shell said.... Russian companies don't have any substantial experience in developing tar sands. Shell, by contrast, is active in developing natural bitumen deposits in Alberta, Canada.... Tatneft expects to produce 1.5 million to 2 million metric tons of oil a year from the tar sands project by 2020 for which it has signed the alliance with Shell. Shell said the two companies will 'conduct a feasibility study and assess technologies for extraction and processing (upgrading) of heavy oil, which is part of existing exploration and production licenses held by Tatneft.' According to Russian media reports, Tatneft had a shortlist of eight candidates that included Shell, Exxon Mobil Corp. (XOM), Chevron Corp. (CVX), ConocoPhillips (COP) and Repsol YPF SA (REP). A Tatneft spokesman said neither the form of cooperation, nor the target production price are known."
Shell signs deal with Tatneft on Russian tar sands project
MarketWatch, 27 September 2007

"Ray Leonard of the Kuwait Energy Company was the speaker who, for me, stole the show. He offered, prefaced with a few caveats, insights from within the oil industry, setting out how what the oil industry tells the public and what it actually thinks are very different. One got a sense from listening to Leonard of the degree of profound unease behind closed oil company doors, as year after year they have to downsize their declared reserves and find themselves less and less able to be optimistic. A clear and accomplished speaker, he spoke of a conference last year called the Hedberg conference where an invited audience from oil companies and bodies like the USGS and the EIA all, in confidence and with no press presence, exchanged their best data, coming up with far more sobering data than had previously been made public. These kind of 'I’ll show you mine if you’ll show me yours' sessions were also key in the early stages of the climate change issue, and led, eventually to the formation of the IPCC. In the early stages though, as now with peak oil, those with the actual data preferred a cautious initial approach behind closed doors....As an example, in terms of growth from exploration, he compared the figures of the USGS survey in 2000 with the data generated at the event. The USGS figure, on which much international government complacency on this issue is based, is 700 billion barrels. The figure that emerged from the industry was just 250 billion. He said that although for him that wasn’t a great surprise, it is a confirmation of an emerging trend. In terms of growth from unconventional oil resources, he was doubtful that the Alberta Tar Sands will be able to produce anything like what they are predicted produce. Limiting factors include the carbon implications of the extraction, the availability of cheap natural gas, and the amount of water it requires. There will be production from Alberta and the other main unconventional resources, Green River Shale in Wyoming and the Venezualan oil sands, he said, but nothing like has been predicted. These unconventional sources will be slow and expensive he said, and will do little to fill the widening gap caused by depletion. He concluded that we will see a peak rather than a plateau, which will occur at around 95-100 million barrels a day, and in a very high price environment."
ASPO 6. In Praise of… #3. Ray Leonard
Transition Culture, 25 September 2007

"Mexico's energy industry problems run far deeper than terrorist attacks on its infrastructure, analysts say, and have major implications for U.S. oil supply. 'Mexico's oil production is in decline. There's probably no way to stop it,' said Mike Rodgers, an expert at one of the top oil industry consulting firms, PFC Energy in Houston. Mexico is the second largest supplier of oil to the United States (about 1.5-million barrels a day). But output from its major fields is dwindling fast, according to official figures from the state-owned oil giant Petroleos Mexicanos (Pemex). The country's known oil reserves will run out in nine years, the government says, potentially undermining the nation's oil-dependent budget.... Mexican output peaked at just over 3.4-million barrels a day in 2004. 'I don't believe we'll ever see it that high again, no matter how much is invested,' said David Shields, an oil industry consultant in Mexico City. Daily output at Mexico's biggest oil field, Cantarell, highlights the problem. Production there dropped by a staggering half a million barrels in the last 18 months, to 1.5-million barrels from 2-million. Once the world's second-biggest oil field, it is expected to continue losing production, down to as little as 600,000 barrels a day by 2013.... Pemex has said it can offset declines at Cantarell with new production from other fields. While several sites, onshore and offshore, have potential, it would take a decade of massive investment to bring them on stream, analysts say. 'They really don't have a way to fix the problem,' says Rodgers. 'They could have if they had used some foresight. Now it's virtually impossible.' In his recent state of the union speech, Mexican President Felipe Calderon mentioned the nation's dwindling reserves. 'Our petroleum reserves have been reducing constantly. It has to be said,' he said, as if broaching a taboo subject. Rather than proposing ways to increase production, Calderon seemed to accept there was no way for Mexico to drill its way out of the problem. Instead, he called for 'an urgent reduction in public spending to reduce the enormous dependence on oil revenue.'"
Analysts watch, wince as Mexico's oil supply dwindles
St Petersburgh Times (Florida), 24 September 2007

"Specifically, Goldman Sachs said it has learned that:

1. The energy, water, and labor bottlenecks in the Canadian tar sands are severe and will likely prevent significant scaling up of the supplies at an oil price of $70/bbl, while a substantial change in Canadian policies in order to incentivise the use of nuclear power in tar sands production, and facilitate immigration of much needed foreign engineers appears unlikely in the near term;

2. The nationalisation of the Orinoco belt assets by Venezuela has led to a sharp decline in non-conventional output and no further foreign input of capital;

3. Biofuel production has substantially driven up agriculture prices, pushing the subsidised cost of many of these fuels anywhere from $65/bbl to $150/bbl with a further scale-up likely to push agriculture prices even higher and hence raise biofuel production costs;

4. ExxonMobil abandoned its gas-to-liquids (GTL) project due to high costs, the Sasol GTL plant in Qatar has run into technical problems in the ramp-up phase, and the Shell GTL project is significantly over budget, all of which suggest that GTL is off the table at an oil price of $70/bbl."

Goldman Sachs lifts end-of-year oil price forecast
Energy Publisher, 24 September 2007

"When it comes to oil shale, in the old days you used brute-force digging. That takes way too much energy. We had to figure out how to construct an oil facility that operates entirely underground. The goal is to convert the oil shale into crude oil, then pump that to the surface.It's going to take time. These efforts won't be commercially viable until after 2020 because of the technology required, and the science and research involved. This is not a business for startups."
Don Paul - Vice President and Chief Technology Officer, Chevron, San Ramon, California
Fast Company, October 2007

"...the North Sea, the reserve that turned the United Kingdom into an oil superpower in the 1980s, much to Margaret Thatcher's delight. It was fun while it lasted. Production is falling off a cliff. The U.K.'s oil and gas output peaked in 1999 at 4.5 million barrels a day (a figure that combines oil and the equivalent output of natural gas). Today it's about three million barrels, a figure expected to decline by 10 to 15 per cent a year. The U.K. is now a net importer of oil and gas. Mexico's Cantarell field, one of the world's most prolific oil producers, is sweating too. Last year's production, which averaged 1.78 million barrels a day, was 13 per cent lower than the previous year's. A similar decline is expected this year. Meanwhile, demand is climbing relentlessly. China was self sufficient in oil until the mid-1990s or so. Now it's the world's second-biggest oil importer. Its consumption has climbed about 50 per cent since 2000 alone. China can't take all the blame. Note that some of the world's biggest oil producers are holding back oil to feed their own growing economies. Saudi Arabia's consumption was up about 30 per cent between 2000 and 2005; Iran's was up 21 per cent. Since the 1960s, two barrels of oil have been consumed for every barrel found."
Two barrels of oil are used for each one found. $100 oil anyone?
Globe and Mail (Canada), 21 September 2007

"Canada and Britain can help achieve global energy security by working together on international resource development, says the head of the British government's foreign trade and investment agency. Andrew Cahn, CEO of UK Trade and Investment, said Canada and Britain can jointly promote the idea that energy security depends upon finding international cost-effective, secure and environmentally friendly ways of exploiting known oil and gas reserves and exploring for new ones. 'Energy security has two different meanings,' said Cahn. 'One is making sure that we have adequate supplies for our growing needs in the future. The other is to make sure we are protected against terrorism and other threats. 'On the latter, huge strides are being made and a lot of joint work is done. On the former, the resources are there - and Canada has a large amount of them - but there are technological challenges. Only a small proportion of Canada's resources are now available for exploitation using current technologies.'....He said declining reserves in the once-bountiful North Sea have provided U.K. firms with expertise in finding innovative technological solutions and overcoming environmental challenges, which can also be used to extract oil and gas from hard-to-access areas in Canada. As reserves in the Western Canadian Sedimentary Basin decline, Canadian producers have repeatedly stressed the need to tap into unconventional plays like coalbed methane, tight gas and shale gas while at the same time calling for the development of new technologies.....According to the U.S. energy information administration, which analyses energy supply and demand on a country-by-country basis, the U.K. is the largest oil and gas producer in the European Union. But it became a net importer of gas in 2004."
Britain wants to be part of Canada 'oil rush'
Business Edge (Canada), 21 September 2007

"Lord Oxburgh, the former chairman of Shell, has issued a stark warning that the price of oil could hit $150 per barrel, with oil production peaking within the next 20 years. He accused the industry of having its head 'in the sand' about the depletion of supplies, and warned: 'We may be sleepwalking into a problem which is actually going to be very serious and it may be too late to do anything about it by the time we are fully aware.' In an interview with The Independent on Sunday ahead of his address to the Association for the Study of Peak Oil in Ireland this week, Lord Oxburgh, one of the most respected names in the energy industry, said a rapid increase in the price of oil was inevitable as demand continued to outstrip supply. He said: 'We can probably go on extracting oil from the ground for a very long time, but it is going to get very expensive indeed. 'And once you see oil prices in excess of $100 or $150 a barrel, the alternatives simply become more attractive on price grounds if on no others.'"
Oil industry 'sleepwalking into crisis'
Independent On Sunday, 16 September 2007

"As crude oil prices hit a record high yesterday, an as-yet unreleased Queensland Government report warns of massive social dislocation, rising food prices and infrastructure headaches because of rising oil costs. The report on the looming 'peak oil' crisis concludes that we will have to re-think the way we live and travel in the next few years as relatively cheap liquid fuels become a thing of the past. 'Peak oil' refers to when global output fails to meet demand, a situation the report estimates will occur in the next few years, although some economists believe we are now on the cusp....The report was prepared by a taskforce of scientists and industry experts, including Queensland's chief geologist John Draper and the Department of Primary Industry's chief scientist Joe Baker, and chaired by the newly appointed Minister for Sustainability Andrew McNamara."
Report warns of petrol chaos
Courier Mail (Australia), 15 September 2007

"Crude oil rose to a record $80 a barrel in New York after supplies dropped the most this year. U.S. oil inventories fell a greater-than-expected 7.01 million barrels to 322.6 million last week, the Energy Department said today. Prices also rose after OPEC said yesterday it would increase production by 500,000 barrels a day, less than is needed to meet a seasonal rise in demand....The IEA, an adviser to 26 industrialized nations, said global oil demand will rise 1.4 percent to 85.9 million barrels a day this year in a monthly report. Consumption will increase 2.1 million barrels a day to 88 million in 2008."
Oil Rises to Record $80 on Larger-Than-Expected Supply Decline
Bloomberg, 12 September 2007

"U.S. refineries must be expanded to handle a rising tide of crude-oil imports from Alberta's tar sands, the world's second-biggest oil deposit, says John Hofmeister, Royal Dutch Shell PLC's U.S. chair. Shell, Saudi Aramco, ConocoPhillips, BP PLC and Marathon Oil Corp. plan to spend a combined $15 billion (U.S.) to expand refineries from Michigan to Texas to process more low-grade oil from the tar sands."
More refining needed to process Alta. output
Toronto Star, 11 September 2007

"Opec, the cartel of most of the world’s oil producers, meets in Vienna on Tuesday. Every indication is that the producers will refuse the request of consuming countries to open the spigots so as to bring down oil prices. 'You cannot convince any member to add more crude to the market,' Abdalla el-Badri, Opec secretary-general, told the press. Venezuela can’t: its production is sinking as Hugo Ch�vez replaces Petr�leos de Venezuela’s highly regarded technocrats with political hacks. He wants more for each barrel he produces, especially if high prices threaten American prosperity. Iran, suffering from falling output as the American embargo denies the country the know-how and equipment needed to update facilities, is also a price hawk. The key player, Saudi Arabia, will talk the talk of moderation and friendship to the West, then whine that prices are already down from their summer peak, that a slowing American economy will reduce the demand for oil, and that the weaker dollar means the kingdom is getting less real purchasing power for its oil. Unsaid is the fact that the Saudis need the money to fund the lives of thousands of indolent princes, and the terrorist madrasas it continues to finance. Best of all, Opec now knows that it can count on Vladimir Putin to help it in two ways – one intentional, the other unintentional. Putin will cooperate with Opec because high oil prices make it easier for him both to provide Russia’s people with butter and his military with guns. He is also inadvertently helping to maintain prices by allowing Russia’s oil output to fall as his former KGB and other cronies take over the country’s oil companies, and reduce foreigners to minor roles. As The Economist magazine pointed out, KGB-trained thugs 'know how to grab assets and jail foes, but not how to run real businesses'. In short, there is little likelihood that any of the major producers will permit the foreign investment they need to step up production sufficiently to make a significant dent in the current price of oil. The Saudi royal family doesn’t want to antagonise the bin-Ladenites by inviting American companies in, although it relies on the American military to keep it in power. Mexico won’t allow American capital in, but wants to ship unlimited numbers of its workers out to the United States. The Bush administration acquiesces. Any downward pressure on prices will have to come from a reduction in the demand for traditional petroleum... Meanwhile, the American economy remains dependent on its enemies for its fuel, its politicians refuse to take meaningful steps to reduce that dependence, and America sleeps."
US pays the price of relying on foes for oil
Sunday Times, 9 September 2007

"Shell is considering using nuclear power to operate its controversial tar sands programme in Canada. Tar sands extraction – mining oil from a mixture of sand or clay, water and very heavy crude oil – uses a huge amount of energy and water. Environmentalists say it results in more than three times as many emissions of carbon dioxide compared to conventional oil production. Now Canadian firms AECL and Energy Alberta have proposed building a nuclear reactor near the site of Shell's vast Athabasca tar sands development. The boss of Energy Alberta has said the C$6bn (�2.8bn) reactor has the backing of a large unnamed copany that would take 70 per cent of the reactor's energy.... Walt Patterson, associate fellow at think-tank Chatham House, said: 'Extracting oil from tar scares the pants off me. The whole idea is fundamentally perverse in the context of our present environmental situation. To then power it with nuclear, it seems to be the worst of all worlds.'... Shell and its Athabasca partners currently pump over 155,000 barrels of oil per day from the tar sands but want to increase this by five times over the next 20 years. This would need more than an extra 1,000MW of generating capacity. Most of the project's existing power comes from a gas-fired plant, but gas production in North America is declining."
Shell could take nuclear option to mine oil from Canadian tar sands
Independent On Sunday, 9 September 2007

"High oil prices are here to stay, according to Total, the French oil multinational, which has raised its forecast value of a barrel of crude from $40 to $60 as it predicts continuing strong demand for oil, rising costs and political constraints on production. Total’s decision to bet on a higher oil price is based on fundamentals, said Christophe de Margerie, the chief executive, who said the recent turmoil in the debt markets had shaken most of the speculative money out of oil futures. Despite the loss of the hot money, the price of Brent crude was about $77 per barrel yesterday, close to its peak of $78. 'Demand is still strong in Asia, there is strong demand in the Middle East for electricity generation and water purification. The price will remain high,' he said. The Total chief said that biofuels would not provide an answer for the world’s energy needs, insisting that hydrocarbons and, increasingly, nuclear power, would supply 80 per cent of the world’s energy for the next 50 years. The French energy giant’s shift to a higher oil price scenario forced it to reduce by 20 per cent its production growth estimates for the period to 2010. The company also warned of significant cost inflation and the risk of project delays. Rising costs have pushed up the oil price at which Total’s investments earn an acceptable return. The French company is putting more money into heavy oil and bitumen projects in Canada but the hurdle rate for such investments has risen from an oil price of $30-$35 per barrel to $50 per barrel. Mr de Margerie said that the world must turn to Iran, where Total is considering a $10 billion (�5 billion) gas project. 'We are not interested in a fight with the US Government,' he said. 'This project has to fly one day. Everyone has to take responsibility if the world doesn’t have enough gas.'"
Price of oil will continue to rise, says Total chief
London Times, 7 September 2007

"Production of conventional oil in OECD countries will peak as soon as in 2010, increasing the world's dependence on the OPEC cartel and Russia, and continuing the rush to non-conventional deposits such as Alberta's oilsands, the chief executive of Norway's Statoil ASA predicted yesterday. Helge Lund, in Calgary to talk about Statoil's oilsands strategy, said he expects to see continued international interest in Alberta's resources, regardless of its high development costs and human resources challenges. 'We see cost challenges all over the world -- in Norway, North Africa, West Africa, the Gulf of Mexico,' the 44-year-old economist and former McKinsey & Co. consultant said during a wide-ranging discussion with reporters. 'I don't think there is any safe haven in the global oil-and-gas industry.'... Oslo-based Statoil, which is expected to complete a US$32-billion merger with Norsk Hydro on Oct. 1, is one of the world's top 12 oil companies, with operations in 35 countries.... While other global companies are reluctant to offer predictions on when oil production might peak, Mr. Lund said Statoil's view is that it will come between 2010 and 2015 for the 30 countries in the Organization for Economic Co-operation and Development. 'That means, from that perspective, that we will be more dependent on a few countries in the Middle East, Russia and a few other areas, generally OPEC,' he said. 'The non-conventional resource comes in as an important part to make up for that.' Statoil paid $2.2-billion in April for Calgary-based oilsands startup North American Oil Sands Corp., which it plans to turn into its largest project outside Norway.... In the oilsands, its plans are unchanged from North American's strategy: First oil, using steam-assisted gravity drainage technology, is expected in 2010, while peak production of 200,000 barrels a day will come near 2020."
STATOIL SEES OECD PEAK
National Post (Canada), 7 September 2007

"Nexen Inc shares rose on Friday despite the latest in a series of cost increases at its Long Lake, Alberta, oil sands project, which lifts the price tag to nearly double the initial estimate. Nexen, the No. 4 Canadian independent oil explorer, said the Long Lake bitumen and synthetic crude development could cost as much as C$6.1 billion ($5.8 billion), up from the last estimate of C$5.8 billion. The project, in which Nexen has a 50 percent stake, was pegged at C$3.4 billion when the partners sanctioned it in 2004. The company blamed poorer than expected productivity in the construction of its upgrading plant and difficulty securing labor amid Alberta's oil sands rush. It pushed the startup of the plant back to the first or second quarters of next year from the previous goal of late 2007.... Nearly all oil sands projects have been hit with large cost overruns due to a tight labor supply in Alberta and industry-wide inflation in the costs of key materials like steel."
Nexen shares up despite latest oil sands cost jump
Reuters, 31 August 2007

"The northeastern shore of Greenland could provide the U.S. with significantly fewer billions of barrels of oil and gas resources than previously thought, the U.S. Geological Survey said Tuesday. The lower resource estimate will mean that, as domestic production declines, the U.S. will have to increasingly rely on other major producers such as Russia, Venezuela, West African states and the Middle East. The USGS published the first review of the hydrocarbon potential of the region in seven years, estimating more than 30 billion barrels worth of petroleum reserves. The government agency said it believed the area - which lies under massive sheets of ice in water depths up to 500 meters - holds 9 billion barrels of oil, 86 trillion cubic feet of natural gas and 8 billion barrels of natural gas liquids that are undiscovered but recoverable. The 2000 survey estimated 47 billion barrels of oil, 81 trillion cubic feet of gas, and 4 billion barrels of natural gas liquids.... The USGS said there is no current technology for exploring or developing oil and gas accumulations under sea ice such as those thought to lie in reservoirs in northeastern Greenland. As the last major survey of the geologic potential of the Arctic estimated that 25% of the world's remaining undiscovered hydrocarbon resources lay within the Arctic circle, the U.S. government was hoping to supplant other crude imports with future supplies from the Arctic."
USGS Greenland Survey Shows Much Lower Resource Potential
Dow Jones, Newswire 29 August 2007

"In July, Turkey signed a preliminary agreement with Iran to develop three gas projects in the giant South Pars gas field and build two pipelines to ship an estimated 30 billion cubic meters of Iranian and Turkmen gas to Turkey for resale to Europe.... in the long run, the planned alternative gas suppliers to the EU --including Azerbaijan, Algeria, and Norway -- might not be able to sustain such large volumes of production, and the EU will be forced to either cut back on gas consumption or return to Russia for its gas supplies. Potentially, the most viable source of non-Russian gas for the EU in the region is Iran, and will remain so for decades... Adding to the complexity of the situation is the coming gas shortage in the United States. With consumption overtaking both production and current imports, the United States too will be forced to turn to Russia, Qatar, and possibly Iran for LNG in a few ye