OGI announced yesterday that a 2 billion barrel (guestimated) field was discovered in Bohai Bay, China. There might be more oil in the South China Sea disputed areas.

Mexico is probably getting overconfident with its Ku- Maloob-Zaap nitrogen injection. Cantarell was a larger field and the nitrogen injection schema only boosted production a decade, the drop off in production in their largest field is of the steepest type. Mexico will need to tap into its onshore heavy oil resources. That takes time, it might take more expensive upgrading also.

North Ghawar was reported as watering out. I have read that there are many different parts of Ghawar and much is not published. The Saudis yet have on a website that there are 75 billion barrels of recoverable oil in Ghawar. I think that might closer to remaining oil in place, and that most of it may not be recovered with current technology. Ghawar was described as past peak. I recall OPEC had advertised a million barrels a day plus in production cuts, OPEC is something that might obscure peak forecasting.

National Oil Companies might need more money for E&P to replace declining production or temporarily boost it like Mexico did. National governments need to take more funds from NOIC's to fund growth.

I think Rex Tillerson's 4 year investment plan for XOM is a failed plan, even as defined by his own terms. He plans to spend 20B a year for 4 years to increase capacity by 1 Mb. That's not net, btw. That's gross. Not only am I unconvinced that he'll gross that amount, but, I also conjecture he'll be spending more than 20B a year the second two years.

It's a stupid plan fraught with exploration and cost escalation risk, especially when there are at least 10 E+P companies already trading on the exchanges that he could buy. Everyone from Suncor to OXY, to Devon, the CNQ, NXY, Anadarko, and so on.

But Rex Tillerson's need to believe in the traditional model is so strong, he can't consider the possiblity that his plan is higher risk and will spend the money to prove it, (dammit!).

Other interesting examples of stubborn belief include the public beleiving that Dan Yergin is "an oil expert", and/or that Rex Tillerson understands or even cares to understand the price of oil. Neither are true of course, and even Rex has tried to tell us in as many words. When he was first made CEO of XOM he was asked about the high price of oil and said "I have no idea why the price of oil is where it's at, and frankly I don't care. It's not what I do."

A very honest response for a man in his position, imo.

When Matt Simmons says he won't be investing in XOM, he too is being quite honest and knows exactly what he's saying.

Tillerson is now essentially running an Oil and Gas Trust. He trumps up the gross production capacity he wants to achieve, while carefully avoiding the net, and meanwhile he's really spending capital buying back XOM shares. And Yergin is really just a Front Man for CERA, a Hood Ornament--a kind of accidental expert--who is wise enough to never, ever say anything notable, that hasn't already been said by someone else.

Interesting world.

Gregor