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ASPO Houston:
It was nice to meet all the folks from the oil drum and see and meet them as real people not just as anonymous contributors.
On Friday afternoon their was a roundtable by Henry Groppe, Charles T Maxwell, and Boone Pickens.
Mr. Groppe presented some remarks to the effect that KSA had made some wrong decisions due to the IEA stating that non-OPEC oil production in 07 would increase by some 1.7 MM brl’s per day. KSA then decided that OPEC’s production should be cut by this amount, and achieved a reduction of 1.5 MM brl’s per day. While in reality non-OPEC production never increased at all. He also stated that he was of the opinion that in the future KSA could achieve 12 to 15 MM brl’s per day and not the +20 that some project.
Mr. Maxwell presented some remarks to the effect that International oil CO’s had relied on the EIA and CERA price data back in 05 to be in the range of 35 to 40 Dollars in 09. The Oil CO’s were of the opinion that if they held back on their E&P budgets they could get cheaper rates in the future. They are now in the position where they will have to spend enormous sums to achieve their goals in E&P.
These are some of the causes of the current high prices.
Mr Pickens was of the opinion that Production would never exceed 85 MM brl’s per day, and we would see 100 dollar oil before we see 80. IMO it may be to his advantage make these kinds of projections.
This is of course my understanding of their comments and please correct me if I am in error.
Regarding Mr. Pickens and his prediction on oil prices, I realize he is investing in wind farms in Texas, but I don't think that presents a conflict of interest nor an advantage for him to make bullish predictions about oil. Now, if he were predicting lower oil prices and also investing in wind farms, then I would question his motives.
As it is, I don't think his predictions are going to actually affect the price of oil so I don't see what advantage he gains. I see him as a guy with the knowledge to make accurate predictions and the guts to put his money where his mouth is.
-Don
Guys like Pickens, Simmons, and Buffett all have enough money that I don't think they need to scam people to make more...
I follow what they all have to say and what they do with their money to give myself a hint as to what's to come.
They are all smart investors, humble and have been around for awhile...they don't need to impress anyone and are thinking beyond their bottom dollar IMHO.
Dragonfly41, I agree with your comment: 'guys like Pickens, Simmons, and Buffett all have enough money that I dont think they need to scam people to make more...'
I also follow what they do, but pay less attention to what they say.
I dont agree with 'your humble opinion.'
'These people'... Well, what do 'these people' do? They play the game of capitalisim and they are very good at it. They are perfectly suited to the game and they will continue to play it as long as they are successful, have sharp minds, see the trends and act on them, make more money and enlarge their egos while acting 'humble'...(sometimes). Money is the means by which they keep score.
One of my favorite lines is from the movie 'China Town'...Jack Nicholson, upon discovering that the wealthy of the LA area are busily cutting off water to farmers and forcing farms to sell at 'fire sale' prices, is stunned. Then he delivers the line (questioning why the wealthy would force poor farmers out of business to further enrich themselves)...'My God, how much better can they eat?'...Nicholsons character didnt understand that the wealthy were not concerned with eating better or having finer mansions or bigger autos...The wealthy were simply playing the game of capitalisim...And, the wealthy could care less who gets hurt, as long as they win (profit) in the game.
Some individuals, like Roberto Clemente, are perfectly suited to play baseball. Some individuals, like the trio mentioned above, are perfectly suited to play capitalisim.
A lot of us were puzzled by Mr. Groppe's and Mr Maxwell's comments regarding Saudi Arabia, especially Mr. Groppe since he showed that crude + condensate production had peaked.
So, of the four long time energy insiders, three of them--Pickens, Simmons & Groppe--all thought that at least crude + condensate production had peaked (Pickens was using Total Liquids).
Mr. Maxwell thought that we would see a brief pullback in oil prices, followed by another price increase in six to nine months.
My April, 2006 letter to two Texas newspapers regarding Mr. Pickens and Mr. Rainwater:
http://www.energybulletin.net/14606.html
My recurring question: If you believe Pickens, Rainwater, Simmons, et al, regarding Peak Oil, wouldn't you avoid buying the SUV to drive to and from the $500,000 mortgage?
If you believe ExxonMobil, Saudi Aramco, Yergin, et al, regarding Peak Oil, wouldn't you be more likely to buy the SUV, thus driving up energy demand and prices?
So, who is royally trying to screw the American public?
"So, who is royally trying to screw the American public?"
Hmm. Classic case of a false set of choices, and also a misleading question. It may not be the case that anyone is trying to screw the American public but that there there are plenty which are succeeding simply through a combination of ignorance and greed, and that group includes the American public itself.
Hello WT,
Just out of curiosity: was any ASPO Conf. attendees doing my suggested Peakoil shoutout when their yeasty beverage of choice reached half-empty during the cocktail sessions or late-night yada,yada,yadas?
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
I thought the comment about the 1.7 MM bbl/day drop by Mr. Groppe was a bit surprising also. I think that Stuart Staniford's analysis presented at ASPO and on the Oil Drum definitely is a good technical basis to believe that it was not voluntary.
One unknown here is whether Mr. Groppe is well connected enough (he probably is) to get some direct information from the KSA royal family about what's happening there.
There was another part of his comments though that I have difficulty accepting, and that was the part about KSA being able to produce 12 to 15 MM bbl/day for a long period (and I thought I actually heard him say 20 MM bbl/day). I think it's possible that they may get to, say, 10 MM bbl/day with their current intense drilling program, but I cannot concieve of 12 to 15 MM bbl/day.
I must also say I was dumbfounded at Mr Groppe's confidence in saying Saudi could produce 12-14mbpd. Its behavior at current prices says otherwise. Also, from a moral POV, so many poor nations are greatly suffering at the current price level such that the Saudis are guilty of a great sin if they can actually produce enough and thus cause the price to fall.