This Week in Petroleum 11-28-07
Posted by Robert Rapier on November 28, 2007 - 10:55am
Topic: Supply/Production
Tags: eia, gas inventories, gas prices, oil inventories, twip [list all tags]
2nd Update
Crude was down sharply following today's release. The AP explains:
NEW YORK (AP) — Oil's rise to $100 a barrel, which seemed a done deal as recently as two days ago, was dealt a severe blow Wednesday when the government reported an increase in supplies at the Nymex delivery terminal in Cushing, Okla., which is closely watched by traders as a benchmark of oil inventory tightness.
Overall crude supplies fell during the week ended Nov. 23 by 400,000 barrels, in line with the 500,000 barrel decrease analysts had expected. But that decline was overshadowed by a 600,000 barrel increase in inventories in Cushing, Okla. Cushing inventories are up 13.4 percent in two weeks.
Activity at the Cushing terminal is studied closely by oil traders because it is the physical delivery point for Nymex crude. Falling supplies there are seen as a symptom of a tight market, and those concerns ease when Cushing inventories rise.
At this point, I think the only chance oil has of reaching $100 this year is if OPEC comes out of the meeting next week and really spooks the market. Of course every time I say that, oil runs up $8. But I do expect it to drop into the $80's pretty soon.
Updated following the release
Crude inventories fell less than expected, but mostly in line with expectations. Refinery utilization is picking back up. The one thing to note is that crude imports are now up over the same period last year, and with the reports of more OPEC shipments headed this way, this trend is likely to continue. This is the first time in a long while that I recall imports being up year over year.
Summary of Weekly Petroleum Data for the Week Ending November 23, 2007
Some excerpts:
U.S. crude oil refinery inputs averaged nearly 15.5 million barrels per day during the week ending November 23, up 573,000 barrels per day from the previous week's average. Refineries operated at 89.4 percent of their operable capacity last week.
U.S. crude oil imports averaged nearly 10.4 million barrels per day last week, up 534,000 barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 10.1 million barrels per day, or 144,000 barrels per day more than averaged over the same four-week period last year.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) dropped by 0.4 million barrels compared to the previous week. At 313.2 million barrels, U.S. crude oil inventories are in the upper half of the average range for this time of year. Total motor gasoline inventories increased by 1.4 million barrels last week, and are below the lower end of the average range.
Nothing earth-shattering in this report. I think now it's a waiting game until OPEC's meeting next week.
------------------------------------
Here is the expectation for this week's report:
NEW YORK (Reuters) - U.S. crude oil stocks probably fell last week on lower imports, a preliminary Reuters poll of nine industry analysts showed on Monday.
Analysts called for an average draw of 800,000 barrels for crude oil stocks, a 1.4 million barrel drop in distillates, which include heating oil and diesel fuel, and a 1.0 million barrel increase in gasoline stocks.
However, the estimates were all over the place:
Phil Flynn of Alaron Trading in Chicago, however, predicted that crude stocks rose on higher imports. Crude imports had fallen 667,000 barrels per day to 9.8 million bpd in the week to Nov. 16.
Imports last week could have fallen about 300,000 bpd to 9.5 million bpd, according to an estimate by Tim Evans, analyst at Citigroup Global Markets in New York.
But Peter Beutel, president of Cameron Hanover in New Canaan, Connecticut, estimated crude imports could have risen between 250,000 to 750,000 bpd last week.
Generally, you would expect that a draw this week should push prices back toward $100. However, there are other factors pulling crude in the other direction. Given that one of the major factors that pushed oil up has been a widely held belief that OPEC had nothing more to give (or couldn't back up their promised 500,000 bpd increase), news like this should give traders pause in the short term:
OPEC oil exports, excluding Angola, will rise by 720,000 barrels per day (bpd) in the four weeks to December 8, according to Roy Mason of tanker tracker Oil Movements.
The increase will be the biggest this year, with most of the extra supply heading to Western refiners. Mason estimated that seaborne exports from the 11 OPEC countries would rise to 24.54 million bpd from 23.82 million bpd to November 10.
Based on these observations, I think it is very likely that a new all-liquids peak will be set in November. In fact the IEA's new production numbers for October (the full report is now available for free) show a (preliminary) new record. The total liquids production rate in October was reported to be 86.43 million bpd (see Table 3). That is up almost 2 million bpd over August, and 300,000 bpd above the previous July 2006 record of 86.13 million bpd (thanks to Stuart Staniford for providing that number). The IEA doesn't break out just crude + condensate, but with all-liquids in that neighborhood, C+C should be near record territory as well.
The other big question is the upcoming OPEC meeting. All year I have been in the (lonely) camp that OPEC is setting on some spare capacity. I think that question has been answered, although they were certainly slow to open the taps. The questions now are 1). How much more capacity do they have?; and 2). Can Saudi get the production increase that they reportedly desire? I think there is a lot of risk out there for short-term bulls. Supply appears to be increasing, there are projections that demand will soften at these prices, and OPEC is about to discuss another production increase.
Yesterday's OPIS Report also had a blurb on this:
The list of market watchers predicting $100/bbl oil is growing, putting more pressure on OPEC to boost production at its Dec. 5 meeting. "The market is still not pricing in production increases. I would have thought today would have been a little more give-back," said one trader who expects OPEC will boost supply.
Oil has certainly run up higher than I thought it would this year. However, the factors that helped with the price run-up are starting to shift. The long-term bullish factors remain. Short-term, I would heed the signs pointing to a more favorable supply/demand situation.
Recession talk is likely to get louder after the holidays. U.S. economic slowdown will be the primary story of oil prices and global demand in 2008. In the meantime, prices may touch $100, but I don't think sustained $100 oil and another big jump in prices above $100 is going to be the big story of next year.
Dont worry. We'll see $100 very soon, maybe within 20 days.
There will be a new war - on Kosovo. The Albanian minority in Serbia (but majority in Kosovo) is preparing to declare their full independence, on 10th of December. This will be backed up by the USA and some EU countries. Result: clashes between Albanian and Serbian paramilitants.
I am not saying this conflict could shake the world, but it will be significant enough just to move the oil price a few percents higher, crossing the $100 mark.
http://science.reddit.com/info/61mye/comments/
thanks for your support...
As I read this, oil has fallen to $92.75 (Nymex), and the stock market is experiencing a little mini-boom (Dow is up $244 so far today). But it's ironic, given a lot of bad news. Wells Fargo Bank (one of the best-managed US banks) today reports that it is taking a $1.4 billion write-off because of subprime losses.
UPDATE 3-Wells Fargo to take $1.4 bln charge for bad loans
Meanwhile, Citibank looks like it is selling itself to Abu Dhabi:
Citigroup-Abu Dhabi deal: A sign of the times
This is something I've long predicted - insolvent US banks will be looking for "white knights", and the only people with the cash who are foolish enough to buy these liabilities are Middle East countries flush with petrodollars. Whether or not this will be enough to save the rotting US banking system is an open question. I think in the long run, it's probably a doomed exercise, but insolvent America has little choice but to sell the family jewels.
I think December will be a wild roller coaster ride for the US stockmarket, but ultimately I think it will end in tears.
A couple of more stories of interest:
Recipe for a meltdown
Beware our shadow banking system
We live in interesting times.
regards,
Oz
For several years running I read constantly that the booming real estate market was holding up the U.S. economy - fueling financial markets and consumer spending. Now the real estate market is in a record-breaking slump - a buyer's market without any buyers. Combine this with the credit crisis, since in any case they can't really be separated, and I wonder if there's anyone out there who really believes a recession next year isn't inevitable.
If China removes the restriction from the yuan currency peg to the U.S. dollar, then it's lights out for the U.S. economy. It is already failing, obviously, but that would be the final fatal blow. Meanwhile, Russia, Norway, and OPEC are drowning in U.S. dollars.
My favorite recent quote from Kunstler: "...the world's 'reserve currency' becomes the world's reserve toilet paper." LOVE IT!
That's a big if, though. China has to be very careful about letting its currency float. It's not going to happen anytime soon.
China has amassed $1.7 trillion (Euro 1.2 trillion) in cash as a result of the peg. Largest most powerful army and navy in the world. The rich and the powerful all make a pilgrimage to China to show their respect. Huge influence in Africa, Latin America, most of North America, Persia, North Korea, Pakistan. Expanding influence in the Middle East.
Neighbors Vietnam, Thailand, Russia, India, Japan cowed and subdued.
Why let the Yuan float?
Navy???
Their submarines cannot be detected by the American, Russian or any other tin can Navy in this world. And they proved it recently against the USS Kitty Hawk.
chinese subs undetectable?
huh?
if by navy you mean a flotilla of wooden junks- then yes, certainly. 'paper' navy is a more apt term.
boy we are in for interesting times if policy makers in the world's most populous nation think anything like the above statement.
I think what you mean was 'delectable'. I'm sure the U.S navy would more than happily correct you. When I was learning english I sometimes made mistakes too. It happens.
You have no idea what you are talking about.
The subs that China has are complete targets. They are loud, the crew are poorly trained, and they suffer from crap target processing software.
A submarine is absolutely made by its crew. The US Navy is so far in front everyone else on crew quality it isn't even funny. The Australians are quiet good, they and the Norse are about the only ones close to US Navy quality. There is a reason for that. Those two nations are utterly devoted to having a top flight submarine force..... They are the premier arm of those two countries Navys.
The 2nd tier can be dangerous but a LA/Virginia class is going to sweep them from the sea 75-90% of the time. (Usually because someone drops a wrench or lets the toliet seat fall.... I'm NOT kidding. Good friend of mine was a Sonar man on an Improved LA boat)
2nd Tier:
Royal Navy
USSR (some officers were as good or better than the USA, their boats simply don't get out enough anymore for their crew to be sharp)
Kriegsmarine
France (good at sinking Green Peace... untested against people that shoot back)
Pretty much anyone in Nato that operates boats does so at an acceptable level. Can they kill a CVN? Sure they can. Can they kill a CVN out at sea during General Quarters? I'm not betting on it if the CVBG has an Improved LA/Seawolf/Virginia escorting it. But hey, even a blind pig finds an acorn sometime. The 3rd tier may have some dangerous boats but unless some Admiral decides to do donuts in Shanghai harbor the odds of a Kilo or Tango sinking a CVN are about 1000-1.
You could give the Chinese a AIP boat from Germany and I still wouldn't bet on them nailing a CVN. They simply don't have the crews...... yet.
If China WANTED a real blue water sub force, they could do it. They have a long way to go though. It is unlikely they could make the structural changes in their naval program that would be required to train the crews in the expertise and flexibility that is needed. The problems are in many ways political.
No more talking about things you have no clue about. You are on probation from the ignorance patrol.
And neither can the Russian or American subs be detected by others. It's not that hard to hide a sub, especially during peacetime, and it's kind of silly to say that's what defines "the most powerful navy in the world". Fact of the matter is that China has very little blue-water (long-range) navy, and the subs are pretty much defensive assets against the US's overwhelming naval superiority, especially in terms of force projection.
Regardless of whether people like it or not, the US's navy gives it utterly unmatched force projection ability. As incompetently as its Iraq endeavour is being handled, few other countries would even be able to attempt it, and none would have had a hope of conducting the original bombing campaign that destroyed Iraq's military and military infrastructure. Of the world's carrier-borne aircraft, the US has twice as many has every other nation combined. No navy in the world can match the US's.
None of that is America-boosting; it's just fact. That no military in the world is anywhere near the US's should hardly be surprising, though - no military spending in the world is anywhere near the US's; the next-highest country spends about 10% of what the US does.
in response to Why let Yuan float? I mentioned Michael Gomez of Pimco excellent article on China, the Yuan etc in my earlier post to read in full you can visit Pimco.Com in his article he talks about the contiuing massive growth of their economy and WHY it may be in China's own intersest to now let the Yuan float(an excerpt):
"From an economic perspective, a stronger CNY would help reduce the trade surplus, ease pressure on inflation, mitigate speculative purchases of onshore assets, help the central bank gain monetary credibility, foster proper allocation of investments, stimulate domestic demand, rebalance the economy, and disarm protectionist tensions with the U.S. and Europe (the latter a growing concern, given that EU is now China’s number-one trading partner and the CNY has significantly depreciated against the euro over the last year). At the same time, the sterilization costs of heavy currency intervention will grow as interest rates in China rise, while those in the U.S. fall4. Finally, any concerns of a growth slowdown from the stronger CNY easily could be offset by expansionary fiscal policies, particularly targeted infrastructure and social investment."------as it relates to what i was talking about in my earlier post this will add substantial upward pressure to Crude Oil/Gasoline both in the short term and the long haul------Patrick Kerr of OilGasFutures.Com
I remember, during the Carter administration people actually started to conserve energy. The electric companies had to raise their prices to protect their profits, as did other energy companies. I think, that the great fear of all energy suppliers, including the Arab companies is that Common Americans will suddenly wake up and discover they can save money by simply going to bed at sunset, turning down the temp on the hot-water heater and staying home on the weekends.
Most of the people I associate with are starting to walk to work, replace all their incandescent bulbs with fluorescents, (as I have done months ago), and quit using their cars or doubling up. We are all staying home on the weekends, only using our cars when we have to. I think the magic price of gas that promotes this phenomenon is $3.00 and above.
I believe that the oil companies know that if prices were to rise above this mark, it will cause a trend to set in the minds of most Americans and they (the oil companies) will be caught on the tail-end of a conservative revolution that will erode their profits and inflict fear in the minds of most energy suppliers. If I'm right, gas prices should continue to fall back below $3.00 a gallon as the oil companies try to get people back on the road.
After the Carter days, one of the first things they tried to do in every state was lobby to get rid of the 55 mph speed limit. There was a tremendous promotion to get people to move away from the conservative, alternative energy mindset. They tried really hard to bury this mindset. And, they were successful.
I think we all know the direction we need to go and one day, it will happen and that is what will bring down the economy. The transition to alternative energy, if it is even possible , will be a sudden shift in the mindset of the people. This is the fear in the minds of all energy suppliers. If it sticks, it will be their end, even before their oil supply tanks are moving towards empty.
Another thing people fail to realize is that they have tow options when reducing energy consumption, both equally effective. They can 1) Cut down by doing less (50% less driving, 50% less time lights are on, etc.) or 2) Become 50% more efficient (fluorescent vs. incandescent, hybrid vs. conventional IC, etc. etc.). As our friend Kunslter points out, however, it may be that we have to completely revamp our car culture and stop blowing green smoke up people's asses with hybrids, plug-ins, which realistically will never attain > 25-30% of the U.S. automobile fleet even with soaring gas prices.
"Meanwhile, Citibank looks like it is selling itself to Abu Dhabi"
It will be interesting to see how the islam-haters react if the family jewels suddenly start doing islamic banking!
Hey Robert, You may be right on your outlook for the near term trend...I still love to see these pullbacks, and view them as a chance to get into a longer term investing/Trading strategy at a better price....also I've read reports about shortages and rationing in China along with the Chinese Government ordering refiners to make sure the public is supplied with the fuel they need. Additionally as I'm sure you know they are Fast-Tracking new refineries and are now allowing "teapot" refiners (1/10th regular size) to refine again to help meet demand...also the other factor that I think will keep pushing prices higher is the dollar---Pimco's Michael Gomez wrote an excellent article on why the Chinese are going to allow the yuan to appreciate if Pimco's Gomez is right(i think he is) and the Chinese with their continuing high growth let the yuan appreciate this could mean crude will go much higher.---So will the US slowing down curtail demand of crude?, well yes maybe but the subprime/potential recession will keep the fed cutting rates and keep the dollar weak--making crude more affordable to foreigners like the chinese- anyway crude looks interesting on pullbacks--the bigger the pullback the better it looks-right now-we've had a nice $4-5 dollar pullback over the last several days---pre-OPEC meeting on Dec. 5....OPEC is setting market up to be disappointed if they can't increase verifiable production massively(regardless whether they say it or not it's likely they can't increase it much at all) and the Chinese are locking down all the supply they can---we could see the market quickly retest $100 per barrel level or higher-----for investors/traders Pullbacks look like opportunities to get in at better prices-and jumpstart some very aggressive returns right off the bat---Pk of OilGasFutures.Com
Based on the limited data available, it would seem that higher prices managed to pull some extra production. I wonder if what we are seeing now is real spare capacity being used up, or it is a short-lived burst that cannot be sustained for very long. After all, I'd imagine that every oil producer in the world has at least a few barrels of "spare capacity" if the price is high enough.
I've been following the "Has Saudi Arabia" peaked for a while now, and if seems at least that the most pessimistic views have not been borne out.
One of the things that Stuart Staniford's tracking of production data has shown (at least recently) is that the IEA data seems optimistic in terms of what is being measured in the very near-term compared to the more delayed EIA data.
There are different ways of viewing peaking. For example, is it really just one-single month? That is one way to measure it and using the EIA data for C+C, we still get May 2005 at 74.3 MMBPD.
Is it the sustainable 3-month production level (I would quantify that as the "minimum" of a centered value for any given month)? If we did it that way, May 2005 would still be "the peak" because the 3-month sustainable comes in at 73.9 MMBPD.
How about a recursed value like what Stuart has shown us before (and the method I also use to smooth the data). Using a 13-month centered moving average, single recurse value gives you a peak of November 2005, though just barely compared to the mathematical values for October and December 2005. Over a longer averaging time, single-month spike gets lost as high frequency "noise." The recursed average for November 2005 comes in at 73.7 MMBPD, fairly close to the 12-month moving average.
An advantage to this centered, recursed moving average is the ability to project forward (at least for a few months) into the future trends that are not easily altered unless very substantial and sustained changes in the data occurs.
Could we have seen the single month peak coming using this projection technique? No. However, what is evident as you retrace the data was that projecting forward, the rate of increase was definitely slowing as seen by the shape of the curve.
So, what does all this mean in the context of the latest data? Well, there might be a new single month peak C+C value coming on the horizon but given the data available from the EIA, that would require a move (increase)of 1.8 MMBPD over a two or three month period. There has not been that sort of increase since May-July 2004, and production was just under 71.4 MMBPD when that increase started and lasted for all of two months.
As for Saudi Arabia, they've got a way to go to get back to their 2005 highs of 9.6 MMBPD and an even longer way back to their 1981 highs of 10.2 MMBPD. We'll see what they pull out of their bag of tricks.
But I suspect that the numbers that are being reported for liquids by the IEA include a substantial increase in the NGLs. In addition, OPEC Lease Condensates (which does not count against the production quota) has been gradually increasing in recent years (now constitutes ~4% of the reported volume).
James Hamilton over at Econbrowser has a very interesting article about Saudi Oil production. He includes numerous links to support his conclusion.
“I take the latest Saudi production estimates as confirming that the Kingdom has the ability and the intention to boost production substantially above the 8.6 million b/d low we saw for most of the last year.”
Check it out at:
http://www.econbrowser.com/cgi-bin/mt-tb.cgi/715
State of Denial: Bush at War III, page 287
(Friday, February 20, 2004)
About a year ago there was some discussion here about the Saudis increasing their storage capacity for crude oil and speculation that this was in anticipation of a call for them to increase production. The thought was that they could increase exports for a limited period of time rather than admit they had no more spare capacity. Could something like that scenario be at play here as the Saudis promise to "increase production?"
Well thats a factor. Another big factor is Saudi Arabia is in general very conservative with production practicing a round robin type approach and resting wells. This is documented.
As long as they don't produce flat out they always have the ability to boost production for a short time say less than six months by stopping this practice. Also its my understanding that a new field is either coming online soon or may be online already don't know the field. But its several hundred kb of production. And of course they have storage draw down. Even if your overall output is in decline as long as new fields are brought online you can boost production for a bit.
Next of course we don't know for sure the type of oil. I don't think anyone has ever disputed that they have a fair bit of heavy sour oil that is difficult to sell. US refinries may well have been upgraded to the point they can take delivery of the oil.
I think the last argument is probably true since we know that a lot of refineries have been upgraded to handle heavier sour crudes. I'd guess this is both for stuff coming from the tar sands and KSA.
http://www.mees.com/postedarticles/oped/v49n31-5OD01.htm
So given that refinery utilization is up and imports are up and we know that many refineries have been upgraded then the logical conclusion is US refiners are now buying the heavy sour oil from KSA. This is not unexpected although I thought that KSA would eventually refine this stuff themselves.
I guess at least for the US market the choice was refine the crude or if KSA refined it they would send the refined products to local markets.
I'd suspect on the Saudi side a lot of their comments about lack of refining capacity where actually directed at lack of heavy sour refining capacity.
On the flip side is if what we really are seeing is a increased supply of heavy sour then the markets are over reacting by lowering the spot price. I'm sure eventually this will be corrected. The heavy sour refining probably requires a pretty good price spread to be profitable.
What this means to me is that we have probably tapped basically the last big increment of crude that could be brought online. Depending on decline rates etc this addition would I think be worked out in less than 6 months. Also if I recall correctly this is almost 2mbd of production I think some of it was already shipping but they could have another 500kbd increment at least of this stuff still waiting for buyers.
Sorry for not finding all the numbers but first we have to verify that the increases are actually heavy sour. I'm a bit surprised since I thought that this stuff would not sell until late next year at the earliest.
Does anyone know what the KSA ability to refine their own sour, heavy crude is?
What is their ability to refine their own crude likely to be in the next few years?
They're in the process of adding a refinery to ultimately deal with a million barrels a day from Manifa, I believe.
Right I know about that thats a bit different very high in vanadium. But they have other heavy sour fields up too 2mpd if I remember. And I don't think all that was being utilized. They have been trying to sell their heavy sour for a long time. Someone with more knowledge of the fields may be able to explain in more detail. Until recently this stuff was a very hard sale.
If its really being sold now then this is not good news it means we are officially scraping the bottom of the barrel.
Here is a link.
http://www.blackwell-synergy.com/doi/abs/10.1111/j.1744-7992.2007.320703...
BINGO !
We have a winner !
http://www.pennwellpetroleumgroup.com/display_article/312546/7/PRARC/none/GenIn/1/MARKET-WATCH:-Crude-contract-expires-above-$95/bbl/
So I was right looks like Saudi Arabia folded and just increased the spread.
So time to check the price of asphalt over the next few months looks like we will have it coming out of our ears.
Right I know about that thats a bit different very high in vanadium. But they have other heavy sour fields up too 2mpd if I remember. And I don't think all that was being utilized. They have been trying to sell their heavy sour for a long time. Someone with more knowledge of the fields may be able to explain in more detail. Until recently this stuff was a very hard sale.
If its really being sold now then this is not good news it means we are officially scraping the bottom of the barrel.
Here is a link.
http://www.blackwell-synergy.com/doi/abs/10.1111/j.1744-7992.2007.320703...
BINGO !
We have a winner !
http://www.pennwellpetroleumgroup.com/display_article/312546/7/PRARC/none/GenIn/1/MARKET-WATCH:-Crude-contract-expires-above-$95/bbl/
So I was right looks like Saudi Arabia folded and just increased the spread.
So time to check the price of asphalt over the next few months looks like we will have it coming out of our ears.
Also this says to me KSA does not have anything else to sell. I really thought they would hold the line and not do this till towards the end of next year. These guys are getting desperate.
Robert, your camp hasn't been entirely lonely on whether Saudi has been sitting on, or has been developing, more production capacity. I have said several times that nobody* knows how much capacity Saudi really has, nobody knows why Saudi production (until now) did not increase, nobody knows ....
My comments are typically shot down by some arrogant doomer hothead lacking sufficient mental agility to admit that only God is omniscient.
* My use of the term "nobody" is a generalization that excludes the three or four people who actually probably do know, but I round down to "nobody" for simplicity's sake.
The Saudi Oil minister had an interview in Singapore this morning - he mentioned that they are capable of 11 or 12 million bpd. Probably an exaggeration.
I would think that the number of people who think that Saudi Arabia has not been sitting on AND is not developing more production capacity is just about zero.
I'm presently adding more production capacity in Texas. Does that mean that the Texas has not peaked?
In any case, as I noted in a September post, I estimated that Saudi Arabia will show close to a double digit decline in net oil exports from 2006 to 2007, even if they do average 9.0 mbpd (C+C) for the fourth quarter of 2007.
West, I meant net productive capacity---of course, you know what I meant---and you're off-base my comments otherwise. Admitting that one does not know, that any assessment is unable to confirm either way whether important information lacks, is not to say Saudi hasn't peaked. One simply does not know. And even to throw in a probability statement ("well, then, Saudi *probably* has peaked ...") is inaccurate because what is is. "Probability" language would only indicate one's own internal inability to say what is. Keep your eyes on the inability. It's a good teacher.
By the way, your comment re double digit declines says nothing about the future, hey? That's the relevant point here, again: *unable* to say ...
If Saudi Arabia maintained their 2005 production rate for decades and if their rate of consumption from 2005 to 2006 stayed the same, their long term (25 year) overall net export decline rate would be about -10%/year, resulting in zero net oil exports in 2036. The net export decline rate would accelerate with time.
In any case, this was our May, 2006 assessment (the Texas/Saudi production graph), using production data through 2005:
http://static.flickr.com/55/145186318_27a012448e_o.png
We do know, based on our model and recent case histories, that net export decline rates tend to accelerate with time, and we know that Saudi Arabia will show an accelerating net export decline rate from 2006 to 2007, versus 2005 to 2006.
I would think that the number of people who think that Saudi Arabia has not been sitting on AND is not developing more production capacity is just about zero.
But if Saudi has been setting on some spare production capacity, then talk of decline rates is meaningless - because the decline rates include managed declines of unknown magnitude. Go back to March and see the projections of where Saudi would be right now. Those projections were based on an involuntary decline - Saudi unable to arrest it. People were projecting 8 million or even less bpd by now. I think a lot of folks - not aimed specifically at you - have developed amnesia over what they were saying in March. When Stuart wrote this back on March 2nd:
http://www.theoildrum.com/node/2325
A great number of people lapped that up. In fact, you wrote that you had been out on that limb for a long time. But at least part of that limb has broken off, and I have yet to see anyone come out and admit they they blew it on that call.
But you did say that Saudi may see "somewhat of a rebound", so you may not have been on the "unlikely to be arrested" bandwagon. But many were. And not only were those people wrong, in fact exactly the opposite of those predictions happened.
Here's what I wrote on that account on March 4th:
http://www.theoildrum.com/node/2332#comment-165472
Those are unambiguous statements. And no two ways about it, this is EXACTLY what has happened. It still doesn't answer the question of peaking, but Saudi has done exactly what I predicted they would do (which was definitely a minority opinion here).
And as you know, in March I specifically talked about Saudi Arabia being able to increase production (to a level below the 2005 peak), after an initial sharp decline, as new projects came on line. But the bottom line is this, what refutes a peak is a new peak. We will need to see a calendar year average production rate of 9.6 mbpd or more (C+C) to refute the 2005 peak.
As noted above, in September I assumed a fourth quarter production rate of 9.0 mbpd (C+C). I estimated that this, along with higher consumption, would result in a -9.5%/year net export decline rate from 2006 to 2007.
And as you know, in March I specifically talked about Saudi Arabia being able to increase production (to a level below the 2005 peak), after an initial sharp decline, as new projects came on line.
What has never bee