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I would alter your last question to "How much of their spare capacity can be processed?" (At a decent rate / EROEI etc..)
Marco.
Think about your question. Each month, fields are obviously depleting. Each month, they are obviously able to replace that depletion. So all of the spare capacity they have been bringing online can be processed, since their capacity has been steady (after recently increasing) and it is being sold to their customers. If it couldn't be processed, they couldn't sell it.
But "Spare capacity" is the oil they are NOT bringing to market. Spare capacity is what they are claiming they have 2+ mbd of. If it was "spare" then sure as hell the world needs it now at $106 a barrell and sure as hell we have not got the refinery capacity to process this sour heavy stuff they claim as spare.
Marco.
But "Spare capacity" is the oil they are NOT bringing to market.
They have to bring some of that spare capacity online each month - as fields are depleting - if they are maintaining their production at a steady level. Between February and October of last year, when production was steady over the entire time, they had to bring on enough spare capacity to cover for the fields that depleted over that time period.
But my argument is that there is only so much of that spare capacity that the world can accept due to processing problems so really they are supply constrained which effectively is the same thing as demand constrained, which ever way you look at it. If it was more light sweet they could bring into play oil would not now be at $106 a barrel and Saudis would be pumping more as this is above even their 'desired' price.
If you think about it. If heavy sour is indeed all they can bring into play and the world currently cannot process any more of this stuff then the statement from the Sauids "pumping more would not bring the price down" is in a round about sort of way a true statement. pumping more of what they are offering would help diddly squat.
The only thing I am trying to puzzle out is why so many plans for heavy / sour processing seem to be getting delayed or cancelled.
Marco.
If you think about it. If heavy sour is indeed all they can bring into play...
I understand that this is your argument, but it isn't accurate. Let's think about what would have happened last year if Saudi had no spare capacity. Saudi production - 8.6 million bpd in February 2007 - would have fallen to maybe 7.9 million bpd by year end (and this was predicted by some here). Instead, production at year end was 9.1 million bpd:
http://www.eia.doe.gov/emeu/ipsr/t11c.xls
What does this mean? That in February of 2007 they were setting on at least 1.2 million bpd of spare capacity (which if you recall was the argument I was making at that time); capacity they brought on line during the year. What was the quality? Quality that their customers could process, obviously, as they bought it.
And if you look at the quality of crude inputs to U.S. refineries, you see that at least in that case the gravity change over the past 12 months is very small:
http://tonto.eia.doe.gov/dnav/pet/hist/mcrapus2m.htm
In fact, crude in 2007 was lighter than it was 2 or 3 years earlier. So I don't see any evidence of the argument that they only have spare capacity that is heavy and sour. Some of their spare capacity is certainly in that category. But clearly they have been setting on spare capacity that is light and sweet.
Well Robert, at the risk of you crying Troll once again, I would point out that you again are making an argument that is not sustainable by any information that I can locate and certainly not by the data to which you link.
KSA provides about 15% of US imported crude imports and an even lower percentage of the oil inputted to US refineries, given domestic production. Where is there any information on the quality of the KSA oil imported? Where is there data on the quality of the crude supplied by those accounting for 85% of US imports?
If there was a change in the quality of Saudi exports to the US, it could be easily hidden by a compensating change in the quality of the other imported crude (85%) or of domestically produced oil. Even if Saudi exports to the US have not changed in quality, the quality of the rest of their oil production (~80% of total) could have changed. Do you have data that precludes this possibility?
You simply can't conclude, as you do, that "clearly they have been setting on spare capacity that is light and sweet."
As for our previous disagreement regarding the validity of inventory data as a useful indicator, I note with interest that the non-OECD countries are since 2004 accounting for all the increased consumption of oil (complete data only available through 2006, though OECD consumption through to November 2007 is available and it indicates flat to declining consumption). There are some bumps and shifts within the OECD during this period, but nothing that supports the use of inventory data to explain Saudi behaviour, which as I recall is what you try to do from time to time.
There is no inventory data for the non-OECD countries that I've ever been able to locate.
Otherwise, I greatly appreciate most of your posts, especially your ongoing contribution to the ethanol debate.
In support of Roberts I'd say what I call the micro data which is incomplete information is still open to interpretation. If it was clear cut then Saudi Arabia would be under a lot more pressure than they are now.
If we had real inventory problems and say oil was 200 dollars a barrel then KSA claim that the world was well supplied would be met with serious resistance.
Looking outside the monthly data we are clearly in far worse shape now than we where in 2005.
And KSA has not really responded.
Well Robert, at the risk of you crying Troll once again...
If you recall, you were called Troll when you opened up with a gratuitous insult. Challenging my arguments is not what I consider trolling - except when you toss in insults.
KSA provides about 15% of US imported crude imports and an even lower percentage of the oil inputted to US refineries, given domestic production. Where is there any information on the quality of the KSA oil imported? Where is there data on the quality of the crude supplied by those accounting for 85% of US imports?
I almost put this caveat in there. The point is, there is no evidence to support Marco's argument. It is conjecture. Furthermore, 1). We know they brought spare capacity online - spare capacity that I argued at the time (an unpopular argument) that they had; 2). It was obviously good enough for their customers to process, as they bought it. If you can't process it (Marco's question "How much of their spare capacity can be processed?") then you don't buy it.
So my argument is simply that their spare capacity - whether it was of a slightly different quality or not - could all be processed.
There are some bumps and shifts within the OECD during this period, but nothing that supports the use of inventory data to explain Saudi behaviour, which as I recall is what you try to do from time to time.
No you are presuming not only that the hidden inventory information supports you, but that Saudi sells to these customers. As always, the transparent data has favored my argument. Yours relies on the data we can't see. You know which one I think is a stronger argument (and once again, I point out that my predictions on their behavior were in fact correct - which I presume you must think was a lucky guess).
"No you are presuming not only that the hidden inventory information supports you, but that Saudi sells to these customers. As always, the transparent data has favored my argument. Yours relies on the data we can't see. You know which one I think is a stronger argument (and once again, I point out that my predictions on their behavior were in fact correct - which I presume you must think was a lucky guess)."
First of all, Robert, please point to the gratuitous insult you are attributing to me. It isn't my normal practice to give anything away freely, even insults. My memory tells me that I interjected that you were again presuming to use inventory data where it was not warranted.
My argument is not about Saudi behaviour, but about YOUR claim that the data to which you pointed supported YOUR contention regarding KSA behaviour.
Your statement that the transparent [inventory] data has favoured your argument is patently ridiculous in the face of the quality of evidence you have marshalled --vague references to anecdotes regarding non-OECD stocks-- and the quality of your logic, in which you claim that US and OECD inventory levels (as I recall you began with only US data) can explain supplier behaviour in a market in which massive new demand and virtually all new demand is coming from elsewhere.
The problem with your use of limited quality of oil data and limited inventory data in YOUR argument regarding Saudi production history is the potential effect it has on your more reasoned and well-supported arguments, such as on the ethanol matter. It reflects very poorly on you that you make this quality of argument in what seems to be a juvenile pissing contest to establish who is the most accurate prognosticator on TOD. Are readers going to be forced to verify every reference you make, because they have detected elsewhere in your writing a habit of using poor and/or irrelevant data and making spurious arguments with it for seemingly egotistical reasons.
My view on Saudi Arabia is that the regime has every political and financial incentive to mislead the world with respect to their petroleum production capacity, including their domestic population. That doesn't make it so, only likely. Also based on what I read on TOD from people who know a great deal more than myself about oil production, including yourself, I doubt that they will ever be able to arrest the historical transformation situated at the end of the 2 millenium of the common era and rooted in the 'end' of the fossil fuel era. I have concluded that even their capacity to increase their own crude oil production to 2005 levels is very doubtful.
If I was part of Saudi Arabia's inner circle, I would argue that in any case it doesn't matter whether the Kingdom raises production, the tide is not for the turning; the Kingdom should look after the Kingdom's long-term interests. Hoard as much as is sustainable politically and economically: a value that is being actively tested almost daily.
Such behaviour, is in my view, another one many characteristics of the peak oil period, and like the others ultimately attributable to knowledge of physical factors, such as declining resource quality, declining reservoir pressure, etc..
It isn't my normal practice to give anything away freely, even insults.
I am not going to spend time going back and pulling that up. You know there was an insult. Whether you think it was warranted is beside the point. If you open with an insult, I consider that trolling. It isn't necessary, and adds nothing.
My argument is not about Saudi behaviour, but about YOUR claim that the data to which you pointed supported YOUR contention regarding KSA behaviour.
This argument has gotten beyond silly. Of course the data supported me. I showed the OECD graphs. The inventories were at record highs and rising. The OECD makes up most of the oil consumption in the world. The Saudis sell a lot of oil to the OECD. Those facts are indisputable. It makes sense that high and rising OECD inventories mean that their purchases are going to have to slow down (or their sales increase). All you are doing is saying that maybe elsewhere, someone, who may or may not be a Saudi customer - may have had falling inventories to offset the OECDs increasing inventories – and therefore Saudi could have sold to them. That's what I consider a very weak argument. (The anecdotes on non-OECD stocks were not vague, but that's beside the point.) Furthermore, the Saudis certainly benefited greatly from making these moves.
And I note that you can't help yourself, and go right back into the insults:
"juvenile pissing contest" "using poor and/or irrelevant data" "making spurious arguments"
This wastes my time. When you accuse me of making poor arguments, it isn't a pissing contest to point out that 1). I made predictions based on those arguments; 2). Those predictions came true; 3). Those who made arguments such as yourself - pointing out that I was using a partial data set - turned out to be wrong in that Saudi production didn’t continue to fall. Perhaps it is time for YOU to step back and say "Maybe there was more to that than I really understood. Maybe you can gain a lot of information from looking at OECD inventories. Or maybe I am the one who was using a half-baked logic, and I should re-examine where my own argument may have fallen short." Or are you one of those who thinks it is only significant when OECD inventories are falling?
The irony is that you fail to realize that it is you who is engaged in a pissing contest - one in which you have already lost.
You never demonstrated a statistical relationship between OECD inventories and Saudi production. When you provide data which accounts for time lags in information availability, I will believe that you are least trying to do so.
If, a statistical relationship can be established, you have to demonstrate that it is not accidental. You have not done so. Among other things, you have to provide some evidence that any growth in OECD inventory is not a result of a new attitude towards reliability of supply (cost of supply disruptions, etc) and that the Saudis were unaware of this shift in attitude, if it indeed occurred. I recall referencing at least one industry analyst who claimed that such a shift in attitude was the case.
You have to demonstrate, that the Saudis considered growth in demand from the non-OECD countries (1 million b/d in 2005 over 2004, 1.3 mbpd the following year) to be temporary or irrelevant, or at least try to explain why their production behaviour appears to be completely disconnected from the reality that demand growth in world markets is overwhelmingly accounted for by non-OECD countries.
And I could go on.
You appear to believe that to challenge the validity of your assertions, amounts to an insult. You might want to think about that.
You also appear to deny a personal predilection for pissing contests, and then go on to declare victory.
You never demonstrated a statistical relationship between OECD inventories and Saudi production.
You really crack me up. Sit in the popcorn stands, never show even a tiny sliver of data yourself, and heckle me when I showed 1). A graph of OECD inventories that supported Saudi's claims; and 2). I accurately predicted Saudi's moves on the basis of those trends. What was your prediction? Oh, I am sure you were one of the masses who expected Saudi production to fall all year. Right?
Tell you what, Champ. You win. You know all about inventories. You are the best at interpreting invisible evidence.
Here are two 25 minute interviews with Matt Simmons. They are about 6 MB each.
http://www.evworld.com/evworld_audio/mSimmons1_feb08.mp3
http://www.evworld.com/evworld_audio/mSimmons2_feb08.mp3
They shocked the hell out of me. It is startling to come to find what many of us have been expecting is indeed here, now... and the really scary thing is the "new and improved" oil well extraction methods he speaks about, prolong the output volume but at the cost of severe depletion rates once the end nears. So, this means we will go along business as usual and all of a sudden, depletion hits hard and fast... add to that our nation's essential bankrupt financial status and climate destabilization and... even after being at this place for 14 years now and all that I have done (solar PV, solar hot water, super insulating the now zero energy house, heat pump, greenhouse, large garden, increasingly larger orchard, 50 MPG Prius) I still feel very uneasy about what is coming.
Todd
Damned ! Twilight in the desert part 2: Nightfall....