Dream on. . . you lost me at Bakken.

I'm still waiting for an answer regarding the following question:

If private oil companies, using the best available technology, with virtually no restrictions, could not reverse the long term Texas and North Sea declines, why would they be able to reverse the conventional declines anywhere in the world?

Note that Saudi Arabia and the world, in 2005, were at the about the same stages of depletion at which Texas and the North Sea respectively peaked in 1972 and 1999 (based on HL).

If the Ghawar complex is in decline, it would appear that every single oil field in the world that has ever produced one mbpd or more of crude oil is in decline.

I'm not arguing that we can't make money finding smaller fields, but I doubt that we can reverse the long term decline, especially given the super giant situation.

In calculating this 8-16 mbd did you account for the fact that many of those megaprojects will not reach the stated peak flows during 2008/2009?

Thanks for calling my attention to the megaprojects list.

http://en.wikipedia.org/wiki/Oil_Megaprojects

If the depletion rate holds at Yergin's 4.5 percent, and if all these projects are on time and reach their production goals you have a net addition of about 5,000,000 bbl/day by end of 2009 through the megaprojects. Do you think small wells will account for 3-11 million barrels per day? Seems like a pretty huge stretch to me.

Taking a closer look at the megaprojects list, though, causes one to feel a little more cautious about making overly optimistic predictions:

1. Saudi Arabia, alone, is slated to add 2.7 million bbl/day in the 2008-2009 period. With Saudi stating it will not increase production and that the market is well supplied, one has to wonder if any of this 'new oil' will see the market as a production gain. Saudi Arabia's secrecy in the oil reserves area also does not inspire confidence.

2. Iraq is slated to add 900,000 bbl/day in the period. Given the current trouble in the country and geopolitical instability resulting in production being shut in, it is possible that Iraq may not deliver.

3. Nigeria is slated to add 610,000 bbl/day. As the country has a history of instability and shut in capacity, I don't know if any added capacity is likely to reach market in a consistent fashion.

4. In all 7.5 million bbl/day of new capacity is supposed to be produced inside of OPEC. As the cartel is acting more effectively as a cartel it may be possible that these barrels won't reach markets for reasons of political self interest.

5. Canadian additions in the megaprojects summary during 2008-2009 are supposed to reach 735,000 bbl/day. Canada is just now beginning to feel the bite of plummeting natural gas supplies. Since Canada relies on synthetic oil/tar sands for new supply gains and such production is slated to involve 10+ percent of the nation's current natural gas supply future reductions in that supply may well have a negative impact on Canada's ability to increase production.

6. Russian additions in the megaprojects summary during the 2008-2009 period are supposed to reach 1.1 million bbl/day. Taking a closer look, Russian production 2007-2008 is flat or declining so one wonders if the 1.1 million bbl/day addition is a realistic figure. Furthermore, it is possible Russia could curtail new projects in favor of higher priced oil. Its strong arm tactics regarding gas supply do not inspire confidence in its commitment to add supply to world markets and place downward pressure on prices. Most analysis supports a price increase bias on the part of the Russians.

Of course it's possible that many of these projects will also experience delays or fail to produce expected amounts of crude. Regardless, given the above list, at least 6.1 million bbl/day of the megaprojects list confront serious geopolitical and other production risk factors. Furthermore, if enhanced recovery is biting as deep into the reserves as some on this site are projecting, the depletion rate may well be beyond Yergin's optimistic 4.5 percent.

In any case, I don't think this new oil is a sure thing by any stretch and a net gain in oil production of 8-16 million bbl/day by end of 2009 seems to be in the realm of a hallucination. I think any gains, if there are real gains, will be fought for tooth and nail and that we will struggle to break 90 million bbl/day in any case. Both above and below ground factors make this a really tough sell.

Good luck with your predictions! I hope you don't have any money riding on it :)

Cheers

Rob