Perhaps this is a quiet week ?
Posted by Heading Out on October 13, 2005 - 11:50pm
(Perhaps as in . . .before the storm?)
The tables that Jean Laherrerre used for the amount of reserves that Saudi Arabia has, was, in his paper, drawn from two sources. In an earlier post on those numbers, I cited only the IHS data from the table that he had published. The other source is Wood Mackenzie (WM) and in an article yesterday in Rigzone it is noted that WM is seeing that the incentives for new exploration may outweigh that of buying other oil companies.
The tables that Jean Laherrerre used for the amount of reserves that Saudi Arabia has, was, in his paper, drawn from two sources. In an earlier post on those numbers, I cited only the IHS data from the table that he had published. The other source is Wood Mackenzie (WM) and in an article yesterday in Rigzone it is noted that WM is seeing that the incentives for new exploration may outweigh that of buying other oil companies.
A study by oil consultants Wood Mackenzie has modelled the effect of oil prices on the profitability of exploration. Assuming they could sell the oil they have discovered for $40 a barrel, the best explorers would have made returns of more than 20 percent on every dollar they have ploughed into finding new oil supplies over the past 10 years.Although WM suggest that the industry will have to spend $40 bn to find enough oil to replace that which is being produced. Of course this gets us back to the question as to whether, even if they spent that money, would they actually be successful in finding that much oil. Certainly the fact that companies are not making those investments might be an indication that they, themselves, might not think it feasible.Even the worst performers out of the 28 top international oil firms surveyed would have made a 12 percent return.
Last week at this time I also referred to the plots of gasoline statistics at the EIA. It is worth commenting that the US gasoline production continues to fall according to the plot, (which you may remember is a four-week average) while the actual weekly data shows that production may be starting back up (though obviously we still have refineries off-line). In the same way while imports are still going up on the graph, the weekly data shows that these numbers have stabilized. The worry with that is that the amount we have "borrowed" from others may well now be starting to reach a ceiling. A couple more weeks of data and we should know.
And as a final comment for the evening, having been out of touch while wandering around the Mississippi Delta, I have been catching up on comments, and see that we are being told to expect a warm winter everywhere but the far North-East. Well, rabbits! Since that was where I was hoping to spend Christmas break.
“This order [i.e. capitalism] is now bound to the technical and economic conditions of machine production which today determine the lives of all the individuals who are born into this mechanism, not only those directly concerned with the economic acquisition, with irresistible force. Perhaps it will so determine them until the last ton of fossilized coal is burnt.”
—Max Weber, 1905
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I wonder if that will grab anybody's attention?
Now for the mystery. The implied supply for the past 4 weeks was actually LARGER than it was for the equivalent period last year by about 80 kbbl/d, and when compared to the EIA product supplied, gives a number of +600 kbbl/d, which should be associated with a stock increase. However, there was a withdrawl of 2.6 mbbl from stocks. By comparison, last year for the equivalent period this implied supply minus EIA product supplied was +430 kbbl/d, and there was a stock build over the 4 week period of about 1 mbbl of gasoline.
What's going on here? If the EIA numbers have any connection to reality, there is more gasoline demand out there than is being reported by the EIA, to the tune of at least 200 kbbl/d. Only time and the gasoline stock numbers will tell...
It might also be an indication that, until recently, they have not expected oil prices to stay above $40.
Which is true? I don't know, but the fact that rig demand has exploded tells me that companies think exploration is profitable NOW. And since geology hasn't changed in the last 12 months, that suggests companies have changed their economic forecasts: prices are high enough that they think they will make money on exploration.
In the latest STEO, EIA is now predicting $63 oil through "the rest of 2005 and 2006".
Yes, things will perhaps not be so quiet if that tropical area continues to organize near Jamaica...see www.crownweather.com and take a look at the discussion as well as the technical maps. It would be the last storm we have name for this year...unless they have to assign the Greek alphabet to name storms. It has been quite a season!
drew
Anybody know anything about it?
Pressure waves cause differences in electrical conduction in porous rocks if there is a nonconductor like oil or a conductor like water inside it. Think of oil holding apart two grains of relatively conductive rock and when a pressure wave goes through, the rocks touch and conduct electricity. If the pore holds water instead, then the electricity will conduct at all times instead of only when the pressure wave is going through.
It is much more complicated than that, though.