DrumBeat: November 8, 2006
Posted by threadbot on November 8, 2006 - 8:20am
Topic: Miscellaneous
Oil jumps on energy report: Inventory report shows surprise decline in gas stocks and distillates, used to make heating and diesel fuel; crude stocks up less than expected.
Summary of Weekly Petroleum Data for the Week Ending November 3, 2006
U.S. crude oil refinery inputs averaged nearly 15.2 million barrels per day during the week ending November 3, down 124,000 barrels per day from the previous week's average. Refineries operated at 88.1 percent of their operable capacity last week. Gasoline production decreased slightly last week compared to the previous week, averaging over 8.7 million barrels per day, while distillate fuel production also declined, averaging 4.0 million barrels per day.U.S. crude oil imports averaged 9.8 million barrels per day last week, down 306,000 from the previous week. Over the last four weeks, crude oil imports have averaged nearly 10.0 million barrels per day. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 1.0 million barrels per day. Distillate fuel imports averaged 224,000 barrels per day last week.
The Emerging Natural Gas Crisis
Gas production has already peaked in the US and it appears to have peaked in Canada too. Some experts claim that production in Alberta peaked in 2001 when it produced 5.1 Tcf; Alberta is the largest exporter of natural gas to the huge US market. To make maters worse as oil production is ramped up in the Tar sand regions of Canada larger amount of natural gas will be consumed locally. The extraction process consumes huge amounts of natural gas.
Jim Kunstler: Ass Kicking Republicans
I confess, what bugs me about my Democrats is that they seem to think we can just duck out of the contest for Middle East oil and keep enjoying the happy motoring fiesta -- which, by the way, is not just the way we live in this country but also the basis of our economy, when you sweep aside all the bullshit. Contrary to what a lot of utopian Democrats wish, it will never be prime-time for ethanol, bio-diesel, hydrogen, or twenty other nominees as replacements for gasoline -- at least not the way we run things now. Driving a Prius might induce raptures of eco-moral superiority, but changing the zoning laws would produce a better outcome -- and that's just too hard.
Australia's dry horrors 'worst for 1000 years': "a frightening glimpse of the future with global warming."
CANBERRA - Australia is facing its worst drought in 1000 years.The prediction, made at an emergency summit on Australia's mounting water crisis, is 10 times worse than earlier forecasts and prompted urgent action to secure drinking water supplies for Adelaide and rural towns.
Commodity Strategists: Oil May Rise 10% This Year, Lehman Says
Oil prices may increase to as much as $66 a barrel in the fourth quarter from about $59 now, Morse, who joined Lehman from Hess Energy Trading Co., said in an interview in Seoul. Next year, crude may average as much as $8 a barrel more than in 2006. So far this year, prices have averaged $67.10. Lehman is the fourth-largest U.S. securities firm.
Analysis: Israel sees shale replacing oil
HAIFA, Israel, -- The Israeli process for producing energy from oil shale will cut its oil imports by one-third, and will serve as a guide for other countries with oil shale deposits, according to one company.
Oil majors lag on biofuels, may lead in future
LONDON (Reuters) - Major oil companies have been conspicuously absent from biofuels production so far, but they are set to play a bigger role with the advent of new technology that better fits oil industry skills.Global biofuels output has soared in recent years amid Western governments' concerns about security of energy supply and global warming.
Historically, upstream oil and gas – as opposed to downstream businesses such as refining and marketing – generated the sector's highest returns on capital. Investments made in the 1970s and 1980s provided accessible reserves for conversion into cash. Relatively light, fixed tax regimes meant leverage to the oil price.As areas such as the North Sea enter decline, though, that is changing. Oil companies are struggling to replace reserves and expand production. The best resources are either off-limits or subject to punitive fiscal regimes.
Iran's Achilles heel: its dependence on oil revenues
As the world's fourth largest oil exporter, Iran has profited mightily from the tripling of global oil prices over the last four years. Its economic stability is dependent on oil revenues, so it is here that Iran's rulers are vulnerable.
World Must Spend Extra $3 Trillion on Energy by 2030, IEA Says
The cost of satisfying the world's thirst for energy through 2030 has swollen by $3 trillion in a year because of higher industry costs, especially in oil and gas, the International Energy Agency said.
Marathon Oil approves $3.2 billion expansion
Marathon Oil Corporation said today its board of directors has approved a $3.2 billion expansion of the company's refinery in Garyville, La,. in a move that will nearly double the plant's crude oil refining capacity by 2009.
Public warned over European energy crisis
The Irish public must take climate change seriously if the country is to survive a potential European energy crisis, a top diplomat warned today.EU Ambassador to the US John Bruton told the Seanad Irish people need to urgently realise the scale of the environmental problem and make sacrifices.
Radical change needed to ensure North Sea oil's future
BRITAIN will remain a major petroleum economy for many years to come, said the head of the industry's biggest operators body yesterday - but raising the £300 billion of cash needed to produce its remaining reserves will depend on a radical overhaul of the industry, which needs an urgent shift in the regulatory and tax regime.Malcolm Webb, the chief executive of the UK Offshore Operators' Association, told a conference in Aberdeen that, to ensure the North Sea's vital remaining reserves can be fully exploited, the money will have to come from private industry, but warned that attracting that "is not a given".
From the Wilderness is closing:
What is important to me is that we try to make our obligations good. Sadly, in my present condition and position I may not be able to have much impact on that. FTW is closing its doors with many angry people who have not received their orders and vendors who never got paid for what they shipped us. I did everything I could possibly think of to prevent that, including considering returning to the States with all the risks and personal anguish that would entail.
Byron King: Peak oil and global warming
The intellectual content of the Association For The Study Of Peak Oil And Gas (ASPO) conference was truly like taking a drink of water from a fire hydrant. I mean it. There was so much there that I was learning something new with almost every presentation.
Total makes double strike in North Sea
Total, the French oil and gas giant, yesterday said it had made two "significant" finds in the UK section of the North Sea.The Paris-based company said one discovery at Jura West, some 160 kilometres east of Shetland, could begin production in 2008.
The discoveries will enable Total to keep its production platform in its Alwyn field going until "well after 2010", it added.
Prop 87 Goes Down:
Big Oil trumps Clinton, Hollywood in California
LOS ANGELES (Reuters) - California voters rejected a ballot measure to tax state oil production and fund the development of alternative energy after one of the most expensive referendum campaigns in U.S. history, according to results early on Wednesday.The statewide initiative, called Proposition 87, was defeated 55 percent to 45 percent with 90 percent of Tuesday's votes counted -- despite support from Bill Clinton, Al Gore and such Hollywood stars as Julia Roberts and Brad Pitt.
Fresh OPEC output cut possible in December: Qatar
ABU DHABI (AFP) - OPEC could cut oil output further next month if prices continue to fall, Qatari Energy Minister Abdallah al-Attiyah was quoted as saying."The oil market is not currently stable" despite the oil cartel's decision last month to reduce output, and "OPEC could decide on another production cut" at a mid-December meeting in Nigeria, Attiyah to the official WAM agency.
Total's Q3 net profit tops forecasts, ups dividend
Drilling Deep in the Gulf of Mexico
As oil consumption grows and access to most oil-rich regions becomes increasingly restricted, companies are venturing farther out to sea, drilling deeper than ever in their quest for energy. The next oil frontier — and the next great challenge for oil explorers — lies below 10,000 feet of water, through five miles of hard rock, thick salt and tightly packed sands.
Prop 87 Post Mortem
I had consistently predicted that it would pass. Ultimately, I think the uncertainty of a price hike caused voters to turn against it. But I also think that Vinod Khosla was a terrible choice for their spokesman. This was a guy with a vested financial interest, who was also guilty of incredible hubris and hypocrisy. I think he thought he could just make people so angry at the oil companies, they would vote against them. He should have spent more time arguing the case for Prop 87 instead of telling people that oil companies are baby killers. I was ambivalent about passage of the proposition right until the end, but I do have some satisfaction in seeing that Khosla's dirty politics were not rewarded.
I will be back next week, but first I have an appointment with a big buck on the Powder River. :-)
I voted no too. Ethanol has enough money and support right now, it doesn't need anymore.
I have to disagree with your assessment. As I noted a few days ago, I voted against it (absentee ballot) because it is/was a poorly written proposition that was a neubulous pit of verbiage. I would have voted for it had it been directed toward conservation and buy-downs for AE systems. I wouldn't have cared if the price of gas went up.
Todd
I recall reading somewhere that Matt Simmons's next book will be about how the FF's infrastructure is mostly old and corroded, along with the retirement of so many with technical knowledge. Diminishing returns and/or positive feedbacks will contribute to the Hubbert Decline in ways that have not been fully disclosed by the IOCs & NOCs.
This Reuters link maybe helpful towards Matt's next tome:
----------------------------------------
Russian technical standards agency Rostekhnadzor warned on Thursday that almost all the country's oil and gas pipelines were in a critical condition, a possible sign of more shutdowns after the closure of a link to Lithuania."Russia's pipeline transport is in an unsatisfactory state. Environmental damage caused by oil and gas pipelines is inexcusable," Rostekhnadzor chief Konstantin Pulikovsky said in a statement.
He said pipeline safety measures conducted by pipeline owners were insufficient and Rostekhnadzor planned to strengthen its control over the pipeline system.
Rostekhnadzor is an independent federal agency for ecological, technical and nuclear monitoring. It is in charge of industrial safety issues and reports directly to prime minister.
Russia's crude oil pipeline monopoly Transneft <TRNF_P.RTS>, the world's largest pipeline operator, controls the vast majority of oil pipelines, while gas monopoly Gazprom <GAZP.MM> owns all the gas routes.
Rostekhnadzor said most pipelines in Russia were built in the 1960s and 1970s and more than 40 percent of the trunk pipelines are over 30 years old, making them prone to corrosion.More than 30 accidents have already happened this year, mainly due to exposure and corrosion, the statement said.
-----------------------------------------------------
From Bloomberg, BP has now discovered pipelines 'anomalies' in its Black Sea pipelines:
-----------------------------
Nov. 7 (Bloomberg) -- BP Plc, Europe's second-largest oil company, suspended crude exports from the Georgian port of Supsa on the Black Sea after discovering ``anomalies'' in a pipeline.
The pipeline transports about 150,000 barrels of crude oil a day from Azerbaijan. Shipments through the pipeline were halted for November and no resumption date has been set, Toby Odone, a London-based BP spokesman, said in a telephone interview today. The oil will be diverted to other ports, he said.
---------------------------
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Thanks. I mean that. Your posts are worth your own weight in gold.
it will be a interesting guessing game as to which they decide to repair, and which they decide to risk continue running as is.
i also wonder how much the 'repairs' will impact other projects as well as the finite resources they would have to fix up their old soviet infrastructure.
My contention is that the biggest initial effect of peak oil will be to exacerbate this infrastructure crisis. Both in the oil field and in general. We have in many ways lived the last twenty years of the investments in infrastructure made in the 60-80's a lot of our current housing stock for example was built during this period for example. A good bit of it is getting to the age where major refurbishment is needed or it will decay into slums. I live in Irvine for example and a lot of the homes here need 30-50k worth of repairs for example. And this is generally a area where the homes are well cared for. Since we are probably facing a perpetual slowdown from now on out as peak oil causes the world economy to slowly shrink any housing stock that was not refurbished during the recent boom probably will not be refurbished unless its sold well below market value.
The same goes for roads and commercial properties and our electric network.
Next for example there is a good chance shipbuilding will slow to a crawl over the next few years leading to a aging shipping fleet within 10-20 years.
And of course the oil fields are in the same boat.
So basically we are facing the need for trillions in investment to maintain our current infrastructure much less fuel growth. Rising oil prices will basically destroy any chance we have of solving our infrastructure problems.
Not to mention of course causing the value of a lot of it to decrease as it becomes untenable to use in a high oil price world.
Next I think the impact of high cost fuel oil, bunker fuel and asphalt on our world economy is way underestimated.
The lowest grade products of a cheap oil world economy have been one of the core reasons for our current growth.
I just keep hoping that people will wake up and start addressing these problems so we can figure out how we are going to transition at the minimum to a world of expensive and rising oil prices. Much less develop a alternative fuel economy.
The problem is alternative energy sources can barely begin to replace the daily fuel usage much less support critical infrasture rebuilding needs that will arise over the next 20 years. So I really think we need to focus on first a clear accounting of the the state of the nations infrastructure from housing to oil fields then decide how we solve the problem. A obvious solution will be to refocus on denser communities and rail and basically give up on a lot of our road beds and far flung suburbs. The nice thing about this approach is the roads that are discounted will make a nice source of asphalt for maintaining roadways we decide to keep allowing us to invest in focused solutions.
This does not mean that we all move to big cities but a rebirth of the American small town is not a bad thing.
On the oil field front instead of spending billions getting the last drops of oil out of oil fields or deep sea project with marginal returns it makes far more sense to get the national oil companies and majors to work together on the most promising fields.
What do we have to do in return ? I think its simple help these countries develop diversified robust economies that can withstand the loss of oil. Nigeria is probably the poster child of a westward leaning nation that we simply won't help. It could and should be a fantastic country. If we would do the right things in Nigeria then I think it would open the door in other countries.
Right now the chances of this happening are slim to none. But I think that if we can determine the best solutions for all of our problems and present them we have a chance of finding compromises that works.
Another issue that can no longer be ignored for example is world population we have to start excepting responsibility as a world for our population.
As you can see we are finally reaching the point that issues which have been ignored for years have festered to the point we must solve them.
I'm not a doomer I just think that we are reaching the point that if we don't make responsible choices and hard decisions then our inaction will result in the worst possible outcomes for these problems.
The first step is getting a clear understanding of the problems we face and determine the best possible solution.
This means for example for cars forget about alternative fuels. We can build super fuel efficent small diesel/hybrids that would drastically slash our fuel usage overnight if we set up the right economic conditions. Sure we could use soybeans for the diesel that's fine in the long term. But short term we should heavily support development of 50mpg+ transportation. Along side this electric consumer and freight rail can easily be made very economical at the expense of long haul trucking. This is a example of where we have to pick a winner and loser. Long haul trucking needs to die. If we decide to do nothing then we will soon face the situation that long haul trucking is simply to expensive and we don't have any alternatives which means we will basically stop shipping a lot of goods in a reasonable time frame as they wait for available rail. This will lead quickly to shortages and wild economic swings as goods rise in price till trucking is affordable then quickly drop and pent up rail deliveries finally reach their destination.
Our new global just in time economy is very sensitive to transportation problems and trying to convert it back to one where large inventories are maintained will be painful and it will lead to local shortages and pricing problems. I actually think that the global just in time model is a good one it just needs to be converted to work on a sustainable transportation system. This may result of course in you having to wait a few months when purchasing a new car or tv before you take delivery but this inconvience is far better then uncertian delivery.
Enough rambling, but it is getting close to time to take a serious look at all the issues we are facing and start making the tough decisions to solve them.
The average barrel of oil is utilized something like this:
19.6 gallons of gasoline
10 gallons of diesel
4 gallons of jet fuel
-------
33.6 gallons out of 42 per barrel of oil
Thats 80% of our oil consumption in just 3 fields. If we eliminated the need for this consumption, our 21 million bpd consumption would be cut down to 4.2 million bpd. We'd be self sufficient!
Ah well, one can only dream ~_~
Imagine pulling up whole subdivisions of asphalt driveways and streets to repair major roads.
You are trying to hang onto a paradigm that isn't going to survive. Most people reject this notion out of hand because it is frightening and there is no alternative on the horizon - more of the same isn't going to work.
I try to look at the future realistically. And what I see, among other things, is a collpase of economies based on growth. It doesn't matter how efficient transportation is if there is no reason to use it.
Todd; a Realist
Actually I agree 100% the underlying problem is growth based economies are over. At least on earth. The point is with some thought we can wind down our economies with dignity.
Also to be honest what is yet one more house or suv or flat screen tv ? This is what our growth based economy has given us massive quantities of the same thing for everyone. One thing about living in both southern California and Florida is I notice there are no beautiful public gardens here. On of the few places on earth that could host the worlds most magnificent public gardens and nothing.
I suggest you see.
http://goflorida.about.com/od/attractionsaz/a/boktower.htm
There is nothing equivalent in California.
This may sound like a completely different concept but its not. Its about growth via quality and arts and craftsmanship. The point is you can have a vibrant growing economy if its about producing long lasting quality goods and beauty. Not a McMansion but real mansions with real a real Picasso. The Japanese switched over to this sort of economy a long time ago.
The point is there is a light at the end of the tunnel even in a economy that does not grow like we are accustomed too. What does it grow it grows plenty of beautiful gardens homes and art. And it can continue to grow medical science.
Technology need not stop. Look at paintings immense wealth can be created with less than 100 dollars in materials.
What has to stop ?
One more SUV just like your neighbors and a crappy house super size it.
The number of streetcars, and the amount of track they run on, has been growing, concretely. The number of people who no longer use cars, but instead use a system which at least in part uses electricity from renewable (essentially hydro), has been growing.
The amount of renewable energy likely to feed the system in the future will need to include the growth of wind and PV systems - PV factories are a fairly common growth item these days, with a new announcement every few weeks, recently.
Is this growth (or more realistically, shuffling - melt down a few thousand cars people no longer need because the streetcar serves them well enough, especially when fuel is expensive, and you likely have enough metals like steel and copper for more streetcars and tracks) unsustainable?
The problem is what is meant by growth - and where growth ends. Nobody involved in industry in Germany that I know of realistically expects growth to go on forever - after a point, only replacement and repair of the streetcars and tracks will be required. Which is fine - since the point is to ride the train to get to where you are going, and not to get richer than anyone else.
This is okay in a growth economy, because "their day will come." Eventually, it is assumed, those on the bottom - or their children - will rise up through the pyramid, and enjoy a middle class lifestyle, too - maybe even a high-class lifestyle. And in turn be supported by even more poor people below them.
You can see the problem with this scenario. It requires constant growth.
Sure, efficiency can help, but there's only so much we can cut back. Someone has to grow food, haul waste, make clothing, etc. Will we do it ourselves? That will leave us a lot less time for nuclear engineering or solar technology. Will we have a permanent underclass to do these things for us? Probably. I could see a future where downward mobility is the norm, as much as upward mobility was in the 20th century.
This usually when someone suggests that the solution is a bunch of robots that will do all the dirty work, so we humans can spend our days selling each other insurance or designing Web pages. I wouldn't bet on that one - not in the light of peak oil.
It would be like living in the late 50:s but with much better electronics, hospitals, communications and transportation infrastructure. I would also find it reasonable that most people would be able to own or hire a car for weekend trips to the countryside, friends and family outside the railways, bicycle lane networks and electricity only reach of small cars.
Today it would be easier to have the same level of prosperity with far less oil mostly due to much better infrastructure. Now we have district heating, more efficient houses, more railways in the densely populated areas (A lot of the rest have been torn up), much better roads and more bicycle lanes in manny towns.
Travel and living patterns including shipping etc would have to changed but not drastically and it can mostly be accomondated within the present building stock. The lack of rail spur lines would probably be compensated by hybrid rail/road traffic. Most changes would be gradual.
The hardest part would probably be to get people to feel that all these changes are for the good and that we are living in prosperous times. I guess it is fairly likely this might be helped by some failures in adaption in some other area of the world showing us that we are lucky and need to keep working hard to stay lucky.
Worse, I realise that the 'American Dream' seems almost unstoppable, and growth is an integral part.
But at the same time, how people think is part of the problem - I keep reading numbers that make me think Americans have gone insane (I remember things like the articles of clothing or toys bought in a year - the average is way beyond one a week in either category).
There seems no cure for that insanity, but it still is insane. Though reality seems to have no relation to insanity, at some point, reality becomes inescapable regardless, even if the insanity was in reaction to reality.
Personally, much of this debate hangs on values which are impossible to quantify - what is the worth of a well fitting pair of shoes which lasts ten years of use, and can be resoled by a competent shoemaker? In today's America, the worth would seem to be about zero, while in many parts of Europe, the worth would seem to be self-obvious in terms of the number of places such shoes are sold and repaired. Affordable? Maybe, maybe not. But imaginable and desirable for enough people to keep a local shoe industry going? Definitely.
Will America ever see a growth in such a local shoe industry? Possibly - but will it then be seen as a sign of collapse since this means Nike Air is no longer available, even if the ads are still broadcast? (Collapse in the broad doomer sense, not anything specific.)
Sometimes, I wonder how Americans as a group can be so distant from the reality which still existed when I was a child.
Systems collapse for a number of reasons, and sometimes, I just wonder if America will be the first example of societal collapse brought on by sheer marketing mixed with greed.
In my eyes, possibly the most scary aspect of the 20th Century was how deeply we learned to manipulate ourselves through film, radio, TV, with ideology or profit as the motivation leading to ever more refined tools to manipulate ourselves without restraint.
The old tools were bad enough, but this last century may have seen something else. One perspective of mine about how to define a society is to define what it rejects - and at this point, marketing seems to make the definition, in an America where many things considered normal here are rejected out of hand by huge numbers of Americans. A tiny example - a German nursery school (Kindergarten) doesn't bother with a girl and a boy toilet - who cares? The 3 and 5 year olds certainly don't, and neither do the adults. And the toilets are not private in terms of doors either, as the bathroom has four or six or whatever number of them anyways - again, who cares?
Somehow, I doubt a number of German attitudes would be allowed to exist in today's America, since these attitudes seem to encompass what is rejected - quality as a desirable trait, for example.
The term growth is not good or bad only what it is refering to. A climax forest has growth in it, just as it has decline. The key is they are in balance. The overall forest is not "growing" in size, but components of it are constantly growing and declining. We need this kind of model for our overall economy. Rather than saying the entire economy must expand (or show "growth") there must be recognition of what components should be growing and which components/sectors should be declining and recycled.
Exactly !
I'd add that this is a economy that is refining itself.
Each time it becomes more efficient or produces a good that lasts longer the excess can be used for some expansion in the traditional sense. For example you can always replace a one story house that can not be easily made efficient with say a four story building that uses less resources. This is real growth in the sense you have a more valuable asset but the energy costs of construction would be "paid down" over time via the increase in efficiency.
Think of it this way every object can use energy in two ways.
One in its construction and second in its use. A car uses far more energy in its use than in its construction. A water glass is of course the opposite.
In a society that does not grow energy wise your free to still create a bazillion plastic cups and throw them away.
But as you can see its far better to create a glass once and reuse it. The most compelling reason is that heating the water to wash the glass can come from say a solar heater or other renewable source. The same with the soap.
Also high energy tasks like glass making can be coupled to cheap energy sources such as hydro.
Basically over time the energy impact of a glass can be paid off while disposable plastic cups cannot.
And of course you can wash the plastic cup for the same effect this is not a plastic vs glass debate.
It just shows that in a constant energy society the focus would be on making washing reusable items efficient since the cost of manufacture can be "paid off" if the object lasts long enough.
According to this Newsday link:
--------------------------
Some analysts think prices will rise as driving increases for Thanksgiving visits and holiday-related shopping. "We can expect now for gasoline prices to slowly drift higher," said Stephen Schork, editor of the Schork Report, an industry newsletter published in Villanova, Pa.
Schork said that if government forecasts for a mild winter are correct, prices probably won't rise much further. "You tend to see your biggest spikes and price gains prior to the start of the season," he said.
However, a number of private weather forecasters are calling for a colder than normal winter for the Northeast, contradicting government forecasts and raising the possibility of higher heating fuel prices.
-------------------------------------
The gas-station nearest my house went up two cents/gallon since yesterday to $2.07/ gal. So does a 'slow drift higher' mean $2.50/gal by January 1, 2007? Will OPEC production cutbacks help these prices drift higher still?
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
(An expanded version of a reply to Cry Wolf)
The previous (nominal) peak in oil prices was pretty close to Yergin's predicted long term index price of $38 per barrel. As you know, Yergin's point was that rising production would force prices down.
IMO, the opposite has happened, with falling oil production forcing oil prices up to ration remaining supplies via price, resulting in oil prices trading in record high (nominal) range this year--50% to 100% higher than Yergin's long term index price and 50% to 100% higher than the previous (nominal) peak.
Now, the 2005 Group, e.g., Darwinian and I, thinks that we are past the peak, at least the peak of conventional C+C production. By and large, the 2010 Group, e.g. Robert and Cry Wolf, thinks that the most likely peak is after 2010. We all agree that the economy as we know it is screwed, it's just a question of how soon it is screwed.
The 2010 Group advocates the position that the recent C+C production declines are voluntary, especially by KSA. IMO, the cuts are voluntary in the same sense that Texas has cut its production by 75%, because we also couldn't find buyers for all of oil, but I digress.
IMO, the mathematical (HL) case is overwhelming that the world and KSA are now where the Lower 48 and Texas were when the started declining.
As I have also outlined, Khebab's post-50% models for the Lower 48 and Russia were essentially 100% correct in predicting post-50% cumulative production (using only production data through 50% to generate the model). And the North Sea, like the Lower 48, started declining when it crossed the 50% of Qt (C+C) mark. Russia is a complex case, but it hit a plateau on either side of the 50% mark, followed by all of the Soviet/Post-Soviet complexities, but recent reports indicate that Russian production is again falling--as predicted by the HL model.
Assuming that Ghawar is declining (IMO, a highly reasonable assumption given the "best case" that the field is producing one-third water, after being redevloped with horizontal wells), the four current super giants and the North Sea, which together recently accounted for as much as 18% of world C+C production, are all either declining or crashing. The North Sea, as an important petroleum province, is almost literally vanishing in front of our very eyes.
I think that we are starting a new round of bidding for declining oil supplies, especially for declining exports.
(An expanded version of a reply to Cry Wolf)
No time to ponder right now. Walking out the door. You guys take care.
As everyone knows, Robert and I have had endless discussions on this issue, and I fully realize that there are seasonal patterns and refinery issues, but the fact remains that US refineries, week after week, require a lot of oil.
IMO, the total petroluem import number is a sensitive indicator of where oil markets are headed. IMO, the crude oil inventory numbers are now less reliable as an indicator due to what I suspect is a (temporary) surplus of heavy, sour that has been obscuring flat to declining inventories of light, sweet.
In any case, if memory serves, this is a rare case of a situation where Robert and I agree on price trend based on inventory and import data. I think that he predicted--based on inventory and import data--rising prices before he left.