The Megaproject update
Posted by Heading Out on April 5, 2006 - 11:42am
To give a very rough number his overall projected increase in production, if all the projects now scheduled come on line on time and at current targeted capacities, is that production will go up by something less than 1 mbd a year over his last projection. To put this in context, back last October, estimating a 5% decrease in existing well production, and an average of around 1.75 mbd of increased demand per year would give an annual shortfall in production of around 3.2 mbd relative to anticipated demand in each of the next four years. He had anticipated that oil demand for 2005 would be 83.5 mbd, increased demand would be 1.4 mbd, while there would be an increase in supply of 2.4 mbd, of which non-OPEC would provide 1.5 mbd. Depletion would be at 4.2 mbd.
Of course the big problem, and this is not really addressed in the update, comes from the actual depletion rates, and the steps that are being taken to compensate. With Saudi Arabia admitting to a level of up around 800,000 bd/year in existing wells and then stating that this will be overcome by increased in-field drilling (ie not a new project) the numbers for offsetting production do not appear and we are left with trying to estimate changes based on rig numbers and the like.
Just to run over my own pet observation one more time, I do note that the list now includes Manifa to come on line in 2011 at 300,000 bd, and in 2012 at 700,000 bd. The reason I keep mentioning this is that Saudi Arabia list it as part of their available oil that no-one buys so "demand cannot be that critical". However, because of its composition that oil requires a special refinery and the Saudi's have only recently recognized reality and planned to build one. Thus the appearance of the oil on the projected market of the future. But it also recognizes that current Saudi projections of capacity are still about 1 mbd high.
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Khebab and I predicted this in our article on the Energy Bulletin. Following is an excerpt:
"We are deeply concerned that the world is probably facing an imminent and catastrophic collapse in net oil export capacity because of declining production and increasing domestic consumption in the top exporting countries. Figure 4 predicts that the combined oil production by the current top four net exporters will be reduced by 50% by the year 2028, which would probably equate to a reduction in net oil exports of at least 75% over the next two decades."
http://www.energybulletin.net/13575.html
I agree with your assessment. If one assumes that nuclear war with Iran can be prevented by covert CIA/MI-6/Mossad action to foster an internal Iranian revolution to overthrow the current ruling powers, it still portends bad news for Iranian export amounts.
Consider the first graph in this link found at Energybulletin:
http://www.mees.com/postedarticles/oped/v49n14-5OD01.htm
Notice how much total Iranian production fell during the last revolution: ONE SIXTH of former output! The production recovery, although accomplished in a quick time period, only rose to 2/3 of former output. So even if we never go to war with Iran: the internal revolution will probably permanently remove any possibility of future Iranian exports as the remaining energy will be kept inside the borders! Those countries dependent on Iranian exports are probably screwed either way.
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
A second idea I dreamed up is an upgrade of the Vietnam "Puff the Magic Dragon". For this, get an Airbus A380 and outfit it to carry and spray VX. You, the driver/pilot will have to wear a space suit. as you sit at its yoke. Drive/fly said plane over that road leading to Mecca during the annual pilgramage and LET THEM HAVE IT! That'll rile up EVERY moslem and generate regime change due to extreme unrest. Drive at about 300 feet up (OK, 100 metres) and spray away as you have your iPod going in your A/C helmet. Besides generating enough unrest to overwhealm Arab governments, you get to take out a bunch of terrorists.
Both cases end up being a case of "careful what you wish for, as you might just GET it!". In reality, there are really no easy solutions, like so many cases in Engineering but a lot worse off.
EWI, Mar 2006 (sorry, no link to subscription service)
It appears that investors may be on the verge of taking a bath in emerging markets, including the Middle East, as a series of bubbles peak and burst. I would expect the contagion to spread like the Asian Flu in the nineties, only more widely this time.
-pop
I don't see reasons this practice not to continue with rising of oil prices - quite the opposite actually. Of course there will be some pressure on domestic consuption but it will be nowhere near the pressure on oil exports.
So paradoxically, the internal absortion (consumption) rate will increase over time, as this subsidy makes their internal economies grow more energy-intensive. And as the difference between internal oil prices and international market prices grows bigger a growing chunk of oil is smuggled abroad for the profit of neighbours and smugglers.
So this factors add.. to a bigger, and increasing,(that is second derivative positive) growth in oil consumption in the producer countries.
Average production 2005:- 2.5mbpd
Average consumption 2005:- 0.17mbpd
As was pointed out to you yesterday, you need to add product imports before this "4% decline" becomes meaningful. Part of what we're seeing is a shift from crude imports to product imports and you're ignoring this effect. You're also also pointing out the number at one particular point in time, when the larger trend doesn't, at this point, look that alarming. It's starting to come across as unfounded alarmism if you ignore important effects in order to make the number sound worse.
Fundamentally, crude oil prices represent what refiners will pay for the feedstock for the refineries.
Light, sweet crude oil prices are up year over year, while total (heavy, sour + light, sweet) crude oil imports are down 4% year over year--and the shortfall is growing as time goes forward.
What does that tell you about the supply of net oil export capacity?
Granted, some of the supply may be and probably is being diverted to the refineries in the exporting areas, but it's a circular argument. Any way you slice it, the markets are sending a price signal that the US needs more crude oil imports, especially light, sweet crude oil imports.
Furthermore, as domestic demand--especially in Russia and Saudi Arabia--goes up, I expect that slightly falling product imports will start showing major declines.
As I said last year, I expect that by the end of 2006 we will be in the teeth of a ferocious net oil export crisis.
Other trends might also be precluding this market change, like the increase in Countries Nationalizing their fields, as the clear National Security importance of this resource makes itself more obvious to each state.
I think what will be the key postPeak determinant in export amounts is how self-reliant or self-sustaining each country is in a purely biosolar domain. Don't have the facts at hand, but it seems Venezuela's natural habitat should be able to water & feed its population with very little oil, versus Saudi Arabia's massive requirements to desalinate drinking water and import food.
If Chavez is smart, he should be encouraging voluntary birth control and Powerdown in Venezuela; to maximize biosolar sustainability, then they can sit on their reserves to use internally far into the future, or dribble out for export later at a vastly higher price.
Saudi Arabia, which has a very low quotient of natural bio-sustainability due to rapid and continuing pop. Overshoot and the parched desert climate, is therefore forced to export energy to import ever-increasing amounts of food and desalinization equipment in a fruitless effort to avert eventual political revolt when depleting exports cannot match basic lifeneed requirements.
Each countries' individual depletion rate colliding with its population's minimal sustanence needs determines when TSHTF.
This is the basic formula that Jay Hanson and Jim Kunstler use in warning us how the American Southwest will basically be ghost towns in the future.
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
Thank you very, very much. Your insights are (close to?) indispensable (if this is not correct: sorry I'm a native Dutch)
HO hits the nail:
"To put this in context, back last October, estimating a 5% decrease in existing well production..........actual depletion rates, and the steps that are being taken to compensate. With Saudi Arabia admitting to a level of up around 800,000 bd/year in existing wells"
If there is any place to find out we passed Peak Oil, TOD will be the first. So we did.
Thanks again Westexas for hammering the net export capacity subject, and especialy your advise to become a net food- and/or energy producer which you have been firing at us all the time.
Note to other TODers: advise like this usualy comes at a premuim only. Take note.
RR
Link: http://tonto.eia.doe.gov/oog/info/twip/twip.asp
I think fear is the only thing propping oil prices up in the short term.
RR
25,7 million barrels higher than a year ago, or less than 8%.
RR
The Lower 48 and the North Sea are two large producing regions that have been thoroughly exploited by private companies using the best technologies and data available. There were no political disruptions. The Lower 48 peaked at 49% of Qt. The North Sea (based on my plot of crude + condensate) peaked at 52% of Qt. In other words, slightly less and slightly more than 50%.
Khebab and I (my idea, Khebab did the heavy lifting) used the Hubbert Linearization (HL) model to predict post-peak Lower 48 production. The method, using only 1970 and earlier data, accurately predicted 99% of post-peak Lower 48 cumulative production.
Deffeyes puts the world halfway point at December 16, 2005. Based on Deffeyes work, at current rates of consumption, we will consume 10% of all remaining recoverable conventional reserves in the next four years.
The top four net exporters are at around 55% of Qt, farther along the depletion curve than the world and increasing cash flows are driving up consumption in some exporting countries, e.g., car sales in Russia are up 15% year over year. This is why I view declining world net export capacity as a mathematical certainty.
I have suggested that Peak Oil websites put a Peak Oil "Clock" counting down remaining recoverable conventional reserves at the rate of about 833 BO per second, starting from 1,000 Gb (crude + condensate) on 12/16/05. The production rate per second could be reset every January 1st.
How high for oil prices? All we know is that $60 to $70 has not dampened demand. I agree with Simmons that we are probably headed toward $200 or more, in 2005 dollars, by 2010.
Then you backpedal and say: "This is why I view declining world net export capacity as a mathematical certainty." We all agree that declining world net export capacity is a mathematical certainty. That's a truism which requires no mathematics at all to demonstrate. The point at hand is not the eventual decline of world net export capacity. It's the ferocious crisis you are predicting to occur within the next 9 months.
Khebab and I (my idea, Khebab did the heavy lifting) used the Hubbert Linearization (HL) model to predict post-peak Lower 48 production. The method, using only 1970 and earlier data, accurately predicted 99% of post-peak Lower 48 cumulative production.
This isn't right either. Prediction is something you do before the fact. Unless you did the "prediction" prior to 1970, it wasn't a prediction at all. It was an exercise in ad hoc curve fitting. It is very easy to manipulate the HL method to "predict" the right answer after the fact.
Deffeyes puts the world halfway point at December 16, 2005.
This is revisionism.
From New Scientist vol 179 issue 2406 - 02 August 2003, page 9:
Furthermore, when this prediction fell through, Deffeyes switched to Thanksgiving 2005. And when that prediction fell through, he switched to Dec. 16, 2005. And as recently as a few days ago (at the EGU meeting in Vienna) he was waffling yet again, saying the halfway point may be as late as April 2006. Deffeyes' method isn't scientific at all. It consists of taking a series of pot-shots, and then sweeping his failed predictions under the carpet.
Of course, you'll claim that these discrepancies are small, but that's not the point. The point is that:
a) The statement "Deffeyes puts the world halfway point at December 16, 2005" is a flat-out lie.
b) Deffeyes' method has already been shown to be inaccurate by the fact that his prediction of peak oil in 2004 failed.
So now, let's try again. At what price will oil sell for during the ferocious crisis you are predicting before the end of 2006? Don't worry about your ego. This isn't about you. It's a test of your theory.
That said: 1) Deffeyes's first prediction of 2004 looks remarkably precient given the subsequent "bumpy plateau" documented by Stuart, so it seems to me pointless to quibble about various points along a relatively flat line; 2) WesTexas and Khebab's theory needs more numbers to substantiate it, but on an a priori basis it makes simple sense - growing oil exporting economies will export less oil if production remains flat or begins to decline even modestly. As with determining peak - or even global warming, one's comfort level with the adequacy of the statistical information will vary.
So now we are left with teasing out what "ferocious decline" means and when that becomes important. As for predictions: last Fall I didn't think gas prices would go below $2.50/gal, because of the lack of refinery capacity. I was wrong. Given the increased volitity in the market, I think it's foolish for me and most non commodities traders to make predictions, (beyond my simple prediction, of course, that the front contract for oil will not retreat lower than $55/bl after May 1, 2006).
I think you mean a relatively flat line SO FAR. It is not known yet whether the current plateau is the ultimate peak. What we do know for sure is that Deffeyes' prediction of 2004 is already wrong, and has the potential to get a lot wronger as time goes on. We won't know exactly how wrong until we know the date of the actual peak. You can't say he did pretty good yet because we don't know the actual peak date yet. You're just assuming that the peak is now, and that's not legitimate. You may be wrong.
More importantly, I'm not quibbling about the date. I'm quibbling with the fraudulent notion that Deffeyes has a prediction.
Yes, I am increasingly satisfied that "peak is about now." Time will tell. Can you point to any other time when the production numbers have been flat for seventeen months coincident with dramatically rising oil prices? How long does one wait until one realizes that the production numbers are not going to go significantly (>1%) above 85 mbd?
Yup. Late 2001 thru early 2003.
Resolution too fine, data swamped by noise.
We're looking for a parallel to the current situation. What could be more swamped then now. Iraqi oil is out, Nigerian oil is out, and price is being influenced by non-events like Iran. The talk on this website alone probably adds a dollar to the price of crude.
I agree, there are problems here "analagous"-wise.
But be careful. The price run-up I'm looking at in the period I mention is actually from $20 to $40 (100%) and greater than that of the current period.
Also, the tech-crash and other events are localized. The price and production scenarios we are discussing here are global. Granted the US situation is relatively large and influential. However it still only accounts for roughly 25% of the world energy situation at most.
For the record, I believe JD's logic here is correct and his comments regarding the oil-gurus' predictions valid. If we are going to pride ourselves on technical detail and accuracy, then we need to be critical of numbers that are tossed about and to set an example ourselves.
At the same time, Fletcher makes good points and Westexas and yourself are doing the hard work. Good to see the analysis/debate on this level. And of course a bit of emotion is always good for entertainment's sake at least.
Good point. I am putting Westexas on the spot, but please understand that it's not personal. It's about theory and methods. Westexas is doing lots of good work relating to peak oil, and I respect that. I very much agree with his ideas on gas taxes etc. However, I'm dead serious about being honest with predictions and numbers.
RR
In 2003, Deffeyes was increasingly satisfied that the peak had already occurred in 2000. From the New Scientist article:
Or, as was written in the ASPO newsletter:
That's a huge goof, as you can see by referring to Stuart's Plateau graph. Deffeyes seriously thought that 77mbd (2000, EIA) was it, and here we are today pushing 85mbd. That's a major screw-up and it makes his methods suspect. His superficial focus on production trends leads him into error. He's not paying attention to things like bottom-up analysis, or geological data (like the USGS). Those factors are very important.
Here's another data point: In his book "Hubbert's Peak", Deffeyes claimed that the numbers pointed to the year 2003 as the peak. So, if we were to be honest, that is the year we should use to evaluate the accuracy of Deffeyes' method.
Can you point to any other time when the production numbers have been flat for seventeen months coincident with dramatically rising oil prices?
1979-1983. Production was worse than flat. World oil production dropped by 15% over 5 years, amid the highest real prices ever. Did that prove that oil was peaking? Obviously not -- although some people at the time apparently said it did.
However, one thing to note is that I believe Deffeyes is working off the time series of field crude from the OGJ. I haven't checked that any time recently, but it's possible it has a somewhat different answer.
I also think that when making predictions in public, if they prove wrong, it's appropriate to do a little public reflection on the fact and improve the methodology in some way before moving on. Just making new predictions using the identical method with no public acknowledgement seems unsatisfactory.
(1) In regard to oil prices, I was deliberately a little vague because as several people have pointed out, a significant drop available oil and a subsequent oil price spike to $100 or more could conceivably cause a subsequent short term oil price decline back to the current level or lower. Longer term, as production continues to fall, I think that we will see the $200 level. So, I expect to see $100 oil this year, but I don't think that it will stay there--in the short term. Long term, yes.
(2) In regard to the HL technique. As I'm sure we all know, in 1956 Hubbert did predict that Lower 48 production would peak between 1965 and 1971. He also suggested that world oil production would peak within 50 years or so, i.e., before 2006. In regard to "curve fitting" allegation, this is simply not true. In effect, we pretended that the post-1970 Lower 48 production data did not exist. We used the 1970 and earlier data to predict post-1970 cumulative production. There no mathematical way that one can "curve fit" the data set. It is mathematically impossible. Actual Lower 48 production was 99% of what the HL model predicted. My point is that Hubbert predicted the peak in advance, and using only the data through 1970, the data set was right on the mark for post-peak cumulative production. The point of this excercise is to apply the model to Deffeyes' prediction. The Lower 48 model indicates that Deffeyes' prediction of 1,000 Gb of remaining conventional recoverable crude + condensate reserves should be taken very seriously.
In the absence of serious hurricanes, economic collapses, or new wars, maximum single day 2006 NYMEX WTI oil price could be about $80 with the average for the year closer to $70. Much of this price increase would be due to gradual US dollar devaluation. Sellers will want a higher US$ price to keep up with general inflation.
Any nonlinear events could drive the US dollar much lower or oil higher depending on how one looks at it.
Can't argue with that;-)
http://www.theoildrum.com/story/2006/1/2/101214/8972#comments
Silver is an interesting speculation; both Bill Gates and Warren Buffet like silver, and they are both way smarter than I am. Following my principle of learning from VSP (Very Smart People) I bought some shares of Pan American Silver a couple of years ago at around $6 a share. I suppose they have gone up, but financial markets and making money in them is boring to me now, compared with more interesting challenges, such as teaching BSYW (Beautiful Single Young Women) to sail.
By the way, another DUET: All women are beautiful young and (so long as they wear no ring) single. Sailors have known this for a long time;-)
"Oil is close to a cusp, I think. It has increased in price by over 30% in each of the last 3 years. That has spurred just about all possible rapidly available production to come onstream. Some biggish new projects are due to come online in 2006 so there is a possibility that there will be a slight oversupply in the near term. The two critical factors are: will decline rates in the current major fields in production (FIP) be higher than current fairly optimistic predictions; will there be a significant reduction in demand (currently expected to be 1.9% increased demand) due to a global slowdown? A few months back I coined "Agric's law of oil price" which is: the average price of oil in a calendar year will be within 5% of the maximum price for the previous calendar year (Nymex light sweet, next month quote). This has been true the last 3 years, I expect it will continue to be so until prices go haywire. That gives an average price in 2006 of $70.
I expect the oil price to creep up to $70 by mid march. Thereafter I predict a spike to about $95 in response to some external event, it could happen by mid April. Will $100 oil happen in 2006? Maybe not based on current supply and demand but there is a significant probability that geopolitical or supply disruption events do cause a $100+ spike. I do not expect the oil price to drop to $40, even $50 is unlikely since a key support level at $56 has held well in recent months."
I'm now more confident that the oil price will hit $100 in 2006 (maybe a 50% probability), the current price of about $68 is based on high US crude stocks and relatively little supply disruption / geopolitical angst, there is considerable scope for upside price moves. I do not expect the price to drop below $55, the average for 2006 should be between $65 and $75 unless things go quite awry. Something fairly serious (supply disruption or geopolitical wise) would probably need to occur for the price to exceed $125 anytime in 2006.
It is a bit silly that oil prices have been moving up on declining gasoline stocks. The gas stocks were bound to decrease due to refinery shutdowns (some of which were delayed due to hurricanes) and changed gas formulation legislation. The recent sharp growth of imports in refined products to US is much more important than the minor reduction in crude imports, look out for some nasty trade numbers in the next few months.
It would have been better if the US economy had slowed a bit more already. Now, when the slowing hits, it will be sharper.
My gold prediction was good "I expect gold to make a jump to near $600 by April before pausing". Note that gold will correct downwards soon-ish before making its next serious push up (guess: drop from peak of perhaps $620 to between $550-$570). US$ accurate too: [till mid year] "the US$ should remain in the 88 to 92% range of its index". Copper has beaten me, I never expected it to get as high as $2.60: "I expect the price to drop from current level of about $2.00 to below $1.60, probably by March to May, then climb back to above $1.80." US stocks have remained a function of Fed liquidity pumping so are 10% higher now than I predicted, but that will change - when you sense it happening go short, a drop of 10%+ does happen in the next few months but beware, there is yet scope for further upside in stocks (though not much, lol).
Tis a peculiar world, and likely to get more so.
It was the very nature of the super large fields from the countries mentioned above that made the water injection system so attractive. Because most of the oil production came from just a few super large fields, these countries were able to utilize water injection effectively. If the U.S. was able to incorporate water injection in our oil fields back in the early day...we would not have the small decline rates that we have today. I guess we can count our lucky blessings that sometimes we are better off without certain technologies.
Unfortunately, collapse rates of these large fields will cause terrific problems for our Shake and Bake society. Today, one is still able to drive through the 48 states and stay in any hotel ya like and eat at any restaurant. But in the future, many of these Interstate Cities with 20 different hotels and 30 restaurants will be only a mere fraction of the size. You might see only 3-4 hotels and maybe a half dozen restaurants. And if you take it even a few years later....most of the 3-4 lane interstates will be only at most 2 lane. The government will have to let the other inside lanes go, or either plow them under, due to the fact that the tax money will not be there or even the asphalt. So for a while, we may still have the interstate highway system...but with less lanes.
I believe as available energy becomes harder to find, the next so called "NICHE" industry will be in the dismantling and recycling of our major cities...structures, underground services, and concrete. Even if Nuclear makes a big comeback, we will not have much use for skyscrapers, when a large percentage of people will be out in the fields producing food to eat. Wealthy and keen individuals will have the insight to purchase these once spectacular commercial real estate skyscrapers and buildings, for pennies on the dollar, and turn them into remanufactured goods for those who have moved back out to the more rural areas and small cities.
Its probably wise to take advantage of the few years of FAT left in the economy, to save money, purchase a place in the country, and hoard some silver and gold...probably more silver. I would not want to be in a large city when social services, police, and public works goes to hell.
Have a nice day...and don't take any wooden nickels.
"In trading Wednesday, shares of BP (BP:NYSE - commentary - research - Cramer's Take) were rebounding after the oil giant said production in the first quarter will be lower than last year because of lower volumes in Russia. BP expects output of 4 million barrels, compared to 4.1 billion during the same period last year. "
Typhoon: Imports are much lower than last year
Total Net Imports (crude + products) are UP 3.8% (4 wk average, year on year). Source EIA.
"Right, I've had time to review in more detail his past and present analyses and clearly he is not talking about field in place but country-based production.
I still wonder, however. First, while he acknowledes the peaking of Mexico and other countries now and in the very near future, he doesn't go into any detail about how he factors them in (while in his analysis new production is very detailed). Some have suggested that Cantarell by itself would take up to 2 mbpd off the market by the end of his study. He also only subtracts world capacity from countries/regions clearly past peak (N. Sea, etc). However, the peaking and decline of Ghawar and Burgan (producing together equivalent or more than the entire North Sea) have profound implications for the whole world that I do not believe are reflected at all in his analysis, since he's not considering S.A. or Kuwait as declining producers. I believe we are at a great historical discontinuity in the production of the largest of the megafields, with most peaking last year or this, meaning historical data will not adequately reflect the impact of their decline. I don't have the answers, I just think these are clear concerns that are not taken into account in his numbers.
Overall, I think his work is a very fine and valuable contribution."
E.g. in this Reuters article:
Crude oil is set to rise above the $80 a barrel level in the next few months as output tails off, maintaining energy's role in a continuing commodity bull market, a hedge fund manager said on Wednesday.
Benchmark U.S. light sweet crude oil futures for May delivery were around $66.33 by 2:12 p.m. Oil hit a record $70.85 a barrel in late August 2005.
"In the next few months we will see oil above $80, as it has passed the peak of the production cycle," David Murrin, chief investment officer at UK-based Emergent Asset Management said at the Reuters Hedge Funds and Private Equity Summit on Wednesday.
...in the next few months!!!
I don't put a lot of credence into these kinds of predictions. Most studies have shown that typical analysts quoted in the media do not out-perform the market. The market sees more like $70 oil in the next few months and I'd say that's a more plausible prediction than $80. Looking at option prices for August oil, the imputed odds are only about 10% for hitting $80 or above. Even out to December the odds only go up to 22%. So this guy's prediction looks like it's still considered a long shot by the markets.
Thus, if the market was to "think" that there are good odds of surmounting $80 this fall, it would have to "think" that there are similar odds of falling below $60. (October futures are just about at $70. The contango peaks in April 2007 at $70.29.) How many people at this point really think that oil is headed back to the $50's? Not very many. There has been a shift in perception, but this means that implied volatility has to be rather low. If you are a believer in the secular bull market of oil, the calls might be a good gamble. January 2007 $80 calls are priced at $2.72. This means that you can capture all of the potential price appreciation above $82.72 with a maximum risk of only $2.72.
Let's put it this way. A few years ago, did anyone really think oil would reach these levels? Just because the market thinks something is likely doesn't mean it won't happen. People are entitled to their opinions, regardless of what the market "thinks".
You must be careful in paying too much attention to the markets' assessments, they are very often flawed. Checkout your interpretation of gold prices in response to my predictions just 3 months ago, here:
http://www.theoildrum.com/story/2006/1/2/101214/8972#comments
I do agree with you that a lot of the pundits do spout mostly crap. Once in a while one or two are correct, it could be chance, it could be fundamental understanding. I think there is a 50/50 chance of oil reaching $100 in 2006, hopefully only briefly. Guess-trapolating that is probably a less than 5% probability according to the markets - care to offer me a 10/1 bet?
Which means only an opportunity to invest in commodities and get rich, of course...
The world is already overpopulated and is eating up virtually all its resources. We have barely begun to glimpse the brick walls of resource limitation.
Click to Enlarge
As most of us now know, non-opec was just about flat as a pancake quarter by quarter all through 04 and 05, so 1.5mbpd increase did not even remotely happen. And total world supply was also flat in '05 over the 4thQ of '04. WHat gives? ALso, any one have any idea why crude inventories in the US are going up, while those of gasoline are going down? refinery issues? Demand just too damn strong(and we're barely into spring, let alone summer-yikes.)?
The Hovensa refinery on the island of St. Croix also had a problem with its catalytic cracking unit which has now been repaired. BP's big Texas City refinery has finally started up after a six-month outage, but it is only producing paraxylene at the moment.
If refinery capacity utilization doesn't rise by a whole lot, it'll be a sign that light sweet crude is lacking. It could be that all of the crude building up in inventories is low-quality. Under this scenario, we could have a gasoline supply problem this summer.
If utilization rises, more gasoline and other finished products will be produced, but we will see crude inventory drawdowns. Imports are much lower than last year. The figures indicate that the import situation is only deteriorating. It won't help that a lot of Nigerian production is shut in right now.
It must be emphasized that the crude builds we've seen just aren't that impressive, considering the circumstances.
For example: New Onstream Production for 2006 puts
OPTI/NEXEN (Long Lake Project) at 70,000 bpd. Wrong for these reasons.
- Project's "first steam" starts in Mid 2006. No actual Saleable product until Mid 2007!
- As first years production is only 6mths worth of annual rates, you will only get 1/2 the name-plate plant capacity in 2007 not 2006. So first full year production rates, of the state 2006 wont be until 2008!
- The 70,000 bpd stated in the report is Bitumen production. Not net available for sale. The Long Lake Project processes into a net 58,000 bpd of Light Sweet Synthetic 39API.
Extrapolate that inaccuracy into the Megaprojects list and what do you get?2.As the first year of production is only 6 months worth of the annual rates, you will only get 1/2 the name-plate plant capacity in 2007 not 2006. So first full year production rates, as stated for 2006 wont be a reality until 2008!
You have a nice way of explaining things