The Oil Drum

This is a guest post by Roger Conner Jr., known on TOD as ThatsItimout.

(Throughout, all headlines in all caps are mine, to help structure the content of the remarks, extracted from the following speeches. Links are provided so that the original remarks and slides can be viewed in entirety by the reader)

Presentation by Dr. Nimat B. Abu Al-Soof, Upstream Oil Industry Analyst, Secretariat, to the OPEC-organized session "The Petroleum Industry: New Realities Ahead?", at the Offshore Technology Conference 2007, Houston, Texas, 30 April - 3 May.

http://www.opec.org/opecna/Speeches/2007/OPECSpareCapacity.htm

If we look at the future, however, the issue of security of demand, which is intrinsically linked to the issue of security of supply, is of very real concern. Without confidence that there will be demand for OPEC oil, the incentive to undertake investment will also be reduced because of concerns that this will lead to large levels of unused capacity and, in turn, to downward pressures on oil prices.

This would result in huge revenue losses and OPEC Member Countries, as developing countries with strong competing needs for financial resources, would be adversely affected in terms of available resources for education, healthcare and infrastructure.

UPDATE: NEW UPDATED POST ON TOP OF FRONT PAGE AS OF 1:20am EDT, 8/21

This post is a collection of different Google Earth based mashups of various weather data, oil infrastructure overlays and excellent impact maps established by Chuck Watson (see also PG's post for a list of resources on Mexico oil infrastructure). The list of Google Earth files (kml/kmz files) used in this post can be find on my blog. There is now a good likelihood that Dean will impact significantly the Cantarell and the KMZ oil complex which constitute the backbone of the Mexican production.

With the successful test drilling of Jack-2 in the ultra deepwater Gulf of Mexico, there has been a media blitz proclaiming the good news. The "peak oil" theory is under attack. From Business Week's September 7, 2006 article Plenty of Oil--Just Drill Deeper The discovery of reserves in the Gulf of Mexico means supply isn't topping out, we learn

You can tune out all the scare talk about Peak Oil for a while--probably a long while. Peak Oil is the theory, on the verge of becoming conventional wisdom, that the world's petroleum supply is topping out and will not be able to meet global demand soaring along with the economies of China and India. But a successful test in a mammoth field deep beneath the Gulf of Mexico, announced on Sept. 5 by Chevron (CVX), Devon Energy (DVN), and Norway's Statoil (STO), should help put that scary scenario on hold for decades....

Cambridge Energy Research Associates predicts world oil and natural gas liquids capacity could increase as much as 25% by 2015. Says Robert W. Esser, a director of CERA: "Peak Oil theory is garbage as far as we're concerned."

Under the fold is a discussion we had last year with our friends at KAC/UCF (a site we'll probably be seeing a lot of if trends continue--and here is a link to their "Hurricane Impacts on Gulf of Mexico Oil Production" (.pdf warning)). The discussion was regarding the structural standards to which offshore rigs are built and their wind tolerances...interesting stuff.

...AIR FORCE PLANE FINDS ALBERTO LOCATED FARTHER TO THE NORTHEAST AND STRONGER...

AT 10 AM CDT...1500 UTC...A HURRICANE WARNING HAS BEEN ISSUED FOR THE GULF COAST OF FLORIDA FROM LONGBOAT KEY TO THE OCHLOCKONEE RIVER.

A HURRICANE WARNING MEANS THAT HURRICANE CONDITIONS ARE EXPECTED WITHIN THE WARNING AREA WITHIN THE NEXT 24 HOURS. PREPARATIONS TO PROTECT LIFE AND PROPERTY SHOULD BE RUSHED TO COMPLETION.

A TROPICAL STORM WARNING REMAINS IN EFFECT SOUTH OF LONGBOAT KEY TO ENGLEWOOD...AND WEST OF THE OCHLOCKONEE RIVER TO INDIAN PASS. A TROPICAL STORM WARNING MEANS THAT TROPICAL STORM CONDITIONS ARE EXPECTED WITHIN THE WARNING AREA WITHIN THE NEXT 24 HOURS.

At present they are accepting the NOAA forecast that this year will be above normal, but not as bad as last year, however, as they note:

Based on NOAA's May 2006 projections for the 2006 hurricane season and the historical relationship between tropical storm activity and production disruptions between 1960 and 2005, total reductions in crude oil and natural gas production from the Gulf of Mexico OCS due to tropical storm activity in 2006 are expected to range from 0 to 35 million barrels and 0 to 206 billion cubic feet, respectively. NOAA emphasizes that its May hurricane outlook is based on climatological conditions that are still evolving. An updated hurricane outlook will be issued in August, when conditions favorable for hurricanes are more predictable. There is a possibility that NOAA could substantially revise its projections for seasonal hurricane activity, as in 2005, when the May outlook, projecting hurricane activity for 2005 somewhat lower than what is currently projected for 2006, was revised upward substantially in August, prior to Hurricane Katrina. Actual storm activity in 2005 then ended up close to the upper bound of the revised range. If a similar situation occurs in 2006, EIA estimates of shut-in crude oil and natural gas production due to tropical storm activity would be significantly higher.

In a direct reference to the Russian president, Mr Barroso (head of the European Commission) last week complained that the Kremlin was increasingly resorting to a very blunt, but potent weapon in its dealings with Europe - "the use of energy resources as an instrument of political coercion". . . . . In short, to mix the energy metaphor, Gazprom appears to have Europe over a barrel.