Articles tagged with "iran"
News of the future was, in my youth, something that one found by crossing the palm of a lady in a dark tent with a piece or two of silver (or the modern equivalent) at one of the fairs that came to town. Such opportunities still exist, with all the caveats that existed back then likely still being in force. However, projecting the future, whether of the weather, the likely corn crop this year in the United States, or the production of crude oil by the nations of the world has become a much bigger business with copious tables, graphs and theories replacing the rather worn pack of cards or crystal ball of my youthful experience.
Our part of the world underwent a drought last year severe enough to kill several trees in our yard, for example, as well as hurting the corn crop. This year, corn plantings have been severely impacted by the heavy rains and cold weather, so that decisions on crop plantings have become more complicated and delayed, with follow-on impacts on the ultimate yield in a number of Midwestern states. Corn yield apparently falls at an average rate of 2.3 bushels per acre per day of delay in northern Wisconsin. These changing conditions make it difficult to assess how much ethanol, for example, will be available to meet demand, although the latest EIA TWIP holds out some optimism for this year.
The impact of the drought on corn prices, and the consequent fall in ethanol production, as production costs rose, are directly visible from their plot of the two over the last year.
However, with the weather impacts still being assessed, it is already being concluded that the US corn crop is unlikely to reach the record level of close to 14.6 billion bushels that were earlier projected. It still, however, has the potential to reach around 12.3 billion bushels, which would satisfy the just under 5 billion bushel need for ethanol, as well as other demands of the market. By May 12 only 28% of this year's expected crop had been planted, in contrast with a normal year where 65% would be in the ground. Thus, even the relatively short-term projections of the EIA could yet be in trouble for this year.
Posted by Heading Out on January 23, 2013 - 10:59am
Tags: gas prices, iran, iraq, nigeria, opec oil production, saudi crude production, vehicle miles driven, venezuela [list all tags]
Leanan has noted the API report of the continuing drop in US oil demand. It would be wrong, I believe, to explain this purely by reference to the increased efficiency of vehicles now on the road, nor would it be realistic to expect that these changing conditions will result in a lowering of gas prices.
To explain the rationale behind these thoughts requires reference to two sets of data. The most potent is the behavior of the Kingdom of Saudi Arabia (KSA), but before discussing their actions the story begins with the changes in the miles travelled reports that are issued by the Federal Highway Administration each month. Driven by a comment on recent versions of that plot, it is worth revisiting the summary of the rolling total of miles travelled in the United States, with the October 2012 plot being the last available.
With the possibility that demand for Iranian oil may fall below 1 million barrels a day (mbd) as sanctions continue to bite, Iran has announced that it wants OPEC to cut back production to the agreed quotas, rather than the overall additional 1 mbd that is actually being produced and sold. Such a move would, of course, make it more difficult for those customers who have found a way to replace Iranian oil, and perhaps incline them more toward disregarding the embargo.
OPEC has just released their December Monthly Oil Market Report (MOMR) in which they anticipate that earlier projections for 2013 oil demand growth will still be valid at 0.8 mbd. (Though they note that December 2012 growth y-o-y was at 1.0 mbd as the US economy continued to improve). They expect that all of this increase will be met by non-OPEC increases in supply, and that demand for OPEC oil may even drop 0.4 mbd. Part of that projection continues to rely on increased US crude production, and the EIA TWIP of December 5th had the latest chart showing that projected growth, based on the newly released Annual Energy Outlook 2013.
Figure 1. Projections of future growth in US crude oil production. (EIA TWIP) from Annual Energy Outlook 2013)
As a footnote to that graph, the Alyeska pipeline pumped an average of 582,755 bd in November, which brings the annual average up to 544, 625 bd. It is clear from looking at that plot that the gains in production are assumed to come from increased production of the "tight" oil deposits that have produced the overall gains achieved to date. The optimism of this projection goes a little beyond the levels that I anticipate will be achieved.
Posted by Euan Mearns on November 28, 2012 - 3:45pm
Tags: algeria, angola, crude oil production, ecuador, iea, iran, iraq, kuwait, libya, nigeria, oil watch, opec, qatar, saudi arabia, spare capacity, united arab emirates, venezuela [list all tags]
OPEC is currently pumping at close to near term and historic highs of 31.2 mmbpd of crude oil. Outside of Saudi Arabia, the majority of spare capacity is deemed to lie in Iran and Nigeria. Iran could certainly pump more if permitted to do so by the international community. It is doubtful that Nigeria could. The UAE Kuwait, Qatar, Libya, Algeria and Venezuela are all pumping at close to capacity levels. Saudi Arabia alone has meaningful spare capacity of 2.1 mmbpd.
Embedded in the production stack (Figure 1) is an intriguing tale of general strike, international conflict, civil war and sanctions combined with masterly control of oil supply that has kept global markets in balance.
Figure 1 Monthly crude oil production for 12 OPEC countries. All data published in this interim report are taken from the monthly IEA Oil Market Reports.
From May 2007 to August 2010, Rembrandt Koppelaar published an e-report called Oil Watch Monthly that summarised global and national oil production and consumption data from the International Energy Agency (IEA) of the OECD and Energy Information Agency (EIA) of the USA. This is the second in a series of new Oil Watch reports, co-authored with Rembrandt and details crude oil production data for 12 OPEC countries (includes Angola and Ecuador, excludes Indonesia) as reported by the International Energy Agency. Earlier editions:
Posted by Heading Out on October 28, 2012 - 7:35am
Tags: chinese oil demand, iran, iran oil exports, iran sanctions, oil pipeline, saudi crude production, turkey, us crude production [list all tags]
There has been a stir in energy news lately as folks have begun to extrapolate the growth in American oil and gas production to the point that they predict the United States may out-produce Saudi Arabia, in terms of total hydrocarbon production. Of course, in some cases, it is North American oil independence that is featured rather than that of the USA. The reason for this generalization is that by broadening the geography so the region also includes Canadian and Mexican production, then US imports from those countries magically disappear (which does not mean that they don’t have to be paid for. The US imported around 2.5 mbd from Canada and 1 mbd from Mexico in July). The stories also don’t dwell on the comparison of apples and apples. Consider the following quote from NPR. It is the easily missed sentence at the end of the first paragraph that is critical.
In 2011 the U.S. produced 5.66 million barrels of crude oil a day, according to the Department of Energy's Energy Information Administration. By next year the agency projects that will increase 21 percent to 6.85 million barrels a day. Add in things like natural gas liquids, biofuels and processing gains at refineries and that number increases.
"By 2013, we'll probably be a little over 11 million barrels a day," says EIA administrator Adam Sieminski. "That puts you pretty close to Saudi Arabia's" production of more than 11 million barrels a day, he says.
It might be pertinent to note that some of the crude produced in the Kingdom of Saudi Arabia (KSA) will be refined in the US, providing refinery gains here, and further distorting the comparison. Ah, well!
The current production gain in the US has resumed after a short plateau, although the gains following the shut-ins for Hurricane Isaac seem to be leveling off.
Posted by Heading Out on October 15, 2012 - 12:30pm
Tags: alaska pipeline, armenia, azerbaijan, china, iran, lng, natural gas, npra, russia, south pars, turkey, turkmenistan [list all tags]
There has been much talk in the current presidential debates about possible changes in US energy policy, with Governor Romney suggesting that more federal land be opened for prospecting for oil. Historically, one of the regions included in such lists is the National Petroleum Reserve in Alaska. And, perhaps anticipating the debate, the current administration has already recently moved toward opening those territories up for development.** However, those fields have been determined to contain more natural gas than oil, and so hopes for finding more oil reserves has shifted into moves offshore, where Shell has continued optimism as it begins to sink new wells in the Chukchi sea – although well completions have now moved into next year. However, suggestions in the past should be noted that more of the hydrocarbons under the Arctic are gas deposits than oil, and this argument has been strengthened by the recent discovery in the Barents Sea of more gas, when oil had been anticipated.
The large volumes of natural gas that are currently being developed and marketed, whether in the United States or from Turkmenistan, are making considerable change in the economies of many countries. Russia, who lost the sales battle to supply natural gas to China, can no longer justify the expense of opening the Shtockman field because alternate supplies are coming to the market at lower costs. This in turn, will cascade on to prices in Europe, where the advent of more gas in the UK is making it difficult to justify a switch into a greater reliance on renewable sources such as wind and solar.
This scenario means that it is not a good time to have a huge reserve of natural gas, or to go to the market with this resource to generate income. This is particularly true if the country in question is Iran.
Iranian Oil Minister Rostam Qasemi has announced that Iran’s exploitation of the South Pars gas field will equal Qatar’s exploitation of the gas field by the end of Iranian calendar year 1392 (ends March 20, 2014) if $54 billion is invested in gas projects.
Iran and Qatar share the largest natural gas field in the world, a reserve that is known as South Pars in Iran and as the North Field in Qatar.
The theme of these posts over the past eighteen months is to look at the leading producer nations that provide crude oil to the world, and to see if it is realistic to anticipate significant increases in their production. Posts have now looked at North America, Russia, Saudi Arabia and China based on the original list of rankings produced by the EIA in 2009. And, as I noted before beginning the China posts, the interesting question at the moment relates to a) how much oil Iran is currently producing and b) how much, realistically, can it be expected to produce?
These are not questions with the same answer, since the current sanctions imposed on the country have clearly already had an impact on the amount of oil that is being exported from Iran. Nevertheless, the volumes produced have fallen below those now achieved by China, and for that reason China was given priority when it came to the order of writing these posts. But back at the beginning of 2011, there was no doubt that Iran was one of the top 5 producers, particularly if one combines the USA and Canada into the new “politically correct” term of North America as a way of dodging questions on long-term US production levels.
If one looks at the latest September OPEC Monthly Oil Market Report (MOMR), for example, there is now a gap of 1 mbd between the official production claims, which are shown below, and the reports from other sources, which follow.
Figure 1. OPEC production reports, from the originating country (OPEC September MOMR)
Figure 2. OPEC production reports, as provided by secondary sources (OPEC September MOMR)
After the Portuguese came the Persians, and then the English. The importance of the fortress waned, but that of the Strait of Hormuz itself, if anything, has only increased. Commodities flow in the opposite way these days, but unlike the luxury and exoticism of the past, today these are vital inputs to the world economy.
For most of this past year, these posts have reviewed and then discussed data on the state of different reservoirs of oil and gas that ultimately provide the power we need and use every day. However, as we come to the end of 2011, it seems as though there is a gloss or spin applied to stories about the state of global energy supply, which implies that concerns about future energy supply are overstated. Instead, the impression is left that there will be, in the immediately foreseeable future, no return to shortages. So this post will be a more general view of the topic, less concerned with absolute numbers and references, but seeking to suggest that these perceived words of wisdom are like the promises of a return to $30 oil that we heard only three or so years ago, likely to fade into oblivion once they have served their immediate purpose.
It should be noted up front that there are considerable differences between the supplies of natural gas becoming available, and those of crude oil. Natural gas reserves are still increasing; I wrote just recently of the realization that exists in Azerbaijan that the gas produced from the Shah Deniz field will have a hard time competing in the global marketplace in three years because of the arrival of natural gas from the Levant Basin. The relatively low prices for natural gas in the United States brought about by the development of wells in the gas shales such as the Barnett, Haynesville, and Marcellus, and their initial high productivity, will continue to make it difficult to see much increase in price. Yet this comes at a time when the price that natural gas is sold for in America is around $3.50 per thousand cubic feet (kcf) or $124 per thousand cubic meters (kcm). That price is often insufficient to totally cover the costs of its production and return a profit to all the investors, with some indications that a profitable price would need to be closer to $6.00 per kcf. The low price of natural gas relative to world prices, however, means that it helps to keep American industry competitive, since fuel costs are usually significantly lower here than elsewhere.
Does Thursday's announcement that the EU is considering to ban oil imports from Iran epitomise the draining of power from west to east? The big winners here will be China and India, who do not fear rising Iranian influence and who will gladly soak up any additional oil exports they may have to offer. However, ending this small dependency upon Iranian oil imports in Europe (Figure 2) does clear the way for military action without the need to ponder the immediate consequences on oil imports.
Figure 1 Iran displays export land traits where growing domestic consumption is eating into the oil available for export that has been declining slowly since 2003. Data from BP. Y-axis is barrels per day (1000s). Balance = production less consumption which is a proxy for net exports. Production = crude+condensate+NGL whilst consumption may include refinery "gains" and bio-fuel. In many countries there is also an active two-way trade in crude and refined products.