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IEA Leaves 06 World Oil Demand Outlook Unch at 84.8M B/D
The International Energy Agency Friday trimmed its global oil demand growth estimate for this year to its lowest level since it began its forecasts, led by shrinking demand in developed industrialized nations, but with China offsetting much of the impact.
The energy security watchdog for the Organisation for Economic Cooperation and Development in its latest monthly report tweaked lower world oil demand growth for this year to 1.19 million barrels a day against last year, the lowest figure since it started issuing 2006 growth estimates a year ago.
Its estimate for outright demand this year and next is little changed at 84.78 million barrels a day and 86.38 million b/d, respectively.
(11 Aug 2006)
The life of an oil reservoir
Heading Out, The Oil Drum
With your indulgence I am going to try and explain a little bit more about some of the stages that an oil reservoir might go through, to clarify some of the topics that have arisen in discussing oil production from large oil reservoirs. To do this I am going to build a simple model, to try and illustrate the odd point, concerning production and reservoir collapse. (This might help in understanding some of the debate between Matt Simmons and Jim Jarrell, as reported by Marco. Please bear in mind that this is a very simplified example, to illustrate the points - to those more knowledgeable, I apologize. But please jump in and clarify what I have not made clear or not explained correctly.)
Let me start by assuming that I have a layer of rock that is 300 ft thick, five miles wide and thirty miles long. Let us then assume that this has been folded in the middle, so that it now has trapped oil within all the pores of the rock. And, for the sake of discussion let's assume that it has a porosity of 20%. Now having found this reservoir - which is, let's say some 6,500 ft below the current surface of the ground - back some years ago, the oil moguls of the time decided to drill into it and extract the oil.
(15 Aug 2006)
Oil's Dirty Laundry (state oil companies)
Stephen Glain, Newsweek International
Why are oil prices so high? Partly because the industry is dominated by incompetent monopolies.
Remember the giant companies that once dominated the world oil market as the Seven Sisters? Of course, they have long since been expelled as owners from the Middle East to Mexico, and must now beg and barter for access to oil. The majority stake in world oil reserves that they held is now in the hands of nation-states. The result is a critically important anomaly: a vast global free market for oil, in which all the power players are nationalized, often highly inefficient state monopolies. One might call them the Seven (Or So) Sovereigns.
These new giants are far less controversial than the old ones. As oil prices continue to hover around record highs of $75 a barrel or more, the heated public discussion in the West still is focused on oil states and multinationals: Saudi Arabia and ExxonMobil, not Saudi Aramco. Yet, shielded from market forces, the state oil companies have a very clear impact on prices. In comparison with private companies like ExxonMobil, they pump a smaller share of their reserves, using less modern technology, with much more erratic management, and spend much less on finding new wells. All of this works to tighten supply, raise uncertainty and push up prices.
From the market viewpoint, the problem with state oil companies comes down to "inefficiency," says Jean-François Seznec, an oil expert at Columbia University.
...In the global oil market, the state-for better or worse-is the guiding hand. And it's going to cost you.
(Aug. 21-28, 2006 issue)
Related article in the Economist: Really Big Oil (Sluggish behemoths control virtually all the world's oil; they should be privatised).
These articles appear to be opening salvos in an ideological war about who should control oil production. I think "efficiency" is a red herring - the real issue is control. From the point of view of peak oil, the high prices are a good thing, since they dampen demand and encourage oil consumers to develop alternate sources of energy. -BA
BP nearly halving diameter of prudhoe bay pipeline?
From BP PRUDHOE BAY ROYALTY TRUST (BPT) Form: 10-K Filing Date: 3/16/2006:
Production from the Prudhoe Bay field is carried to Pump Station 1, the starting point for the Trans-Alaska Pipeline System, through two 34-inch diameter transit lines, one from each half of the Prudhoe Bay field.
The following is from the Associated Press, Oil Field Shutdown Raises More Questions by Allison Linn, 8/9/2006:
BP has approached the Japanese firm JFE Steel Corp. and other steel producers about buying 18-inch pipe to replace the corroded sections at Prudhoe Bay, said David Belvin, senior technology manager of sales and service at JFE's Houston office.
The new pipeline diameter will be nearly half the size of the original.
(9 Aug 2006)
Revised plan fails to lift clouds over Prudhoe Bay or BP
As Greater Prudhoe Bay Field Manager for BP PLC (BP), Kemp Copeland oversees a workforce of 4,000 who toil on 300 square miles of unforgiving arctic tundra. Life is good whenever he keeps the giant oil field humming at 400,000 barrels of crude per day - which is most of the time.
But the entire operation has been vaunted into a hostile media glare since BP's shocking announcement a week ago that it was shutting down the largest producing field in the U.S. because of pipeline corrosion. The oil giant, with the blessing of regulators, has since modified the plan to allow output from the western half of the field. But Copeland's operation will be under the microscope for the foreseeable future.
"When I think of the worst things that can happen in my job, it's always going to be centered on the safety of people," Copeland said in an interview. "This is about the second worst thing that can happen."
After initially signaling a months-long suspension of the entire Prudhoe bounty, the supply outlook by week's end looked considerably less dire. Not only had BP affirmed its intention to keep some 200,000 barrels flowing on the western half of the field, company officials were eyeing alternative pipeline routes in the east that suggested at least some of the suspended production could be back within weeks, rather than months...
As the Prudhoe shutdown story simmers down for now, a broader uncertainty hangs over an oil giant that was already facing a criminal probe into its Alaska pipelines after a giant oil spill earlier this year.
(13 Aug 2006)