THE OIL DRUM

Deepwater oil production will help reduce the decline in world oil production from aging fields. The IEA claims that four Saudi Arabias need to be discovered up to 2030 to replace the present decline in production (about 5 %/a). The deepwater ultimate is likely to represent less than half of Saudi Arabia’s oil ultimate. It is not enough!

In this post, I consider the limited impacts of climate policy on fossil-fuel production and discuss estimates of fossil-fuel production in the long run.

Four weeks after the Elgin G4 well sprung a leak above the production platform in the North Sea, Total has spudded the first of two relief wells as backup in case the attempt to kill the well from above doesn't work. It will take 6 months to drill the wells, however, and an estimated 200,000 cubic meters of gas has been released so far - reportedly enough to heat all of Aberdeen for a decade. In this post, I will provide some additional background on the history of this project and what Total E&P UK's plans were prior to the leak and subsequent shutdown of all production.

Countries trade crude oil and oil products back and forth. When all of these transactions are netted out, is the US close to becoming a “net” oil exporter?

With the recent increase in oil production (perhaps even exceeding that of Russia on a “barrels-per-day” basis), a person might think that US oil production problems are behind us. If we look at the data, though, it is very clear that the US is still a long way from becoming a net oil exporter.

The US Energy Information Administration (EIA) recently released full-year 2011 world oil production data. In this post, I would like show some graphs of recent data, and provide some views as to where this leads with respect to future production.

People are often confused about the overall extent of U.S. oil reserves. Some claim that the U.S. has hundreds of billions or even trillions of barrels of oil waiting to be produced if bureaucrats will simply stop blocking development. In fact, in a recent debate between Republican candidates contending for Gabrielle Giffords' recently vacated House seat, one candidate declared "We have more oil in this country than in Saudi Arabia." So, I thought it might be a good idea to elaborate a bit on U.S. oil resources.

A crisis situation has developed at a gas and condensate production platform in the Elgin field in the North Sea. Gas is leaking out of a well near a offshore platform at a rate of approximately 2 kilograms per second (12 MMCF/day if gas), and a large sheen (assumed to be condensate) has been observed on the water. All workers on Total's Elgin PUQ (production-utilities-quarters) Platform plus those on the Rowan Viking drilling rig, which had been working next to it, have been evacuated. On Monday, workers on a platform and drilling rig at the Shell-operated Shearwater field (4 miles / 6.4 km away) were also evacuated. There is currently a two-mile vessel exclusion zone around the site and a no-fly zone.

Abstract: The Deepwater Horizon incident demonstrated that most of the oil left is deep offshore or in other locations difficult to reach...In this regard, the physical limitations on producing ever-increasing quantities of oil are highlighted, as well as the possibility of the peak of production occurring this decade. The economics of oil supply and demand are also briefly discussed, showing why the available supply is basically fixed in the short to medium term. Also, an alarm bell for economic recessions is raised when energy takes a disproportionate amount of total consumer expenditures. In this context, risk mitigation practices in government and business are called for.

In this post, I provide...charts showing long-term changes in energy supply, together with some observations regarding implications. One such implication is how economists can be misled by past patterns, if they do not realize that past patterns reflect very different energy growth patterns than we will likely see in the future.

This paper examines the impact of oil price changes on global economic growth. Unlike some recent studies, this paper finds that oil price rises have had significant negative impacts on world economic growth. A time-series analysis of the data from 1971 to 2010 finds that an increase in real oil price by 10 dollars is associated with a reduction of world economic growth rate by between 0.4 and 1% in the following year. As oil prices approach historical highs, the global economy may be vulnerable to another oil price shock.