Joined: Oct 15, 2004 Posts: 2197 Location: Arkansas
Posted: Thu Nov 30, 2006 4:58 pm Post subject: Re: Is Opec at Peak Production
On another thread, Dantespeak has posted some good articles on the recent big drop in Opec production. Opec says it has reduced production bc of high world inventories of oil. Pessimists out there have opined that Opec may be using high inventory levels as a cover for depletion. Only time will tell. Here's the articles from Dantespeak (as he points out, usually production would be increasing this time of year, not decreasing).
It says Opec's Oct 06 production dropped by .16mbpd to 29.4mbpd. This is arguably due to the Opec agreement to reduce production. However, keep in mind the following data on Saudi Arabia's production, which shows SA production declining throughout the year, even before the announced Opec report:
1Q06 = 9416
2Q06 = 9133
Aug 06 = 9183
Sep 06 = 9056
Oct 06 = 9031
Posted: Fri Dec 01, 2006 2:27 pm Post subject: Re: Is Opec at Peak Production
When the world "peaks" in oil production depends much on when Opec peaks. One issue pointed out about an Opec peak is, Opec's own consumption of oil has been increasing as its internal demands increase, thus, leaving less oil for export to the rest of the world.
Here's an article in Business Week detailing how Iran may cease exporting any oil within a decade due to rising demand in its own country.
Quote:
Yet Iran has a surprising weakness: Its oil and gas industry, the lifeblood of its economy, is showing serious signs of distress. As domestic energy consumption skyrockets, Iran is struggling to produce enough oil and gas for export. Unless Tehran overhauls its policies, its primary source of revenue and the basis of its geopolitical muscle could start to wane. Within a decade, says Saad Rahim, an analyst at Washington consultancy PFC Energy, "Iran's net crude exports could fall to zero."
This assumes Iran has the oil to produce, but analyzes Iran's failure to invest the necessary capital to get it into production.
Notice the 13% decline rate in existing Iranian production - ouch!
Quote:
In September, Oil Minister Kazem Vaziri-Hamaneh suggested that with no new investment, output from Iran's fields would fall by about 13% a year, roughly twice the rate that outside oil experts had expected. "NIOC is likely to find that even maintaining the status quo is a mounting challenge," says PFC Energy's Rahim.
(1) A nuclear arms race building in the Middle East; or
(2) Gulf states need nuclear fuel for domestic consumption so that they can continue to export fossil fuels to maintain their economy. As has been pointed out, there is growing evidence that rising domestic consumption in Opec countries means they will be exporting less and less. Thus, maybe they need nuclear, that or they may in fact see PO on the horizon.
I'm all for this, but its hard for me to imagine that the ME would be switching to alternative fuels if they had all the oil and gas that the IEA claims they will be exporting in 2025.
Notice the problem of increasing domestic consumption, a common theme and problem (bc less to export):
Quote:
“National production will continue decreasing by 1.2 percent per year while oil demand is rising by 1.5 percent per year,” he said in Bandung yesterday (17/12).
The will try to solve the problem with more drilling (assuming they can find the rigs, which is a big assumption):
Quote:
To solve this, BP Migas is targeting the drilling of 200 wells between 2007 and 2009.
However, even with more rigs, they are not that hopeful:
Quote:
“We hope there are new fields. Otherwise, it will difficult to meet domestic energy needs, let alone export,” he said.
Quote:
According to Trijana, now Indonesia has entered the net oil importer phase, when oil imports are more than exports.
Quote:
“So, in my opinion, now we are already suffering an energy crisis,” Andang told Tempo in Jakarta yesterday.
He in fact questioned BP Migas' target of drilling 200 wells between 2007 and 2009 in order to overcome the energy crisis.
Posted: Mon Dec 18, 2006 12:50 pm Post subject: Re: Is Opec at Peak Production
Nice find by Leannan - Opec says peak oil "not far away."
Quote:
while some of the more pessimistic oil specialists are declaring that peak oil has already been passed, or at best is here now, others believe it is not going to arrive before 2010. Some optimists give the world a little more breathing space — that is to say up to 2020, and perhaps even up to 2030. However, all in all, most would appear to agree that peak oil output is not very far away for all of us. It could take place sometime within the next decade or so, which in fact means that there is not much time left for a world economy to be driven largely by oil.
Some more interesting quotes (from page 57) This quotes are the industry consensus taken from the 2006 Oil and Money Conference held in London. So, here's what the industry is thinking:
Quote:
"consensus that entered a new oil era with new supplies becoming more costly to develop
Sounds like something ASPO or Simmons might say
Quote:
another area of concern surrounded the dwindling of highly trained engineers and other technical staff
Sounds like something ASPO or Simmons might say
Quote:
widely felt that demand growth, rising costs, and capacity constraints would require massive investments in the coming years on a scale the industry has never seen
Sounds like something ASPO or Simmons might say. And, keep in mind, it is saying this situation has never been experienced by the "industry"
Quote:
geopolitics in the Middle East pose some very serious challenges in the coming months. Risks of a military conflict between the United States and Iran could come to a head in the next six months
This is scary. I wonder where they got that six month time table. I haven't seen anyone, anywhere, say that
Furthermore, under any of these scenarios, and since peak oil output is not about the time at which oil will run out, but the time at which production can no longer be increased to cope with increased demand, it seems the only way the oil price can go is up.
Now, what does the 2006 Petroleum Executive of the year think about Peak Oil - in the current Opec Bulletin he writes an article saying the era of cheap oil is over, here's a snippet:
Quote:
This conclusion seems to be in line with the view held by the peak oil output advocates who argue that the ongoing oil price rises are mainly due to supply-demand imbalances. This is because we are at, or near, the production peak of world oil, if not on the downward slope of Hubbert's peak curve. This is not to deny the role of other factors (such as geopolitical), but only to stress the importance of supply and demand for crude oil as the prime factor in determining the price of the commodity
Dr. Shokri Ghanem, Chairman of NOC Libya.
Based on the above, it seems fair to say that Simmons and ASPO share the consensus view. This is all very pessimistic.
Here's the link to the above PDF is you want to read this stuff.
Posted: Mon Dec 18, 2006 1:24 pm Post subject: Re: Is Opec at Peak Production
I observe, something interesting is going on.
OPEC apparently admit PO within decade, it means, that they already have it now. Russia is also apparently struggling.
I have only one question here.
When peak of all FF will arrive?
I do not think, it is very far away.
That would be a right time for TSHTF.
Posted: Mon Dec 18, 2006 1:32 pm Post subject: Re: Is Opec at Peak Production
EU,
There has been an ongoing debate on this site about whether recent Opec drops in production can be taken at face value, meaning, really a dropped bc of "high inventories" or whether those drops are being done to mask depletion. Of course, we will one day find out, probably this year during driving season. However, in light of that ongoing debate, I, like you, also find it interesting the timing of this Opec admission PO within the decade. The article by Dr. Shokri Ghanem above, seems to be suggesting PO right now. I hope that others will take the time to open the above link and read his article and see what you all think he is saying about the timing of PO.
Joined: Jan 06, 2006 Posts: 508 Location: Pacific Northwest
Posted: Mon Dec 18, 2006 7:52 pm Post subject: Re: Is Opec at Peak Production
I am very interested to hear all this, quite the epic day. TSHTF I am convinced... _________________ We stand here, as the light of other days surrounds us.
"Hail the Dead"
Joined: Oct 15, 2004 Posts: 2197 Location: Arkansas
Posted: Mon Dec 18, 2006 8:58 pm Post subject: Re: Is Opec at Peak Production
There's another thread running on the Opec admission that peak will occur in the next decade. Here's the link for anyone interested in reading through it.
Matthew Simmons has been criticized for being too pessimistic, but I would urge everyone here to compare his speech to the DOE in June of 2006 to the Opec statement. Notice how Simmons continually links PO to underlying fundamentals, like not enough qualified people, aging infastructure, bottlenecks, cheap oil gone (basically EROEI argument). Also, in that presentation, Simmons made an "educated hunch" that by the end of 2006, Saudi Arabia would only be producing 8000mpbd of crude oil (See pg 44).
This prediction of only 8mbpd seemed ridiculous at the time, and way too pessimistic. However, as Dantespeak points out:
Quote:
Check out OPEC's monthly report, page 42, it shows that SA is down to production of 8.750 mbpd from a peak of 9.416 in the first quarter. Other OPEC countries haven't cut production in any similar proportion.
Doesn't look like Simmon's prediction will be that far off.
Joined: Oct 15, 2004 Posts: 2197 Location: Arkansas
Posted: Mon Dec 25, 2006 8:46 pm Post subject: Re: Is Opec at Peak Production
Quote:
WASHINGTON • Iran's nuclear ambitions are motivated not just by a desire for regional supremacy but by a potentially devastating crisis in its oil industry, a US researcher said in a report made public yesterday.
Iran's image is of a muscular oil producer with plentiful reserves, but in fact it could soon face its own energy crunch owing to failing infrastructure and lack of investments, Roger Stern at Johns Hopkins University said.
Writing in the respected Proceedings of the National Academy of Sciences of the United States, the professor of geography and environmental engineering said Iran's oil problems have the potential to topple the clerical regime.
Quote:
Many of Iran's oil deficiencies are of its own making, he said, noting that generous domestic subsidies for gasoline mean that Iran's national oil company cannot make money at home and so needs to export as much as it can.
But rapid population growth means that domestic demand is rising all the time, while authorities have let their refineries and pipelines fray.
So Iran, despite being the second-biggest exporter in the Opec cartel behind Saudi Arabia, actually has to import oil products like gasoline to cope with demand.
Quote:
New analysis on Iran's oil production says lack of investment is causing serious problems in Iran being able to export any oil, that, and growing domestic use is causing Iran serious problems.
For at least 18 months, Iran has failed to meet its quota for oil production set by the Organisation of the Petroleum Exporting Countries, he said.
The strong suggestion, Stern said, is that Iran's oil production is now actually falling, despite the bonanza that exporters have enjoyed from a period of record-high crude prices.
And a nationalistic regime is fueling the problem by making life ever-harder for foreign oil companies, he said.
Posted: Mon Jan 08, 2007 1:52 pm Post subject: Re: Is Opec at Peak Production
Quote:
Seems like this is falling inline with Simmons' predection that Saudi oil output will be down to 8mbpd by 2008
Difference being that Saudi is taking voluntary cuts to maintain price....Simmons was suggesting they would be producing at this level because their fields were all in serious rapid decline.
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