Like the illusion of Wall Street, with its vast and powerful investment banks, now shuttered, China too is an illusion perpetuated by the Globalists that gave us the 15,000 mile Caesar salad, poisoned cat food and lead based paint on babies' pacifiers. Like the illusion that money would come from thin air to always push housing prices higher, China has spent a generation pursuing its illusion. Pursuing an unattainable dream to be like the West, while 6000 years of its carefully shepherded top soil blows into the sea.
Joined: Apr 06, 2006 Posts: 3626 Location: 3 miles NW of Champoeg, Republic of Cascadia
Posted: Wed Aug 13, 2008 7:17 am Post subject: Megaproject Forecasts
In case you haven't seen these articles/graphs, here is a roundup of bottom-up analysis of the short term production outlook, courtesy of the gang over at TOD.
CAMBRIDGE, Mass. (January 17, 2008) – The missing link for understanding the future of world oil supply – a solidly based view of oil field decline rates – has now been filled by a new field-by-field analysis of production data by Cambridge Energy Research Associates (CERA) and IHS Inc. The aggregate global decline rate is 4.5 percent, rather than the eight percent cited in many studies, based upon CERA’s analysis of the production characteristics of 811 separate oil fields.
“Some of the more gloomy, pessimistic ‘peak oil’ views about the future of oil supplies that are current today result from an assumption of high decline rates,” said CERA Oil Industry Activity Director Peter M. Jackson, author of the Finding the Critical Numbers report. “This new analysis provides the basis for more confidence about the future availability of oil.
“The absence of definitive, comprehensive analysis of production timelines and decline rates has led to widely differing estimates of the potential future availability of oil: an information vacuum that has contributed to the ‘peak oil’ theory of future liquids production capacity,” he added. “We hope that this study will contribute to a more informed understanding of the issues, both below ground and above ground.’’
This garnered a lot of puzzled responses in the peak oil camp, since a detailed bottom-up examination also suggests it will be quite difficult to overcome even a 4.5% decline. 8% was mentioned as a possiblity by Schlumberger's CEO at some point; many in the peak oil camp had considered lower declines, like 2% based on Hubbert Linerization. Recent statements from the IEA suggest they believe the decline will be higher, specifically 5.2%:
Quote:
Supply growth deriving from a concentration of new project start-ups during 2008-2010, allied to weaker economic growth, sees potential spare capacity rise in excess of 4 mb/d. However, this expansion slows from 2011 onwards when global demand growth recovers, leading to a narrowing of spare capacity to minimal levels by 2013. Since the 2007 MTOMR, significant downward revisions have been made to both non-OPEC supplies and OPEC capacity forecasts. Project delays averaging 12 months, coupled with global average decline of 5.2% - up from 4% last year – are the factors behind these revisions. Over 3.5 mb/d of new production will be needed each year just to hold global production steady. “Our findings highlight again the need for sustained, and indeed, increased investment both upstream and downstream -- to assure that the market is adequately supplied,” stated Mr. Tanaka.
3.5 mb/d is as much as Mexico produced in 2006, to put things into perspective. The IEA will release their new bottom-up study in November.
The July update on Megaprojects also included a set of charts showing how the forecast had changed with time, with delays and cutback manifesting themselves. This was animated by member rethin:
As the summary chart shows, 2007 actually yielded a net loss, which may have contributed to the recent price run up. It also shows higher gains for the next 3 years, which is why I'm not concerned about shortages for now, barring an extra vicious hurricane season or a major producer suddenly going offline. The delay involved in developing new projects means that to overcome the mild declines in 2011/12 we should be hearing announcements of major projects in the works now. The major declines experienced thereafter are even more alarming. A tally of new production announcements would be a worthy thread, along the lines of the discoveries catalog. _________________ Cogito, ergo non satis bibivi
C'mon man, who're you gonna believe?
Posted: Wed Aug 13, 2008 1:04 pm Post subject: Re: Megaproject Forecasts
It is a great project. TOD have done a couple of related items and there is a trend for the supply to be registered on average 3 years before delivery. So that dramatic drop of from 2011 onwards may not be any where near as bad.
It does not include small projects and infill drilling so there is a little bit more on top.
It is, however, very useful for short to medium term planning.
Posted: Wed Aug 13, 2008 1:08 pm Post subject: Re: Megaproject Forecasts
I have a noob question. Does the decline in existing fields remain constant even if demand/production drops(although that seems very unlikely)? For example, if a worldwide recession were to happen and demand in all countries drops, will the 4.5-5.2% decline remain at that level, or would it drop to 4% or something lower?
Yet Petrobras has said that 1 million bpd is not out of reach from Tupi. That tells me there is a lot more likely to be added after 2013, and possibly beforehand.
Then there are the other recent Brazilian discoveries which aren't anywhere in the Oil Megaprojects list yet (Caricoa, Sugar Loaf, etc.).
There's a lot more to be added after 2012 or thereabouts (and not just Brazil). It just hasn't been planned and announced yet. _________________ Abundance - what a concept!
Joined: Apr 06, 2006 Posts: 3626 Location: 3 miles NW of Champoeg, Republic of Cascadia
Posted: Wed Aug 13, 2008 11:51 pm Post subject: Re: Megaproject Forecasts
JustaGirl - the rate will likely accelerate as more declining production comes from offshore fields, which are worked harder due to high operating costs, and decline faster as a result. We are seeing this now with Cantarell in Mexico, which is exhibiting double digit decline. This is also due to the tertiary recovery using nitrogen, and perhaps also due to lack of skill or investment on Pemex's part.
Whether Tupi will produce the ca. 250 kb/d to maintain flat production in 2011/12 remains to be seen. Delays are affecting projects industrywide; you have regional imbalances to compensate for - some estimates for Mexico expect them to cease exports in as little as 2 years, which is a 1.2 mb/d shortfall for the US to overcome right there. Demand will continue its inexorable rise as well, especially in nations like Mexico and KSA where cheap subsidized fuel is considered a birthright. The same phenomenon could overtake Brazil as its production and revenues spike. With an attendant rise in living standards will anybody want to continue toiling away with a machete harvesting sugarcane?
I notice Brazil is among the countries avidly purchasing petroleum products from the US now, too. What the sum value of all their products will be by 2018 is anybody's guess. It will be interesting to see how fast they think they can ramp up these pre-salt projects. As the chart shows the net decline for 2013 is quite steep - 2.3 mb/d or so. That's a lot of drilling, and on the back of all of KSA's big projects too. _________________ Cogito, ergo non satis bibivi
C'mon man, who're you gonna believe?
Posted: Fri Aug 15, 2008 3:26 pm Post subject: Re: Megaproject Forecasts
The animation showing the effects over time of delays and cutbacks on upcoming projects is great. It chimes with what has been going on in other infrastructure - utilities, transport, you name it. Costs just won't keep still, much pleading for extra money, postponements into next budget. That detail passes the smell test. _________________ Volatility. When life isn't exciting enough.
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