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Saudi oil: far from twilight (Michael Lynch)

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Peak oil - Aug 10

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Many more articles are available through the Energy Bulletin homepage


Oil supply can outpace future demand, CERA says

Paul Haavardsrud, Canada.com
Global oil capacity can rise faster than demand for the next decade and beyond according to a fresh study of world oil fields that works to puncture views that higher prices are imminent as supplies near a peak.

The call from a well-respected international energy consultancy comes as oil prices trade near a record, pushed this week by problems that are forcing Alaskan producers to shutter 400,000 barrels a day.

Immediate disruptions aside, worldwide production capacity could increase nearly 25 per cent by 2015, according to Cambridge Energy Research Associates.

"In the short term, as we all know, this is a world oil market that is labouring under stress and apprehension, but the growth that we see there is very substantial," said Dan Yergin, CERA chairman and Pulitzer Prize-winning author of The Prize: The Epic Quest for Oil, Money & Power.

Updating and extending a study released last year, CERA now believes world supply can hit 110 million barrels a day in the next nine years up from 89 million barrels a day currently.

It's a far cry from projections from the so-called ``peak oil camp'', who believe cresting oil supplies will spur a rude comeuppance for a world hooked on oil.

Counterpunching that notion, CERA's field-by-field analysis and look at 360 new projects suggests global supply can keep climbing for decades.
...
In the context of dire predictions from the ``peak oil crowd'', CERA's study does offer a counterbalance that can be lost when oil prices rush higher.

A look at Saudi Arabia, for instance, shows that new projects and a fresh emphasis on exploration will shortly lift capacity there to 12.5 million barrels a day from about 10 million.

The finding directly refutes claims made by Houston-based investment banker Matthew Simmons who posited in his 2005 book Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, that production from the Kingdom was set to fall sharply taking the global economy along for the ride.

"I have no reason to suppose that Saudi Arabian productive capacity is really in any danger and might start falling off rapidly anytime soon," said Peter Jackson, a co-author of the CERA report.

"The peak in oil production that is being debated, ostensibly, at the moment, is many decades away."
(9 Aug 2006)
Jeffery Brown recently declared July 13, 2006 'Daniel Yergin Day' to mark the fact that the price had doubled over Yergin's November 2004 prediction of $38 / barrel for November 2005. I think it's wise to consider that we might need a "counterbalance that can be lost when oil prices rush higher." Unfortunately, a prediction of peak at "many decades away" seems far removed from what's actually likely. We've seen how the IEA's similarly optimistic predictions are based on some dubious methodologies. Given the private nature of CERA's research we might best assume similar methods have been used to reach such conclusions.
-AF


Daniel Yergin, the "Energy Pope," deconstructed

Marc Strassman, Etopia Media
Sooner or later, proponents of peak oil inevitably run up against Daniel Yergin, who Der Spiegel in a July 16, 2006, article entitled "The War over Resources: Energy Security Will Be one of the Main Challenges of Foreign Policy" says "has been known as the 'Energy Pope' since the 1991 publication of his book 'The Prize: The Epic Quest for Oil, Money, and Power,' which won him a Pulitzer Prize."

In this recent interview, Mr. Yergin makes a number of statements that deserve close scrutiny.
(8 Aug 2006)


Peak Oil Panic - Phase 1

Big Gav, Peak Energy (Australia)
There seems to be a lot of ranting going on down here in the political arena lately - it seems I can't turn on the TV or open a paper without seeing someone blabbering away about ethanol (and its drawbacks) or compressed natural gas or petrol prices, not to mention that old magical elixir hydrogen and life after the oil runs out - and we've still got ages before the next election.

North American readers will probably be amused to note that the US ethanol production system is being held up as a model that we should envy.

I think the steadily rising oil prices associated with the onset of the peak (whenever that may be - The Oil Drum has a graph which says it may have passed, Yergin at CERA is still saying we'll be producing 110 million barrels a day in 2015 and that gas is more of a concern) will prompt a variety of responses in a largely predictable order - first more drilling / exploration, then a frantic surge towards biofuels (which we're now seeing), flirtations with dodgy alternatives (tar sands, oil shale) and finally a push for coal-to-liquids plants.

Once the dust has started to settle on all this activity and it becomes clear that we've at best reached a plateau of liquid fuels production (and, assuming China and India are still industrialising, demand is still rising) governments will finally start making a concerted push for fuel efficiency (and energy efficiency in general) and electrification of our transport systems (combined with big investments in renewables, in more enlightened cases, and nuclear, in others).
(10 Aug 2006)
A potpourri of links, excepts and commentary from an Australian POV. See the photo at the bottom of the entry in which Stephen Colbert declares that we Peak Oilers are "on notice".

UPDATE (Aug 11). Big Gav writes in an email: "Colbert didn't actually hold up that sign, it was just something Jamais put together using some web site tool to create Colbert images with your choice of words..."
-BA


Is a Wall of Oil Heading for the Market?

Cry Wolf, The Oil Drum
Those few of you who may have read some of my earlier posts will know that I like technical analysis, but prefer to look at the technical position in conjunction with what is going on in the real world. In particular, Stuart's excellent plateau posts provide a short-term view of world oil production struggling to rise above 85 million bpd.

What has concerned me was the knowledge that a number of large new oil fields are due on stream during 2006 (and beyond) and I was left wondering how many of those were already on production, and would be included in EIA, IEA data and therefore included in Stuart's charts? And how many have yet to come on stream later this year? Was it possible that a wall of new oil was heading for the market that would see production rising towards 86 or 87 million bpd?

Chris Skrebowski's megaprojects database (pdf warning) formed the basis of this research. I have basically trawled company web sites and the internet for status reports on the 29 new 50,000 bpd+ projects that were due on during 2006.
(10 Aug 2006)


Saudi Oil: Far from Twilight

Michael Lynch, Energy Tribune
With the recent problems in the oil market, renewed attention has been focused on the theories of M. King Hubbert and a new generation of oil supply modelers, who believe that geological resources are scarce and a peak in global oil production is near. In fact, these analysts - usually geologists - are unfamiliar with statistical modeling and don’t recognize that they are engaged in curve fitting, not scientific analysis. The repeated failures of their predictions and their refusal to address substantive criticisms of their theories and methods are damning indictments of their claim to be scientific.

The most recent controversy over Saudi oil has focused on assertions that the Saudis are experiencing insurmountable problems in their oil fields, that their reserves are overstated, and that their production is near a peak.
(9 Aug 2006)

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