Click on the headline (link) for the full text.
Many more articles are available through the Energy Bulletin homepage
Reserves don’t matter as much as the cost of getting the oil out the ground
Carl Mortished, UK Times via Globe & Mail
LONDON — Oil and gas reserves don’t much matter any more. You arrive at that conclusion after listening to Royal Dutch Shell’s strategy presentation in which the company this week finally allowed investors to have a look at the gauge on its fuel tank.
… Reserves on their own don’t matter. What matters is the cost of getting the reserves. Shell’s investment per barrel of oil and gas has increased fourfold in just three years, a period during which the oil multinational’s output has not increased. The company displayed another chart showing the average spending of the big oil companies. Per barrel of hydrocarbons, spending rates were pretty static during the 1990s at between $5 (U.S.) and $6 a barrel. In 2003, the rate of investment began to escalate and is now shooting higher, rising at an alarming pace. Last year, the average investment per barrel was just shy of $15.
On top of that, you must load the daily cost of operating wells and pipelines and the colossal overhead of running a big oil company. Moreover, we know that the $14-to-$15-a-barrel average investment is just an average and it is rising.
(20 March 2008)
Why Exxon Won’t Produce More
Christopher Palmeri, Business Week
Oil fell nearly $5, to $104 per barrel, Mar. 19, on news of a government report showing slackening demand. Not long ago, a $5 drop would have been an astonishing plunge that shook the trading establishment. These days? Nah, that’s just the ho-hum daily volatility in the oil market. But how is it that crude can still trade above $100 a barrel, three times what it sold for at the start of the decade, despite a very wobbly economy?
If you want to understand that, it helps to listen in to ExxonMobil’s (XOM) presentation to analysts in New York City in early March. Halfway through the three-hour meeting, Exxon management flashed a chart that showed the company’s worldwide oil production staying flat through 2012.
Ponder that for a minute. … even with prices at the pump near all-time highs, Exxon isn’t planning on producing any more oil four years from now than it did last year. That means the company’s oil output won’t even keep pace with its own projections of worldwide oil demand growth of 1.2% a year.
(20 March 2008)
High Oil Prices Making Some Africans Richer, Others Poorer
Terry FitzPatrick, Voice of America
High oil prices are creating the best of times and worst of times for Africa. That is according to several experts speaking this week at an oil industry conference in South Africa. For the handful of countries that export oil, times are good. But times are tough for everyone else.
Many economists regard Africa as the frontier in oil development. Four of the 13 members of OPEC are in Africa, and more nations want to join. But not everyone is benefiting from the current oil boom.
“You are coming to an economic situation of have’s and have-not’s,” said Tyrena Holley.
“I have met oil companies that are well-meaning to go into production and then spread the wealth within the country,” said Tyrena Holley, a business expert with the U.S. Consulate in Cape Town. “I have yet to see it cross several borders to include the whole continent of Africa.”
Continent wide, rising oil prices are likely to hurt Africa more than help it. That is according to independent analyst Simon Ratcliffe. He told delegates at the Oil Africa Conference that poorer nations have fewer resources to withstand rising energy costs.
“Each county has a threshold of what they can bear before it significantly affects their economies,” he said. “And within countries you have personal thresholds of what people or families can bear, and again it primarily affects the poorest.”
Ratcliffe says these effects include electricity blackouts, slower economic development, higher food prices and political instability. Others at the conference predicted the growth of a middle class in Africa will make the situation worse.
(17 March 2008)
Simon Ratcliffe is on the board of ASPO.
Related from The Tide:
British scientist predicts oil peak in 2011
Expert predicts decline in oil production
Countdown to €100 Oil: €70 Oil
DoDo, The Oil Drum: Europe
How would oil prices look in Euros?
—
[Diagram]
Below the fold, I’ll explain what data is displayed on the diagram, and show a few more diagrams.
The Euro itself as basis for a historical trend is not that straightforward. Over the past three decades, the Euro (EUR, €) has been (and is) “under construction”.
The Euro is presently the official currency of 15 of the currently 27 member states of the European Union (as well as four embedded micro-states, from Andorra to the Vatican), controlled by the monetary policy of the European Central Bank (ECB). But it became physical currency only in 2002, then in 12 of the then 15 EU member states, and started existence as accounting money of only 11 member states in 1999.
For the time before 1999, the Euro has to be pegged to some predecessor. There are two possibilities.
One is to use a virtual unit calculated from then extant national currencies.
(20 March 2008)
