Click on the headline (link) for the full text.
Many more articles are available through the Energy Bulletin homepage
China’s oil demand fell by nearly 6% in Q1 of 2009
Shashank Shekhar, Business 24-7 (Arab Emirates)
China’s oil demand fell by nearly six per cent year-on-year in the first quarter of 2009, Energy Intelligence (EI), the US-based energy advisory firm has said.
In a new update, EI said that Chinese net crude imports and domestic production averaged 7.39 million barrels per day. That is 5.6 per cent lower than the corresponding figure in 2009.
EI did not take into account stockpiles that the Chinese government has allegedly been building to make use of the low oil prices. The statistics exacerbates the widespread fear among analysts that oil demand, and therefore oil prices may seriously suffer this year because of low “actual demand”.
(28 April 2009)
Iraqi Oil: Black Gold or Black Hole?
Nawar Alsaadi, The Oil Drum
Investors and global oil companies such as Shell Petroleum, Eni, China National Petroleum, and Exxon Mobile betting on Iraq are certain to be disappointed.
Ever since the fall of Baghdad in April 2003, we have heard about the unlimited potential for the Iraqi oil. Often news reports mention that Iraq has the third largest oil reserves in the world, and that Iraq’s oil ministry has a goal of producing 6 million barrels/day of oil over the medium term.
However, six years after the fall of Baghdad, the country is nowhere close to producing 6 million barrels a day. As a matter of fact, the country is still not producing at the same level it did before the war (2.2m bpd vs 2.5m bpd before the war). It is worth noting that the pre-war level was achieved despite years of war and crippling economic sanctions. Yet despite current access to capital and technology, the country could not yield better results than oil production under the Saddam regime in the midst of war and sanctions.
There are several reasons why Iraq has failed to rise to the occasion, and in this article I will attempt to address some of them:
• Endemic corruption
• Political reserves
• Bad management
• Political rivalry and foreign oil company stalemates
• Political insecurity
This is a guest post by Nawar Alsaadi. Nawar currently lives in Canada, but lived in Iraq until 1990. He still has close ties to the country, and has been following the situation closely there.
(27 April 2009)
Squeeze that Sponge
Guy Chazan, Wall Street Journal
Nearly two-thirds of crude still gets left in the ground. With enhanced oil recovery, companies are determined to lower that number.
—
Often stymied in their quest for new crude, Western oil companies are squeezing more out of the reserves they already have.
Despite the engineering advances of the past century, nearly two-thirds of crude still gets left in the ground. So oil companies are raising the ante, investing billions of dollars in cutting-edge technology to increase the amount of crude they can tap.
The potential rewards are huge: Raising the average recovery rate world-wide to 50% from 35% would boost the world’s recoverable oil by about 1.2 trillion barrels — equal to the whole of today’s proven reserves, the International Energy Agency says.
… Intense effort and the most advanced brainpower in the oil industry will be required to get at these hard-to-extract hydrocarbons, insiders say. The Paris-based IEA says it could take more than 20 years to raise recovery to 50%. Yet the global recession has lowered demand for oil, which could deter some of the investment necessary. Meanwhile, energy prices are higher than they were just a few years ago, making enhanced-recovery methods — which are energy-intensive — more costly. The IEA estimates that the cost of the additional oil is between roughly $20 and $70 per barrel, depending on the method. Some require fuel to create heat, others involve the production of chemicals.
The benefits of enhanced recovery are cited regularly in the debate about how much oil is left to pump. “Peak oil” theorists believe the world’s oil and gas supplies are fast running out. Champions of enhanced recovery, by contrast, say this isn’t so, and point to steady upward revisions in estimates of the world’s recoverable hydrocarbon reserves as the industry invents new ways to pump hard-to-get-at oil.
(27 April 2009)
Independent petroleum geologist and EB contributor Jeffrey J. Brown (“westexas”) comments at The Oil Drum:
A lay person reading this article would come away with the impression that regions like Alaska and Norway must be doing pretty well because of enhanced recovery techniques. Two excerpts from the article, and some EIA numbers:
Prudhoe’s recovery factor today is expected to be more than 60%, compared with less than 40% when production began in the late 1970s. At the start of the 1980s, the field was expected to last about 30 years. . . Prudhoe’s total recoverable reserves are now estimated to be several billion barrels more than what was envisaged when production started.
Total Alaskan production has fallen from 2.02 mbpd in 1988 to 0.72 mbpd in 2007, a decline rate of -5.4%/year. The three year decline rate since 2004 was -7.8%/year (EIA).
One company noted for its successful use of 4D is Norway’s StatoilHydro ASA. At its Norne field under the North Sea it has carried out repeated seismic surveys to discover changes in subsurface structures and to monitor flow rates of water, gas and oil in real time. Such techniques have helped lift the recovery factor at Norne to 52% from 40% and extend the field’s life past 2015.
Norway’s crude production has dropped from 3.23 mbpd in 2001 to 2.18 mbpd in 2008, a decline rate of -5.6%/year. The three year decline rate since 2005 was -7.1%/year (EIA).
… Note that there is an inherent flaw in the Drill Baby Drill position. We have all of these case histories of discrete mature regions that peak and decline, even with the use of the best available technology. It’s not if, but when that conventional production peaks.
Then we have unconventional, but regions like Canada are not exactly flooding the market with oil, and the 11 year decline in net oil exports from Venezuela more than exceeds total current net oil exports from Canada.
… What this particular WSJ reporter (and many others) is missing, or willfully ignoring, is that the decline rates cited for Alaska and Norway, and the -4%/year long term decline rate for Texas, are net, after the new and improved technology has been tried–at least for the fields where secondary/tertiary recovery techniques can be profitably implemented. I would think that the enhanced recovery contribution from fields in these areas, where secondary/tertiary recovery techniques have so far not been used, will be pretty small, relative to total production.
Simmons: Energy industry facing enormous challenges
John-Laurent Tronche, Fort Worth Business Press
The keynote speaker at the Alliance Expo & Annual Meeting offered a sobering revelation to the oil and gas industry employees seated in front of him: the boom of summer 2008 that sent oil and gas prices skyrocketing was the only truly great situation the industry ever had, and it’s not likely to return any time soon.
In a room with more than 1,100 people, Matthew R. Simmons, chairman of energy investment bank Simmons & Company International, addressed the dismal economy and rough seas in which the energy industry has found itself.
“At the peak of the boom everyone prospered,” he said at the April 22 event in Wichita Falls, presented by the Texas Alliance of Energy Producers. “High prices created the first genuine win-win-win we ever had, but too many people were saying these high prices will hurt the economy. Then came the collapse.”
By his assessment, Simmons said that for two decades the prices of gas and oil were so low that the energy consumers were the only winners.
“The energy consumers were living in a fool’s paradise,” he said. “…But the consumer party had to end. As oil and gas prices rose the consumers got angry. There was a period of time last year that I think every single morning that I saw the Today Show on the first story was ‘Pain at the Pump.’
(27 April 2009)
Governments Must Cooperate for “Power-Down” as Oil Runs Out
Chris Rhodes, Scitizen
Oil production is expected to fall by around 3% per year, beyond the oil peak. To avert catastrophe, oil-producing nations must agree to reduce their production by 3% per year and oil-importing nations to reduce their imports by an exactly matching amount. Production will fall and must be planned to fall, while consumers take-up the slack in supply.
(27 April 2009)
