Oil reserves and our future

[Tigermike 3,046]

Stick your head in the sand if you want, but here is a look at the future.

On June 27th, Mr. Ray Leonard, a well known oil expert, reiterated his 2001 prediction to a group to whom he was speaking:

"By 2010, the production of the fuel that has driven the world's economy will start to rapidly decline. This will conflict with the steadily increasing demand for oil. The collision of these two trends will lead to shortages and increased prices, providing a strong incentive to shift to alternative fuel resources.Due to unequal distribution through the world of oil and gas supply and consumption, [the upcoming] transition will result in significant shifts in global power and wealth."

http://www.energybulletin.net/node/45679

IEA warns of tightening oil supplies

By Carola Hoyos in Madrid and Javier Blas in London

Published: July 1 2008 13:16 | Last updated: July 1 2008 13:16

The oil market will remain tight during the next five years as production from non-Opec countries stalls and demand growth remains relatively strong, the western countries' energy watchdog warned on Tuesday.

The International Energy Agency's warning is the starkest sign yet that even record oil prices above $140 a barrel have not yet not done enough to balance demand growth from countries such as China with sluggish supply increases.

EDITOR'S CHOICE

In depth: Oil - Feb-22

Crude awakening for oil consumers - May-27

Oil in motion - May-23

The IEA said that annual non-Opec growth would slow to 0.5 per cent between 2008 and 2013, against demand growth of 1.6 per cent per year. The mismatch means the world economy would be more reliant on Opec, the oil cartel, and oil prices are likely to remain at record levels, analysts said.

"Structural demand growth in developing countries and ongoing supply constraints continue to paint a tight market picture over the medium-term," the IEA said in its Medium-Term Oil Market Report, released on Tuesday in Madrid.

"Poor supply-side performance since 2004, in the face of strong demand pressures from developing countries, has forced oil prices up sharply to curb demand," the watchdog added.

Crude oil prices surged on Wednesday more than $2.50 to $142.73 a barrel, but still below Monday's record high of $143.67 a barrel. The report also said that current oil prices were "justified by fundamentals."

The IEA said that despite billions of dollars of investment, the challenge of pumping ever more oil out of their aging fields is proving so great that non-Opec countries will in the next five years have to rely on biofuels, such as corn-based ethanol, for 50 per cent of their growth in overall fuels.

The fast decline of fields - especially in the North Sea and Mexico where production is shrinking by more than 20 per cent each year - means that 14.8m of the 16m barrels of new supply from non-Opec countries over the next five years will go to making up for losses from old fields producing less and less each year.

But Opec is also struggling, with project delays impacting its ability to add new capacity. The IEA substantially downgraded its expectations for Opec crude capacity from 2008-2013, cutting earlier forecasts by 1.2m b/d.

The IEA said it believed Saudi Arabia was having bigger problems than the kingdom, the world's largest exporter, was willing to admit to, despite its national oil company having gone to great lengths last month to reassure energy ministers gathered in Jeddah that, except for Khursaniyah, its capacity editions were running on schedule.

The IEA said: "State company Aramco insists that [Khursaniyah] delays are not symptomatic of likely delays at their other projects. Nonetheless, latest market intelligence leads us to push back our estimates for the Nuayyim increment and for Manifa, by six to nine months compared with the July 2007 forecast."

All this is happening while demand growth is continuing, especially in the developing countries, whose oil needs are expected to have almost caught up with those of the developed world by 2013.

Global oil demand is expected to grow by 1.6 per cent a year over the next five years, rising from 86.9m b/d to 94.1m b/d. This is despite the IEA having slashed its forecasts for rich countries' demand because of lower growth, especially in the US, which is struggling under the double burden of a credit crisis and high oil prices.

The IEA now expects OECD demand to contract by 0.1 per cent a year, rather than grow by 1 per cent, a revision the group said "constitutes the major change versus last year's Medium-Term Oil Market Report."

The IEA added that a number of highly populous developing countries are getting wealthier. "It is only right that they should aspire to the standard of living seen in the OECD - one that includes the same intensity of use of energy. But if the supply of oil is restricted, then the only way in which balance can be achieved is through a gradual price increase until demand is curbed in OECD countries."

But the IEA warned governments not to blame speculators. It said: "Like alchemists looking for a way to turn basic elements into gold, everyone wants a simplistic explanation for high prices," bluntly adding: "Often it is a case of political expediency to find a scapegoat for higher prices rather than undertake serious analysis or perhaps confront difficult decisions."

http://www.ft.com/cms/s/0/cd683aa0-4764-11...?nclick_check=1

[tiger88 934]

One of the weekend guys on Fox claims to have some buddies in the oil industry who have told him that it would be 1-6 yrs max until they started pulling oil from the outer shelf once they start. He said he confirmed that with several other folks he knew but wasn't friends with. All six said it was doable.

My only question is wtf are we waiting on?

[Justin5 20]

This completely supports my current views on the situation.

[Tigermike 3,046]

This completely supports my current views on the situation.

Which are?

[au2004ece 30]

One of the weekend guys on Fox claims to have some buddies in the oil industry who have told him that it would be 1-6 yrs max until they started pulling oil from the outer shelf once they start. He said he confirmed that with several other folks he knew but wasn't friends with. All six said it was doable.

My only question is wtf are we waiting on?

Why would it matter if it would take 20 years? The argument that we would not see the benefit for some number of years is the weakest argument ever against opening more oil exploration. Is the world going to end in 20 years so that we won't need energy?

[tiger88 934]

One of the weekend guys on Fox claims to have some buddies in the oil industry who have told him that it would be 1-6 yrs max until they started pulling oil from the outer shelf once they start. He said he confirmed that with several other folks he knew but wasn't friends with. All six said it was doable.

My only question is wtf are we waiting on?

Why would it matter if it would take 20 years? The argument that we would not see the benefit for some number of years is the weakest argument ever against opening more oil exploration. Is the world going to end in 20 years so that we won't need energy?

Because, if an alternative (afa dependence on foreign oil is concerned) isn't in place fairly soon (some say 10-15 yrs or less), then we will be f@#$%d afa the future of life as we know it or even remotely close to as we know it. Society could/probably will collapse either fully or to a large degree.

Therefore, if it takes too long to get the oil flowing then the argument can be made that any attempt would be useless afa being available in time to help us.

Not to mention that the instability of the Middle East is a big issue as well. It could go up like a powder keg any day and then we'd be screwed as well. 1-6 years gives us much more safety afa that scenario is concerned.