Peak Oil

Endgame in Iraq?

2008-06-19T23:45:00.002+01:00

New deals are about to be struck between the big four oil companies and the Iraq administration on a no-bid basis. These are two year deals with preference given to these same companies at renewal time.

And with the New York Times reportof the new “oilfield service agreements” for the four oil companies ExxonMobil, Chevron, Total and BP, all granted in no-bid fashion, it is clear to anyone watching that the end-game had to be resolved before the door hits the oilmen on the way out of Washington. Blood in Your Tank: Petrofraud War - Smirking Chimp

But the author Michael Fox talks of the repercussions - Russia and China are both cut out of this deal. Will we Brits suffer from this with even higher gas prices from a miffed Russia?

And then there's Iran - a resolution passed in congress for a naval blockade in the Straits of Hormuz - yes big oil is definitely looking for high oil prices whilst they are still in power. Global Research

Endgame? No it's just the beginning

Speculating Paper Oil

2008-06-11T22:35:00.005+01:00

As oil price currently peaks at $139 per barrel, The Opec Secretary general appeals for calm in the stock markets where speculation reaches an all time high.

In support of his point that prices are being driven by factors other than supply, Badri said world consumption of 87 million bpd is smaller than the value of trading in oil-related financial instruments.

Badri said the "paper market" equaled about 1.36 billion bpd and he was critical of investment banks, some of whose forecasts for rising prices have been partly credited for sending oil to new peaks...OPEC, which currently has 13 member-countries, was willing to raise production if needed, although there was no demand for extra barrels.

"Nobody is asking for oil at this time. We are checking with our member countries. There is no queue for oil," he said. Reuters

Enough Already...

2008-05-22T21:36:00.002+01:00

As the price of a barrel hits $135 today I think the Guardian have it right in this piece:

Bubble Trouble

It is most definitely a bubble and I think the last $30-$40 hikes are down to speculation alone. Glad to hear that the wheat bubble just burst. These stock market people are just idiots - greedy idiots.

$114.95 while my back was turned

2008-04-16T21:22:00.003+01:00

Have been to busy to blog, or to watch the oil news, hence I missed this new peak at nearly $115.00. So I was wrong, over at peakoil.com my nomination for highest price in 2008 was $125, that'll be blown before midsummer's day.

Also heard from a pal in the food industry, farmers are taking out of the system land for food and are now growing biofuels - this land won't return to food crops until its price is better than fuel. This is no longer a threat, it is happening today and the company can't get enough supplies. I often thought that in the west, food was too cheap, we throw too much away and we should pay more, but this global economy means that high prices lead to starvation in true third world countries.

I think there must be a penalty tax on car use, we've got to stop burning our food potential, if we don't return our land to growing food we shall be plagued by wars and conflict until the population reaches a sustainable level.

$104 and rising..

2008-03-05T22:41:00.004Z

(AP Photo/Ronald Zak)
VIENNA, Austria - OPEC on Wednesday accused the U.S. of economic "mismanagement" that it said is pushing oil prices to record highs, rebuffing calls to boost output and laying blame at the feet of the Bush administration.

Oil prices surged past $104 a barrel for the first time after the OPEC announcement and the release of a U.S. government report showing a surprise drop in crude oil stockpiles.The 13-nation Organization of Petroleum Exporting Countries said it would maintain current production levels because crude supplies are plentiful and demand is expected to weaken in the second quarter.

OPEC President Chakib Khelil told reporters the global market is being affected by what he called "the mismanagement of the U.S. economy," and that America's problems were a key factor in the cartel's decision to hold off on any action. Associated Press

At the same time Bush is telling the International Renewable Energy Center: "We want our city people driving not on gasoline but on electricity. And the goal, the short-term goal, is to have vehicles that are capable of driving the first 40 miles on electricity".

Confusing messages from Opec and Bush. Is it just the US dollar or is Big Oil persuading Bush to scare his SUV drivers so they won't complain about the price at the pump? Perhaps it's a mixture of both - the price should be high due to demand over supply, but as long as the dollar is on the wane then there will be an exchange rate premium to the oil price hike.

The Wiemar Dollar

2008-02-09T12:15:00.000Z

Michael Fox analyses the $600 per head cash handout that Bush is hoping will raise the economic outlook of the USA.

"Where is this $150,000,000,000.00 “economic stimulus package” coming from? Let’s make this really clear. The United States government does not have any money. On the contrary, the national debt now stands at $9.2 trillion dollars, which is more than 61 times more than the “package.” So, as they don’t have the money to give, those $600 checks they plan to mail out this spring will literally comprise just printing money." Smirking Chimp

And printing money leads to a devaluation of the currency which leads to an increase in the price of oil etc etc etc.

I see it as just pure folly, but Fox sees a sinister attempt by big oil to grab more cash from the population. He also warns of the eventual outcome of the US attitude to economics - comparing it to the Wiemar Republic between the wars and Germany's "way out" of the situation.

The costly truth about tar sands

2008-01-23T19:14:00.000Z

Designer of loss making Toyota Prius, Bill Reinert, talks of the environmental damage caused by tar sand extraction in Canada, and of the costly resources required to turn the sands into synthetic oil.

...in a 2-mile-wide pit below, trucks head to refineries with loads of sand weighing more than Boeing 747s. Yellow flames shoot skyward as 900-degree-Fahrenheit (482- degree-Celsius) heat liquefies any embedded petroleum. Floating scarecrows and propane-powered cannons do their best to chase migrating birds from lethal wastewater ponds.

Eventually, nuclear reactors may surround the crater 270 miles (435 kilometers) northeast of Edmonton, Alberta, delivering the power required to wring oil from sand...

Meanwhile, at Fort McMurray's pit mines, it takes 2 tons of sand, 250 gallons (947 liters) of water and 1,400 cubic feet (39.6 cubic meters) of natural gas to produce one barrel of synthetic crude, says Peter Wells, director of research firm Neftex Petroleum Consultants Ltd. in Abingdon, England.

That's enough water for a day's use for a U.S. family of four and enough natural gas for 5.6 days. The gas is burned to power a process that extracts a tarry substance called bitumen from the sand and then refines it into synthetic crude.

In turn, each barrel generates as much as 110 kilograms (240 pounds) of carbon dioxide equivalents, the same as refining three barrels of traditional light crude.

"...When you're schlepping around two tons of sand for a barrel of crude, it shows that conventional oil is already well into depletion", says Jeffrey Rubin, chief economist at CIBC World Markets Inc. in Toronto.

Read more of this excellent article at :- Bloomberg

Now Bush admits oil depletion

2008-01-17T12:12:00.000Z

Last night, on ABC's Nightline, Terry Moran interviewed President Bush in Riyadh, Saudi Arabia, during his trip to the Middle East. When discussing what President Bush might say to the King of Saudi Arabia to lower oil prices, George Bush said:

"If they don't have a lot of additional oil to put on the market, it is hard to ask somebody to do something they may not be able to do."
The Oil Drum

He further blames the troubles with the US economy on the price of oil, but doesn't seem to be factoring in the dollar exchange rate. Excuse maker supreme?

The interview with George Bush can be seen here : ABC News

$100 barrier broken

2008-01-02T22:37:00.000Z

...and so early in the year.

"Oil has broken through the landmark $100 a barrel, driven by a slumping dollar, geopolitical instability and worries over a winter fuel supply crunch." BBC

"Violence in Nigeria helped give crude the final push over $100. Bands of armed men invaded Port Harcourt, the center of Nigeria's oil industry Tuesday, attacking two police stations and raiding the lobby of a major hotel. Word that several Mexican oil export ports were closed due to rough weather added to the gains, as did a report that OPEC may not be able to meet its share of global oil demand by 2024." Assoc Press

The Opec story which is quoted as a shortfall by 2037 on other websites is truly alarming as this is beyond peak. Peaking output is generally associated with reduced demand, so not meeting demand is going to worry the superpowers.

2007 Peak $99.29

2007-12-31T16:00:00.000Z

So we managed to keep the price of oil below the magic $100 mark this year, although it's on the rise again this week following the Bhutto assasination. Now that the US are beginning to acknowledge PO it may be that demand will finally start to level off and the future is looking better.

"LONDON (Reuters) - Oil rose above $96 a barrel on Monday, heading for its biggest annual gain this decade as dwindling fuel stocks and growing concern over political turmoil offset the impact of a softening U.S. economy.

U.S. crude climbed 12 cents to $96.12 a barrel by 6:55 a.m. EST, while London Brent crude gained 42 cents to $94.30.

With prices starting the year at around $61, oil is now up almost 58 percent. It hit an all-time high of $99.29 on November 21 as a falling U.S. dollar and thinning inventories stoked investor interest." Reuters

A new method of electricity generation from solar energy is being developed by a company called Nanosolar using a print technology for laying the light capturing cells onto aluminium film- it's designed for power stations only at the moment which doesn't really make use of all available sunlight in a country but it's a start. Energy News Network

China deals for Iran oil

2007-12-10T09:58:00.000Z

China have completed the earlier understanding with Iran by signing an agreement for the development of the Yadavaran oilfield. Worth $2 billion, this deal secures energy resources for China in 4 years time. Is it this deal that has been exercising the minds of the Washington spin doctors? Now that China have their foot in the door it would be pointless for the US to cause trouble and unrest in Iran, or indeed to continue to call for sanctions. China will develop and the world had better get used it.

"A new U.S. intelligence report that Iran stopped atomic weapons development in 2003, contrary to U.S. suspicions, may have cleared the way for Sinopec to move ahead on Yadavaran, although Washington is still arguing in favor of sanctions...The Yadavaran deal calls for the Chinese company to invest in developing the oilfield in two phases, with the first phase to produce 85,000 barrels per day to be carried out in four years and the second phase to produce another 100,000 barrels per day to be completed in another three years, Xinhua said, citing Nozari" cnn.com

PO now enters UK mainstream culture

2007-12-09T13:40:00.000Z

If The Archers is a litmus test of UK mainstream culture then Peak Oil is now part of the collective consciousness here.

Heard on today's omnibus edition of the long-running BBC Radio 4 soap, a discussion on coverting fields to bio-fuel production as the "oil is running out" and the issues that will arise from the reduction in food production.

PO has arrived!

Crisis in Caracas?

2007-12-02T10:27:00.000Z

There is a major referendum today in Venezuela, granting Hugo Chavez the opportunity to stand for election beyond a fixed number of terms. Many see this as a step toward totalitarianism and students in their thousands came out to protest "Not like this" on Thursday. Reuters

But there is also a document in circulation claimed to be from a CIA operative in Caracas to CIA Director General Michael Hayden, uncovered yesterday, outlining a plan for interfering with a Venezuelan referendum set for Dec. 2, and laying out the steps for instigating and backing a coup. The plot, called "Operation Pliers," and laid out in the letter to Hayden by an undercover operative named Michael Steele, who reportedly works in the US Embassy as a "regional affairs officer," was intercepted by Venezuelan intelligence and released publicly on state TV yesterday. Associated Press. Another blog that has reported this in the peak oil forum has, by some coincidence, been hacked. Peak Oil Forum. I would point out though that the veracity of this document is yet to proved. operation-pliers. For more detail on the memorandum see :- IndyMedia Belgium

In response Chavez is threatening to cut-off oil exports to the US and possibly elsewhere thus creating the shortage that will fuel a massive price increase in black gold if there's evidence of interference in the referendum. He is also joining a call to price oil in the more stable Euro rather than US Dollars.

No doubt Bush and his cohorts will be fully aware of this power that Venezuela has, and they may react badly when they are cornered. A mistaken image mix-up by the CNN Spanish service ask a question "who killed him" under an picture of Chavez, how predictive is this?

Government run by Big Carbon

2007-11-26T09:27:00.000Z

"Those worried by the current state of British politics will not be calmed by Ruth Kelly’s decision last week on a third Heathrow runway. She let Big Carbon walk all over her. British Airways (BA) and the British Airports Authority (BAA) have long been among our most fearsome lobbyists. They love Heathrow and would bulldoze Windsor Castle to help it expand. Kelly shuddered at their advance and capitulated...

...The pressure to expand Heathrow is chiefly a result of the success of BA and BAA in resisting a third London airport in the Thames estuary back in the late 1970s. When most big world cities were constructing airports and rail links well away from their populated areas, Britain was dithering and arguing and eventually building Stansted...

...Kelly has broken another commitment made in 2003 to keep the third runway to 2,000 metres, for short-haul domestic flights only. She is now “persuaded” in favour of a full-load, all-screaming, all-polluting, jumbo-sized third runway, lengthened by 300-500 metres. Its flight path will bring to Camden, Hammersmith and Harrow the aeronautical delights now endured by Richmond and Windsor. With a doubling of Heathrow’s throughput, the prospect is of Armageddon along the M4 corridor as a sixth terminal sucks 25m extra car journeys to the airport perimeter..."

Full story :- Times Online

Iraq - US Navy in for the longstretch

2007-11-13T09:20:00.000Z

KHAWR AL AMAYA OIL TERMINAL, Iraq -- The U.S. Navy is building a military installation atop this petroleum-export platform as the U.S. establishes a more lasting military mission in the oil-rich north Persian Gulf.
While presidential candidates debate whether to start bringing ground troops home from Iraq, the new construction suggests that one footprint of U.S. military power in Iraq isn't shrinking anytime soon: American officials are girding for an open-ended commitment to protect the country's oil industry.Iraq's two export terminals are an increasingly vulnerable link in that supply chain. If they are both working, they can load almost two million barrels a day, or about 2.4% of the world's daily oil needs. If the four tanker berths at Al Basra Oil Terminal, the better-working of the two, are occupied with loaded ships, the cargo would represent almost 10% of global demand. Wall St Journal

Greenpeace joins Stop Heathrow Expansion campaign

2007-11-09T11:03:00.000Z

A campaign against the proposed third runway at Heathrow has taken to the road as the government prepares to launch a consultation into the airport's expansion.
A film featuring local Heathrow residents and green campaigners detailing why a third runway at the airport would be an environmental disaster will be screened during the month-long tour, alongside voices blaring out through loudspeakers.
Thousands of Londoners' voices will be collected during the tour of the capital and the Thames valley and roar back at representatives of the aviation industry and government to symbolise the noise experienced daily by people living under Heathrow's flight paths.
Guardian Unlimited Video

Stop Heathrow Expansion

$98.62 !!

2007-11-07T22:15:00.000Z

Is this the highest price this year - or just another milepost on the way to the big ton??

The ever-weakening dollar and worries about winter fuel supplies sent US oil prices to a peak at $98.62 a barrel. But prices later fell back sharply after US crude inventory figures showed a smaller than expected weekly fall.
BBC News

Certainly the average pump price for unleaded petrol is now over £1.00 in the UK BBC News - although it has been that way locally to me for about 4 weeks :-(

A Crude Awakening

2007-11-04T15:53:00.000Z

This new documentary on release this week in UK cinemas is the winner of several prizes in the film industry.

For preview see :- A Crude Awakening

BBC review :- BBC Film Network

Connecticut - First state to wake-up

2007-11-03T12:48:00.000Z

As oil is fast approaching the psychological barrier of $100 pb this week, finally some members of the US government are reacting sensibly

HARTFORD — Lawmakers led by Rep. Terry Backer and Sen. Bob Duff on Thursday warned of potential dire consequences if Connecticut ignores the soaring price and plummeting worldwide availability of oil.
Backer, D-Stratford, and Duff, D-Norwalk, on Thursday formed the General Assembly's Peak Oil & Natural Gas Caucus to investigate the issue and plan for better mass-transit, more efficient land use and better technology to cope with the coming shortage..."The whole nation is asleep," Backer said. "They sit in their complacency that an endless supply of cheap oil will keep coming to our country." While the United States offends a growing number of oil-rich countries, other nations including Russia and China are working hard around the globe contracting oil reserves, he said.

"Four to five years from now, people will be sitting in their cars, in lines for gas, if you can find it," Backer said, stressing that the United States' peak of domestic production was in 1971 and Mexico's is peaking now. "I see this coming like a train over the next five years," he said.
Connecticut Post

It's the currency, stupid!

2007-10-25T12:09:00.000+01:00

I'll reproduce this one in full - an FT article that has a lot to tell us for now and for the future.

Insight: Saudi Arabia may hold key to oil and dollar link
By Adam Robinson and Edward Morse of Lehman Brothers. Published: October 24 2007
After a generation on the sidelines, the US dollar has re-emerged as a central issue in the pricing of oil. Since the credit crunch in August, when the dollar has gone down, oil has gone up, by an average ratio of more than 5 to 1. Since August 21, the greenback has declined 4 per cent versus the euro; West Texas Intermediate crude, the global oil benchmark, meanwhile, is up 25 per cent. Why are commodities traders fixated on the dollar? Like other oil market puzzles, the answer may lie in Saudi Arabia.

With a booming economy and inflation ticking higher, some speculators worry that Riyadh will de-peg its currency from the dollar. And they see such a step as having the effect of re-pricing oil in euros and yen.
That’s because if Saudi Arabia de-pegs and does nothing else, it will be sitting on two rapidly depreciating assets: $20,000bn in oil reserves and $800bn in US dollar reserves. But if it were to diversify its currency reserves or oil pricing regime, then it is almost certain that the dollar would weaken. As a result, oil prices in dollar terms would have to jump to keep oil demand growth from Asia in check. For speculators with this mindset, oil at almost any price looks cheap, especially when the market is pricing in another dollar-weakening Fed cut this month.
Speculators do have it right that the US and Saudi business cycles are increasingly out of sync, and that it will become more difficult for Riyadh to maintain its currency peg to the dollar without exacerbating inflation. Inflation has crept higher, from 2.3 per cent in 2006 to an annualised 3.8 per cent this July.
But betting on a break in the peg may be premature. Inflation remains modest in comparison to Saudi Arabia’s neighbours, most of which have inflation in the vicinity of 10 per cent. Additionally, the components driving the jump in inflation – food and rents – are unlikely to be significantly affected by a shift in exchange rate regime, the former driven by global agricultural demand and the latter by the influx of foreign workers into the country.

Finally, Saudi Arabia will not want to jeopardise its FDI inflows (Like China, Saudi Arabia’s peg to a weak dollar makes it a cheap investment destination versus other emerging markets whose currencies have already appreciated). As a result, we expect any break with the currency peg would likely be measured and managed, with a relatively insignificant impact on the dollar. While the Saudis may break their dollar peg as the US Fed eases monetary policy, they are unlikely to re-price oil in other currencies and break their “dollar alliance” with Washington.

Dating back to the aftermath of the oil crisis of 1973, the US negotiated the original alliance with the Saudis to assure petrodollar recycling. As oil prices have risen this decade, economists including ourselves have argued that the re-investing of oil export revenues into the US by Saudi Arabia and its neighbours has contributed to keeping interest rates low and equity valuations high. Often referred to as the “central banker” of oil, the Kingdom has proven on multiple occasions that it is focused on protecting a buoyant outlook for the global economy, as much to assure itself of a buyer as to preserve its political alliance with the United States. That usually means supplying enough oil to the market and holding spare capacity for use in the event of a disruption. Today, however, given mushrooming dollar reserves and the weakening US economy, it also means that Saudi Arabia must hold off on reserve diversification or doing anything that would initiate an attack on the dollar.

As risks to the Saudi economy increase, however, the Kingdom is not likely to stand idle. We don’t doubt that Riyadh’s increased leverage in Washington due to higher oil prices and a declining dollar will be put to at least subtle use. It is difficult to imagine exactly how that leverage over Washington will manifest itself, but it may include higher technology weapons at greater discounts or higher consideration of Riyadh’s concerns in other areas, including regional security. Thus, while we may actually never witness the Kingdom using its enhanced leverage, the fact that speculators perceive it to exist may push up the price of oil.

Adam Robinson is an energy research analyst at Lehman Brothers. This piece was co-authored by Edward Morse, chief energy economist.
The Financial Times Limited 2007. FT.com

The Guardian becomes Peak "Doomer"

2007-10-22T13:35:00.000+01:00

Back from a break I've found the price of oil has jumped somewhat... Petrol now over a £1.00 a litre.

The Guardian reports today :-

Steep decline in oil production brings risk of war and unrest, says new study· Output peaked in 2006 and will fall 7% a year· Decline in gas, coal and uranium also predicted.

The German-based Energy Watch Group will release its study in London today saying that global oil production peaked in 2006 - much earlier than most experts had expected. The report, which predicts that production will now fall by 7% a year, comes after oil prices set new records almost every day last week, on Friday hitting more than $90 (£44) a barrel...

...The report presents a bleak view of the future unless a radically different approach is adopted. It quotes the British energy economist David Fleming as saying: "Anticipated supply shortages could lead easily to disturbing scenes of mass unrest as witnessed in Burma this month. For government, industry and the wider public, just muddling through is not an option any more as this situation could spin out of control and turn into a complete meltdown of society." Mr Schindler comes to a similar conclusion. "The world is at the beginning of a structural change of its economic system. This change will be triggered by declining fossil fuel supplies and will influence almost all aspects of our daily life."

Guardian Unlimited

Schlesinger concedes imminent peak

2007-09-18T10:50:00.000+01:00

"Former US Energy Secretary Dr James Schlesinger today claimed that the intellectual arguments over peak oil had been won, and that in effect ‘we are all peakists now’. In the keynote speech at the first day of an oil depletion conference hosted by the Association for the Study of Peak Oil in Cork, Schlesinger said that oil industry executives now privately concede that the world faces an imminent oil production peak, and argued that a recent report by the US oil industry grouping the National Petroleum Council constituted “a backdoor admission that in the next decade or two we face a moment of truth”. In a wide-ranging interview with Lastoilshock.com, Dr Schlesinger - who was also Defence Secretary and CIA Director - explains why he thinks “the battle is over, the peakists have won”, and discusses the delusions of US energy policy, Iraq, Iran and $100 oil. "
For podcast : David Strahan

I must add the cliche 'Now is the first day of the rest of our lives'
Now we start to re-construct our energy basis and attitudes to conservation
Now we stop lying about the middle east
Now we start to invest in alternative energies
Now we start to worry how we can feed the world rather than feed the SUV.

Shell Chairman warns of depletion

2007-09-16T10:22:00.000+01:00

Oil industry 'sleepwalking into crisis'
Former Shell chairman says that diminishing resources could push price of crude to $150 a barrel... He accused the industry of having its head "in the sand" about the depletion of supplies, and warned: "We may be sleepwalking into a problem which is actually going to be very serious and it may be too late to do anything about it by the time we are fully aware."

Independent on Sunday

Lord Oxburgh gives this warning in an interview with the Independent ahead of his presentation to ASPO in Ireland later this week.

$80 - New High

2007-09-12T16:48:00.000+01:00

Oil prices have surged to a record of $80 a barrel, a day after Opec said it would boost its output of crude in an effort to ease cost pressures.

BBC News

The Life of Ghawar

2007-09-08T11:05:00.000+01:00

The world’s most essential oil field may be in decline.
No country is more important to oil markets than Saudi Arabia. The kingdom produced roughly 9.2 million barrels of crude a day in 2006, and accounted for 19 percent of world oil exports. Many analysts expect it to supply a quarter of the world’s added production over the next few years. And as the only producer with significant excess capacity, it has played a crucial role in alleviating temporary supply disruptions, increasing daily production by 3.1 million barrels during the first Gulf War, for example, when oil production in Iraq and Kuwait dropped by 5.3 million barrels.

The Ghawar oil field is the kingdom’s crown jewel. Stretching for more than 150 miles beneath the desert, it is the largest known deposit in the world. It produces perhaps twice as much oil as any other field, and has doubtless accounted for more than half of Saudi Arabia’s oil production. Yet the Saudis have been removing oil from this reservoir for half a century. Sooner or later, its production must fall.The Saudis do not release data on how much oil they are extracting from individual wells, or on the remaining reserves of individual oil fields. But the total amount that the kingdom produces has been declining, down a million barrels a day over the last two years of data.

The Saudis have claimed these cuts have been in response to weak demand. However, the big drop in production began in the spring of 2006, when the price of oil was rising from $60 to $74 a barrel; the claim that no one wanted to buy Saudi Arabia’s light crude strains credulity. The drop in production has also coincided with a huge new Saudi effort to find and pump more oil: The number of active oil rigs in Saudi Arabia has tripled over the past three years.

Frustrated by the lack of hard data on Ghawar, Stuart Staniford, a computer scientist with a doctorate in physics, has conducted a painstaking study of publicly available information. His research has been reported at theoildrum.com, a Web site that analyzes energy markets.

The Saudis have developed Ghawar by using peripheral water injection— water is pumped into the reservoir, driving the remaining oil to the surface. More details about Saudi production were available before 1980, allowing Staniford to infer that the depth of the remaining oil column in northern Ghawar at that time was about 500 feet. Evidence from many sources suggests that the water level has been rising at about 18.4 feet per year. If you extrapolate that trend, this would mean that the northern part of Ghawar is by now quite depleted.

Staniford has also built a detailed computer simulation of the Ghawar reservoir, based on its size and shape, the porosity and permeability of its rock, and the assumed oil-extraction rates. The results of this simulation line up remarkably well with Staniford’s other calculations. Oil production from northern Ghawar has likely peaked.

Southern Ghawar still holds a lot of oil, and perhaps the kingdom’s push to find new fields will bear fruit. But northern Ghawar was developed first because it was by far the most promising field. Its production cannot be easily replaced. At about the same time that Saudi production began its decline, the new Haradh project in southern Ghawar began producing perhaps an additional 300,000 barrels a day. The Saudis have also made a huge investment to reopen the Qatif field on the eastern coast, which they had abandoned in 1995; it is now producing an estimated half-million barrels a day. With Saudi production falling despite these new contributions, the situation could be serious.

At a bare minimum, the era when excess Saudi capacity could cushion geopolitical disruptions in oil supplies may well be over, even though the threat of such disruptions is greater than ever. Atlantic Monthly

EU Backs HIPER

2007-09-03T19:48:00.000+01:00

A British-led team of scientists has won European Union approval to seek to make nuclear fusion, the physicist’s dream, a reality.

Nuclear fusion has the potential to solve the world’s energy crisis with carbon-neutral technology by harnessing the process that drives the Sun...The decision paves the way for a seven-year, £500 million programme to construct an experimental reactor based on a revolutionary technique that could make fusion a commercial reality within two decades...

The prototype for the Hiper (high energy laser fusion research) project is likely to be built in Britain...A pulsed laser with a power of a petawatt (a million billion watts) is directed at a fuel pellet two millimetres across. The vast pressure this creates compresses the pellet to a diameter of few microns and generates temperatures of tens of millions of degrees, allowing fusion to begin.

Professor Dunne, of the Rutherford Appleton Laboratory in Oxfordshire, said: “To put that in perspective, it [the laser] is 10,000 times the power of the entire UK National Grid. And then you’re going to focus that down onto a spot that’s 10 to 100 times smaller than the width of a human hair. The pressure is equivalent to 10 Nimitz class aircraft carriers sitting on your thumb.
Times Online

China Crude Imports up 39% in July

2007-08-23T00:13:00.000+01:00

China's General Administration of Customs confirmed preliminary data released earlier this month that showed the country imported 39.3% more crude oil in July than it did in the same month last year, and that liquefied natural gas (LNG) imports soared fivefold in order to meet robust energy demand during the country's peak summer consumption season.

China's crude oil imports in July hit a record monthly high of 14.83 million tonnes, equivalent to 3.51 million barrels per day, which brought the total volume of crude imported from overseas so far this year to 96.37 million tonnes, up 14.7% year-on-year.

Saudi Arabia remained the largest crude exporter to China between January and July, with the Middle Eastern country exporting 14.3 million tonnes of crude to China during the seven-month period. Resource Investor

This may explain why the Saudis cannot/will not up the supply to the US?

Colder War - Canada v Russia in the Arctic

2007-08-18T11:08:00.000+01:00

Canada is operating the largest-ever military exercise in the Arctic to firm Canada's disputed claim to this lonely region. "It's a sovereignty operation" to counter grabs by Russia, Denmark, Norway and the United States, Brigadier General Chris Whitecross, commander of Joint Task Force North, told AFP. Each nation is claiming flaps of Arctic seabed, believed to hold 25 percent of the world's undiscovered oil and gas reserves. All of them, including its allies, deny Ottawa's hold on the famed Northwest Passage.
I.O.L.

As Russia staked a high-profile claim to the seabed under the Arctic Ocean, the country’s experts remain divided over the venture’s relevance. The liberal Nezavisimaya gazeta newspaper cited experts as saying that Russia’s polar venture did more harm than good. On August 13 the daily commented that Russia had started a pro-active expansion into the Arctic (Nezavisimaya gazeta, August 10-13).

Eurasian Daily Monitor

Syria loses confidence in the US Dollar

2007-08-18T11:01:00.000+01:00

Syria is finalising moves to drop its currency peg to the dollar to strengthen the government's ability to defend the exchange rate, and should complete the move within weeks, central bank Governor Adib Mayaleh said yesterday. Syria depends on oil, of which it produced 380,000 barrels per day last year, to earn foreign currency. A stable exchange rate has been a hallmark of monetary policy, although oil output has declined from a 600,000 bpd peak in the 1990s.

Gulf News

The Oil Law has stalled

2007-08-03T09:50:00.000+01:00

Good news but for how long?

Platform, an oil industry watchdog, warns that the Iraq oil and gas law could "sign away Iraq's future". Greg Muttitt, its co-director, says: "The law is permissive. All of Iraq's unexploited and as yet unknown reserves, which could amount to between 100bn and 200bn barrels, would go to foreign companies."

The Iraqi parliament has gone into summer recess without passing the oil law that Washington was pressing it to adopt. For the Bush administration this is irritating, since passage of the law was billed as a "benchmark" in its battle to get Congress not to set a timetable for US troop withdrawals. The political hoops through which the government of Nouri al-Maliki has been asked to jump were meant to be a companion piece to the US "surge". Just as General David Petraeus, the current US commander, is due to give his report on military progress next month, George Bush is supposed to tell Congress in mid-September how the Maliki government is moving forward on reform.

The Guardian

Murdoch Digs into Dow Jones

2007-08-01T22:16:00.001+01:00

Dow Jones Takeover
"Rupert Murdoch has won his battle to take over rival US media business Dow Jones, owner of the Wall Street Journal.
His News Corporation company is paying $5.6bn (£2.7bn) for Dow Jones, after agreement was reached between the two boards.

Although the Dow Jones board has backed the deal, one of its directors resigned in protest at the move. Dieter von Holtzbrinck said he was "very worried" about the impact of the bid on the Wall Street Journal's editorial independence. Another, Leslie Hill, reportedly quit as a director as the final deal took shape. "

I am also very worried about this news. To have control over the business psychology of the US in addition to all his other worldwide newspaper and media companies is too much power for one man on this planet. And at such a time. Will we ever believe what we hear in the news again?

Saudi Arabia to focus on renewable energy

2007-07-30T22:13:00.000+01:00

"A multimillion-riyal world-class research centre for renewable energy has been set up at the Dhahran-based King Fahd University of Petroleum and Minerals...The move to open this research centre is also significant in view of the fact that Saudi Arabia continues to face long-term economic challenges that put pressures on Saudi oil revenues. Hence, there is a need to diversify the economy and decrease reliance on oil, the earnings of which make up around 90-95 per cent of the total Saudi export earnings, 70-80 per cent of state revenues, and around 40 per cent of the country’s gross domestic product (GDP)..."
Khaleej Times

Indeed, looking to the future can be the only reason Saudi Arabia would consider something like this. One presumes their own power stations are driven by oil and that they are now looking for an alternative. Although how one exports solar power is anyone's guess?

The rise of the PetroEuro

2007-07-26T14:51:00.000+01:00

Post-Enron there's been a slow decline in the opinion of the health of the US economy. With the dollar depreciating against the pound/Euro and further slides imminent, one can expect the middle east, who purchase most of their imports from the Eurozone, to change the pricing of oil to the Euro in the near future.

Resource Investor

This may then further leverage the impact of the price of oil onto the US, as the cost of Euros will continue to increase until they get their house in order, while at the same time reducing the impact on Europe.

So Mr Bush - if you want to reduce the price of oil - get out of the middle east and get your economy straight.

Sliding value of Petrobucks

2007-07-24T10:08:00.000+01:00

I missed this third explanation of why the Saudis will not/can not pump more oil. The fall in the US$ means that their spending power is reduced - so in Saudi terms the recent price increases merely represent a catch-up for them.

"The falling US dollar is lowering the Organisation of the Petroleum Exporting Countries’ purchasing power by up to a third, making the powerful oil cartel more reluctant to increase production and cut prices."
Financial Times

This softens the blow for sterling and euro countries and hits the USA harder.

Opec talks of a fair price

2007-07-22T18:31:00.000+01:00

A Kuwaiti oil newsletter quotes the head of Opec's research division:

"A price of $60 to $65 is appropriate for consumers and producers, because it boosts means of investment in the oil industry in light of growing demand for oil in the coming years," state firm Kuwait Petroleum Corporation's (KOC) monthly newsletter quoted Hasan Qabazard as saying
Reuters Kuwait

This seems to back up the idea that pricing is NOT about supply but about capability. The waters get muddier...

Out of the closet

2007-07-21T00:22:00.000+01:00

Peak oil is getting a fair bit of coverage. An item on the BBC 6pm news yesterday discussed petrol at £1 per litre and how to economise. The second part of the BBC play "A Minute to Midnight" (about an oil geologist and his peak oil report) was aired tonight, less a fiction more a report on the status quo.

The Guardian has covered the topic in some detail this week :-

18 Jul North Sea's glory days over as big companies look abroad
18 Jul Petrol hits £1 a litre with no end in sight to oil market's turmoil
17 Jul Help us out, west asks Opec, with pound at 25-year high against dollar
16 Jul Oil 'could hit $95 a barrel this year'
15 Jul Sky-high oil prices signal higher rates
15 Jul Opec tightens its grip as oil prices hit the roof
13 Jul $80 a barrel prediction as oil soars again

Over in the US, The National Petroleum Council produced a report this week which is beginning to admit to a growing concern : Energy Bulletin . As a result the current chairman of Chevron Corp led an urgent call for dramatic increases in vehicle fuel mileage standards and the rapid adoption of ethanol and other biofuels The Globe and Mail

There's a better chance of handling the situation if people are gradually warmed up to the idea, rather than wait for a crisis to occur.

Shift to the West

2007-07-15T11:44:00.000+01:00

I read on Wikipedia - Oil reserves that once peak is reached in the Middle East then the secondary oils (such as tar sands) in Canada and Venezuela will be the major source of oil worldwide.

This oil of course is more expensive to squeeze out of poor planet earth, so there's no thinking the energy crisis will be resolved. I can imagine that the Opec countries will need to hang onto as much oil as possible and push the price up - hence their non-cooperation with the US when asked to increase output. But the big producers like Saudi Arabia are not that strapped for cash - is money the only reason to control supply?

Iraq Commission

2007-07-14T21:55:00.000+01:00

They represented their report on Channel Four this evening - I missed bits of it whilst preparing dinner, so may edit this after seeing my recording. But my initial reaction is that nothing has changed much.

They talk of focussing the troops on training and them not leaving until ISF (Iraq Security Force) is capable and that the judgement of the ISF capability will be left to the military (oh yes I have heard this before - it's so the politicians are not responsible !!). But if no progress has been made on this capability during the last years why should anything change now?

They talk of diplomacy between all players, surrounding countries and the UN. But the US congress has just voted on making Iran an outlaw state and giving carte blanche to the US Army. So which century is this diplomacy going to happen.

They then talked of UK cash going in to help the rebuild - what about all the money taken by Halliburton and co? - hopefully the cash will go via the UNHCR as promised so we don't also help to fill that company's profit margin.

Apparently Iraq should be pumping 3.1 M bpd but is only attaining 2.5M bpd - at least some oil is being saved then !!

US and the Balkans

2007-07-13T18:24:00.000+01:00

I missed most of the Balkan war as I was in the US at that time - no UK news available and the US newsreels were obviously pitching at an audience who didn't care about the whys and wherefores. But watching the Ali Cambell Diaries yesterday I see that Clinton was very much against action in Kosovo. Was this because there was nothing to gain - no interests to protect?

Kuwait - Bluffing?

2007-07-12T22:45:00.000+01:00

There's been an ongoing issue about Kuwait's reserves. They appear to be stuck for the last few years reporting reserves of 100 Bn barrels even though they pump every day and have not discovered any new oil. Is this the fabled golden goose or just a fake to prop up their budget?

See the article in Energy and Capital

Oil Reserves vs Consumption 2007

2007-07-12T16:29:00.001+01:00

Hubberts Peak is the maximum amount of oil output before we get into a situation of declining resource with an increasing requirement. The issue known as Peak Oil has long been debated since Hubbert wrote his 1956 paper about the decline in US reserves - his prediction for the US was spot-on and most feel no reason to doubt predictions based on the same algorithms for World Oil.

The source for this data is EIA Energy Review and represents proven known reserves.

It's not rocket science to see that 1318 Bn Barrel / 22 Bn Barrels p.a. gives us about 60 years before the tap runs completely dry. Unless major new fields are found (and none have been for some time) we have reached Peak Oil and we should start to plan

The US and Peak Oil today

2007-07-12T11:20:00.000+01:00

Argued today with those on PeakOil.com about taxing fuel to reduce consumption. It's bizarre how they just don't get it. As soon as you mention tax everyone comes up with hundreds of excuses, they are all talk and won't put their money where their mouth is.

Mothers today are justifying their 4 x 4 by saying it's protecting their children , yet they are burning fuel unnecessarily and destroying the future of those same children.

Bush's man Petraeus is talking about a 15 year stretch in Iraq. I wouldn't mind betting that's the life cycle of the oil fields there. The US Government paper published in January admits Peak Oil finally :- Government Accountability Office (pdf) - we can argue about when but there's no escaping it.