Energy / Crude Oil

• Just How Significant is the OPEC Announcement?

  The Organization of Petroleum Exporting Countries (OPEC)  announced on Tuesday that its members could not reach an agreement to change OPEC's production quotas. How significant is that announcement? In my opinion, not very. Forbes provides these details: Analysts thought the 12-member group would boost production in an effort to cool off oil prices and take some pressure off the world economy.... Instead of raising production the Organization of Petroleum Exporting Countries ended a contentious meeting in Vienna without changing quotas for its members. "We are unable to reach consensus to ... raise our production," OPEC Secretary General Abdullah Al-Badri said.…

• Global Oil Reserves Increase by 6.6 Billion Barrels in 2010

  In the absence of replenishment by successful exploration or reserves growth, so-called 'reserves replacement', proved reserves would tend to decline over time as production depleted the existing reserve base. However, the tendency has been for proved reserves at the aggregate level to increase over time as reported discoveries, extensions and improved recovery have exceeded production. Global oil reserves rose by 6.6 billion bbls to 1,383 billion bbls in 2010. That represents an increase of 25% over the 2000 figure of 1,105 billion bbls, despite an estimated cumulative production of 318 billion bbls during the intervening ten years. Thus global reserves…

• Are U.S. Bureaucrats About to Make a Huge Oil Supply Blunder?

  U.S. Secretary of State Hillary Clinton got the file Monday as the State Department concluded a public comment period on its draft environmental impact statement, and will publish a final one some time this summer, before making a determination as to whether permitting construction of the cross-border TransCanada pipeline would be in the U.S. national interest. The reality check is about the project called The Keystone Pipeline, that will carry 7-800,000 barrels per day of oil made from Canadian bitumen to the massive U.S. Gulf Coast petroleum hub, where refineries are particularly suited to process the heavy oil made from…

• The Oil Beneath California

  The development of oil in Texas produced, in its time, the four richest men in the world (H.L. Hunt, Sid Richardson, Roy Cullen and Clint Murchison) and the single richest acre of oil production at Kilgore but is not where the greatest number of productive fields of oil per acre, or perhaps the most expensive acre in the country lies. (And the current richest American, Harold Hamm, incidentally is now from Oklahoma - oh, tempora). That expensive acreage is found in and around Los Angeles in California, and so it is California that I will write about today. Oilfields of…

• Offshore Oil Dispute in South China Sea Has Enormous Global Implications

  The world’s unceasing quest for new oil deposits has combined with offshore technology to impel many countries to investigate their offshore resources in their “exclusive economic zone,”  (EEZ) defined by the 1982 United Nations Convention on the Law of the Sea Part V, Article 55 as extending 200 nautical miles from a nation’s coastline. Difficulties arise in congested maritime areas where overlapping claims create friction, and one of the most contested areas in the world today are the waters surrounding the Spratly islands of the South China Sea. The Spratly islands consist of more than 750 islands, islets, atolls and…

• Peak Oil and the Collapse of the Soviet Union

  Synopsis: The causes of the fall of the Soviet Union are thought to be inefficiency and the Soviet response to the Reagan Administration’s military buildup of the early 1980s. However, a more plausible explanation is the decline in Soviet oil production caused by peak oil. This gives the world an example of a modern economy confronted by peak oil and what lessons we can learn from it. Neo-Classical Economics In the West, we have great economic Nobel laureates such as Hayek, Solow, Freidman. and Samuelson, who extol the virtues of markets for organizing an economy. Yet their theories for how…

• UK Government Predicting Peak Oil Within 5 Years

  The UK Secretary for Energy and Climate Change, Chris Huhne, has committed to establish an "Oil Shock Response Plan" to cope with some of the consequences of peak oil (http://www.businessgreen.com/bg/news/2072738/exclusive-government-develop-oil-shock-response-plan). While there remains dissent as to the facts of peak oil, a growing body of experts think that the phenomenon will occur at some point during the next five years. On a recent BBC radio 4 broadcast (March 27th) a former president of Shell, John Hofmeister, reckoned that there was no problem with the production of oil meeting demand for it until 2050/2060. This kind of estimate includes various kinds…

• Sunday Oil Market Roundup

  The Nymex oil price has calmed down a bit in the last week, and now stands at $100.10/barrel.  Mysteriously, that's about 3 bucks higher than it was 2 weeks ago. After flirting with $4/gallon, the national average for regular unleaded is $3.867 according to AAA Fuel Gauge. Let's focus on demand prospects going forward. U.S. gasoline demand had been above the 2010 level, but high prices have disrupted the normal rise in May. Demand is now well below its 2010 level according to the EIA's most recent This Week In Petroleum report. U.S crude stocks are above their 5-year average…

• The Bear Case for Oil

  Let’s do some out of the box thinking here. Let’s say that the global economy is really slowing down. The demand for oil will fall. Let’s say that China continues to raise interest rates, slowing its economy further. Then Chinese oil demand starts to wane. Then we bring on stream new US onshore supplies opened up by advanced technologies in places like the Bakken field in North Dakota. Then current high prices at the pump deliver a summer driving season that is a shadow of its former self. Next, the exchanges get religion and decide to damp down speculation in…

• Enhancing Oil Recovery: A Look at Stripper Wells

  The Total (oil company) discussion on Enhanced Oil Recovery has an illustrative graph to explain why there is a growing need to get as much of the oil in a reservoir as can be economically recovered. When the large flows of oil that I have written about previously stopped flowing from the major production fields in the on-shore United States, that did not mean that the wells from which they issued were immediately shut-in. Rather, in many cases, although the driving pressure to move the oil to the ground surface had largely disappeared, there was still a sufficient imbalance within…