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| 2006 |
"Iran is suffering a staggering decline in revenue from its oil
exports, and income could virtually disappear by 2015 if the trend continues, according to
an analysis published Monday in a journal of the National Academy of Sciences.... Iran
earns about $50 billion a year in oil exports. The decline is estimated at 10 to 12
percent annually. In less than five years exports
could be halved and then disappear by 2015, Stern
said.... He said oil production is declining and both gas and oil are being sold
domestically at highly subsidized rates. At the same time, Iran is neglecting to reinvest
in its oil production."
Iran oil industry founders, report says
Associated
Press, 26 December 2006 |
"Alarm bells are ringing on the issue of security of global energy supplies, International Energy
Agency (IEA) Chief Economist Dr. Fatih Birol said Friday at a press conference in
Istanbul. 'The threat to the world's energy security, especially on oil and natural gas,
will reach serious dimensions in the next 10 years,' he added.... Birol highlighted that the most important message the
report was delivering was the 'threat to energy security, especially in natural gas.'.... The
world is facing twin energy-related threats: that of not having adequate and secure
supplies of energy at affordable prices and that of environmental harm caused by consuming
too much of it, the report said.... The ability and willingness of major oil and gas
producers to step up investment in order to meet rising global demand are particularly
uncertain. ”
Agency report rings alarm bells for global energy security
Turkish Daily News,
23 December 2006 |
"... worried over surging crop prices China is
now clamping down on the use of corn and other edible grains for producing biofuel. While
it wants to support the growth of alternative energy sources, Beijing says the issue of
national food security should take precedence over the country's green agenda.... surging
demand for biofuel is now partly blamed for recent price hikes in the food market and for
shortages in grain stocks. Wheat prices are at their highest level in a decade, due to
poor harvests in key producing countries like the United States and Australia, while corn
prices have surged by up to 20 percent in local markets.... As biofuel is produced from
renewable biological resources, what government officials worry is that possible
overcapacity may lead to a shortage of edible grains and feedstock supplies. This has
already happened with cornstalk used in ethanol production. Cornstalk prices in China have
jumped 500 percent to 30 US dollars per tonne since 2005. The same is now happening with
the corn... Experts warn that if ethanol production continues to be corn-based, China will
be forced to import the crop by 2008. Relying on crop imports is a sensitive issue as the
government policy supports food self-sufficiency for the sake of national security."
Biofuels Eating Into Food Grain Stocks
Inter Press Service, 20
December 2006 |
"China, hosting its first major energy summit on Saturday, urged top
oil consumers to join together in the face of resurgent producer power and sought to paper
over differences on how best to achieve energy security. Ministers from the United States,
India, Japan and South Korea - nations that consume nearly half the world's oil - gathered
in Beijing for the meeting, which marked a rare move by China to take a leadership role on
global energy issues. 'We want to send out an important, positive message, which is: the
world's key energy consuming countries plan to strengthen mutual cooperation,' China's top
energy policy maker Ma Kai said. '(We will) promote conservation of oil, improvement of
energy efficiency, strong development of oil alternatives, and reduce reliance on oil,' he
added in prepared remarks to the forum."
China, at energy summit, urges oil consumers to unite
Reuters, 17 December 2006 |
"China will invest over one trillion yuan (about 127 billion
U.S. dollars) in developing an alternative coal-based energy source to ease the country's
dependence on oil imports, according to the National Development and Reform Commission
(NDRC). The project aims to produce 30 million tons of liquefied coal and 20 million tons
of dimethyl ether (DME) by 2020. Coal-to-olefin (CTO) output is expected to hit 8
million tons and coal methanol to reach 66 million tons."
China to invest 1 trillion yuan to develop oil alternative
Xinhuanet, 15
December 2006 |
"The North Sea will run out of oil and gas. The question is, when.
The United Kingdom Offshore Operators' Association predicts that production will fall below one million barrels per day before 2020. The UK government's energy review said production will be reduced from
just under 3.5 million barrels a day now to below 1.5 million by 2030.... Tony Mackay, the
managing director of Mackay consultants, says: 'North
Sea oil production peaked in 1999 and gas production in 2001. Both are currently declining by
about 10 per cent per year and there is little
chance of that trend being reversed. 'New fields continue to be discovered and developed,
but are much smaller.'"
Dwindling resource of fuel for a solid future?
The Scotsman, 13 December
2006 |
"China cannot afford to embark on industrial production of
grain-derived biofuels because supplies of corn and other crops are needed to feed the
country's 1.3 billion people. 'It would be a disaster for us if we depend on a huge amount
of corn and other grains for energy," said Zhai Huqu, president of the Chinese
Academy of Agricultural Sciences, in comments quoted by the official China Daily. China,
which relies mostly on polluting energy sources like coal, has set a goal of producing
about six million tons of cleaner-burning substitutes such as ethanol, which is derived
from corn, by 2010 and 15 million tons by 2020. But with prices of corn and other grains
soaring as demand rises in China and arable land increasingly being swamped by
development, top officials cast doubt on such goals. Vice Finance Minister Zhu Zhigang
said biofuels should only be produced once the supply of grain exceeded demand, the
newspaper reported. 'The government will impose strict controls on any biofuel project
using grain as the raw material,' Zhu said."
Biofuels seen as a luxury China cannot afford
Agence France Presse, 12 December
2006 |
"Few countries can match Iran in its ability to generate angst among
Westerners. It appears determined to become a nuclear power. Tehran's Islamic leaders aid
radical groups across the Middle East. And as the U.S. gets bogged down in Iraq, Iran's
influence in the region is on the rise, fueled in large part by its vast energy wealth.
Yet Iran has a surprising weakness: Its oil and gas industry, the lifeblood of its
economy, is showing serious signs of distress. As domestic energy consumption skyrockets,
Iran is struggling to produce enough oil and gas for export. Unless Tehran overhauls its
policies, its primary source of revenue and the basis of its geopolitical muscle could
start to wane. Within a decade, says Saad Rahim, an analyst at Washington consultancy PFC
Energy, 'Iran's net crude exports could fall to zero. 'That's not to say Iran doesn't have
abundant resources. The country's 137 billion barrels of oil reserves are second only to
Saudi Arabia's, and its supply of gas trails only Russia's, according to the BP
Statistical Review of World Energy. Getting it all out of the ground, though, is
another matter. Iran has been producing just 3.9 million barrels of oil a day this year,
5% below its OPEC quota, because of delays in new projects and a shortage of technical
skills. By contrast, in 1974, five years before the Islamic Revolution, Iran pumped 6.1
million barrels daily. The situation could get even tougher for the National Iranian Oil
Co. (NIOC), which is responsible for all of Iran's output. Without substantial upgrades in
facilities, production at Iran's core fields, several of which date from the 1920s, could
go into a precipitous decline. In September, Oil Minister Kazem Vaziri-Hamaneh suggested
that with no new investment, output from Iran's fields would fall by about 13% a year,
roughly twice the rate that outside oil experts had expected. 'NIOC is likely to find that
even maintaining the status quo is a mounting challenge,' says PFC Energy's Rahim."
Surprise: Oil Woes In Iran
Business
Week, 11 December 2006 |
"Eighteen percent of all corn is going into ethanol production. We're
getting 4.5 million gallons of ethanol. That's 1 percent of U.S. petroleum use. It's 1
percent. If we use 100 percent of U.S. corn, and we won't do that, but if we used 100
percent, what would that do for us? Six percent."
Biofuel Skeptic Extraordinaire - An interview with David Pimentel
Grist, 8 December 2006 |
"Oil production in Southeast Asia will reach a peak in 2013 as fewer
new fields are found, forcing the region to evaluate its dependence on crude, said Michael
Smith chief executive of UK-based consultant Energyfiles Ltd. Crude oil output will hit an
apex of 3.3 million barrels a day by 2013, compared to 95 million barrels a day of global
production, said Smith, during a presentation at the OSEA 2006 conference in Singapore.
Southeast Asia’s gas production will hit a total of 4.7 million barrels of oil
equivalent a day at the same time before reaching a top level in 2020."
Southeast Asian oil output likely to peak by 2013
Bloomberg, 6
December 2006 |
"Costs for the oil sands project of Synenco Energy Inc. and China
Petroleum & Chemical Corp. have surged 160 per cent and the companies plan to build
key components in China to try to control spending.Calgary-based Synenco Wednesday said
the mining and extraction portion of the Northern Lights project could cost $4.4-billion,
more than double a previous estimate of $1.7-billion.... According to Tristone Capital
Inc., Northern Lights could cost as much as $10-billion in total, which is in the range of
current costs in the massively overheated construction arena around Fort McMurray in
northeastern Alberta. 'There is no question that costs affecting capital-intensive oil
sands projects have changed dramatically in just a few months — largely due to
resource shortages — and our project's cost estimates have also risen,' said Todd
Newton, president of Synenco. To combat inflation, parts of Northern Lights will be built
by workers in China."
Oil sands partners to build in China as costs soar
Globe
And Mail, 6 December 2006 |
"The U.S. government's top energy forecaster on Tuesday said it
raised its estimate for world crude prices in 2010 by about 20 percent to near $60 a
barrel due to delays bringing new oil fields on line. African producers like Angola and
Nigeria and Latin American states like Brazil will be slower than initially projected in
ramping up production from new projects, putting a squeeze on world supply, said Guy
Caruso, administrator of the Energy Information Administration. 'It's clearly going to
take longer now to bring on the new supplies and to have an impact on price than we were
thinking a year ago,' Caruso told reporters."
Oil field delays mean higher 2010 crude price: EIA
Reuters,
5 December 2006 |
"Gazprom, which owns one-sixth of the world's natural gas, pipes 30%
of its output to Europe and provides around 4% of Britain's gas supply. But there have
been growing indications that its declining gas fields and failure
to invest in new exploration and production could
squeeze output, threatening shortages....'This is not about a shortfall of gas, it's about
a shortfall of cheap gas,' said Sergei Kuprianov, spokesman for deputy chairman Alexei
Miller. 'We must get to the point of liberalising gas prices in our country. If we get to
a stage of equal prices for domestic and foreign markets it will influence decisions by
customers.' Meanwhile, he said, imports of Central Asian gas will grow. From Turkmenistan
alone, Gazprom plans to more than double imports over the next four years to as much as
80bn cubic metres - around 14% of its own output. Professor Jonathan Stern of the Oxford
Institute for Energy Studies said central Asian imports were crucial to tide Russia over
until new gas fields come on stream in 2015. Much
will also depend, he says, on domestic usage 'and as long as prices are like this demand
will gallop up.' But he said it was unlikely that
President Vladimir Putin would agree to domestic price hikes before the 2008 presidential
election."
Gazprom tries to reassure customers 'there's enough for everyone'
Guardian, 30 November
2006 |
"Kazakhstan has downgraded its long-term oil output forecast because
of delays at Caspian oil developments, senior Kazakh officials said Tuesday, according to
media reports. Kazakhstan's Energy and Mineral Resources Minister Baktykozha Izmukhambetov
said Tuesday, according to Interfax news agency, that planned oil production will reach
only 130 million metric tons, or 2.6 million barrels a day, by 2015. Earlier in June, he
had said that Kazakhstan had planned to reach the production of 3 million barrels a day,
or 150 million tons, by that time. Kazakh Prime Minister Daniyal Akhmetov said Tuesday
that the downgrade of long-term production forecast was related to delays in starting
production at offshore fields. "We have to realize that we have a delay in the
program of developing the Caspian," Akhmetov was quoted as saying by the Kazakh state
news agency Kazinform. "All our plans to reach oil production of 120 tons by
2010-2012 and 150 million tons by 2015 are in doubt because of it." Akhmetov said
that the delay would also affect Kazakhstan's macroeconomic indicators, without
elaborating. Production at giant Kashagan oil field in the Caspian is unlikely to start
before 2009-2010 because of technological difficulties related to the development. There
have also been periodic tensions between the government and the developing consortium, led
by Italy's Eni Spa (E), over issues such as Kazakhstan's acquisition of a stake in the
project."
Kazakhstan downgrades long-term outlook for oil production
MarketWatch,
28 November 2006 |
"The fact is that, despite all the public ballyhoo about global
warming, both governments and private businesses, have been drastically reducing their
investment in energy research over the past 20 years. The US Federal Government, for
example, has halved its energy research and development spending and now spends $5 billion
a year on energy research and development. The rest of the world’s governments
between them spend about the same amount. This is one-fourteenth of the US
Government’s military research spending and one sixth of its spending on medical
R&D. The disparity is even greater in the private sector. Power generation companies
on average spend just 0.5 per cent of turnover on R&D, compared with 3 per cent in the
motor industry, 8 per cent in electronics and 15 per cent in pharmaceuticals. The British
Government has proudly announced the creation of a new Energy Technology Institute, funded
with £50 million a year of public money, but this is a tiny figure, given the importance
of global warming and the vastly greater amounts spent by both public and private sectors
in other fields of research. What these disparities suggest is a monumental case of market
failure: markets are simply not sending the right price signals to motivate economic
activity, investment and innovation in energy technology on the scale now required. The
reasons for this market failure were presented in the Stern report: very long lead times
in power generation projects; the collapse of oil prices in the mid-1980s; and the
fickleness of political fashions on nuclear power. But whatever the causes of these market
failures the implication is clear. Research, development and deployment of new
non-polluting energy sources require and deserve far greater levels of public
support."
Give us non-polluting energy — starting now
London Times, 23
November 2006 |
"A rise in oil production from the Caspian, Africa and North America
will ease OPEC's burden in meeting world oil demand in 2007, but an anticipated supply
surge may not materialise. Producers outside OPEC may pump enough new oil next year to
meet growth in world demand, unlike this year or in 2005, according to the International
Energy Agency, as new fields come on stream."
OPEC's rivals set to pump more oil in 2007
Reuters,
23 November 2006 |
"The chief executive of Mexico state oil monopoly Petroleos
Mexicanos, or Pemex, said Wednesday the company expects production at its Cantarell oil
field to decline by an average of 14 percent a year between 2007 and 2015. Speaking to
members of the Senate Energy Committee, Luis Ramirez Corzo said the average annual decline
is equivalent to about 150,000 barrels a day. The offshore Cantarell, Mexico's largest
source of crude oil, began declining in 2005 from a record 2.13 million barrels a day in
2004. Ramirez Corzo said output at Cantarell is expected to average 1.8 million barrels
daily this year. Pemex is aiming to substitute Cantarell's declining output with
production from other projects under way, he said. The main problem facing the state
company is how to finance future projects, Ramirez Corzo said."
Mexico's Pemex chief: Cantarell oil field output to drop 14 percent a year
Associated
Press, 22 November 2006 |
"When Gazprom, Russia's giant state-owned gas monopoly, cut supplies
to Ukraine last January in a price dispute, shivers went through a wintry Europe, which
started looking harder at ways to reduce dependence on Russian gas imports by finding
more, and different, suppliers. In the ensuing months, that quest has opened a fierce
divide in the West between pro- and anti-Russian camps - those who believe Russia is just
as reliable a source as alternatives in the Middle East, northern or sub-Saharan Africa,
and those who see Russia exploiting its energy resources for political purposes....these
ideological disputes, which have flared with surprising vigor and even venom 17 years
after the Berlin Wall fell, mask what is perhaps a more uncomfortable truth: Russia may
not have enough gas to keep both Europeans and Russians themselves warm in winters to
come. 'The issue is not about Russia's reputation as a reliable supplier of gas to
Europe,' said Jonathan Stern, director of gas research at the Oxford Institute for Energy
Studies. 'The fact is that there is a limit over how much gas Russia can sell to Europe. I
don't think Europe realizes it, but we are reaching the limit of Russian exports. Russia
needs the gas for themselves.' The signs emerged during bitter cold last January and
February when demand across Europe and Russia reached record highs. According to Vladimir
Milov, president of the independent Institute of Energy Policy in Moscow and a former
deputy minister of energy, 'gas supply cuts to power states in central Russia reached
between 80 and 85 percent as compared to base contractual volumes.' Milov, who quit his
job in 2002 after failing to persuade President Vladimir Putin to restructure Gazprom and
make it more competitive by breaking it up and giving the regulators genuine powers, says
Russian and European customers could face a gas deficit of 100 billion cubic meters a
year, beginning in 2010, compared to actual demand. 'The Russians are suffering this
monopoly environment in the gas sector,' said Milov. Gazprom produced 547.1 billion cubic
meters last year. Of that amount, nearly 300 billion cubic meters was supplied to domestic
consumers, at subsidized prices, and around 150 billion cubic meters was sold to
Europe.'... Still, for a country which holds 40 percent of the world's gas reserves -
making it the largest - shortages may seem a bizarre situation for Russia to find itself
in. Robert Larsson, energy analyst at the Swedish Research Defense Agency, said the main
reason is that 'Gazprom is buying gas instead of developing the fields.'... Andris
Piebalgs, the EU's energy commissioner, acknowledges the problem. He wants to start
focusing on energy efficiency, liberalization of the energy markets and more support for
renewable, cheaper energy. 'The EU must create the conditions for developing a long-term
energy strategy and not let governments decide to deal with external suppliers like
Gazprom,' said Emmanuel Bergasse, an independent energy analyst in Paris. 'If the EU is
serious about an energy policy, it should reduce its vulnerability through robust energy
efficiency and renewable-energy action plans.'.... Even if there were a decision to
diversify further, Stern from the Oxford Institute for Energy Studies is not convinced
buying gas from the Middle East, Central Asia, Iran or Nigeria would lead to greater
security. 'Why does everyone assume that non-Russian gas will be more secure than Russian
gas,' asked Stern."
Problem for Europe: Russia needs gas, too
International Herald
Tribune, 21 November 2006 |
"The energy crisis is far worse and will begin hitting far earlier
than the Government believes, a top power industry consultant has claimed. A report from
LogicaCMG states that by 2015 energy demand could
outstrip supply by 23% with climate change and demand for electricity to power
air-conditioning causing blackouts all year round. LogicaCMG says its analysis contrasts
with thewarning in the Government's Energy Review which suggested that by 2025 demand
could outstrip supply by 30%. 'The energy gap is widening far quicker than anticipated,'
said LogicaCMG energy analyst Kieron Brennan. 'That widening is a major issue as potential
solutions like new nuclear power can't be built in time to close it.' The report says
demand could grow at as much as 2.4% a year as a raft of power stations come offline -
nuclear reactors coming to the end of their efficient life and ageing coal-fired stations
unable to fit the technology to produce so-called clean-coal electricity.Even if new
gas-fired stations are built, there may not be enough gas to power them."
Blackout warning as energy crisis looms
London
Evening Standard, 21 November 2006 |
"The International Energy Outlook 2006, issued by the US Department
of Energy, expects Saudi Arabia - the largest oil exporter - to increase its crude oil
production from 12 to 18 million barrels per day by
2030. Oil prices are expected to hover between $34
and $96 per barrel in 2030, the report said.... The IEO 2006 report also predicted that
world oil demand would increase by 47 per cent from 2003 to 2030. In absolute terms,
demand would grow from 80 million barrels per day in 2003 to 98 million barrels per day in
2015."
US report says Saudi Arabia will raise oil output
Gulf News, 18
November 2006 |
"Russia controls 29 trillion cu m of proven gas reserves and over 1.2
billion metric tons of gas condensate. This is about one third or one fourth of the
world's total reserves, depending on which estimate is used. Yet next year Russia may be
hit by a gas shortage of 4 billion cu m, according to the Industry and Energy Ministry,
which drafted a report for a meeting with President Vladimir Putin devoted to the Russian
energy sector....Next year's shortage will be just above 0.5% of the amount Russia will
have at its disposal, 785.7 billion cu m (this includes the output of Gazprom and
independent producers, as well as gas purchased from Central Asia). This does not seem
like a lot, all the more so as a partial reduction of exports in the first nine months of
2006 (by 0.3% to countries outside the CIS and by almost 30% to the CIS) could make up for
it. Nevertheless, if the gas sector is not reformed,
the problem will get worse and worse, and by 2010 Russia may have a shortage of about 30
billion cu m. The country's main gas producer is
Gazprom, which accounts for over 90% of total output. This year, Russia is expected to
produce at least 551 billion cu m, and 561 billion cu m next year. But it no longer has
any significant reserves left that could be put into production anytime soon. The
depreciation of Gazprom's fixed assets is approaching 60%, and its key fields are
similarly exhausted. The development of new ones is moving farther and farther into the
Arctic, in the zone of permafrost and the northern sea shelfs. Gas producers' operating
costs are rising fast. Today they stand at $6 per 1,000 cu m, having almost tripled since
the late 1990s. On the Yamal Peninsula, which lies in the Arctic and has 26 gas fields,
they will exceed $20 per 1,000 cu m because of extremely severe conditions. A geologist
told me that Yamal is 'a piece of something unknown frozen together over millions of
years, and it is unclear how it will be possible to build or produce anything there.' The
above-mentioned problems are technical and naturally accompany the stage of extensive
growth in gas production. You do not have to be an expert to understand that the near term
will require huge investment in new and promising fields and infrastructure. Only by doing
so will we be able to hope for a breakthrough in gas output in 10 or 15 years. Which gas
sector development strategy will the Kremlin choose? In reality, there is not much of a
choice. It can either produce more and increase exports indefinitely, or it can use gas
sparingly at home, putting off any large increase in exports until better times. Yet under
existing contracts, Gazprom has to export over 2.5 trillion cu m over the next 15 years.
..... Ahead of the G8 summit in St. Petersburg, Claude Mandil, executive director of the
International Energy Agency, said that Russia would need $11 billion of investment
annually because of the potential gas shortage. The Industry and Energy Ministry in its
report said it would be necessary to invest $600 billion by 2011. Gazprom will come up
with only half that sum, while the few independent gas producers will be responsible for
the rest. Even a price hike would bring in only $10 billion. That is a lot of money, but
nowhere near enough."
Why Russia has a gas shortage
Novosti, 17 November 2006 |
"BP PLC, which entered the Russian energy market three years ago with
the blessing of President Vladimir Putin, has become the latest foreign producer to feel
the icy power of the Kremlin as the state increases its control of oil resources. The
company's joint venture TNK-BP, Russia's third-biggest oil and gas producer, has been hit
with back-tax bills, threatened with license annulments and last week prosecutors opened a
criminal investigation against a TNK-BP executive.Its difficulties mirror those seen by
Royal Dutch Shell PLC, Exxon Mobil Corp. and Total SA in their Russian projects. Awash in
oil money after years of high prices, a confident Russia is moving to ensure that the
state has a major role in all key energy projects ... the BP-managed company, which
expended huge efforts imposing Western standards of corporate governance in the often
unruly Russian business world, now faces pressure on the TNK shareholders to sell up to
the state, analysts and people close to the situation say.... William Browder, CEO of
Hermitage Capital, the largest investment fund in Russia, said BP and other large oil
companies simply couldn't afford to stay out of Russia with dwindling reserves available
to them elsewhere in the world. 'If I was sitting in the board room of Shell, BP and Exxon
Mobil and thinking about Russia, I'd be scared,' he said. 'But at the moment, Russia
doesn't seem to suffer any real consequences for playing hardball. In a world where
there's no oil, foreign companies are lining up to work regardless of how the Russians
treat them.'"
BP next in line as Kremlin targets Western oil companies
Associated
Press, 17 November 2006 |
"Congressmen Roscoe G. Bartlett (R-MD) and Tom Udall (D-NM),
cofounders and cochairmen of the Congressional Peak Oil Caucus, said that a
new report released today by Cambridge Energy Research Associates (CERA), Why the Peak
Oil Theory Falls Down: Myths, Legends, and the Future of Oil Resources, confirms the
urgency for the United States government to adopt a crash program to mitigate the
devastating consequences of peak oil. Congressman Bartlett said, 'The CERA report agrees
that world oil production will peak and projects it will occur within 20-25 years.
However, world demand is growing exponentially - faster than production so the CERA report
confirms the likelihood of future shortages of liquid fuel and much higher and volatile
prices. A major flaw in the CERA report is its reliance upon questionable assessments of
global reserves by the USGS. USGS estimates of future world reserves equate a 50 percent
probability with a 50th percentile or mean. That is a bizarre and totally inaccurate use
of statistics. It almost doubles the amount of projected reserves compared to the 95
percent probable estimate. Actual discoveries are tracking the 95 percent probable trend.
That means world oil production will peak much sooner than CERA projects in this report.'
Congressman Udall said, 'CERA's report is one of the most optimistic predictions for the
peak in global oil production to date, and it still underscores the need to address this
problem immediately...'"
Congressional peak oil caucus responds to CERA study
Energy Bulletin, 14 November 2006 |
"What I’m saying, is that this is a global problem and it goes
like this: if we are to encourage economic growth around the world if we are to raise
living standards for all people of all nations the world needs a clean, affordable,
diverse energy supply. If we look two or three or four decades into the future, we know
that hydrocarbons alone will not meet the needs of a growing world economy. Even with all
the technical expertise the world could offer and all the political will it could muster,
eventually, we will run out of oil. And, even before then, the price of a dwindling supply
will be prohibitive. At present, our world is overly focused on, and overly dependent
upon, one source of energy. And that path is unsustainable.... we must actively move
toward developing and deploying alternatives to diversify our global energy supply. To be
sure, the private sector has a major role to play here – and companies are realizing
that they can make money in the alternative energy business. But, I also believe that
governments – all governments – must lead the world to a quick and aggressive
transition to alternatives."
Middle East Institute’s 60th Anniversary Conference
Remarks Prepared for Energy Secretary Samuel Bodman
US Department Of Energy, 13 November
2006 |
"China produced 23.86 million tons of heavy oil last year,
representing 13.2 percent of the country's oil output, Jia Chengzao, an academician with
the China Academy of Sciences, told the ongoing World Heavy Oil Conference in Beijing.
Heavy oil - a catch-all name for oil shale, oil sand and natural asphalt - and natural gas
hydrate, are becoming increasingly important substitutes for conventional energy resources
in China. Production is increasing and technological advances are helping to reduce
exploitation costs. New policies will be formulated to encourage the exploitation of
unconventional oil and gas resources to ease China's energy shortages, said Ma Kai,
director of the National Development and Reform Commission (NDRC) on Monday. Developing
unconventional oil and gas resources has been written into the country's 11th Five Year
Plan (2006-2010) as a necessary measure to meet a voracious demand for energy. China is
facing rising pressure from energy shortages as international oil demands continue to
climb and conventional oil resources become scarcer. China boasts abundant heavy oil
resources and "has discovered a total of 70 heavy oil fields in 12 basins after 50
years of exploration", said Zhao Xianliang, an official with the
Ministry of Land and Resources (MLR).... Meanwhile, the country has 47
billion tons of oil shale reserves, with 16 billion tons exploitable, and has six billion
tons of oil sand reserves, with half of them exploitable. Traditionally, the NDRC and MLR
only evaluated only oil and natural gas as energy resources but this year, for the first
time, they will also assess coal-bed methane, oil shale and oil sand. The latest
evaluation round covered 47 basins that have coal-bed methane, 80 oil shale mines and 24
oil sand basins."
China to encourage heavy oil exploitation to ease energy shortages
Xinhua, 13
November 2006 |
"U.S. Secretary of Energy Samuel Bodman is warning that high oil
prices can wreck economies, especially in the developing world. Bodman made his remarks
during a speech in Washington. In remarks before the annual conference of the Middle East
Institute, Secretary Bodman says worldwide demand for energy is expected to skyrocket over
the next quarter-century. 'The Energy Information Administration estimates that by 2030
global energy consumption will grow by over 70 percent. The strongest growth is expected
in developing economies in Asia, including China and India, with growth expected to triple
in that region over the next 25 years,' he said. The energy secretary says governments
around the world must fund more research into alternate energy sources, such as ethanol,
solar and wind. He also urged nations to educate more scientists and engineers to work on
making such alternatives practical for consumers to use."
US Energy Chief Says High Oil Prices Could Wreck Economies of Many Countries
Voice of America, 13 November
2006 |
"Kyoto committed Canada to cutting emissions by 6 percent from 1990
levels by 2012. Emissions are now 35 percent above that target and are set to rise more
rapidly as oil-rich tar sands are opened up in western Canada, which happens to be the
Conservatives' power base."
Canada faces U.N. grilling over Kyoto abandonment
Reuters, 12 November 2006 |
"The world will lurch from one energy crisis to another unless
governments switch from increased burning of fossil fuels to more nuclear, renewable and
energy-saving sources, the Western world's energy watchdog said. In a landmark report
published yesterday, the International Energy Agency (IEA) forecast skyrocketing fuel
prices, blackouts and supply disruptions as it pointed to a 50 per cent surge in energy
demand by 2030. Chinese and Indian economic growth will propel global oil demand from 84
million barrels per day to 116 million bpd by 2030 with most of the increased supply
coming from Saudi Arabia, Iraq and Iran. Non-Opec oil
supplies will peak in the beginning of the next decade, reckons the IEA, raising the risk of supply disruptions which could push
the crude price as high as $130 per barrel..... In its report, World Energy Outlook 2006,
the IEA offered a choice of two scenarios. In its reference case, the agency paints a
picture of soaring demand and increasing risk of supply disruptions as dependence rises on
a diminishing number of gas and oil suppliers. 'This
energy scenario is not only unsustainable but doomed to failure,' said Claude Mandil, head of the IEA. The IEA describes an alternative
scenario in which global energy demand is reduced by 10 per cent by 2030, oil demand
reaches 103 million bpd and OECD carbon emissions peak around 2015. ....In a stark
reminder of the risks, Mr Mandil pointed to the need
to invest $20 trillion to meet rising demand for energy. 'It is far from certain that this investment will actually occur,' said
Mr Mandil. The apparent soaring investment by oil companies was illusory, he said,
because of inflation in drilling costs."
Watchdog warns of one energy crisis after another
London Times,
8 November 2006 |
"The world is on a course that will lead it 'from crisis to crisis'
unless governments act immediately to save energy and invest in nuclear and biofuels, the
International Energy Agency warned on Tuesday. In an
apocalyptic forecast, Claude Mandil, the
agency’s executive director, said that our current path 'may mean skyrocketing prices
or more frequent blackouts; can mean more supply disruptions, more meteorological
catastrophes – or all these at the same time'. The IEA said that the oilfields on
which Europe and the US had come to depend to reduce their reliance on the Organisation of
the Petroleum Exporting Countries would peak in the next five to seven years. These
include those in Russia, the US, Mexico and Norway. According to this year’s World
Energy Outlook, the IEA’s flagship publication, that would mean: 'Growing oil exports
from the Middle East will focus attention on the world’s vulnerability to oil-supply
disruptions, not least because the bulk of the additional exports will involve transport
along maritime routes susceptible to piracy, terrorist attacks or accidents.' The three
countries on which the world will depend most for its future oil supply, Saudi Arabia, Iran and Iraq, are
also among its most unstable. A similar problem is emerging in natural gas, with half of
the world’s reserves found in Iran and Russia – countries that have used their
energy resources as a diplomatic weapon."
IEA warns of ongoing energy crisis
Financial
Times, 7 November 2006 |
"Radical
change will be required if the UK's oil and gas industry is to remain internationally
competitive and bring ashore the remaining 27 billion barrels estimated to lie in British
waters, a major oil conference heard yesterday. The10%
tax increase imposed this year by the government, which will remove £6bn from the
industry during the next three years, has eroded confidence, the United Kingdom Offshore
Operators' Association (UKOOA) conference was told. Malcolm Webb, chief executive of
UKOOA, said there was litle doubt the UK would remain a petroleum economy for many years
to come but warned that energy supplies will have to be imported if demand cannot be met
from North Sea reserves. It was, therefore, in the country's best interests for the
industry and government to join forces and support domestic production. 'This must include
a major shift in the regulatory and tax regime for this next, more difficult phase in the
North Sea's cycle,' he said. 'We chose the theme of 'competitiveness' for our conference
because we believe that is the heart of the matter. The UK offshore oil and gas industry
must develop and maintain the capability to successfully compete on an international
basis,' he added. 'It will take another £300bn or so to produce our remaining reserves.
This money will have to come from private industry and this is not a given. To attract the
funds we will have to demonstrate that industry here can make and sustain a competitive
margin.' He said current activity in the North Sea, which is at record levels, masked
underlying problems and risked a complacency that would be dangerous. 'The North Sea is a
mature province largely situated in deep, hostile waters. Rising costs, resource
constraints, an ageing workforce, a noticeable drop in the number of exploration wells
drilled this year, increasing regulatory burden and a tax regime no longer fit for purpose
are all adding to the challenge.'"
‘Changes required’ to keep North Sea oil and gas flowing
The Herald, 8 November
2006 |
"The International Energy Agency's (IEA) World
Energy Outlook (WEO) 2006... projected that biofuels were set to play an increasing
role in road transport, providing up to 7% of the total consumption in 2030. To
meet this demand, the IEA envisaged that the total amount of arable land required would be
equivalent to at least the combined size of France and
Spain.... But the WEO warned
that the growing demand for food would limit the potential of the plant-derived fuel
produced using current technologies. Yet the
emergence of new 'second generation' technologies, which allow more of a plant's material
to be turned into fuel, could allow biofuels to play a much bigger role in either of the
projections outlined in the report's two scenarios, it said."
World risks 'dirty' energy future
BBC News, 7 November 2006 |
"The US can no longer consider the Arctic as a long-term strategic
energy supply source, according to a new joint study by Wood Mackenzie and Fugro
Robertson, 'Future of the Arctic.' The study found
the Arctic potential is significantly less than previous estimations had suggested, and the mix of resources have been found to contain much less oil and
more gas. 'These findings are disappointing from a world oil resource base perspective,'
said lead study author, Andrew Latham, Vice President, Energy Consulting at Wood
Mackenzie. The study shows only approximately one
quarter of the oil volumes previously assessed in key North American and Greenland basins. Most importantly, the study reveals the Arctic to be a gas province, with
85 percent of the discovered resource and 74 percent of the exploration potential as gas.
'This oil:gas mix is not ideal because remote gas is often much harder to transport to
markets,' explained Latham. 'In addition, export and technology constraints are expected
to delay production of a large portion of the commercial gas until 2050,' he said....
Under the most likely scenario, it is projected that production
from the Arctic will contribute some 3 million barrels of oil equivalent per day (mboepd) liquids and 5 mboepd gas at peak, with the proportion of
production from US basins lower than previously anticipated. 'This
assessment basically calls into question the long-considered view that the Arctic
represents one of the last great oil and gas frontiers and a strategic energy supply cache
for the US,' stated Latham.... The findings also
indicate the US must look elsewhere to meet rising demand - namely to OPEC nations such as
Venezuela, and to Russia.... Additionally challenging is the Arctic's resource
distribution, which is not expected to alleviate current supply issues. With many of the
required technologies still in their infancy, peak Arctic production is not expected for
at least 20 years. This means that in the short term, Arctic resources are unlikely to
compete favorably with lower cost sources such as the Middle East."
Arctic Role Diminished in World Oil Supply
Wood
Mackenzie (Press Release), 1 November 2006 |
"Global oil liquids output will hit a plateau in the next five to 10
years and then permanently decline, whilst global gas production will keep on rising
through to 2020 and beyond, an international oil expert says. Even with high oil prices,
offshore exploratory drilling in South East Asia, where the majority of exploration
expenditure is directed, is not increasing substantially, according Michael R Smith, head
of the global oil and gas forecasting company Energyfiles. Deep water oil drilling is only
growing modestly compared to several other parts of the world and shallow water oil
drilling is projected to begin to decline as good prospects are exhausted."
Global oil output ‘will start to decline by 2015’
TradeArabia,
30 October 2006 |
"World production of crude oil may have already peaked, setting the
stage for declining output that could lag demand, a top advocate of the 'peak oil' theory
said on Thursday. Matthew Simmons, chairman of Simmons & Co. International, a
Houston-based investment banking firm specializing in the energy sector, said U.S.
government data showed that the world oil supply has declined through the first half of
this year. Energy Information Administration data showed world supply of crude oil has
declined to 83.98 million barrels per day in the second quarter after hitting 84.35
million bpd in the fourth quarter of 2005....Simmons acknowledged his call may be
premature, saying, 'If that number turns around, that will be wrong.'... Other speakers at
the conference took a more tempered view of the world's oil capacity, arguing that peak
production is still a few years out. 'Conventional oil production is going to
increase by a few million barrels a day between now and the period between 2010 and 2015,'
when it may peak, said Mike Rodgers, a partner at PFC Energy, an energy industry
consulting company."
World oil production may have peaked-executive
Reuters,
26 October 2006 |
"Tony Blair has warned that security of energy supply will become
almost as crucial an issue for this country as defence. The Prime Minister was speaking as
he marked the official opening of Langeled gas pipeline from Norway, which will provide
about 20 per cent of the UK's gas needs for the next 30 years.... He said energy issues
were at the top of every meeting of world leaders now. 'In the future, energy security
will be almost as important as defence,' Mr Blair told a gathering of British and
Norwegian officials and industry executives, including Norway's Prime Minister Jens
Stoltenberg, in London.... 'Norway is, and is set to remain, the biggest supplier of
imported gas to the UK, at a time when Britain is looking abroad for more of its energy
needs,' Mr Blair said. By 2020, the British Government has forecast, some 80 per cent of
the country's gas will be imported. The 750-mile Langeled link is the world's longest
subsea gas pipeline."
Blair: Energy as important as defence
Independent, 17
October 2006 |
"The answer to America's oil addiction lies in Canada. Or so goes one
line of thinking. As oil supplies got tighter and crude prices soared over the last few
years, tens of billions of dollars flowed into an effort to develop the biggest oil
reserve outside Saudi Arabia: Alberta's oil sands. Along
with the development rush have come rosy predictions on how much this secure, close,
proven supply of oil might yield. Four million, 6 million, even 10 million barrels a day,
which is nearly half America's total daily consumption and would easily replace all
imports from the Middle East. The only thing is, those numbers may be far too high."
Curing oil sands fever
CNN,
7 October 2006 |
"[At the Labour Party conference] Mr
Blair went on to outline the challenge facing his party saying: 'I won't be leading you in
the next election but I've sat in the hot seat for 10 years. 'Here's my advice - the scale
of the challenges now dwarf what we faced in 1997. They are different, deeper, bigger,
hammered out on the anvil of forces, global in nature, sweeping the world.'... He said 10
years ago energy policy had not been on the agenda... "
Blair launches final conference speech with dig at Brown
24dash.com,
26 September 2006 |
"High costs will likely derail some projects in the oil sands,
according to Murray Edwards, the reclusive vice-chairman of Canadian Natural Resources
Ltd., one of many firms working in the overheated Fort McMurray region of Alberta....
"These projects, long term, need prices higher than $50 [U.S. a barrel]," Mr.
Edwards told reporters after in a rare public appearance yesterday afternoon at the
Alberta Global Business Forum in Banff, an intimate annual gathering of top business and
political leaders.... Pressures around Fort McMurray -- competition for labour,
construction materials such as steel and the region's overstretched infrastructure -- have
already forced one global player to amend its plan. Paris-based Total SA, which bought
into the oil sands a year ago, had hoped to see some production in 2010 but in August
revealed first production is now set for 2013. 'Given the current challenges we face . . .
it is going to be difficult for the Canadian sector to deliver the forecast growth in oil
sands volumes over the next 15 years,' Mr. Edwards said in his presentation to the
conference. 'Costs are accelerating to the point where you have to start wondering if
projects are still economic.'"
Edwards sees threat to oil sands projects
Globe
and Mail, 22 September 2006 |
"The costs of finding additional reserves of oil and gas have soared,
an industry study shows, adding to the malaise of international oil companies. 'Reserves
replacement costs surged 73 per cent as increased capital spending did not translate into
incremental reserve additions,' a study of 200 oil and gas companies found."
Cost of search for energy reserves soars
Financial
Times, 21 September 2006 |
"Russia plans a massive increase in the scale of its exports of oil
and gas to Asia in its quest to expand its political and economic role as a global energy
supplier. According to President Vladimir Putin,
Russia plans to export 30 per cent of its oil and gas to Asia in 10 to 15 years, compared
with 3 per cent today. Mr Putin said Russia would
continue to 'behave in a responsible way' in the market. But his ambitious target will
raise concerns in the European Union - the biggest importer of Russian energy - that its
supplies might one day be affected by the flow of oil and gas to Asia.... Speaking on
Saturday to foreign academics and journalists, Mr Putin said prospects for the eastbound
energy links were 'very good' and that Russia, with its border on the Pacific Ocean, had
'a certain natural advantage' in developing ties in Asia. Mr Putin did not specifically
address the possible concerns of European customers, but said Russia would consider other
states' interests.... "
Russia looks east for future oil export market
The
Australian, 12 September 2006 |
"Oil production looks set to peak in the mid-to-late 2020s, but the
decline will be offset as high fuel costs accelerate the quest for other energy sources,
notably natural gas, UBS said in a study published on Wednesday.... 'Exactly when it will
occur is very difficult to estimate ... However, the fact that consumption is outstripping
new discoveries by more than 400 percent suggests that further increases in global
reserves may be nearing an end.'"
Oil output set to peak, but no fuel shortage-UBS
Reuters,
23 August 2006 |
"China's net import of crude oil rose to 70.33 million tons and
refined oil products, 12.03 million tons, in the first half of the year, said an official
with China's General Administration of Customs on Friday..... The
net import of crude oil and refined oil of the country rose by 17.6 percent and 48.3
percent year on year, respectively."
China's net import of crude oil up 17.6 percent year on year in first half
Xinhua, 12 August
2006 |
"Mexican state oil company Petroleos Mexicanos said Wednesday that
production at its Cantarell oil field, the second-largest in the world, will drop faster
than expected. The decline in production at the Gulf of Mexico oil field is a cause of
concern for the country, where oil exports are the top source of foreign income. Mexico
relies on heavily on oil revenues to fund its budget. Vinicio Suro, head of planning at
Pemex's exploration and production unit, told analysts in a conference call Wednesday that
Cantarell's output should fall 8 percent this year
from 2005, faster than the company's original 6 percent estimate. But he said the company is trying to drill new wells to offset the
decline. Suro said output at the Cantarell field is expected to be 1.86 million barrels a
day this year, 56 percent of the country's predicted daily production of 3.35 million
barrels. Production at Cantarell dropped to 1.74 million barrels a day in June, a
four-year low. Suro attributed the drop to a planned well closure. Pemex's most current estimates for the oil field's 2007 and 2008
daily production were 1.68 million barrels and 1.43 million barrels, respectively. Mexico is among the top foreign suppliers of crude oil to the United
States."
Cantarell output to drop at faster rate
AFX, 2 August 2006 |
"Output at Mexico's most
important oil field has fallen steeply this year,
raising fears that wells there that generate 60% of the country's petroleum are in the
throes of a major decline. Production at Cantarell, the world's second-largest oil
complex, in the shallow gulf waters off the shore of Mexico's southern Campeche state,
averaged just over 1.8 million barrels a day in May, according to the most recent
government figures. That's a 7% drop from the first of the year and the lowest monthly
output since July 2005, when Hurricane Emily forced the evacuation of thousands of oil
workers from the region.... It would also be bad news for the United States, for which
Mexico is the No. 2 petroleum supplier, behind Canada. And it could exacerbate tight
global supplies that have kept oil at record prices."
Will Mexico Soon Be Tapped Out?
Los
Angeles Times, 24 July 2006 |
"U.S. Energy Secretary Samuel Bodman said Tuesday that oil producers
have 'lost control of the market,' which is currently in hands of oil traders. Bodman,
speaking in an interview with CNBC, said the producers of oil 'are unable to appropriately
respond to the demands that the marketplace is putting on them.' Bodman, who is in Baghdad
and was being interviewed via a television link, also said oil demand will exceed supply
for the next year or two. 'At least at the present
time and for the foreseeable future, I would guess for the next year or two, we're going
to see demand exceeding supply,' Bodman said. 'And
we're going to be dealing with a very emotional situation in that environment.' Bodman
said there is a crisis for American families that haven't budgeted for higher gasoline
prices, but he said the U.S. economy is absorbing the shock. 'I believe that we see that
the American economy is quite resilient,' Bodman said. 'It is surprisingly quite able to
handle high oil and gasoline prices. But, you know, heaven knows...how long that will
last.'"
Sec. Bodman: Oil Producers Unable To Respond To Demand
Dow Jones, 18 July 2006 |
"The world oil production is at its peak and is set to fall 32% by
2020 as discoveries wane, said Ali Samsam Bakhtiari, a former executive of Iran’s
state oil company. World production is now about 81 million barrel a day, about 3.8
million less than the International Energy Agency’s estimate for the first quarter,
Bakhtiari, who publishes papers and lectures on the theory that global oil production is
on the verge of imminent decline, said on Monday in Sydney."
‘Global oil output at peak, set to fall 32% by 2020’
Financial Express,
10 July 2006 |
"... last week Browne [CEO of BP] admitted that production fell for
the fourth quarter in a row, down 2.5 per cent on a year ago. Questions over where future
production would come from began the erosion of confidence in BP in the 1990s. The company
is transformed, but, as Browne prepares to step down (he reaches the company retirement
age in spring 2008), the questions are beginning to reappear.... as Neil McMahon at
Sanford Bernstein wrote recently: 'Russia is simply not enough.' The TNK deal reversed a
production decline from 2003, while Thunder Horse in the Mexican Gulf and Kizomba off
Angola will keep production up for another five years. But BP production falls from some
4.5 million barrels per day in 2010 back to 4 million barrels per day by 2020. McMahon
notes that in the Mexican Gulf , projects are becoming more challenging. He adds that
Russian discontent with Western majors poses questions over projects there. By contrast,
Shell and Exxon, the largest of the three, peak later, though they see fall-offs by 2020."
Spectres loom for booming BP
Observer, 9
July 2006 |
"A report by the French Senate calls on the EU to lead an energy
transition to counter climate change and 'an oil shock of great magnitude' which they
predict will hit the world by 2020 at the latest. The combination of supply shortages and surging demand from China, India
and the US promises to send the barrel of oil above 150 dollars by 2020, slashing GDP in
consuming countries by 2% along its way, warn Senators Laffitte and Saunier in a report to
the Parliamentary office for the evaluation of scientific choices (OPECST)."
French Senate warns of looming oil shock, calls for energy transition
Euractiv,
4th July 2006 |
"Iran will not be able to meet the natural gas needs in both the
peace pipeline and the European Union's Nabucco project concurrently unless the demand for
gas in both pipelines are lowered, said an Iranian Oil Ministry official. Deputy Oil
Minister for International Affairs, Mohammad Hadi Nejad-Husseinian, said if the gas
pipeline linking Iran with Pakistan and India -- referred to as the peace pipeline -- is
made operational, there will be no gas left for export to Western Europe.... In the Nabucco project, the European
Union has given its backing to the construction of a pipeline that will take gas from the
Caspian Sea region -- Iran, Azerbaijan and Turkmenistan -- to Western Europe through
Turkey, Bulgaria, Romania, Hungary and Austria. The construction of the 3,300 km pipeline,
at an estimated cost of $ 5.8 bn, is tentatively scheduled to begin in 2008 and is
planned to go into commission in 2011. Iran holds the world's second largest gas
reserves after Russia at around 26 tcm."
Iran may be unable to export gas to Europe
Today (Azerbaijan), 1 July 2006 |
"China is moving into Africa on a grand scale. Still a developing
nation itself, it has nonetheless now overtaken Britain to be the continent’s
third-biggest trading partner after the United States and France. Its inroads into the
world’s poorest continent are the the most striking sign of the biggest shake-up in
patterns of world trade in a generation....For the world’s fastest growing economy,
Africa is first and foremost a supplier of oil. In Sudan, state-owned oil companies have
been investing since Western companies left in the mid-1990s. In 1996 China bought a 40
per cent stake in two oilfields and since 1998 it has helped to build a 930-mile pipeline
from the fields to the Red Sea. Last year it bought 50 per cent of Sudan’s oil
exports, accounting for 5 per cent of its needs. China has stakes in extraction in
Nigeria, Angola and Algeria, among others. Its biggest deal so far came in January when
CNOOC, the state-owned energy company, announced it would buy a 45 per cent stake in an
offshore oilfield in Nigeria for $2.3 billion."
Thirst for oil fuels China's grand safari in Africa
London Times,
1 July 2006 |
"Companies have flocked to Alberta's oil sands in the last decade.
Although the region's crude is difficult and expensive to extract because it's mixed with
sand, higher global crude prices have made production here more economically feasible. As
a result, investment in the region has skyrocketed. Around C$125 billion ($122 billion) of
projects is planned over the next decade, while crude production is expected to triple to
3 million barrels a day by 2015. However, the strain
of anticipating that investment is beginning to show, as there's not enough manpower or
resources to meet the industry's needs. Earlier this
year, Husky Energy (HSE.T) suspended plans to build an upgrader at its 200,000-b/d Sunrise
project near Fort McMurray, Alberta - the hub of the oil sands industry - because it
couldn't recruit the construction staff necessary. Upgraders process heavy Canadian oil to
make it more palatable for refineries. Meanwhile, Shell Canada (SHC.T), Royal Dutch
Shell's (RDSB.LN) Canadian unit, said in April that higher input costs have spurred it to
review the economics of its oil sands expansion plans. It expects to report on its
findings by the end of June. In addition to limits on manpower and raw materials, there
are plenty of other checks in the system curbing development and decreasing the likelihood
that new projects will be announced. 'There are an awful lot of projects that are trying
to be constructed at the same time, and that creates bottlenecks in the system,' said
Randy Eresman, president and chief executive of Canadian oil and gas firm EnCana Corp.
(ECA). In particular, more pipeline capacity is needed if producers are to bring on new
projects, Eresman said. A deficit of pipeline infrastructure already limits Canadian crude
producers' access to U.S. markets, and extra output coming on stream will exacerbate the
situation until new pipelines are constructed. Land availability also determines whether
new projects are economically feasible, said Pat Carlson, president and chief executive of
North American Oil Sands Corp. His company is seeking to build a 10,000-b/d oil sands
project in Alberta by 2008, and production could rise to 160,000 b/d by 2016. 'It's
increasingly difficult to assemble the land base necessary and get critical mass for a
project,' Carlson said. And it's not getting any easier. Last week, the Regional
Municipality of Wood Buffalo, which includes Fort McMurray, voted to apply for 'intervenor
status' for oil sands projects heading to the Alberta Energy and Utilities Board for
approval. If Wood Buffalo's application is approved, local officials could veto new oil
sands developments if they feel that local infrastructure - especially housing, schools
and hospitals - couldn't handle the impact. As the
introduction of new projects becomes increasingly unlikely, the stage is set for consolidation, with mergers and acquisitions taking
a bigger share of the Canadian oil spotlight. Already in 2006, numerous energy trusts -
tax vehicles that develop mature oil and gas assets and pay out cash flow to shareholders
- have merged, while Shell Canada, despite reconsidering its existing oil sands expansion
plans, has paid C$2.4 billion for BlackRock Ventures Inc. (BVI.T). Although BlackRock
produces only 20,000 b/d of crude, its operations are located next to Shell's Peace River
holdings. These deals could represent the start of a wave of acquisitions in the sector,
'There's so many factors pointing toward consolidation that it's shocking there hasn't
been more of it already,' Neff said. 'So many
companies are so exposed on their planned investments that they'll be lucky to complete
those, let alone plan any more. The larger companies
will have the advantage when it comes to acquiring labor, so it pays to get bigger.'"
New Canada oil sands projects unlikely
MarketWatch,
21 June 2006 |
"Leaders of the six-member Shanghai
Cooperation Organization, which includes China, Russia, Kazakhstan, Uzbekistan,
Tajikistan, and Kyrgyzstan, embraced a Chinese-led plan during the summit to increase
military cooperation and discussed a Russian proposal to create a regional 'energy club'
that would exclude the United States. The SCO also indicated it would soon invite Iran,
India, Pakistan, and Mongolia - nations that have observer status in the organization - to
become full members. That the SCO provided Iran with a diplomatic embrace at a time when
the United States is trying to isolate Tehran over its nuclear program is yet another
instance of how the grouping is thumbing its nose at Washington, analysts say.... Last
July, as soon as Iran, India, and Pakistan were inducted into the SCO as observers, the
organization also formally asked the United States to withdraw its troops from member
states. Since then, Uzbekistan has asked the United States to vacate an air base it set up
after the Sept. 11 attacks. Both Russia and India have also established military bases in
Tajikistan, not far from the US base in that country. The economic endgame in all this is to dilute
Washington's hold over the Caspian Sea's energy reserves, said Robert Karniol, Asia-Pacific
editor for Jane's Defense Weekly. China and India, the world's fastest-growing energy
consumers, want to divert Central Asia's energy resources toward their own economies, and
Iran and Russia, the region's largest energy suppliers, are keen to reduce their
dependence on sales to the West, Karniol said.....Over the last year, China, India,
Russia, and Iran have signed energy deals valued at about $500 billion with one another
and also have begun to talk of about creating a Central Asian 'energy club' that would
have its own pipeline network and energy market. India and China have raised Washington's
ire with a proposal to convert the prized Baku-Tbilisi-Ceyhan pipeline, which has been designed to bring gas to Europe, into a
feeder for Asia. India wants to extend the
pipeline to Syria, from where oil would be loaded onto tankers and shipped to Asia through
the Red Sea."
Summit forges military ties in Central Asia
Boston
Globe, 18 June 2006 |
"Oil giant BP plans to invest $3 billion to upgrade its refineries to
process heavy crude oil from Canada, BP Chief Executive John Browne said Thursday.... He
said U.S. retail gasoline prices are high because of expensive crude oil, not a shortage of refining capacity."
BP to upgrade refineries to take Canada heavy oil
Reuters,
15 June 2006 |
"Imperial Oil's decision to slow down the Mackenzie Valley pipeline
talks with Ottawa until it gets a better handle on project costs is not necessarily a
setback, an oil-and-gas analyst says. Imperial Oil's announcement on Wednesday may have
come as a surprise but the issue of rising construction costs is affecting projects
worldwide, said Roland George, an analyst based in Calgary. Imperial's senior
vice-president Randy Broiles told an industry conference that, with costs of labour and
materials rising, the pipeline would likely cost more than the earlier estimate of $7.5
billion. Some analysts predict the cost could ultimately be as high as $10 billion..... A
consortium led by Imperial Oil wants to build a 1,220-kilometre pipeline along the
Mackenzie Valley in the Northwest Territories to the Alberta border, where it would
connect with existing pipelines and link to southern markets.... Megaprojects already
underway to develop northern Alberta's oilsands have already put enormous pressure on
skilled labour rates."
Mackenzie pipeline a 'thin' project: Imperial Oil
CBC, 15 June
2006 |
"The mayor and council in this booming northern Alberta city voted
unanimously Tuesday to try and put the brakes on all future oil sands development until
something is done to improve the area's infrastructure. Specifically, Mayor Melissa Blake
and the council for the Municipality of Wood Buffalo agreed to apply for intervenor status
when oil sands giant Suncor goes to the Alberta Energy and Utilities Board on July 5 to
apply for an expansion of its operations. However, they also decided to take the same
action for any future application by any other oil sands company. 'There's going to be a
definite impact on how much the oil sands itself can advance and progress if we can't get
our housing situation under control,' said Ms. Blake."
Fort McMurray votes to put brakes on oil sands
Canadian
Press, 14 June 2006 |
"The world’s five biggest oil
companies including Exxon Mobil Corp are focusing on development of existing fields as it
becomes more difficult to find new reserves, Wood Mackenzie Consultants Ltd said. Oil
explorers are considering developing areas including Venezuela’s heavy oil deposits
and Canada’s tar sands, David Morrison, chairman of energy at consultant group Wood
Mackenzie, said at the Asia Oil & Gas Conference in Kuala Lumpur."
'Top five oil companies focus on developing existing reserves’
Financial
Express, 14 June 2006 |
"People who think that peak oil will
occur are just looking at conventional oil. You have to think beyond that. Think of all
the other hydrocarbon sources, the oil sands in Canada, the natural gas. Think of all the
remote areas of the world that have not yet been explored: the whole of eastern Siberia,
the Arctic, the deeper (ocean) waters. 'So there's plenty of resources. The challenge is getting it converted economically into products
that people can use.'"
David Reilley, CEO of Chevron
USA
Today, 13 June 2006 |
"International oil markets have become so tight that even small acts
of sabotage could result in further large price rises, Alan Greenspan, the former chairman
of the US Federal Reserve, said yesterday. 'The balance of world oil supply and demand has
become so precarious that even small acts of sabotage or local insurrection have a
significant impact on oil prices,' he said. Mr
Greenspan painted a bleak picture of the world's rising vulnerability to high crude oil
prices, saying he was sceptical that oil producers could pump enough crude to meet future
demand.... Mr Greenspan, who now runs a private
consultancy, said there were few good short-term policy options for bringing down energy
prices, saying it was 'not a choice between good and bad' but 'between not so good and
worse'".
Former Fed chief warns on oil supply
Financial
Times, 8 June 2006 |
"France's Total estimates global oil
production will peak around 2020 if output growth continues at current levels and has
advised governments to cool demand to avoid a supply crunch, its chief executive said.
'The capacity of raising (oil) production is a real challenge ... if we stay with this
type of production growth our impression is that peak production could be reached around 2020,' Thierry Desmarest told the World Gas
Conference in Amsterdam on Wednesday."
Total sees 2020 oil output peak, urges less demand
Reuters,
7 June 2006 |
"U.S. Energy Secretary Sam Bodman
said on Tuesday that soaring energy prices could damage economic growth but there was
little the Organization of Petroleum Exporting Countries could do to help bring them down.
U.S. crude prices have hovered around $70 a barrel in recent weeks after striking a record
over $75 last month, raising concerns that high energy costs may push inflation higher and
curb consumer activity. But Bodman said the economy of the United States, the world's
biggest oil consumer, was holding up well so far under the strain.' Am I concerned about
the impact of high oil prices on the economy? Sure,' Bodman told the Reuters Global Energy
Summit in New York.... Asked if oil cartel OPEC, scheduled to meet next week in Caracas to
decide on production policy, can do nothing to bring down prices, Bodman said, 'Not in my
judgment.' Only top exporter Saudi Arabia has spare oil capacity to bring on to ease
prices or counter supply disruptions, and that crude is too heavy to be useful to
refiners, he added. 'The Saudis say they have an
extra 1 million barrels (per day) but I take that with a kind of a grain of salt. I know
they have the capacity (but) my sense is it is heavy oil and that's not easily refined by
most refineries,' the U.S. official said... In
addition, the United States has permanently lost some 10 percent of Gulf Coast oil
production and 5 percent of natural gas output due to hurricane damage last year, Bodman
said. 'I don't expect it to come back,' the energy secretary said. 'The hurricanes have
inflicted a lot of damage already.'"
Oil price may hit economic growth: Bodman
Reuters,
23 May 2006 |
"Gazprom may not have enough gas to
supply Europe over the next decade, the head of the International Energy Agency (IEA) said
yesterday... Concern over Gazprom’s output has been mounting in recent years as
evidence emerged of the company’s flat indigenous production profile. While Russia
has the world’s largest gas reserves, the giant utility relies on a small number of
giant gasfields and has not yet invested in
developing new resources in the Arctic.... Gazprom
is the monopoly buyer of gas for export from Turkmenistan, which is used to supply the
utility’s domestic customers in Siberia, while the Siberian gas is shipped to Europe.
Gazprom’s monopoly over Central Asian gas exports is a deterrent to new investment by
those countries, Mr Mandil said."
Gazprom risks serious shortfall of gas for export
London Times,
23 May 2006 |
"Gazprom might be unable to meet
its supply commitments by the end of the decade because of a lack of investment, the head of the International Energy Agency and a former Russian deputy
energy minister said Monday. 'We are afraid that Gazprom will not have, in the coming
years, enough gas to supply even their existing customers and existing contracts. This is
our data,' IEA executive director Claude Mandil told an energy summit in London, Reuters
reported late Monday. 'Gazprom is not investing enough.'"
Gazprom Could Be Short of Gas by 2010
Moscow Times, 23 May
2006 |
"European energy consumers face further big rises in gas prices in
the coming years because of acute shortages of Russian supplies.... Eric Berglöf, chief economist at the European Bank for Reconstruction and
Development, told MEPs and senior EU officials that
Gazprom, the Russian gas group majority-owned by the state, would struggle to offset
declines in output, but demand from Europe and ex-Soviet Union countries would grow at
2-3% a year... He told the European Enterprise Institute that 70%
of production at Gazprom, the world's third-largest energy group, came from fields whose
gas was running out... Mr Berglöf, founder of a
Moscow economic thinktank, warned that without serious reforms of both Gazprom and
Russia's energy sector, prices for domestic use and export could double by 2010. Christian
Cleutinx, head of EU-Russian energy dialogue at the European
commission, said the EU would be 80% dependent on
gas imports by 2030 as demand rose by 60%. But, he said, Russia planned to export only an
extra 50m tonnes of gas to all countries, not just the EU, by 2020, leaving Europe 150m tonnes short and forcing it to use other
countries.... Mr Berglöf added: 'We won't see
progress at the G8 and, after that, further deterioration coming from fundamental trends
in Russia and its economic and political system. But there is pressure for greater energy
efficiency, investment in renewables and reform of the power market there.'"
Europe warned of steep rise in gas price as Russia runs out
Guardian, 11 May 2006 |
"It’s well known that U.S. oil production has been declining for
many years. And, in Alaska, oil production is well past its peak. But has worldwide oil
production peaked? And what impact might worldwide oil production capacity have on already
soaring oil prices? On May 1 Petroleum News discussed these topics with Alaska oil
industry consultant Roger Herrera. 'I really have to believe that the world is very close
to, if not past, peak oil,' Herrera said. Coming from a background as an oil geologist in
the days when there might be a one in 20 chance of striking oil with a wildcat well,
Herrera was trained to be an optimist about finding oil. So, anticipating declining
production really goes against the grain with him. 'Yet here I am,' Herrera said. 'I find
myself a very strong proponent of the problems associated with world peak oil, which in
most people’s minds is a negative position to take.' Herrera sees the statistics of
oil field discovery and production as providing the pointers towards peak production. 'If
you look at the sizes of the oil fields that are added every year, they are smaller and
smaller and we’re not replacing the oil that we’re using,' he said. And Herrera
sees the dwindling likelihood of finding more giant oil fields as a key parameter in the
production equation. 'The giants which are the real feeders to world supply are simply a
thing of the past,' Herrera said. 'So just on the basis of statistics you have to be very,
very concerned.'.... Another issue is that it is not generally possible to recognize a
production peak straight away. 'I believe from just looking at history and peaking oil in
individual countries that you inevitably don’t recognize the peak until after
it’s happened,' Herrera said. So, if world oil has peaked it may take a couple of
years for data to indicate the production summit. Herrera also thinks that the production
of unconventional oil, such as heavy oil, is complicating the picture — rising oil
prices have enabled an increase in unconventional oil production. 'Unconventional oil is
already playing a relatively major role,' Herrera said. However, Herrera
doesn’t see unconventional oil dramatically changing the situation; it just makes
forecasting oil production more difficult."
Has oil production peaked?
Petroleum News, 7 May
2006 |
"Royal Dutch Shell yesterday abandoned its target of replacing every
barrel pumped from its proven reserves, as it raised spending to record levels in an
effort to boost its oil and gas output.... Shell is struggling to replace each barrel it
pumps from the ground and replaced only between 60 and 70 per cent of the 3.5 million
barrels per day produced last year. The company is hamstrung by regulation because some
six billion barrels locked in Albertan oil sands are excluded from its proven reserves by
SEC rules, which define these as mining operations, not oil exploration. Yesterday the oil
multinational finally abandoned the target.... Shell has 50 major projects on the go,
intended to bring 20 billion barrels of oil into production over the next four years.
However competition for resources has led to rampant cost inflation. An expansion of the
Athabasca Oil Sands project has been put on hold and Mr Voser said that several deep water
offshore projects would be delayed for lack of drill ships."
Shell scraps reserves target as it pushes up spending
London Times, 5
May 2006 |
"BP has agreed to pay more than $500,000 a day to secure the
continued use of a drillship in the Gulf of Mexico. The price, a record rate for an
oceangoing rig, shows how rapidly oil exploration costs are rising as the search for new
fields hots up. From December next year, BP will pay a day rate of $520,000 (£297,000) to
charter the Discoverer Enterprise, almost three times more than it pays at present
for the use of the ship. The surge in price reflects a desperation among oil explorers to
retain control of scarce resources, essential if the companies are to meet their own oil
production targets."
BP set to pay record price for drillship
London Times, 17 April
2006 |
"For most of the past decade, Russia, the world's second largest oil
producer and exporter, provided the extra supply needed to meet the world's growing thirst
for oil. Now its production is flat and the world oil market is drum tight. The timing of
Russia's failure to expand oil production couldn't be worse, and experts differ on why it
no longer can be counted upon as a swing producer.... On Wednesday, the Paris-based
International Energy Agency, citing complications from the state takeover of Russia's oil
sector, scaled back estimates for additional production this year to 265,000 barrels per
day, or growth of 2.8 percent.The U.S. Energy Information Administration, or EIA, the
statistical arm of the U.S. Energy Department, takes a grimmer view. It said Tuesday that
it expects Russian production to grow by just 1.5 percent this year and 1.2 percent next
year. It blamed the slow output growth on export taxes that discourage maintenance of
existing oil fields and development of new ones."
Russia seen playing role in tight oil market, higher prices
Knight
Ridder Newspapers, 13 April 2006 |
"Saudi Aramco's mature crude oil fields are expected to decline at a
gross average rate of 8%/year without additional maintenance and drilling, a Saudi Aramco
spokesman said Tuesday. But Saudi Aramco has taken a number of measures to offset a
decline in output from the country's aging oil fields, the spokesman added. 'A variety of
remedial activities are always being taken in oil fields influencing their effective
decline rates,' the spokesman said. 'The drilling of additional development wells in the
producing fields is Saudi Aramco's standard practice to offset normal declines of older
wells.' This is particularly important when oil fields are progressively depleted under a
well thought out strategy of maximizing the sweep and displacement efficiencies, leading
to high ultimate oil recovery, the spokesman said. 'This maintain potential drilling in
mature fields combined with a multitude of remedial actions and the development of new
fields, with long plateau lives, lowers the composite
decline rate of producing fields to around 2%,' the
spokesman said."
Saudi Aramco boosts drilling efforts to offset declining fields
Platts,
11 April 2006 |
"The world lacks the means to produce enough oil to meet rising
projections of demand for fuel over the next decade, according to Christophe de Margerie,
head of exploration for Total and heir presumptive to the leadership of the French energy
multinational. The world is mistakenly focusing on oil
reserves when the problem is capacity to produce oil, M de
Margerie said in an interview with The Times."
World 'cannot meet oil demand'
London Times, 8 April 2006 |
"The world's only oil superpower boosted output last month, starting
a pair of projects that are part of a massive $55 billion endeavor to keep pace with the
world's ever-intensifying thirst for oil. But demand for the world's premiere source of
energy is rising so fast — by around 2 million barrels per day each year — that
even Saudi Arabia's vast resources will be unable to cope without drastic help, oil
executives and analysts say. Remarkably, even Saudis, who control over a quarter of the
world's known oil, are calling for relief from relentless consumption. 'The current
out-of-control demand is not good for us,' Ghazi Al-Rawi, head of private equity at Gulf
One Investment Bank, said in a recent interview. 'When you have this kind of demand,
you're forced to supply beyond the optimal rate. That's not a positive thing.' Most
urgently needed is energy conservation, especially in the United States, which now burns
up a quarter of the oil sold to the world, said Saddad al-Husseini, the former head of
production at state-owned Saudi Aramco.... 'Can (global consumers) afford to keep
increasing demand by almost 2 million barrels a day each year? Is it Saudi Arabia's role
to meet that demand?' asked al-Husseini, who retired in 2004 after working 32 years in the
kingdom's oil sector. 'You're leading yourself to having to find an alternative source of
energy very quickly.'... it takes six to eight years for oil from a new well to reach
consumers. Developing oil sands or natural gas-based diesel fuel is even slower and more
expensive. Saudis worry that consumer demand could overwhelm the slow progress in bringing
new energies to market. 'If this continues, you'll have demand outstripping supply over
the next five years by a wide margin,' said Obaid."
Oil demand could outpace Saudi production capacity
Associated
Press, 8 April 2006 |
"World oil powers are the first line of defense to combat an energy
crisis, but consumer nations, led by the International Energy Agency must develop a new
role as their allies, experts say...Analysts praised the IEA, which represents 26
industrialised nations, for its decision last year to release emergency reserves to
compensate for lost production and refining capacity following hurricane damage in the
U.S. Gulf. But they say consumers as a whole must go further to recognize their
responsibility. They can no longer rely on the Organization of the Petroleum Exporting
Countries (OPEC), whose spare capacity has been squeezed to around 2 million barrels per
day, to just pump more. The IEA has limited relevance, some analysts say. If consumers
want to keep the upper hand, it's almost a truism to say their best weapon is demand
restraint and, ultimately, to move away from oil altogether... For now, the only way OPEC
can move prices is upwards and even that power is curbed as it would be politically
difficult for the cartel to reduce output when oil is over $60."
Consumers must work with oil powers to tackle crisis
Reuters,
8 April 2006 |
"Opec is powerless to bring down oil prices that are closing in on
their record $70 a barrel high, United Arab Emirates’ oil minister Mohammed bin Dhaen
al-Hamli said on Thursday. 'Fundamentally there is nothing we
can do,' Hamli told reporters when asked how Opec might tame
oil costs that are at their highest for a quarter of a century in real terms.... Opec,
which accounts for over half the world’s oil exports, has been pumping almost flat
out for months.... Hamli, in Paris for a major oil conference on Friday, expressed some
concern at last week’s steep drop in US gasoline stocks. The United States, consumer
of more than 40% of the world’s gasoline, is starting to gear up for the summer
driving season when motor fuel demand peaks. 'The United States is a big and important
market. When there is a drawdown we are a little bit concerned,' he said. OPEC still has
some spare production capacity, primarily in Saudi Arabia, but Hamli noted this oil was
the sort of heavy, high sulphur crude that refiners find difficult to process."
Opec toothless to tame high oil prices : UAE
Reuters, 7 April 2006 |
"The world was told that the Russians would
save us. The Soviet Union and its pathetic 14 million barrels a day was dead. When they
upgraded their extraction techniques, oil was going to be around $10 a barrel, we would be
swimming in it. In 2004, Russian production grew by 675,000 barrels a day, in 2005 by
222,000 barrels a day and this year the Russian government told us it was going to put on
another 240,000 barrels a day. So far they have put on 170,000 barrels a day. It is about
9.4 million barrels a day and it is not enough."
Peak Oil Passnotes: Oil Prepares to Push On
Resource Investor,
7 April 2006 |
"Until two years ago, Russia’s high production growth matched
the surging demand from China. But Moscow’s campaign against Yukos, its icy stance
towards investment by foreign energy companies, higher export taxes and ageing fields in
bad need of new technology and better management have stalled the growth of Russia’s
oil industry. This year’s production growth is expected to be 2 per cent, compared
with the double-digit growth Russia had until a few years ago."
Opec warns of Russian oil export slowdown
Financial
Times, 17 March 2006 |
"U.S. oil firms mainly relied on acquisitions to achieve large
reserves additions in 2005, and Europeans may have to follow their lead in future if they
want to halt an erosion of their asset bases... Investment bank Lehman Brothers estimates
that excluding acquisitions, the top U.S. and European oil and gas firms achieved a
reserve replacement rate of only 82 percent. Oil firms usually target a rate of at least
100 percent, the level at which every barrel pumped is matched with a new find. A lower
level suggests a firm's asset base is being eroded and that it will struggle to grow or
even sustain output in future. 'If you want to grow production 3-4 percent, as most of
these companies want to, you'd want to be hitting 130 percent,' Jason Kenney, oil analyst
at ING said. The industry's 2005 result was an improvement on the 72 percent recorded for
2004, although below the average over the past 10 years of 118 percent, Lehman said.
Western oil firms are shut out of the most attractive exploration acreage by Middle East
governments and the areas they focus on are yielding smaller oilfields. This has prompted
some, like U.S. oil majors Chevron and ConocoPhillip's, to turn to buying reserves.
Chevron's takeover of rival Unocal enabled it to notch up an impressive 175 percent
reserve replacement rate last year. Excluding the Unocal deal, Chevron said its rate of
replacing production would have been low. Merrill Lynch said organic reserve replacement
was only 7 percent... Royal Dutch Shell, the third largest listed oil firm which many
consider responsible for sparking investors' obsession with reserves accounting when it
cut its reserves estimates by over 30 percent in 2004, again disappointed. The Anglo-Dutch
firm replaced only 67 percent of the oil it pumped with new finds, although this was up
from 19 percent in 2004. Shell is looking to gas and non-conventional oil to bring its
reserve bookings back on track."
Big oil firms struggle to find new reserves
Reuters,
17 March 2006 |
"Britain lost its oil independence last year for the first
time since the 1970s as the country continued to run down its North Sea reserves. The
UK imported £670m more oil than it exported in 2005, the Office for National Statistics
said. It is the first annual deficit for oil trade since 1979, when the North Sea's first
fields came online....The landmark follows figures last year showing Britain became a net
importer of natural gas in 2004....In a further sign of the UK's reliance on oil, the
Department of Trade and Industry said the amount stockpiled by oil companies in their
refineries was almost halved in December as suppliers dug into stocks to satisfy growing
demand for fuel."
UK goes back to being oil importer
Daily
Telegraph, 10 February 2006 |
"A marked downturn in North Sea oil production means that the
UK will become a net importer of oil at least three years earlier than the government
anticipates, according to new figures from the Royal Bank of Scotland. Even the
contribution from the Buzzard field - which will add about 180,000 barrels of oil per day
from 2007 - is seen as insufficient to prevent a looming dependence on the vagaries of
world markets. The Department of Trade & Industry is sticking to its prediction that
the UK will not become a net importer of oil on a sustained annual basis until 2010.
However, figures from the RBS Oil & Gas Index show production from the UK continental
shelf unexpectedly shrank to 1.5 million barrels per day (bpd) in October, 8-per cent down
on the previous month and a 14-per cent fall on October 2004. Andrew McLaughlin, group
chief economist at RBS, said: "The International Energy Agency is predicting UK
demand of 1.8 million bpd in 2007. But we'll be lucky to produce an average of 1.7 million
bpd in 2005 and it seems unlikely that North Sea production is going to rise above 1.8
million bpd over the next 12 months. 'There had been a hope both in the oil industry and
within government that a period of sustained high oil prices would create more incentives
to produce in the North Sea. But that has not come through. North Sea fields are maturing
rapidly and as a result the UK looks set to become a net importer of crude oil earlier
than the government is anticipating. Even current high prices will be insufficient to stem
the long-term depletion of North Sea fields.' UK crude production peaked at 2.9 million
bpd in 1999 but has been in long-term decline ever since. Since 2004, the UK has been a
net importer of gas."
North Sea Production Slump Casts Doubt on Government Figures
Sunday Herald, 6 February 2006 |
"Iraqi oil production fell by 8 percent last year, with a sharp
decline near year's end that left average daily production at half the 3 million barrels
envisioned by U.S. officials at the outset of the war in 2003. Prospects for improvement
this year are slim, according to many experts, calling into question Iraq's ability to
support itself and fund reconstruction efforts as U.S. assistance is scaled back. Reasons
for the shortfall include the poor state of the nation's oil fields, a creaky
infrastructure, poor management and ongoing insurgent attacks, particularly to pipelines
in the north-central region meant to export oil through Turkey. 'There is no instant
turnaround,' said Paul Horsnell, energy analyst with Barclay Capital in London. 'It could
take five years, six years or seven years.' As of last month, Iraq was pumping a million
barrels a day less than just before Saddam Hussein was toppled from power in the U.S.-led
invasion of Iraq.... Instead of steadily increasing production, the annual output fell in
2005 to 1.83 million barrels a day, including a sharp decline over the final quarter
capped by a December dip to 1.57 million barrels daily. The latest production figures from
the International Energy Agency compare with the 2.5 million barrels per day the Iraqi
industry was pumping just before to the war, a level it nearly equaled in March and April
of 2004.... As a result of pipeline attacks, exports to the Turkey port Ceyhan via the
country's northern pipeline averaged only 40,000 barrels a day in 2005, compared to an
800,000 barrels a day average that the nation hit during some months before the war....
Compounding the problems, experts say, is years of neglect and damage to Iraq's oil
infrastructure, some dating back more than two decades. The weaknesses range from a lack
of crude oil storage facilities that were destroyed in the Iran-Iraq war in the 1980s and
never rebuilt to refineries that decayed during a decade-long period of economic sanctions
against Iraq. The former forces Iraq to pump oil back into the ground when pipelines are
blown up or tankers are delayed, damaging the long-term viability of the reservoir."
Dip in Iraqi Oil Production Holds Ominous Harbinger
Los
Angeles Times, 24 January 2006 |
"But the days of easy oil [in Kuwait] are over. Even the great Burgan field
is beginning to falter and will no longer compensate for stalling oil production in the
north of the country, where the oil fields are ageing more quickly. After many years in
which it did not have to look beyond its borders for help, the country is being forced to
seek the advanced equipment and managerial skills only foreign oil companies can supply.
Kuwait is not alone. From the Middle East to the North Sea, and Alaska to Latin America,
the large oil fields on which the world has come to rely to fuel its economic expansion
since the second world war are requiring increasingly advanced technology and know-how to
coax their last oil barrels to the surface.... Removing, cleaning and disposing of the
millions of barrels of water the north fields will produce every day as they come to the
end of their lives, is more than Kuwait's oil company can handle, its engineers and
executives say.... It is crucial for the oil majors' future that they win the day. With
few, if any, big oil fields left to find, the big western companies are facing shrinking
production and reserves. They are forced to venture into riskier spots such as the harsh
terrain of Siberia's Sakhalin island where extracting a barrel of oil can cost 6-7 times
as much as it does in Kuwait."
Field work: why Kuwait's rulers are being forced to
ponder a new pact with big oil
Financial
Times, 24 January 2006 |
"OPEC producer Kuwait's oil reserves are only half those officially
stated, according to internal Kuwaiti records seen by industry newsletter Petroleum
Intelligence Weekly (PIW). 'PIW learns from sources that Kuwait's actual oil
reserves, which are officially stated at around 99 billion barrels, or close to 10 percent
of the global total, are a good deal lower, according to internal Kuwaiti records,' the
weekly PIW reported on Friday. It said that according to data circulated in Kuwait Oil Co
(KOC), the upstream arm of state Kuwait Petroleum Corp, Kuwait's remaining proven and
non-proven oil reserves are about 48 billion barrels."
Kuwait oil reserves only half official estimate-PIW
Reuters,
20 January 2006 |
| 2005 |
"Matthew Simmons, author of 'Twilight in the Desert: The Coming
Saudi Oil Shock and the World Economy,' .... thinks Saudi Arabia has pumped much of its
usable reserves and will start to experience production declines. Even analysts who are
more optimistic warn that chronically high prices and occasional supply crunches are
likely in the years ahead. The world's consumers are using up nearly all the oil being
produced today, and the outlook for growth of supplies is uncertain. 'In terms of prices, I think the risk is ... it's going to explode,' Fatih Birol, chief economist at the International
Energy Agency, told the Council on Foreign Relations
in New York last week. Mr. Birol thinks plenty of cheap oil remains to be discovered, but
it lies mostly in politically volatile nations of the Middle East. He is hopeful that
those countries will spend the billions of dollars needed to increase their supplies and
satisfy the growing appetite for fuel. 'The bulk of the growth needs to come from
very few ... countries in the future, namely Saudi Arabia, Iran, Iraq, Kuwait' and the
United Arab Emirates -- the countries where the lion's share of the world's remaining oil
reserves lie, he said."
Speculation surrounds oil peak
Washington Times,
25 November 2005 |
"It was an incredible revelation last week that the second largest
oil field in the world is exhausted and past its peak output. Yet that is what the Kuwait
Oil Company revealed about its Burgan field....... it
is surely a landmark moment when the world's second largest oil field begins to run dry. For Burgan has been pumping oil for almost 60 years and accounts for more
than half of Kuwait's proven oil reserves. This is also not what forecasters are currently
assuming.....The news about the Burgan oil field also lends credence to the controversial
opinions of investment banker and geologist Matthew Simmons. His book 'Twilight in the
Desert: The Coming Saudi Oil Shock and the World Economy' claims that the ageing Saudi oil
filed also face serious production falls. The implications for the global economy are
indeed serious."
Arab Middle East News Service, 12 November 2005
Kuwait's biggest field starts to run out of
oil |
"We will
use Saudi Arabian oil for some time to come. But the goal is to recognize that at some
point in time ... we will have to recognize that oil and natural gas, we will run out of
it in the world. So we must make plans for it."
Sam
Bodman, US Energy Secretary
CNN, 12 November 2005 |
“The world must change its energy habits or struggle with choking
fumes, runaway oil demand and a growing dependence on the volatile Middle East for fuel,
the International Energy Agency said on Monday. Energy demand and greenhouse gas emissions
will soar by more than 50 percent by 2030 if consumers keep burning oil unchecked, the IEA
said in its World Energy Outlook. That would blow a hole in the Kyoto protocol aimed at
cutting developed nations' emissions five percent below 1990 levels by 2008-12. To keep
pace with booming demand over the next 25 years, top producer Saudi Arabia and its
neighbours would have to spend an annual $56 billion on rigs and refineries or oil prices
will race higher, said the IEA, adviser to 26 industrialised nations. ‘These projected trends have important implications and lead
to a future that is not sustainable,’
said IEA Executive Director Claude Mandil. ‘We
must change these outcomes and get the planet onto a sustainable energy path.’"
World's energy policy is not sustainable-IEA
Reuters,
7 November 2005 |
"The bad news is that even according to official Iranian reports, at
current production levels, unless Iran invests large amounts of money to develop its oil
fields, within 20 years it will be unable to export oil, and will consume all its
production locally. Since the Khomeini revolution, Iran has produced about 4.5 million
barrels of oil a day, about 2 million barrels less than production levels prior to the
revolution, due to the sanctions that led to the corrosion of equipment and the
curtailment of investment in development of the oil industry. In recent years, national
oil consumption has increased by some 5.2 percent annually, and Iran is already forced to
import gasoline at a total outlay of $5.5 billion a year, as its refineries are unable to
refine the amount required for domestic consumption. It is estimated that Iran needs an
investment of about $4 billion a year in order to increase its oil production and develop
its refineries."
A tutor for the president
Reuters, 3 November 2005 |
".... there are doubts about the Saudi assertions about how much oil
they have. Data about reserves is tightly guarded, and the Saudis dismiss skeptics as
uninformed. But they do not dismiss Edward O. Price Jr., the former head of exploration
for Saudi Aramco and an adviser to the United States government on Persian Gulf oil during
both Iraq wars. He questioned future reliance on Saudi capacity in an article in The New
York Times last year and wanted to know from his former colleagues how they reached their
estimate of more than 150 billion barrels of extra oil. Twenty years ago, a detailed study
by geologists from four large American oil companies then in partnership with Aramco found
little in the way of undiscovered oil resources, he said. Mr. Saleri, who manages Saudi
reservoirs, met with Mr. Price in the United States last year. Saudi Aramco officials
declined to respond to questions about the meeting. But Mr. Price said in an interview
that Mr. Saleri told him that the basis for the higher oil figures was a global study in
2000 by the United States Geological Survey estimating Saudi Arabia's undiscovered
resources at 87 billion barrels. Mr. Price said he responded that the estimates 'by the
U.S.G.S. had no credibility and far exceeded the detailed studies by the old Aramco team.'
The Aramco study, unlike the survey estimate,
involved detailed field work. Questions about Saudi
Arabia's long-term estimates were also raised last year in a report by the National
Intelligence Council, an advisory panel that produces the government's most authoritative
intelligence estimates, according to a government official who insisted on not being
identified because the report was classified. In addition to Saudi Arabia, the Bush
administration has viewed the United Arab Emirates as a supplier with excess capacity. In
2001, the emirates planned to increase capacity to 3 million barrels a day by 2005 from
2.5 million barrels a day then. But capacity has not grown in four years, which one
administration official attributes to a lack of urgency by emirates officials and a lack
of high-level attention by American officials."
Doubts Raised on Saudi Vow for More Oil
New
York Times, 28 October 2005 |
"Russian oil output could peak at
more than 510 million tonnes annually in 2010, or 10.2 million barrels per day (bpd), Russian Energy Minister Victor
Khristenko said on Monday. 'It will reach a certain
plateau of production within the time frame of 2010,' Khristenko told reporters. That plateau would be about 510 to 520 million
tonnes a year, he said, or the equivalent of about 10.2 to 10.4 million bpd."
Russia says aims for 510 mln T oil output by 2010
Reuters, 24 October 2005 |
"Leading energy companies have put future supplies of oil at risk by
reducing their investment in research and technology. Evidence of cuts in R&D spending
by the oil majors emerged yesterday in a report from the International Energy Agency
(IEA).... The agency called for major investment into oil and gas recovery. It reckons
that the world must spend $5 trillion (£2.8 trillion) over the next 25 years to meet an
expected 50 per cent increase in global demand.... The report reveals that the top five
oil multinationals, including ExxonMobil, BP and Shell, reduced their annual investment in
R&D by almost $2 billion from 1998 to 2000. 'The decline in R&D investment . . .
could be a worrying sign that technological progress might be slower over coming years
than in the past,' the IEA says....Known oilfields were declining, the IEA says, and the
industry was turning to unconventional sources, such as tar sands, but the cost of
recovery was big, which required higher oil prices."
Cut in R&D spending poses threat to world's oil supplies
London Times, 23
September 2005 |
"The International Energy Agency (IEA) is not alarmist, but it is
beginning to prepare public opinion for disillusioning tomorrows: shortly after 2010,
production by states not members of the Organization of Petroleum exporting Countries
(OPEC) must begin to decline. This pessimistic warning will be one of the messages that
the agency - charged since 1974 with protecting the interests of consuming countries -
will launch in its annual report, 'World Energy Outlook 2005,' to be published November 7.
The 'non-OPEC' countries notably include large producers such as Russia, China, the United
States, Mexico, Kazakhstan, Azerbaijan and Norway and today supply 60% of global crude
oil. 'The production of conventional oil - not including heavy and shale oils - will reach
a peak just after 2010,' explains Fatih Birol, Director of IEA Economic Studies.....
Short-term production increases will be at the heart of the OPEC country ministers'
debates during their meetings Monday September 19 and Tuesday September 20 in Vienna. To
reassure industrialized countries, the ten cartel members (apart from Iraq, which is not
affected by the quotas) were supposed to decide on a daily production increase of 500,000
barrels (to 28.5 million) or on placing up to 2 million extra barrels a day on the market
'on demand' - a solution favored by the Kuwaiti OPEC president, Sheikh Ahmad al-Fahd
al-Sabah. This decision is primarily political, because the cartel is already pumping well
above the official quota, without, all the same, reassuring the markets."
Non-OPEC Oil Production Will Decline 'Right after 2010,' the IEA Warns
Le Monde, 23 September 2005 |
"Shell Nederland president Rein
Willems said that oil production costs may rise five-fold in the near future. He said that for Shell, the higher costs will mainly be the result of
more difficult resource-gathering and refining methods as the company moves to retrieve
oil from sources other than the conventional oil wells. In
an interview with Dutch engineering magazine 'De Ingenieur', Willems said that the higher
production costs will likely lead to a stronger focus on alternative sources of energy as
opposed to raw fossile fuels such as oil."
Shell Nederland president sees
five-fold rise in oil production costs
AFX,
22 September 2005 |
"In response to the surging oil price, the Organization of
Petroleum Exporting Countries, the global cartel of Third World oil producing nations
commonly known as OPEC, has stated that it is ready to make available to the market if
requested all of its so-called spare production capacity. The key question is; can this
offer give any appreciable relief to those businesses and private consumers under pressure
from today’s oil prices? OPEC’s
promise has been dismissed in many quarters as irrelevant, based upon a well-founded
belief that much of the margin that the cartel is referring to, a margin that could be up
to 2 million bpd but is probably somewhat less, is in the form of heavy, sour grades of
oil. The problem with this is that these grades are unsuitable, given the technological
state of the majority of current refining capacity, for producing the transportation fuels
and other fractions for which the world economy is crying out and for supply of which it
largely depends on oil. What is primarily
required by refineries to produce products such as these is light, sweet crude, and there
is a strong possibility that extra output of this is simply unavailable, driving headline
oil prices, which refer to light, sweet grades, higher in price of late. Indeed, a chorus
of opinion currently cites a lack of appropriate refining capacity for the heavier grades
of oil which are more abundantly available on the world market than light grades, rather
than a paucity of oil production in general as responsible for recent marked light crude
price rises. In addition, estimates abound
that OPEC is already supplying around 650,000 bpd more than its current formal production
ceiling, which could mean that its pledge to make more capacity available is mostly
symbolic, with actual output, in particular that of the important light grades, remaining
largely unchanged.... What will be
interesting to note in the near future is the extent to which, and for what reasons,
OPEC’s offer of extra crude production is taken up. Given that this crude is most
probably of less desirable heavy, sour grades, and that a lack of the right refining
capacity seems to be acute, then take up could be modest and price impact very limited. Ultimately of course, lack of refining capacity is not the whole story.
The unalterable dynamic of rising demand, particularly from East and South East Asia,
versus declining global light crude reserves, coupled with geopolitical uncertainty, is most probably the prime mover
in today’s oil market. This means that OPEC’s so-called spare capacity is very
unlikely to be adequate to take the headline light crude price off the boil any time soon.
"
Can OPEC's Offer Make a Difference?
Resource Investor, 22
September 2005 |
"In an interview with the Financial Sense Newshour,
Matt Simmons, CEO of Simmons and Company International, a specialized energy investment
banker, declared 'We've basically used up the vast majority of the world's high flow rate,
high quality sweet oil ...now we're left with lots of oil. But it's heavy, gunky, dirty,
sour, contaminated-with-various-things oil. It doesn't come out of the ground very fast,
is very energy intensive to get out of the ground. And we're going to pay a fortune for
it.' Bambrough suggested that it will require 18% in oil production growth just to
maintain gasoline and Mid Dist. output. Meanwhile,
non-OPEC light sweet crude has already dropped 3.26 million barrels a day from 2000 to
2004, or around 12%.... In an interview
Monday with Mineweb, Bambrough suggested, 'we have sucked up all the easy stuff,'
which now requires using more energy to produce energy. With a 12% drop in the production
of light sweet crude over the past four years, he believes OPEC will be hard-pressed to
maintain even present oil production."
Sprott's bullish on uranium as cheap, reliable energy source
Mineweb, 20 September 2005 |
"Pemex, Mexico's state oil monopoly, is one of the world's
largest oil companies, pumping more than any company outside the Middle East. Prices are
climbing and production is at a record. So why is the company starved for cash? Its proven
reserves are dwindling, and last year fell 7.7 percent. Its main oil field, Cantarell, is
about to reach its peak production and will begin to decline next year. Without big
investment and new oil discoveries soon, Pemex's total production, now hovering above 3.3
million barrels a day, could begin to decline by the end of the decade, analysts say....
The company is lagging its own production forecasts. Its Web site says it will pump four
million barrels of oil a day next year, but the budget Fox sent to Congress earlier this
month projects 3.48 million barrels. The main oil field, Cantarell, which accounts for
about 2.2. million barrels a day, 75 percent of Pemex's output, will begin to decline next
year by 2 percent, officials say. The question is whether new projects will come on line
in time to make up for the shortfall. Some experts believe that Cantarell will decline
much faster than that. Guillermo Domínguez, an oil engineer who retired as vice president
of technology at Pemex's exploration and production subsidiary in 2003, said that
Cantarell could begin to decline by as much as 15 to 20 percent by 2008."
In oil boom, Mexico's Pemex struggles
New York Times, 21
September 2005 |
"The recently retired head of oil exploration and production
for Saudi Aramco, Dr. Sadad al-Husseini recently told the New York Times that if
current demand and depletion patterns continue, the world will need to open enough fields
or wells to pump an additional 6 to 8 million barrels a day, produce at least 2 million
new barrels a day to meet rising demand and at least 4 million to compensate for the
declining production of existing fields. 'That's like a whole new Saudi Arabia every
couple of years,' he said. 'It's not sustainable.' Assuming that ultimate world production
will be 2.2 trillion barrels of oil, Hubbert's Peak forecasts international oil production
peaking in the year 2010. Husseini, nonetheless, recently attempted to debunk the peak oil
crowd by clarifying his remarks to the Times. 'Given the current outlook in terms
of global exploration and development, the rate of investments in the oil value chain,
energy prices, and the prevailing legal and political investment climate, I believe oil production will level off at around the 90
- 95 mmbd by 2015. This plateau can be
sustained beyond 2020 at continuously higher oil prices and with rapid improvements in
overall energy efficiencies throughout the world,' Husseini wrote in a September 6th
e-mail to the Association for the Study of Peak Oil and Gas-USA."
Sprott's bullish on uranium as cheap, reliable energy source
Mineweb, 20 September 2005 |
"The head of the West's energy watchdog said in an interview on
Saturday that Hurricane Katrina could spark a worldwide energy crisis if damage to U.S.
refineries led to a big increase in U.S. purchases of European petrol. 'If the crisis
affects oil products then it's a worldwide crisis. No one should think this will be
limited to the United States,' Claude Mandil, head
of the Paris-based International Energy Agency (IEA) told German daily Die Welt. 'They are
already buying gasoline in Europe. If the refineries are damaged, that will only increase.
Then this will become a worldwide crisis very
quickly."
IEA chief warns of worldwide energy crisis
Reuters,
3 September 2005 |
"Canada, the largest supplier of crude oil to the U.S., may increase
output from Alberta's oil sands sixfold in the next 25 years as record oil
prices spur investment in the province, a government energy adviser said. Alberta
may increase output from the oil sands to 6 million barrels a day in 2030 from about 1
million barrels a day at present, said Claude Drzymala, a senior energy adviser at the
Canadian Department of Industry....A 15-year-long decline in oil reserves and crude-oil
prices of more than $70 a
barrel are pushing companies such as Royal Dutch Shell Plc, Exxon Mobil Corp. and
Chevron Corp. to spend $76 billion in the next decade to boost supplies of oil from tar
sands and diesel fuel from Qatari natural gas....Output at the Alberta fields, which cover
an area about the size of Belgium, will probably approach 1.6 million barrels a day in
2012 and 2.8 million barrels by 2016, Drzymala said. Production costs will fall to about
$7 a barrel from $11 in the next five years because of new technological
developments, he said. Companies including Exxon Mobil Corp., Royal Dutch Shell Plc
and Suncor Energy Inc. are forecast to spend C$45 billion ($37.9 billion) between this
year and 2010 to expand oil sands output, according to the Canadian Association of
Petroleum Producers, which represents companies that account for more than 95 percent of
Canada's daily oil and natural gas
output. Oil executives say they have no choice but to
try alternatives to drilling because little crude remains to be found in their existing
fields...Canada's exports of crude oil to the
U.S. averaged 1.61 million barrels a day in the first half of this year, ahead of Mexico's
1.57 million and Saudi Arabia's 1.53 million, according to U.S. Energy Department
data."
Canada Oil Sands Output May Increase Sixfold by 2030
Bloomberg,
2 September 2005 |
"We have entered the post-oil era. I want to draw all the
consequences of this and give a real impulse to energy savings and to the use of
renewable energies."
Dominque de Villepin, French Prime Minister
France promises aid to households over oil price
Reuters,
1 September 2005 |
"Sadad al-Husseini.... retired last year
after serving as [Saudi] Aramco's top executive for exploration and production..... It can
be argued that in a nation devoted to oil, Husseini knows more about it than anyone else
....Until his retirement last year -- said to have been caused by a top-level dispute, the
nature of which is the source of many rumors -- Husseini was a member of the company's
board and its management committee. He is one of the most respected and accomplished
oilmen in the world.... The message he delivered was clear: the world is heading for an
oil shortage. His warning is quite different from the calming speeches that .... other
Saudis, along with senior American officials, deliver on an almost daily basis."
The Breaking Point
New
York Times, 21 August 2005 |
"Concerns are being voiced by
some oil experts that Saudi Arabia and other producers may, in the near future, be unable
to meet rising world demand....In the past several years, the gap between demand and
supply, once considerable, has steadily narrowed, and today is almost negligible. The
consequences of an actual shortfall of supply would be immense.....It is widely believed
that most, if not all, OPEC members exaggerated the sizes of their reserves in order to
have the largest possible quota.... .... few politicians have spoken of an energy crisis
or suggested that major policy changes are necessary to avert one. The energy bill signed
earlier this month by President Bush did not even raise fuel-efficiency standards for
passenger cars. When a crisis comes -- whether in a year or 2 or 10 -- it will be all the
more painful because we will have done little or nothing to prepare for it."
The Breaking Point
New
York Times, 21 August 2005 |
"It is estimated that
global oil demand could rise by about 50 per cent by 2020. So, notwithstanding some recent
evidence that suggests China's oil demand is actually slowing down at the moment, the
prospect over the medium term is for sustained and significant growth in demand. The problem is that there are increasing concerns about supply. Oil is an 83m-84m barrel-a-day distribution business with realisable
capacity in the short term of no more than a few hundred thousand barrels. Tight
supply-demand conditions, though, are not, per se, unusual. The new concerns arise from
some quite contrarian perspectives, summarised as 'peak
oil'. Some think the peak in global oil production could be
reached some time between now and 2008, others that it will come between 2010 and 2020, but most
agree it is within the next decade or so. Concern about the depletion of conventional
global reserves seems to have intensified for several reasons, including technological
improvements in geological data gathering and analysis, the increasingly sparse reserves
discovered by new drilling, and concerns that much of the world's conventional oil,
especially in the Middle East, is coming from old and over-exploited mega-fields that are
becoming less productive. There is no risk that we are running out of oil but the chances of being able to match the estimated growth in demand
over the medium term with a rise in production is being seriously questioned. Higher prices might not herald substantially higher (conventional)
supplies......there is no basis for complacency..... what if oil prices were to remain high over the medium-term?.....The
overall net transfers from oil consumers to oil producers by 2007 are estimated at about
$1,500bn - or nearly 3.5 per cent of world GDP. This would amount to a recycling problem
of increasing complexity, from both an economic and a political point of view. It is
against this background that the concept of 'peak
oil' becomes more worrisome... high prices might be
an early indication of a supply-demand imbalance that can only be reconciled by still
higher prices (recession or global slowdown notwithstanding). In that case, a more
comprehensive oil shock surely awaits and that is with conventional oil production holding
steady. Sooner or later, production levels will start to decline..."
The world is heading for a shock over the high price of oil
Financial
Times, 16 August 2005 |
"International oil
companies have advertising campaigns warning that the world is running out of oil and
calling on the public to help the industry do something about it....ExxonMobil, the
world's largest energy group, said in a recent advertisement: 'The world faces enormous
energy challenges. There are no easy answers.' .... Chevron, the US's second-largest
energy group, sends a similar message, but goes two steps further. 'One thing is clear:
The era of easy oil is over. We call upon scientists and educators, politicians and
policy-makers, environmentalists, leaders of industry and each one of you to be part of
reshaping the next era of energy. Inaction is not an option,' was the message in a recent
advertising campaign. The company has even set up a website, www.willyoujoinus.com, warning of the pressures of
high demand and fewer fields and offering a forum of discussion."
Big Oil warns of coming energy crunch
Financial
Times, 4 August 2005 |
"A Morgan Stanley
Commodities Outlook last week predicted that even if demand moderates to 1.5% per annum,
as it predicts, because of oil depletion of 5% there is a need for the discovery of 28
million barrels per day of new oil, which it says is unlikely. 'Great hopes of new oil finds are not coming in,' said the report. High prices show no indication of
curbing demand, which hit 9.7 million barrels a day last weekend in the US. Demand in the
US is currently growing by 2.7% a year. Last year growth for 2005 was predicted to be
between 1% and 2%. Supply disruption in the US is a major fear and the hurricane season is
well underway.... Morgan Stanley's report points out that
the industry may not be well enough equipped to deal with mounting demand. The report said
the industry has allowed chronic under- investment to affect infrastructure, and the
situation is not improving."
Fossil fuels are not yet extinct, says Shell
Sunday Herald, 11 July 2005 |
"Oil prices hit new record highs above $61 a barrel on Thursday,
driven by short-term supply fears as the first hurricane of the season threatened crude
production and refinery operations in the Gulf of Mexico. But private warnings also point
to a worsening long-term outlook, with Saudi officials saying that the Organisation of the
Petroleum Exporting Countries will be unable to meet projected western demand in 10 to 15
years. At today's prices, the world will need the cartel to boost its production from 30m
to 50m barrels a day to 50m by 2020 to meet rapidly rising demand, according to the
International Energy Agency, the energy watchdog for consuming countries. But senior Saudi
energy officials have privately warned US and European counterparts that Opec would have
an 'extremely difficult time' meeting that demand. Saudi Arabia calculates there is a 4.5m
b/d gap between what the world needs and what the kingdom can provide. Saudi Arabia
has the world's largest oil reserves and will need to bear up to half Opec's production
growth in the next 10 to 20 years, with the rest mainly coming from Kuwait and the United
Arab Emirates. Saudi Arabia pumps 9.5m b/d and has assured consumer countries that it
could reach 12.5m b/d in 2009 and probably 15m b/d eventually. But a senior western energy
official said: 'They said it would be extremely difficult to move above that
figure'.”
Saudis warn of shortfalls as oil hits $61
Financial
Times, 6 July 2005 |
"The international oil industry is
struggling to discover enough new oil reserves, despite surging global demand for crude
oil, according to a study by Wood Mackenzie, the energy consultants. In the face of steady
annual increases in demand for oil over the past decade, the West's big oil companies
largely have failed to improve the yearly exploration yield of new reserves to their
portfolios, the study shows. Smaller discoveries and diminishing reserves per well are
adding to pressure on oil companies in the West to gain access to large, unexploited
oilfields in Russia and the Gulf states.... Mr Kellas said: 'Deep- water Brazil has been a
big disappointment. No commercial discoveries have yet been made by international oil
companies, despite having spent nearly $1.5 billion.'"
Oil industry 'struggling to find new reserves'
London Times,
14 June 2005 |
"The Prudhoe Bay field sprawling over an area the size of
Howard County still pumps more oil than any other site in the United States. But its
shrinking production reflects a trend throughout the country: After years of pumping,
fields in the U.S. are drawing less oil from the ground. The implications for U.S. energy
policy are profound. At a time when President Bush and members of Congress are talking
about the need to be less dependent on foreign oil, the country is becoming even more
dependent. As U.S. production declines, demand has been increasing. While there are some
bright spots in U.S. oil production, such as discoveries in the Gulf of Mexico, the
overall outlook points steadily downward and is expected to continue that way for the
foreseeable future -- the result of a natural process of decline.... Oil companies like BP
are trying to extend the life of U.S. fields by using a variety of new technologies to
wring more oil from the ground. But the technology and increased Gulf production are not
enough to reverse the declines.... The bulk of the remaining oil reserves are in the
Middle East. Barring the advent of alternative energy sources or a significant decline in
consumption, analysts said the United States will have little choice but become
increasingly reliant on the very countries lawmakers say they are trying to gain
independence from....'It does feel like we're pedaling hard and running out of options,'
said Maureen Johnson, a BP senior vice president in charge of Prudhoe Bay and nearby
fields."
Alaska Oil Field's Falling Production Reflects U.S. Trend
Washington
Post, 7 June 2005 |
"Oil prices will surge through $60 a barrel by the end of
the summer, delivering a fresh shock to the global economy at the height of the US
'driving season', analysts warn. Federal Reserve Chairman Alan Greenspan attempted to
reassure the oil markets on Friday, saying rising stocks had helped to calm the 'price
frenzy' that took the cost of crude to record highs earlier in the year. But Paul Horsnell
of Barclays Capital said the $10 price decline over the past month had been a temporary
respite, and the market was about to 'tighten significantly', pushing the average price of
a barrel of crude above $60 in the third quarter of 2005. He said that the Chinese economy sucked in a record 3 million barrels of oil a day in
April, up more than a fifth on the same month last year, while a production squeeze
in Russia means that even with Opec producers turning on the taps, supply could struggle
to keep up with demand."
Oil prices to top $60 by autumn, analysts warn
Observer, 22 May
2005 |
"Venezuelan President
Hugo Chavez, who is using oil revenues to fund ambitious social reforms and spending
projects, said earlier this month that Opec oil should be fetching between $40 and $60 a
barrel. On Friday, it was trading at just below $45. Opec has been
keen to point out that there is precious little extra oil to be wrung out of its already
overworked fields. Iran is Opec's second biggest producer and Mr Zanganeh was quoted on
the oil ministry website as saying: 'Opec members are supplying world markets with their
utmost capacity.' Currently Opec is pumping about one million barrels above its
official 27.5 million barrels per day (bpd) target. Another two million bpd from Iraq are
not included in the quota figures. The group increased production in mid-March to help
ease supply problems that many analysts were blaming for a spike in prices. Some analysts
have predicted that any dip in costs is likely to be short-lived - Goldman Sachs says
prices may hit $105 a barrel. Underpinning prices will be demand, especially from
developing nations such as China and India......Sheik Ahmed Fahd Al
Ahmed Al Sabah, Kuwait's Oil Minister and current Opec president said that global demand
will rise to 85.5 million bpd during the last three months of this year."
Opec remarks may pump oil price
BBC Online, 22 May 2005 |
"[Australia's] Deputy
Prime Minister John Anderson believes high fuel prices reflect the inevitable decline in
the world's oil and gas reserves. He expressed deep concern about the long-term future of
oil and says fuel prices will have to be high enough to encourage more exploration. Mr
Anderson says the world could reach peak production of oil and gas far sooner than
predicted because of the rapid increase in energy demands in China. 'We are using stored
energy left over from ages gone by at an alarming rate and it isn't re-making,' he said.
'While people talk about new technologies and they say as soon as oil reaches a certain
price everybody will switch over to hydrogen and what have you. The reality is that it may
not be as simple as that and you have to wonder whether over the next decade we won't
start to get towards peak production and that could be a very interesting time and a very
challenging time.'"
Anderson fears for oil reserves
Australian Broadcasting
Corporation, 20 May 2005 |
"Investment in new capacity by oil-producing nations and energy
companies is too small to meet future growth in demand, the developed world's energy
watchdog warned on Tuesday. Claude Mandil, head of the International Energy Agency, said
even though energy prices were near record levels, the world was not investing enough in
oil and gas production, refining, power generation and transmission."
IEA chief issues energy investment warning
Financial
Times, 4 May 2005 |
"According to
a new study published on Sunday by state oil monopoly Petroleos Mexicanos, the potential
for oil exploration in the Gulf of Mexico has been greatly overestimated. Petroleos
Mexicanos, or Pemex, revealed that terrain in waters deeper than 3,000 meters in the Gulf
of Mexico an area known as the Abyssal Plain were 'not
suitable for oil exploration.' The statement represents a
serious setback for future drilling in the area, and, according to petroleum analysts,
jeopardizes any possible collaborations with foreign investors. Guillermo Pérez Cruz,
head of Pemex's Special Unit for Deep Water Oil Exploration, said the new report reduced
previous oil estimates in the zone by 53 percent.... The survey's findings come at a time
when the state company is desperate to find new reserves. Recently, it's top executive,
Luis Ramírez Corzo, described the monopoly as 'on
the verge of bankruptcy' with total liabilities of US88.5
billion and an annual investment requirement of US10 billion."
Pemex: Reserves overestimated
El
Universal-El Universal Online, México, 18 April 2005 |
"I wish I could simply wave a magic wand and lower gas prices
tomorrow. But we must act now to address the fundamental problem. Our supply of energy is
not growing fast enough to meet the demands of our growing economy..... Our dependence on
foreign energy is like a foreign tax on the American Dream - the tax our citizens pay
every day in higher gas prices, higher cost to heat and cool their homes - a tax on jobs.
Worst of all, it's a tax increasing every year."
George W. Bush 20 April 2005
Bush Urges Action 'Now' on Energy
Washington
Post, 21 April 2005 |
"A
report prepared by energy economists at the French investment bank Ixis-CIB has warned crude oil prices could touch $380 a barrel by
2015. Analysts Patrick Artus and Moncef Kaabi said in the next 10 years demand for oil
will outstrip supply by around 8 million barrels per day (mbpd). 'If one takes into
account the level of previous oil shocks such as in the 1970's, we don't think a price
level of $380 per barrel is out of the question,' they said. The analysts argued that the shortfall in energy needs
would not be made up by alternatives as they were not developed as yet. 'Thus the world will still need to rely
upon traditional fossil fuels,' their report said. They also said existing new oilfield
projects would not be enough to satisfy unprecedented growth in demand from developing
economies, particularly China. 'We have taken into account every new oil discovery and
potential source …as well as this we note the continuing situation of a fall in new
field discoveries,' the analysts said. They pointed out China would contribute greatly to
the world's rising energy needs."
Will oil strike $380 a barrel
by 2015?
Al
Jazeera, 21 April 2005 |
"Speculation over the actual size of Saudi Arabia's oil reserves is
reaching fever pitch as a major bank says the kingdom's - and the world's - biggest
field, Gharwar, is in irreversible decline. The Bank of Montreal's analyst Don Coxe, working from their Chicago
office, is the first mainstream number-cruncher to say that Gharwar's days are fated. Coxe
uses the phrase 'Hubbert's Peak' to describe the situation. This refers to the seminal
geologist M King Hubbert, who predicted the unavoidable decline of oilfields back in the
1950s. 'The combination of the news that there's no new Saudi Light coming on stream for
the next seven years plus the 27% projected decline from existing fields means Hubbert's Peak has arrived in Saudi
Arabia,' says Coxe, referring to data
compiled by the International Energy Association's (IEA) August 2004 monthly report.
The Canadian bank is the latest in a line of oil opinion-makers to speak out about.
Others, notably banker Matt Simmons and the head of the Association for the study of Peak
Oil (Aspo), Colin Campbell, have called into question the validity of its stated reserves,
supposedly 258 billion barrels.... As debate over Gharwar intensifies, pressure on Saudi
Arabia to independently reveal its actual size will come from many sources. Now, for the
first time, a major bank has joined that chorus. The arguments over the world's biggest
oilfield are set to stay."
Bank says Saudi's top field in decline
Al
Jazeera, 12 April 2005 |
" A group of former national security officials Monday took up the
cause of weaning US drivers from their oil addiction - normally the realm of environmental
groups - and asked the Bush administration to spend $1 billion on lighter, more
fuel-efficient automobiles. Retail US gasoline prices now averaging above $2 a gallon make
US reliance on foreign suppliers like Venezuela and Saudi Arabia a looming national
security crisis, a group of 31 national security officials said in a letter to President
Bush. 'This really constitutes a national security crisis in the making,' said letter
signer Frank Gaffney, head of the Center for Security Policy, a thinktank, and a former
Defense Department official under former President Reagan. Other signers included Robert
McFarlane, Reagan's national security advisor, and James Woolsey, Central Intelligence
Agency director under President Clinton..... US drivers should not depend on foreign
suppliers like Saudi Arabia for security reasons, they said. Although Saudi officials say
the kingdom's oilfields are protected from terror attacks, McFarlane said the oil
installations are 'extremely vulnerable from a military point of view.'.... If Saudi oil
facilities are damaged, 'You're not talking about $100 (per barrel) oil. You're talking
about well beyond that,' McFarlane said. US crude oil prices peaked March 17 at $57.60 a
barrel."
Unlikely Bedfellows Lobby Against US Gas-Guzzlers
Reuters, 29 March
2005 |
"The price of nearby oil futures in New
York hit a new all-time high of $57.60 a barrel Thursday. Gasoline and heating oil futures
also hit record highs. The surge, attributed by analysts to buying from speculators such
as hedge funds and pension funds, follows a decision by the Organization of Petroleum
Exporting Countries Wednesday to pump more oil ahead of the spring to let consuming
countries build inventories while they can. The shift from the usual approach of cutting
output ahead of the second quarter shows the depth of the group's concern about supplies
later this year amid expectations for continued strong oil demand.... on Wednesday, Bush himself took a different view of what has driven crude oil to record
high levels again Thursday. He said rising demand in the U.S. as well as in China and
India is outstripping supply."
White House: Oil Costs Due in Part to Lack of Legislation
DOW JONES NEWSWIRES, 17 March
2005 |
"It has long been denied that the
US government bases any policy around the idea that global oil production may be in
terminal decline. But a new US government-sponsored report, obtained by Aljazeera.net,
does exactly that..... this brand new senior-level report on 'peak oil' is unprecedented
in US government circles. It is not just the existence of the report itself that is such a
landmark in the current oil debate..... in its conclusion the report makes troubling
reading, noting that 'the world has never faced a problem like this. Without massive
mitigation more than a decade before the fact, the problem will be pervasive and will not
be temporary. Previous energy transitions were gradual and evolutionary. Oil peaking will
be abrupt and revolutionary'. This report is the clearest
signal yet that the U.S government is taking the subject of 'peak oil' seriously. Yet it remains to be seen what actions can be taken to stop this
potentially 'revolutionary' change."
US report acknowledges peak-oil threat
Al
Jazeera, 9 March 2005 |
“Shell's problems come as worries grow about how the world's
biggest oil companies will continue to secure reserves. Exploration success has been
limited, access to oil-producing countries is a challenge and new competition has emerged
from countries such as India and China. The company said last year it had put its problems
behind it by cutting reserves 23 per cent and forcing the resignation of its three most
senior executives. But Shell said yesterday it would need to cut the total by another
1.4bn barrels. The group also said it had only replaced 15-25 per cent of the depletion in
its reserves in 2004.”
Shell's reserves cut further
Financial Times, 4 February 2005 |
"Anecdotal evidence suggests Shell is not alone in
struggling to find new sources of oil. Mr Van der Veer said: 'If you expect that the world
should be supplied from traditional, on-shore, near-to-the-market oil and gas, then there
are not sufficient supplies.' Shell reckons that oil sands and gas-to-liquids technology
will fill the gap. But if others in the industry are better placed it is because they
bought reserves when oil was cheap — BP’s relative abundance has as much to do with writing
cheques as with drilling wells. Shell’s strategic blunder could prove to be much more
costly than its quarrel with regulators in Washington."
An exercise in futility at Shell
London Times, 3 February 2005 |
| 2004 |
"Concerns over Britain’s dwindling
domestic energy supplies have forced politicians and the biggest gas and electricity
groups to look east for a new source. Their sights have settled on Russia.... By next year
Britain will be a net importer of gas, 40 years after British Petroleum made the first
discovery of gas in the North Sea. Ofgem, the energy market regulator, said last month
that there is sufficient power capacity to keep Britain’s fires burning this winter
— even through a Siberian cold snap — but that situation will change between now
and 2010..."
Britain looks east for new energy
London Times, 20
December 2004 |
"Long-term changes are under way in global energy market that will
affect all Americans and the US energy industry of the future, said Rex W. Tillerson,
president of ExxonMobil Corp.... 'We see energy demand growth a bit less than 2% a year,
which is about what it has been during the past 2 decades. Economic growth will actually
exceed this if the world continues to be more efficient with its use of energy,' he said.
'Nevertheless, even with greater efficiency, the total amount of energy used by 2030 will
have increased by almost two-thirds.' Most of that increase will be in oil and natural
gas, which Tillerson said 'will retain about three fifths of the total energy supply.
Natural gas will grow at a rate slightly higher than oil and could provide one quarter of
all energy by 2030.' .... According to ExxonMobil's assessment, overall growth in world
oil demand is projected at 1.5%/year through 2030.... for the foreseeable future, the
world will be increasingly dependent upon the Organization of Petroleum Exporting
Countries and the Middle East for energy.... There is very little that can be done to
materially alter this reality with regard to conventional oil.'.... Tillerson expects non-OPEC production of crude and condensate to
peak in the next 10 years, 'with 70% of total
production from seven areas—Russia, the US, the North Sea, Mexico, Canada, China, and
Brazil.' He sees the call on OPEC crude supplies increasing slowly through 2010. 'During
this period, growth in non-OPEC supplies satisfies most of the demand growth, leaving a
little room for OPEC growth. But beginning about
2010, the call on OPEC increases rapidly and will require OPEC to add more than 1 million
b/d/year of capacity,' Tillerson forecast. 'The
resources available to OPEC are adequate to accommodate this increase, and we are assuming that OPEC countries will make investments in a
timely manner to meet rising demand.... estimates of
unconventional resources also are very large. Estimates of extra-heavy oil and oil sands
are more than 4 trillion bbl in place. This is expected to go up as interest in these
particular resources increases. These resources are more concentrated than resources of
conventional oil, with large deposits in Canada, Venezuela, Russia, and the Caspian. While
resources of this type have been in production since the 1960s the amount of cumulative
production to date is very small."
Exxon president predicts non-OPEC peak in 10 years
Oil And Gas Journal, 12 December 2004 |
"The depletion of gas reserves in the North Sea and the Irish Sea is
pushing up wholesale prices. It is expected that Britain will have to import 75 per cent
of its gas by 2015."
Customers switch off British Gas over prices
London Times,
11 December 2004 |
"Plans
by the Moscow-based company Gazprom to provide 10% of Britain's natural gas requirements
by 2010 underline Russia's growing international importance as an energy supplier. Oil and
gas bring political and economic clout. And they are fuelling a revival in Russia's
great-power ambitions. Governments in western Europe inclined to criticise President
Vladimir Putin's interference in neighbours such as Ukraine or abuses in Chechnya may have
second thoughts in future as their energy dependency grows. American qualms about the
Kremlin's authoritarianism or its support for Iran may be more readily suppressed when
Russia's position as the world's largest gas exporter and second largest oil exporter is
factored in. At the launch of the UK's international energy strategy last month, the
foreign secretary, Jack Straw, made no bones about Britain's vulnerability in this field. 'As North Sea reserves are
run down, we are likely to become net importers of gas by 2006 and of oil by 2010,' Mr Straw said. 'By 2020 we will probably be importing
three-quarters of our primary energy needs.' Britain's economy, public services and
security relied on 'secure and affordable energy supplies', he said. What holds true for
Britain holds true for its main allies."
Russia's oil and gas power Putin's ambitions
Guardian,
1 December 2004 |
"A senior executive at BP PLC (BP) thinks world oil production will
peak in the next decade, earlier than most other forecasts, the Business reported Sunday. BP exploration consultant
Francis Harper estimated the amount of total usable oil reserves in the world are 2.4
trillion barrels, and production would peak between 2010 and 2020, the report said. Harper
said production would drop off outside the Organization of Petroleum Exporting Countries
first, concentrating power in the producer group. That forecast would mean demand
outstripping supply much earlier than other forecasts by ExxonMobil Corp. (XOM) or Royal
Dutch/Shell Group (RD SC), the report said."
World Oil Output To Peak Next Decade - BP Exec
DOW
JONES NEWSWIRES, November 7, 2004 |
"Royal Dutch/Shell yesterday raised fears that it may have to write
down its reserves by more than 1.5 billion barrels — 10 per cent of its total
reserves — after the Anglo-Dutch oil company admitted that it was considering its
fifth 'volume adjustment' this year.... With less than 60 per cent of its reservoir audit
completed, Shell was unable yesterday to put a ceiling on the potential downgrade of its
reserves, leaving investors in doubt over key issues such as the rate at which it can
replace reserves and the average cost for the company of finding a barrel of oil. Sources
within Shell revealed that a well-by-well analysis found evidence of greater decline rates
than expected. Shell has therefore been forced to take a more pessimistic view of the
likely performance of undeveloped oilfields, the source of the potential billion-barrel
downgrade.... The reduction would come on top of a 25 per
cent writedown in Shell’s oil and gas reserves this year,
which led to the ousting of Sir Philip Watts as chief executive. Colin Morton, a fund
manager with Rensburg, a Shell shareholder, said: 'This is very disappointing. We all
thought we were towards the end of the reserves downgrades and we are now seeing the
likelihood of more, with yet more to come after that. 'Who knows how many more barrels
will need to be written down by the end of the audit? It could be more than twice as many
(as 900 million), or it could be less, but it doesn’t look like we’ve seen the
last of it yet.”
Fear of new Shell reserves downgrade
London
Times, 29 October 2004 |
"This International Energy Strategy is the product of
cross-government work, particularly between the Foreign and Commonwealth Office, the
Department of Trade and Industry and the Department for the Environment, Food and Rural
Affairs. I'm glad to welcome Mike O'Brien back to the Foreign Office to launch it with me.
The Government's Energy White Paper last year identified a dual energy challenge: to
maintain Britain's access to secure and affordable energy supplies, while mitigating the
effects of climate change.Both issues are vital to our prosperity and security. And both
require not just domestic but international action. That is what this International Energy
Strategy is about..... The second part of the energy challenge which this strategy
addresses is the need for secure and affordable energy supplies. Our economy, our public
services and our security rely on them. For the United
Kingdom, our growing need for energy over the next decades has to be seen in a changing
context – that of a probable fall in our own domestic production, as North Sea
reserves are run down. We are likely to become net importers of gas by 2006 and of oil by
2010. By 2020, we will probably be importing three-quarters of our primary energy needs
– and we will need to adapt to that..... By 2020, around half of global oil demand
will probably be met by countries with significant risk of internal instability – and that will require more focus on policies which tackle the
potential causes of conflict, and spread the benefits of energy wealth.... Energy is one
of the eight international priorities which we identified in the FCO's Strategy last
December. On this and on all of those priorities, we can only meet our objectives by
working closely together, across government and outside. We are publishing this
International Energy Strategy – the first time that we have done so – to help us
to do that. I will be tasking our Ambassadors and High Commissioners in priority posts
overseas to take personal charge of implementing this Strategy and delivering its
objectives. We will be developing with them individual Country Action Plans on energy and
climate change. And we will be enhancing our posts' capacity on energy issues and making
better use of our network of energy attachés, with a particular focus on the large new
consumers of energy such as China and India, and producers such as Russia."
Jack Staw, Foreign Secretary,
Launch
of the UK International Energy Strategy, Foreign Office, 28 October 2004 |
"Channel 4 News has been told by a top
Saudi oil industry insider that the American government's forecast for future oil supplies
are a 'dangerous over-estimate'. Sadad Al Husseini has just retired as vice-president of
the Saudi oil company Aramco.... The Saudis very rarely speak publicly about future oil
capacity but there are signs the Kingdom is worried their fields are being pushed too
hard. Al-Husseini has just retired as Head of Exploration at Aramco and he told us in a
rare interview, that estimates of future global supplies from the EIA, the US government's
energy think tank, are simply too high.... Al-Husseini's opinion is a view that is growing
in the oil markets, but which no-one wants to admit ..... It's also a view articulated by
Matthew Simmons, one of the industry's leading financiers, and a former energy advisor to
America's Vice President Dick Cheney. He says the main reason the markets won't wake up to
permanently high oil prices is what he calls 'group think'... "
Oil supplies 'over-estimated'
Channel 4 News, 26 October 2004 |
"Worried soaring
oil prices could hurt the best global prospects in years, finance chiefs from wealthy
nations met on Friday to try to work out what lay behind the surge and how to buffer the
economic expansion. Group of Seven finance ministers and central bankers met at the
tightly guarded U.S. Treasury building over lunch and were to work through the afternoon
before a dinner with Chinese counterparts that has currency reform on the menu. The
officials will set out their world-view at about 5:45 p.m. EDT (2145 GMT) in a communique
sources said would include a call to bolster oil-market monitoring to make it easier to
discern if scarce supply, hefty demand or market speculation lay behind crude's drive to
record levels. The answer to this question is critical. It could affect policy responses
big oil consumers must adopt -- higher interest rates to stem inflation or a renewed focus
on finding new energy sources -- and may offer key information on how long the price rise
will last. On Friday, U.S. crude oil futures topped $50 a barrel. …. Ministers are seeking energy market
transparency to discover if world oil supplies may be scantier than they thought in May
when they urgedproducers to open the spigots. Middle East oil producers generally maintain
they are pumping near capacity and, like oil consumers, are interested in smoothing
out current volatility. Britain and Germany are leading a drive for more data on energy
supply and demand and on inventory levels to try to ward off possible speculative bubbles
in markets. ‘More transparency in the market and less speculation,’ one G7
source said when asked what ministers wanted. Another G7 official suggested the rise in
oil costs was rooted in such
fundamental factors as over-estimated supplies and was not solely due to speculation.
There is ‘a recognition that oil resources are scarcer than was thought a few years
ago,’ the official said. ‘We agree there is a need for more transparency on the
potential supply of various areas.’ If scarcity is the chief culprit, the oil price
shock may not prove as temporary as hoped, the official said."
WRAPUP 1-G7 finance chiefs
mull oil before China meeting
Reuters, 1 October 2004 |
"Ten years ago China imported no oil at all. Last year it
overtook Japan to become the world's second biggest importer. Its thirst continues to
grow. Imports are expected to rise another 40% this year.... Then there is the problem of
supply. In the 1950s, China discovered massive oil reserves in the far north of the
country near the border with Siberia. For 40 years the Da Qing oil field has kept China
self sufficient. But just as China's demand for oil is surging, the pumps on the Da Qing
oil field are starting to splutter. The search for oil has become frantic. In the deserts
of China's far west, teams of oil men have been searching for more than a decade, but so
far nothing.... Only one thing seems certain, China's appetite for
oil shows no sign of slowing. Today China has 10 million private cars - by 2020 that
number will be 120 million."
China's thirst for oil gets into top gear
BBC Online, 1 October 2004 |
"Tullow Oil Britain’s second biggest
independent oil and gas producer, has given warning that power blackouts are likely this
winter.... Mr Heavey said that dwindling UK production and limited storage capacity
— the UK can store only 15 days’ supply of gas, compared with 50 days’
supply being held in continental Europe — meant power cuts this winter were a
distinct possibility. 'There’s not a lot of gas around and the reason that you are
seeing the big peaks in the gas price is because of the tightness of supply,' he said. The
London Natural Gas Index has jumped about 50 per cent since last month, in the lead-up to
the winter peak. Energy analysts have already forecast that the UK will become a
year-round net importer of gas from as early as next year. The UK already relies on
imports in winter."
Prepare for power cuts this winter, says Tullow
London Times,
14 September 2004 |
"Despite vaunted crude oil finds in Africa and Latin America,
widespread pumping decreases will make global markets more dependent on the Middle East
and Russia over the decade, a study released on Wednesday found. Stout demand growth has
whittled spare global oil capacity to its lowest point in 30 years, mostly due to China's
thirst for fuel. But despite crude prices that flirted with $50 a barrel last month,
non-OPEC nations now pump as much as 8 billion barrels of oil more than they discover
annually, Washington-based energy consultant PFC Energy said.... Notable discoveries in
African nations like Nigeria, Angola, and Equatorial Guinea are unlikely to stem the
decline, PFC said. 'We're producing more than we find by a considerable amount,' Mike
Rodgers, a senior director at PFC, said at a presentation for the Center for Strategic and
International Studies. 'We don't really see this changing very much between now and the
end of the decade.' Non-OPEC nations brought major projects on-line in the 1980s, which
are starting to either peak out or decline, PFC said. Countries like Mexico, Malaysia, and
China have hit production plateaus that will be hard to maintain, it said.... And OPEC,
which has long sat on spare capacity, could find itself unable to keep pace with demand by
2020 assuming global demand growth of 1.8 percent a year, PFC said. OPEC cartel members
produce about 8 billion barrels per year more than they discover, PFC said. 'There are
reasons to worry about OPEC's ability to fill that growing differential between non-OPEC
production and global demand under current growth scenarios,' Rodgers said. Saudi Arabia,
the only OPEC nation with any real spare capacity, is unlikely to see production above 14
million barrels, PFC said. The kingdom in August produced 9.5 million bpd versus its
capacity of 10 million bpd, according to U.S. government data."
Energy dependence on Mideast, Russia to grow, says study
Reuters, 9 September 2004 |
"A respected oil-forecasting group predicted that the energy
industry may be unable to produce enough oil to meet projected demand by the end of the
next decade, in a study that lends support to a small chorus of analysts who warn that a
peak in petroleum output is looming in the years ahead, The Wall Street Journal reported
Thursday. In a presentation yesterday, analysts from Washington-based PFC Energy
warned that the world won't be able to produce more than 100 million barrels of oil a day,
only some 20% more than current output of about 82 million barrels a day, and well below
demand projections for the end of the next decade. 'Even production of 100 million barrels
a day can only be sustained for a few years,' said Roger Diwan, a PFC analyst. 'Every year
since the 1970s, we have been consuming much more oil than we have been
discovering.'"
Demand for Oil Could Outstrip Supply
CNN, 9
September 2004 |
"British Gas is set to increase its prices for the second time
this year as it UK energy supplies dwindle and wholesale prices rise ever
higher......Centrica, the company that owns British Gas, says depletion of the North Sea
and Irish Sea gas reserves were taking their toll with the company having to import more
supplies. That, coupled with surging crude oil prices which have hit records of more than
$44 a barrel in the UK, has seen costs pushed ever higher. 'The era of cheap UK energy is
over,' British Gas managing director Mark Clare said. The UK, formerly a net exporter of
gas and oil, is set to become a net importer in the next year or so for the first time
since North Sea oil was discovered in the 1970s, consultants the Energy Information Centre
(EIC) said. This means UK energy suppliers will be forced to bid for energy sources on
global markets and will grow increasingly dependent on overseas suppliers."
Why are power prices on the rise?
BBC Online, 24 August 2004 |
"Is natural gas becoming the new oil? At a time when the nation is
chafing at its persistent dependence on foreign oil, it is becoming clear that the United
States may be headed for the same situation with natural gas.... The United States now
imports about 57 percent of its crude oil, but only 16 percent of its natural gas, and
nearly all of that comes by pipeline from Canada. By 2025, according to recent Energy
Department estimates, the country will be consuming 37 percent more gas - 31.2 trillion
cubic feet a year, compared with 22.8 trillion in 2002.... 'Do we ever want to be in a
situation in 20 years when we say, 'We'd better do this for the Russians or we'll be in a
blackout?' said Amy Myers Jaffe, senior energy analyst at the James A. Baker III Institute
for Public Policy at Rice University in Houston. As for Canada, much of its gas may soon
be consumed at home rather than exported, said Sara Banaszak of PFC Energy, a Washington
consulting firm, because the production of oil from tar sand deposits being developed in
Alberta requires a great deal of gas."
Natural Gas Seems Headed the Way of Oil: More Demand, Less Supply, Higher Cost
New York Times,
20 August 2004 |
"Britain may find itself running short of gas during an extreme cold
snap in
the next three years, according to a House of Lords committee.... Concerns for the
security of gas supply have increased as Britain is moving rapidly from being a net
exporter of gas from its own North Sea fields to being a net importer. By 2010 the UK will
be importing around 50 per cent of
its gas requirements. That figure is set to reach 70 per cent in 2020."
UK's winter gas supply faces 'considerable' risk
London Times,
24 June 2004 |
"But the age of cheap oil is over. If you doubt this, take a
look at the BBC's online report
yesterday of a conference run by the Association for the Study of Peak Oil. The
reporter spoke to the chief economist of the International Energy Agency, Fatih Birol. 'In
public, Mr Birol denied that supply would not be able to meet rising demand ... But after
his speech he seemed to change his tune: 'For the time being there is no spare capacity.
But we expect demand to increase by the fourth quarter by 3m barrels a day. If Saudi does
not increase supply by 3m barrels a day by the end of the year we will face, how can I say
this, it will be very difficult. We will have difficult times.' The reporter asked him
whether such a growth in supply was possible, or simply wishful thinking. 'You are from
the press?' Birol replied. 'This is not for the press.' So the BBC asked the other
delegates what they thought of the prospects of a 30% increase in Saudi production. 'The
answers were unambiguous: 'absolutely out of the question'; 'completely impossible'; and
'3m barrels - never, not even 300,000'. One delegate laughed so hard he had to support
himself on a table.' And this was before they heard that two BBC journalists had been
gunned down in Riyadh. The world's problem is as follows. We now consume six barrels of
oil for every new barrel we discover. Major oil finds (of over 500m barrels) peaked in
1964. In 2000, there were 13 such discoveries, in 2001 six, in 2002 two and in 2003 none.
Three major new projects will come onstream in 2007 and three in 2008. For the following
years, none have yet been scheduled."
Break out the bicycles
Guardian,
8 June 2004 |
"Not only has conventional production not grown over the past
four years, but there is virtually no spare capacity left among producers belonging to the
Organization of Petroleum Exporting Countries.....You can call it just-in-time inventories
or you can call it what it really is -- Saudi Arabia running out of reserves. In fact,
some commentators such as Matt Simmons of Simmons Associates believes the giant Ghawar
field, home to one-eighth of the world's known oil supply, may be 80 per cent to 90 per
cent depleted. Moreover, Mr. Simmons notes that depletion from Ghawar, whose production
has already slowed despite massive injections of salt water to maintain well pressure, is
far exceeding the discovery of replacement oil elsewhere in the kingdom. The tightness in
today's crude market is unlikely to change unless there are major supply discoveries.
Production in most of the world's major oil fields has already peaked and is now
declining. For example, the United States, which is still the third-largest crude producer
in the world, pumps out 25 per cent less oil than it did 30 years ago. And even the
remaining reserves in the Middle East may be substantially smaller than currently
believed. Just last month, Royal Dutch/Shell, the world's third-largest oil company, cut
its estimate of its global proven reserves by a whopping 20 per cent."
Oil market tightness is likely long term
Globe
and Mail, Canada, 15 March 2004
Matt Simmons discussing the state of the major Saudi oil wells
Brief
video interview in filmed at the CSIS (Center for Strategic and International Studies)
in Washington DC, USA on 24th February 2004Matt Simmons discussing oil peak; natural gas; what the President knows;
hydrogen; and Iraq
Video interview in Houston, Texas on 10th February 2003 - click here |
"Oil prices rose back towards $33 a barrel yesterday after
the International Energy Agency said that China's booming economy would fuel
faster-than-expected growth in world oil demand this year. Prices rose as the IEA, which
advises 26 industrialised nations on energy policy, lifted its forecast for world demand
growth in 2004 by 220,000 barrels a day (bpd) to 1.65m. China's soaring economy was
driving up world consumption, the IEA said, estimating that Chinese oil demand
in January hit a record 6.09m bpd, second only to the United States."
Demand in China fuels oil price
Daily Telegraph, 12 March 2004 |
"Chinese demand for oil rose to a
record six million barrels a day in January, according to the International Energy Agency,
which for the second time in four months has been forced to increase its growth forecast
for the country’s oil consumption. The strength of demand in the People’s
Republic is keeping a floor under the oil price, which yesterday gained 31 cents in London
to $32.30 a barrel. Evidence of refinery throughputs and a surge in oil product imports
encouraged the IEA to raise its forecast of Chinese growth in 2004 by 66 per cent, from
350,000 barrels per day to 580,000. China’s industrial furnace has made it the second
biggest oil consumer after the United States."
Chinese burn their way to an oil record
London
Times, 12 March 2004 |
"Unless we make decisions now our
electricity will start to run out within five years."
Professor Ian Fells, World Energy Council
'If... the lights go out'
BBC 2, 10 March 2004 |
"This is a very, very difficult problem to solve, and we
just have never attempted to solve a problem of this magnitude in this country ever
before."
Kelvin Beer, Gas Strategist, Deloitte Petroleum Services
'If... the lights go out'
BBC 2, 10 March 2004 |
"The oil price has stabilised above $30 a barrel. Gas prices
have also risen, trebling since the 1990s in North America, and more than doubling in the
North Sea in the past two years.... Energy use per capita has fallen in the US, the UK and
Europe, but Asian demand doubled during the past 15 years and is forecast to double again
in the next 15. The world consumes 110 billion barrels every four years, and every year
fewer reserves are added than are consumed. US production peaked 30 years ago, while North
Sea output peaked five years ago. A global energy crunch is not imminent but it may be
inevitable."
Rising demand may set oil prices alight
Daily Telegraph, 6 March 2004 |
"But the country's [Saudi Arabia] oil fields now are in
decline, prompting industry and government officials to raise serious questions about
whether the kingdom will be able to satisfy the world's thirst for oil in coming
years.Energy forecasts call for Saudi Arabia to almost double its output in the next
decade and after. Oil executives and government officials in the United States and Saudi
Arabia, however, say capacity will probably stall near current levels, potentially
creating a significant gap in the global energy supply.... An internal Saudi Aramco plan,
the experts said, estimates total production capacity in 2011 at 10.15 million barrels a
day, about the current capacity. But to meet expected world demand, the United States
Department of Energy's research arm says Saudi Arabia will need to produce 13.6 million
barrels a day by 2010 and 19.5 million barrels a day by 2020.... Edward O. Price Jr., a
former top Saudi Aramco and Chevron executive and a leading United States government
adviser, says he believes that Saudi Arabia can pump up to 12 million barrels a day 'for a
few years.' But 'the world should not expect more from the Saudis,' he said. He expects
global oil markets to be in short supply by 2015.'... oil field development requires years of planning and work.... Sadad al-Husseini, Saudi Aramco's
second-ranking executive and its leading geologist, warned at an oil conference in Jakarta
in 2002 that global 'natural declines in existing capacity are real and must be
replaced'....The average decline rate in Saudi Aramco's mature fields — Ghawar and a
few others — 'is in the range of 8 percent per year,' without additional remediation,
according to the company's statement..... The I.E.A. warned in November that huge
investments would be needed to offset the decline rates in mature Middle Eastern oil
fields — it put the average at 5 percent — and the increasing costs of oil and
gas production. The agency, based in Paris, forecasts that Saudi production will need to
reach 20 million barrels a day by 2020. .... In his speech in Jakarta, Dr. al-Husseini
noted the need for exploration, pointing out that colleagues at Exxon Mobil predict that
more than 50 percent of oil and gas consumption in 2010 must come from new fields and
reservoirs. Harry A. Longwell, the executive vice president of Exxon Mobil, says finding
new sources of oil is crucial. Mr. Longwell, in an interview, said that increasing demand
and declining production were not new problems, but they were 'much larger now because of
the world's demand for energy and the magnitude of the numbers now are much larger.'"
Forecast of Rising Oil Demand Challenges Tired Saudi Fields
New
York Times, 24 February 2004 |
"Oil groups face growing pressure to quit the North Sea amid
evidence of global failure to find big new oil deposits. The world’s top ten energy
companies are failing to find enough new crude to replenish their reserves... Shell this
month scared investors when it cut a fifth of its reserves to 'unproven' status. The
outcry led Wood Mackenzie to study the industry’s top ten and the consultancy has
concluded they are finding fewer barrels."
North Sea exploration a loser, say oil experts
London Times,
26 January 2004 |
"Four months ago, Britain's oil imports overtook its
exports, underlining a decline in North Sea oil production that was already well under
way. North Sea oil output peaked at about 2.9m barrels per day in 1999, and has been
predicted to fall to only 1.6m bpd by 2007. Even the discovery of the new Buzzard field,
the biggest British oil find in a decade, with a total of some 500m barrels recoverable,
will not alter by much the overall picture of dwindling resources. This prospect would not be
so bleak were it not that similar trends are now becoming manifest around the globe..... Today we enjoy a
daily production of 75m bpd. But to meet projected demand in 2015, we would need to open
new oilfields that can give an additional 60m bpd. This is frankly impossible. It would
require the equivalent of more than 10 new regions, each the size of the North Sea. Maybe
Iraq with enormous new investments will increase production by 6m bpd, and the rest of the
Middle East might be able to do the same. But to suggest that the rest of the world could
produce an extra 40m barrels daily is just moonshine. These calculations place the coming
oil crunch some time between 2010 and 2015, perhaps earlier. The reserves in the world's
super-giant and giant oilfields are dwindling at an average rate of 4-6 per cent a
year.... The conclusion is clear: if we do not immediately plan to make the switch to
renewable energy - faster, and backed by far greater investment than currently envisaged -
then civilisation faces the sharpest and perhaps most violent dislocation in recent
history."
Michael Meacher, former UK environment minister
Plan now for a world without oil
Financial
Times, 5 January 2004 |
| 2003 |
"Of the many factors that went into the Bush
administration's decision to attack and occupy Iraq, one of the most important was the
long-held view of Richard Cheney, the vice-president, that America's power was threatened
by the potential loss of control over Middle East oil.... This year the US will have
imported about 11m barrels of petroleum a day and mainstream forecasts project a growth of
imports to about 20m barrels a day by 2025. Moreover, global competition for worldwide oil
supplies is projected to grow markedly, especially with China's emergence as a huge oil
importer. Despite discoveries of new reserves elsewhere, petroleum supplies from the
Middle East and the nearby Caspian Sea region are expected to become even more pivotal in
the coming decades, accounting for two-thirds or more of the world's petroleum reserves in
2025. With oil supplies and production increasingly concentrated in the Middle East, and
with growing competition from other oil importers, Mr Cheney and associates believe the US
has a long-term strategic need to secure military pre-eminence in the region. This
sentiment helped fuel the invasion of Iraq. Yet the vice-president's view of US energy
security is dead wrong, in terms of both energy economics and geopolitics.... The US is
playing out Mr Cheney's fantastical vision of national security - one in which a future
struggle over scarce and vital petroleum resources must be won by force of arms."
Professor Jeffrey Sachs - America's Disastrous
Energy Plan
Financial
Times, 23 December 2003 |
"The US Energy Department on Tuesday said that US dependence
on foreign oil would increase at a faster pace than the government had previously
forecast..... Net oil imports are expected to rise to 70 per cent of total US petroleum
demand by 2025, according to the department. The new Annual Energy Outlook 2004 report
says the US is being forced to increase oil imports to accommodate growing demand amid
declining domestic supply. In 2002, net imports of oil were 54 per cent."
US oil imports 'to hit 70% of demand by 2025'
Financial
Times, 17 December 2003 |
"Civilisation is at a turning point. In the next 50 years,
we will experience the biggest surge in energy demand in history. Yet a growing number of
experts are warning that the rate at which we are able to pump oil from the ground is
likely to peak within a few years. If we want to keep our cars on the roads and the lights
on in our homes, we need to find a new source of energy and fast..."
Power Struggle
NewScientist, 2 August 2003 (print edition p8) |
"A moment of truth is fast approaching - perhaps sooner than
we can prepare for it. 'The world faces at best a global recession. At worst, war, famine,
and mass migration,' says Richard Hardman, trustee of the London-based Oil Depletion
Analysis Centre and a former president of the UK Geological Society. He is talking about
the day we no longer have enough oil to meet energy needs. The result is likely to be
skyrocketing fuel prices and economic chaos - far worse than the worldwide recession
caused by the oil shocks of the 1970s. But this crisis isn't centuries away. The crunch
point comes not when we have run all the oil wells dry, but when demand outstrips
production. And a growing number of experts are warning that this is likely to happen
within the next few years. 'There is a growing consensus that we are heading for an
imminent peak [in oil production], if not already past it,' Hardman says. In previous
crises, new reserves always seem to have been found to make up the shortfall. But the
declining rate at which new fields are being discovered suggests it won't happen this
time.... We now just find one barrel of oil for every four we consume. And with production
already declining in the US and the North Sea, the world must rely increasingly on the
politically volatile Middle East and other parts of the developing world... Indeed,
many prominent analysts... foresee oil production peaking in the next next 5 to 15
years... Some believe the peak is already here... These analysts use variations of a
method pioneered by geophysicist Marion King Hubert, now something of a folk hero for
correctly predicting in 1956 the US production peak in the 1970s... Not even the optimists
believe we have much more than 20 years to prepare for the peak, if demand grows at its
historical norm..."
Brace yourself for the end of cheap oil
NewScientist, 2 August 2003 (print edition p8) |
"Our industry can certainly be proud of its past
achievements. Yet the challenges we will face in the coming years will be every bit as
great as those encountered in the past, due in part to ever-increasing global energy use.
For example, we estimate that world oil and gas production from existing fields is
declining at an average rate of about 4 to 6 percent a year. To meet projected demand in
2015, the industry will have to add about 100 million oil-equivalent barrels a day of new
production. That's equal to about 80 percent of today's production level. In other words, by 2015, we will need to find, develop and
produce a volume of new oil and gas that is equal to eight out of every 10 barrels being
produced today."
John Thompson, President of ExxonMobil, the world's
largest oil company
The Lamp (published for ExxonMobil shareholders), 2003, Vol. 85 No.1 |
"On Thursday, the government approved
the development of the biggest [north sea oil] deposit discovered in British territory for
at least 10 years.... You begin to recognise how serious the human predicament has become
when you discover that this 'huge' new field will supply the world with oil for five and a
quarter days."
George Monbiot - Bottom of the barrel
Guardian, 2 December 2003 |
"The world's oil reserves are up to 80 percent less than
predicted, a team from Sweden's University of Uppsala says. Production levels will peak in
about 10 years' time, they say.... Oil production levels will hit their maximum soon after
2010 with gas supplies peaking not long afterwards, the Swedish geologists say.....Alekett
said that his team had examined data on oil and gas reserves from all over the world and
we were 'facing a very critical situation globally.' The conclusions of the Uppsala team
were revealed in the magazine New Scientist Thursday".
World oil and gas 'running out'
CNN, 2
October 2003 |
"Increasing dependence on
international energy infrastructure will be an important factor in international
relations.... We will need to improve the long term-efficiency and stability of the
international energy market through political and economic reform in key supplier and
transit countries... and promoting international diversification of supply..."
UK International Priorities - A Strategy for the FCO
British
Foreign and Commonwealth Office White Paper, December 2003 |
"David O'Reilly, chairman and chief executive of Chevron
Texaco said there was a view among some sections of the public that the [Iraqi] conflict
was about nothing but oil and that was not a good enough reason to go to war. But he said
that the diversity and continuity of the world's energy supply were vital strategic
concerns."
Iraq is 'an excuse'
Daily Telegraph, 18 February 2003 |
"The advocates of war insist it's not about oil. But global oil production is on
the brink of terminal decline and when the West begins to run short of supplies - Iraq
could be a lifeline... For a war supposedly not about oil, military planners made a high
priority of securing the oilfields [in Iraq].... Geologist Dr Colin Campbell predicted a decline in the North Sea
several years ago and claims by 2015 Britain may have to import over half its oil
needs.... Campbell thinks the decline [of global oil production] will start by 2010. 'It
starts with a price shock due to control of the market by a few countries, and it is
followed by the onset of physical shortage, which just gets worse and worse and worse,' he
says... So if alternatives to oil are not found soon
the changes could be radical. Unlimited use of cars and cheap flights around the world may
well be a thing of the past."
Oil War
BBC 'Money Programme', 26 March 2003 |
"Britain has been given its first alarming glimpse into a
future when the North Sea's oil begins to dry up. In September, oil imports exceeded
exports for the first time since August 1991. The turnabout from a £400 million surplus
to a £63 million deficit helped to widen the trade gap to a record £3.9 billion.... the
UK Offshore Operators Association predicts a bleak trend for oil production in the UK.
North Sea oil output peaked at 2.9 million bpd in 1999, but is expected to be just 1.6
million bpd in four years' time."
UK dips toe in nightmare future of disappearing oil
London Times, 12 November 2003
|
| (graphic from business section of London Times, 12 November 2003) |
|
AFTER THE INVASION OF
IRAQ
"The UK is a net
exporter of oil, so we have no need of the Iraqi oil."
British Prime Minister, House of Commons, 14 April 2003
BEFORE THE
INVASION OF IRAQ
".... our energy system
faces new challenges.... Our energy supplies will increasingly depend on imported gas and
oil..... we need access to a wide range of energy sources."
British Prime
Minister, Foreword to DTI Energy White Paper, February 2003 |
"Britain's North Sea oil and gas producers gave warning that
a gas supply failure in the UK would cost the country billions of pounds and called on the
Government to take political steps to build the pipelines needed for future gas imports.
The UK Offshore Operators Association (UKOOA) yesterday gave warning of the political risk
of inaction in the face of dwindling UK North Sea gas reserves. Transco, the UK pipeline
company, is predicting that Britain will become a net importer of gas within three years
and UKOOA yesterday said not enough is being done to build pipelines to link Britain with
supply further afield. In its report, Security of Gas Supplies, UKOOA said that even with
further development of UK gasfields, the UK will need to rely on foreign suppliers.
'Clearly, the political policies of these nations and developing relationships between the
UK and them will be increasingly important.'"
North Sea firms warn on supplies
London
Times, 12 November 2003 |
"At a NATO conference in Prague last November, [former CIA
Director James] Woolsey declared 'Iraq can be seen as
the first battle of the fourth world war,' in rhetoric that he has practiced and honed
virtually since the 9/11 attacks on New York and the Pentagon. 'After two hot world wars
and one cold one that all began and were centered in Europe,' he said, 'the fourth world
war is going to be for the Middle East.' ....."
Woolsey's Role Crucial to Impact of Occupation
'Foreign Policy in Focus', 8 April 2003 |
"The foreign secretary, Jack Straw,
yesterday pinpointed for the first time security of energy sources as a key priority of
British foreign policy. Mr Straw listed energy as one of seven foreign policy priorities
when he addressed a meeting of 150 British ambassadors in London. The US and British
governments officially deny that oil is a factor in the looming war with Iraq, but some
ministers and officials in Whitehall say privately that oil is more important in the
calculation than weapons of mass destruction.... Mr
Straw told ambassadors that, following a review he ordered last year, the Foreign Office
drew up a list of seven medium to long-term strategic priorities, including 'to bolster
the security of British and global energy supplies'".
Straw admits oil is key priority
Guardian 7 January 2003 |
"Inflated oil
prices and natural gas shortages are wiping out jobs and savings, thanks to three decades
of bungled energy policy. Get ready for more bungling... This comes at a time when
Americans are heading into their first big energy squeeze since the 1970s: a shortage of
natural gas, the invisible resource used to heat homes, fuel kitchen appliances, generate
electricity and manufacture many of the chemicals we use. The shortage has triggered a
sharp rise in prices that is likely to exact a heavy toll on low- and middle-income
Americans, especially those living on fixed incomes. "
Why US Is Running Out of Gas
Time
Magazine, 21 July 2003 |
"Mr. Greenspan told the House Energy
and Commerce Committee on June 10 that the country could not expect Canada to make up for
falling production in the United States, and that new facilities were needed to import
liquefied natural gas from Asia, the Middle East and the former Soviet Union."
Canada Is Losing Ability to Fill U.S. Natural Gas
Needs
The
Ledger, Florida, 26 June 2003 |
"Britain's homes could be without
light and heat for long periods by 2020 with the government being forced to repeat the
1974 imposition of power cuts by rota, a doom-laden report by the Institution of Civil
Engineers (ICE) says today. By then, 80% of the gas to fuel Britain's power stations and
domestic central heating will be piped 'from politically unstable countries thousands of
miles away.'"
A vision of
Britain in 2020: power cuts and the 3-day week
Guardian, 1 July
2003 |
"Every generation has its taboo, and ours is this: that the
resource upon which our lives have been built is running out. We don't talk about it
because we cannot imagine it. This is a civilisation in denial.... The only rational
response to both the impending end of the oil age and the menace of global warming is to
redesign our cities, our farming and our lives. But this cannot happen without massive
political pressure, and our problem is that no one ever rioted for austerity. People tend
to take to the streets because they want to consume more, not less. Given a choice between
a new set of matching tableware and the survival of humanity, I suspect that most people
would choose the tableware. In view of all this, the notion that the war with Iraq had
nothing to do with oil is simply preposterous.... Bush and Blair have been making plans
for the day when oil production peaks, by seeking to secure the reserves of other nations.
I refuse to believe that there is not a better means of averting disaster than this. I
refuse to believe that human beings are collectively incapable of making rational
decisions. But I am beginning to wonder what the basis of my belief might be."
George Monbiot - 'Bottom of the barrel'
Guardian, 2 December 2003 |
| 2002 |
"We must not be prisoners of our own time. The horrific terrorist attack in
Bali, the attack on the French tanker off Yemen the other week - these threats are coming
at the world from all directions....And you can't continue.... to just keep erecting
security and defence barriers all around you..... We have a way of life, a set of [energy]
consumption patterns, that are going to have to change - all of us. We have to recognise
that without a major shift in the whole way we organise ourselves, our pattern of life is
simply not sustainable."
Peter Hain, UK Minister for Europe
Mid-East oil 'too costly' for Europe
BBC
Online, 17 Oct 2002 |
"Dwindling domestic supplies and surging demand could lead
to a severe gas shortage within three years, the Department of Trade and Industry warned British consumers
yesterday."
Gas shortage in Britain 'due within three years'
London Times, 26 June
2002 |
"Fuel is our economic lifeblood. The price of oil can be the
difference between recession and recovery. The western world is import dependent. ....So:
who develops oil and gas, what the new potential sources of supply are, is a vital
strategic question...The Middle East, we focus on naturally."
Prime Minister's speech at the George Bush Senior Presidential
Library
10
Downing St, Press Release, 7 April 2002 |
"...the projections in this Outlook raise serious concerns
about the security of energy supplies... the major oil- and gas-consuming regions will see
their imports grow substantially... as production is increasingly concentrated in a small
number of producing countries. Supply security has moved to the top of the energy policy
agenda. The governments of oil- and gas-importing countries will need to take a more
proactive role in dealing with the energy security risks inherent in fossil-fuel trade.
They will need to pay more attention to maintaining the security of international
sea-lanes and pipelines. And they will need to look anew at ways of diversifying their
fuels, as well as the geographic sources of those fuels."
World Energy Outlook 2002
International
Energy Agency, 21 September 2002 |
"Trends in energy markets have been comparatively benign
over the past 10-15 years: the UK has been self-sufficient in energy; commercial decisions
have resulted in changes in the fuel mix that have reduced UK emissions of greenhouse
gases; and trends in world markets and domestic liberalisation have reduced most fuel
prices. The future context for energy policy will be different. The UK will be
increasingly dependent on imported oil and gas...
Increasingly policy towards energy security ...... will be pursued in a global arena, as
part of an international effort.... energy security should be addressed by a variety of
means, including enhanced international activity and continued monitoring.... The UK is currently one
of just two G7 countries which is self-sufficient in energy..... The future for energy
policy seems likely to be much less benign.... issues of energy security are likely to
become more important. The UK will become increasingly dependent on imported oil and gas.... most other
G7 countries already rely substantially on imported energy. ... [One way to maintain
security is] to
use international action to address global threats to energy security. On just about any
scenario the UK will become more dependent on imports both for both its gas and its
oil."
The Energy Review
A Performance and Innovation Unit
Report - UK Cabinet Office - February 2002 |
"Global primary energy demand is projected to increase by
1.7% peryear from 2000 to 2030, reaching an annual level of 15.3 billion tons of oil
equivalent. The increase will be equal to two-thirds of current demand... Global oil
demand will rise by about 1.6% per year, from 75mb/d in 2000 to 120mb/d in 2030....
Primary gas consumption will double between now and 2030".
World Energy Outlook 2002
International
Energy Agency, 21 September 2002 |
