Future Reserves

Just going through some files on my hard drive, and I ran across the following story. Unfortunately, I don’t have the source. But it’s an interesting look at where projected future oil reserves are expected to come from. It also reinforces the difficulty that the international oil companies are going to have replacing their reserves – as most of the remaining reserves are in the hands of national oil companies.

Who Will Supply the World?

Africa

The continent has about 10 per cent of proven global oil reserves and 8 per cent of the world’s gas. The biggest oil producers are Nigeria, Algeria, Libya and Angola, which account for roughly three- quarters of Africa’s oil production. West Africa has become a focus for exploration and has attracted huge investment, such as BP’s dollars 900m deal with Tripoli. The US is expected to buy about 25 per cent of its oil from the area within the next 10 years, up from 15 per cent, which accounts partly for an increase in US military cooperation with African states. China is also securing exploration and drilling licences.

Saudi Arabia

The kingdom accounts for 19 per cent of world oil exports. Many analysts expect it to supply a quarter of the world’s added production over the next few years. And as the only producer with significant excess capacity, it has played a crucial role in alleviating temporary supply disruptions. The Saudis won’t say how much oil they are extracting from individual wells, or what reserves remain in individual oil fields. But the total amount that the kingdom produces has been declining, down a million barrels a day over the last two years. Giant oil reserves were discovered six years ago in the vast desert known as the Empty Quarter. According to estimates, the new fields could produce up to 2.2 million barrels a day for another 50 years.

Iran

Less than 10 per cent of its territory has so far been prospected for oil. Given adequate investment and technological modernisation, Iran could more than double its present production levels to eight million barrels a day, a capacity it had in the early 1970s when oil prices hovered around dollars 11 per barrel. In real purchasing power, today’s oil price is cheaper than it was then.

Siberia

The discovery of new fields in Eastern Siberia could provide between two and three billion tons of oil. In the past two to three years the Natural Resources Ministry has offered a significant number of fields in tenders in Sakha Republic (Yakutia) and Irkutsk region.

China

In the next decade, PetroChina plans to increase its proven oil reserves to 100 million metric tons a year at its Daqing oilfield to meet rising energy demand.

Iraq

Important new fields are being prospected all the time, most notably and recently in the Anbar province, where al-Qaeda forces have been making their strongest challenge. Iraq has the third largest oil reserves of any nation, and that’s if you take the lowest estimate of its reserves. Its oil is of purer quality, and nearer to the surface, than that of many of its rivals. Basra could be as rich as Kuwait in five years.

Brazil

A huge offshore oil discovery could help Brazil join the ranks of the world’s major exporters, but full-scale extraction is unlikely until 2013 and will be very expensive. The “ultra-deep” Tupi field off the coast of Rio de Janeiro could hold eight billion barrels of recoverable light crude, and initial production should exceed 100,000 barrels daily.

Brazilian state oil company Petrobras will start pilot pumping in 2010 or 2011, but full production will take several more years. Getting the oil out will be an expensive and formidable challenge because the oil is so deep under the earth’s surface. The lag time before production means that any impact on world oil prices won’t come soon.

Which Country Is It?

And the answer is: Iran. Those pictures are from the Dizin ski resort north of Tehran. One of the engineers in my group came back from the holidays and told us that the Tehran Airport had been closed for 3 days due to snow. He also forwarded those pictures, which are almost certainly atypical of the U.S. image of Iran.

The initial answers confirmed that: Answers of Norway, UK, Canada, Russia. But it wasn’t long before the right answer popped up. Officially, the first mention of Iran was by “Ben”, and then “Hawkshaw” suggested that it could be Dizin. “KingofKaty” matter of factly stated that it was Dizin, and then the cat was pretty much out of the bag.

And I must admit that even though I had read about winter weather in Iran before, it didn’t really sink in until I saw those pictures. So, my preconceived notions were challenged as well, which is a reminder to beware of preconceived notions.

———————————-

Take a guess at which major oil-producing country is shown in the pictures below.

I will post the answer tomorrow.

Which Country Is It?

And the answer is: Iran. Those pictures are from the Dizin ski resort north of Tehran. One of the engineers in my group came back from the holidays and told us that the Tehran Airport had been closed for 3 days due to snow. He also forwarded those pictures, which are almost certainly atypical of the U.S. image of Iran.

The initial answers confirmed that: Answers of Norway, UK, Canada, Russia. But it wasn’t long before the right answer popped up. Officially, the first mention of Iran was by “Ben”, and then “Hawkshaw” suggested that it could be Dizin. “KingofKaty” matter of factly stated that it was Dizin, and then the cat was pretty much out of the bag.

And I must admit that even though I had read about winter weather in Iran before, it didn’t really sink in until I saw those pictures. So, my preconceived notions were challenged as well, which is a reminder to beware of preconceived notions.

———————————-

Take a guess at which major oil-producing country is shown in the pictures below.

I will post the answer tomorrow.

Which Country Is It?

And the answer is: Iran. Those pictures are from the Dizin ski resort north of Tehran. One of the engineers in my group came back from the holidays and told us that the Tehran Airport had been closed for 3 days due to snow. He also forwarded those pictures, which are almost certainly atypical of the U.S. image of Iran.

The initial answers confirmed that: Answers of Norway, UK, Canada, Russia. But it wasn’t long before the right answer popped up. Officially, the first mention of Iran was by “Ben”, and then “Hawkshaw” suggested that it could be Dizin. “KingofKaty” matter of factly stated that it was Dizin, and then the cat was pretty much out of the bag.

And I must admit that even though I had read about winter weather in Iran before, it didn’t really sink in until I saw those pictures. So, my preconceived notions were challenged as well, which is a reminder to beware of preconceived notions.

———————————-

Take a guess at which major oil-producing country is shown in the pictures below.

I will post the answer tomorrow.

The OPEC Showdown

It has been clear for some time that OPEC members are deeply split over whether $100 oil is good for them in the long-term. Saudi Arabia, having been in this game a long time, probably understands better than most the effect that high oil prices will have. While short-term gains will be great, ultimately economies will falter and demand for their product will be destroyed. Iran and Venezuela, on the other hand, probably couldn’t care less whether the U.S. economy chokes on these prices. The Financial Times covers the impending showdown:

Opec rivals in sequel to oil production drama

The Opec summit show is over and the performers have left town. But the preparations for Act Two, the meeting of oil ministers in Abu Dhabi on December 5, are already under way.

The scene is being set for a contest over whether to accept an oil price close to $100 a barrel or try to bring it down by raising production, with Iran and Venezuela on one side and Saudi Arabia on the other. The ministers’ decision will be an important signal of whether the influence of Saudi Arabia, traditionally the group’s most powerful member, is on the wane.

I think that Saudi will win this round and get a compromise production increase, but this disagreement will continue to fester.

“They [Saudi Arabia] have been trying to soothe the market’s worries for two reasons: because they think that the high oil price will hurt the economies of consuming countries, and more importantly, because they think it will hurt demand for oil in the medium to long term,” she said.

Iran and Venezuela have no such concerns. Their priority is to maximise short-term revenues. Their industries probably lack the capacity to pump any more oil, so they would not benefit from any increase in Opec’s production limits. Unlike Saudi Arabia, they take little interest in safeguarding the health of the US economy.

Saudi Arabia demonstrated at the previous Opec meeting, in September, that it could still get its way in spite of strong opposition from other members.

Ali Naimi, the Saudi oil minister, convinced the rest of Opec to agree an output increase of 500,000 barrels a day, as a contribution to the world’s economic stability.

But resistance from even Saudi Arabia’s traditional allies, such as Qatar, highlighted its growing difficulties in managing Opec.

And if Saudi does want a production increase, they may end up shouldering the bulk of the increase:

There are signs that Saudi Arabia has been going it alone in increasing production; analysts estimate that it has accounted for the lion’s share of the Opec production increase agreed in September, and perhaps even more.

Mr Naimi said recently that Saudi Arabia’s output was now 9m barrels per day. Edward Morse, chief energy economist of Lehman Brothers, says that is about 600,000 b/d more than estimates of Saudi production over the summer.

If they don’t (or can’t) start to bump up production faster than they are currently doing so, by next summer we may think $100 oil is cheap.

We Will Not Attack Iran

That the U.S. will attack Iran seems to be the conventional wisdom. I see a lot of people speculating that we will. Today, another article was published suggesting that high oil prices might lead us to do it:

Soaring oil prices could trigger a US attack on Iran

Indeed, Iranian leaders have so far brilliantly manipulated the US difficulties in Iraq, the deteriorating popularity of the US President George W. Bush at home, and their carefully knitted regional alliances to get the Americans to think twice before attacking them.

They have also used the rising oil prices as a tool to expand their influence throughout the region. These same factors could, however, act as a double-edged weapon. For exactly the same reasons the US might seriously think of launching a massive aerial attack on Iran’s nuclear facilities and military outposts.

No way. It will not happen. I have to believe that we have learned something in Iraq. In fact, I suspect that the administration would probably like to go back and un-invade Iraq. I have to believe that we are not seriously considering invading a country much larger than, and with twice the population of Iraq – and yet one that would present the same kinds of problems we have faced in Iraq. Had Iraq not played out like it has, they might be sitting around contemplating Iran. But because Iraq has not gone according to plans, the administration has got to realize how things might go if we added Iran to the mix.

I know I don’t give our political leaders much credit, but I have never believed that this is under serious consideration. Does anyone here seriously think we might attack Iran? Does anyone think that would be a good idea?

We Will Not Attack Iran

That the U.S. will attack Iran seems to be the conventional wisdom. I see a lot of people speculating that we will. Today, another article was published suggesting that high oil prices might lead us to do it:

Soaring oil prices could trigger a US attack on Iran

Indeed, Iranian leaders have so far brilliantly manipulated the US difficulties in Iraq, the deteriorating popularity of the US President George W. Bush at home, and their carefully knitted regional alliances to get the Americans to think twice before attacking them.

They have also used the rising oil prices as a tool to expand their influence throughout the region. These same factors could, however, act as a double-edged weapon. For exactly the same reasons the US might seriously think of launching a massive aerial attack on Iran’s nuclear facilities and military outposts.

No way. It will not happen. I have to believe that we have learned something in Iraq. In fact, I suspect that the administration would probably like to go back and un-invade Iraq. I have to believe that we are not seriously considering invading a country much larger than, and with twice the population of Iraq – and yet one that would present the same kinds of problems we have faced in Iraq. Had Iraq not played out like it has, they might be sitting around contemplating Iran. But because Iraq has not gone according to plans, the administration has got to realize how things might go if we added Iran to the mix.

I know I don’t give our political leaders much credit, but I have never believed that this is under serious consideration. Does anyone here seriously think we might attack Iran? Does anyone think that would be a good idea?