The End of Peak Oil
15 April 2008In the: Well, that didn’t take long dept.
Not long ago, I wrote in the SNS Newsletter www.stratnews.com and here that I thought the whole “peak oil” theory was wrong. At that time, I suggested that not only had there been several large “elephant” discoveries since the theory’s announcement (the theory suggests no more elephants, or big discoveries), but that more were yet to come.
Here is BusinessWeek from Nov, 2007:
“Petrobras announced Nov. 8 it has found between 5 billion and 8 billion barrels of light oil and gas at the Tupi field, 155 miles offshore southern Brazil in an area it shares with Britain’s BG Group and Portugal’s Galp Energy. Tupi is the world’s biggest oil find since a 12 billion-barrel Kazakh field was discovered in 2000, and the largest ever in deep waters. Perhaps more important, Petrobras believes Tupi may be Brazil’s first of several new “elephants,” an industry term for outsize fields of more than 1 billion barrels.
“Initially, Tupi will produce about 100,000 barrels a day but may ramp up to as much as 1 million before 2020—more than the biggest U.S. field in Alaska’s Prudhoe Bay—”
This week, Brazilian hopes were proven true, as the new Carioca field was announced, fought over, re-evaluated, commented on, and re-drilled. Here is some text from Bloomberg:
Petroleo Brasileiro SA’s offshore Carioca prospect may hold 33 billion barrels of oil, enough to supply every refinery in the U.S. for six years, making it the third-largest oil field ever discovered.
Additional wells must be drilled to develop a “more conclusive” estimate, the Rio de Janeiro-based company said in an e-mailed statement. Only Saudi Arabia’s Ghawar and Kuwait’s Burgan fields are bigger: Ghawar holds as much as 83 billion barrels of crude, while Burgan has up to 72 billion.
Petrobras, as the company is known, rose almost 6 percent. U.S. depositary receipts of Repsol SA, a partner in the field, surged as much as 21 percent to $44.85, the stock’s largest daily gain. New York-based Hess Corp., which owns stakes in two nearby prospects, had its biggest intraday gain since 1981.
“If all of those barrels are recoverable, that’s a very significant find,” said Dick Gibson, a geologist who’s been advising oil and natural-gas producers since 1975. “That whole area off the coast of Brazil is becoming a new oil province.”
The Carioca field, also known as BM-S-9, is located beneath a layer of salt in the deepwater Santos Basin off Brazil’s southeastern coast, where Petrobras in November announced the discovery of the 8 billion-barrel Tupi field.
`Giant Field’
“This would be a giant field under any circumstances,” Merrill Lynch analysts Frank McGann and Shariff Koya said today in a note to clients. “If it were recoverable oil and gas, it would potentially dwarf Petrobras’s existing reserves.”
Brazil holds an estimated 12 billion barrels of crude reserves, South America’s second-largest deposit behind Venezuela, according to London-based BP Plc. If the 33 billion- barrel estimate for Carioca is confirmed by additional drilling, Brazil’s reserves would surpass those of Libya.
Carioca is 66 times larger than the Jack field discovered by Chevron Corp. in the Gulf of Mexico in 2004. San Ramon, California-based Chevron says it will cost more than $3 billion and almost a decade to bring the field into production.
for more, go to:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aHnLYLgBAlfM&refer=home
While others fight over whether the find will double or triple Brazil’s announced oil reserves, it’s clear that a brand-new field, underneath the salt dome off Brazil’s coast, will be one of the largest global finds of all time.
Although it will take as much as ten years to bring this to market, those won’t be idle years, as others speed up the feverish activity of finding new oil at today’s $110+ per bbl price. This will put a lot of pressure on those who want to keep the price high, as exploration teams come back with more and more finds, and the occasional elephant.
Can supply grow faster than demand? I imagine, particularly if the Western world continues to pursue an avenue of weaning itself asap from petroleum.
Today, producers have consumers exactly where they want: supply and demand, fed by Chinese futures contracts and speculators, have created a fake demand number equal or slightly higher than the supply. What would it take to deflate that price pressure? Not much. Just bringing fake demand down by perhaps a point or two would do it.
Don’t go long on oil, except in the short term. There’s plenty of it, and more where that came from.
http://satellitesky.blogspot.com/2007/11/new-elephant-oil-field-discovered-in.html
6 Responses to “The End of Peak Oil”
April 16th, 2008 at 8:32 am
Time to short ethanol yet?
April 16th, 2008 at 9:59 am
This is dated April 1st but is from FT.com/indepth/oil
Colombia sitting on big oil reserves
Colombia’s heavy oil area could hold 20bn barrels of recoverable resources, giving the country greater reserves than leading producers such as Mexico and Algeria, said its natural resources agency.
Foreign investment in Colombia’s oil and gas industry is booming, and the country hopes to lift oil production to 1m barrels a day in the next decade, from about 550,000 b/d currently.
Colombia’s heavy oil potential is dwarfed by that of its neighbour Venezuela, which is estimated to have at least 240bn barrels recoverable in its Orinoco belt region. But Colombia has the great advantage of welcoming foreign investment.
http://www.ft.com/cms/s/e7ab6bcc-0014-11dd-825a-000077b07658,dwp_uuid=f2b40164-cfea-11dc-9309-0000779fd2ac.html
Not much but every drop helps right now. Tim
April 24th, 2008 at 8:20 am
Another small find.
North Sea oil find starts Dana gushing
Apr 23 2008
Shares in Dana Petroleum rose 17.4 per cent after the company said it had struck oil in the North Sea, a discovery that could lift its output by about a fifth, if successfully developed. Read more »
http://www.ft.com/cms/s/7fa4c3d4-1162-11dd-a93b-0000779fd2ac,s01=1.html
May 7th, 2008 at 6:53 am
http://www.fhwa.dot.gov/ohim/tvtw/08jantvt/figure1.htm
See last 3 years of US vehicle milieage.
May 9th, 2008 at 5:38 am
Is the Commodities Boom Driven by Speculation?
EXTRACT: Futures and forward contracts are intrinsically different instruments than securities which are derived from the capital markets (e.g., fixed income or equities). This is under-appreciated.
Derivatives are risk management tools, a “zero-sum game,” fundamentally different from the “rising tide raises all ships” concept of the capital formation markets. While, there is an established theoretical basis and considerable empirical evidence that link investment in capital market assets to positive expected returns over time, notwithstanding the recent surge in commodity prices, the same cannot be said about commodities.
http://www.nakedcapitalism.com/2008/05/is-commodities-boom-driven-by.html
May 19th, 2008 at 8:42 am
BBC Four – The Curse of Oil – 1 Rich and Poor
Three-part series that goes on a revealing journey through the world’s oil-producing regions, beyond the familiar territory of the Middle East. Nick Fraser Storyville Series Editor Now that the oil price appears to be rising inexorably at the pumps, newspapers are full of gloomy predictions related to our increasing addiction to perishable reserves of oil. Bill Cran’s series takes a somewhat different approach. We are in fact still amply supplied with oil on planet earth. The problem is that most of it lies in what we cosseted addicts regard as the wrong places. Getting enough oil to fill George Bush’s SUV requires dealing with nasty governments or destroying the wilderness. But the relationship between oil companies, consumers and those who live where the oil is extracted is changing very rapidly. It is becoming possible for native populations to obstruct oil companies. Cran’s series leaves one with the feeling that there are no easy answers – but that, given the hysteria surrounding the subject, is no bad thing. It’s also ravishingly shot.
http://video.google.com/videoplay?docid=2778637338220112606&hl=en