ODAC News
Wednesday 20 June
The Oil Depletion Analysis Centre
1a/ No bears at the IEA (Platts [Platts oil blog: The Barrel], Fri
15 Jun)
1b/ US requires gasoline imports
to avoid pressure on prices
(Platts podcast, Fri 15 Jun)
2a/ Natural gas - Russia and the
EU. Russia & the EU: Gas unites, politics divide (Platts, Mon 11
Jun)
2b/ LNG imports likely to raise
US natural gas prices: risk manager
(Platts, Tue 12 Jun)
3/ UK's Tullow uncovers oil in Ghana
(BBC News, Mon 18 Jun)
4a/ Lies, damned lies and BP
statistics (The Oil Drum:
4b/ Pay Attention To the Oil
Price Naysayers
(Yahoo Finance, Wed 20 Jun)
5/ Senate OKs plan to sue
OPEC for price-fixing
(Washington Post, Tue 19 Jun)
**********************************************************************************************************
1a/ No bears at the IEA
(Platts [Platts oil blog: The Barrel], Fri 15 Jun)
http://www.platts.com/weblog/oilblog/2007/06/no_bears_at_the_iea.html
Comment: This is from Platts’
oil blog. John Kingston, the writer, is Platts’ Director of Oil, and not
only does he state that the outlook for oil prices for the next few months is
bleak, but that the latest IEA monthly Oil Market report (freely available about 2 weeks after it
is published, i.e. near end of each month) supports Peak in May 2005, so far:
“Some peak oil theorists say world crude production peaked in May 2005.
And you can read parts of the report as confirming that.”
Article: Reading this week's
International Energy Agency report would give little comfort to any market bears.
There is virtually nothing in there that would lead one to believe that oil
prices are going down soon. A few observations:
--Although the data on countries making up the OECD --
the main western economies, plus such countries as Japan, South Korea and
Australia -- show that demand in those nations remains flat, high prices are
not having the same impact in non-OECD countries, which are reporting revised,
higher demand projections for 2006 and 2007. Now, one of the reasons for that
is that old data is coming in showing 2005 demand was more than the IEA had
thought, so the base is now higher. But year-on-year figures 2007 to 2006 still
show solid growth.
--For several years in the recent past, what the IEA
refers to as the call for OPEC crude -- which is basically projected demand
minus non-OPEC production minus OPEC NGL production -- was generally below OPEC
production. Not anymore. Platts reported May production for all 12 OPEC members,
including
--Some peak oil theorists say world crude production
peaked in May 2005. And you can read parts of the report as confirming that. In
the second quarter of 2005, total non-OPEC supply -- that's everything, crude,
NGL, biofuels, etc. -- was 50.6 million b/d. OPEC crude output was 29.7 million
b/d, for total supply of 80.3, a figure that does not include OPEC NGLs. In the
second quarter of this year, even with a growth in biofuels of 300,000 b/d,
non-OPEC supply is projected to be 50 million b/d, a drop of 600,000 b/d in two
years, which reveals a significant drop in non-OPEC crude output given the rise
in biofuels. If OPEC crude supply in the second quarter holds at its first
quarter figure of 30.2 million b/d, that's total world supply, without OPEC
NGLs, of 80.2 million b/d, less than the figure of the second quarter of 2005.
And it's that quarter that includes May, which the peak oil theorists point to
as a high-water mark.
The Barrel was on a panel on CNBC this week to debate
the question: which comes first, $50 or $70? There was no debate. It was 4-0,
for $70. And of course, the discussion focused on WTI, which is artificially
depressed at present. By contrast, Brent already has been there.
1b/ US requires gasoline imports to avoid pressure on prices
(Platts podcast, Fri 15 Jun)
http://www.platts.com/Oil/Resources/Podcasts/americas/index.xml
Comment: Platts podcast, 3 min 28 secs. Cathy Landry, Platts Washington oil correspondent,
discusses whether or not increased gasoline imports would be a problem in the
**********************************************************************************************************
2a/ Natural gas -
http://www.platts.com/Natural%20Gas/Resources/News%20Features/eurussia/index.xml?src=energybulletin
Comment: The gist of the article is
that although the political relationship between
Article: … So while the EC may
have serious concerns about general relations between
Eurogas, which represents Europe's largest gas
companies, predicts LNG imports will make up 20% of
2b/ LNG imports likely to raise US natural gas prices: risk manager
(Platts, Tue 12 Jun)
Comment: The implications of the
article. Natural gas in the
Article: New liquefied natural gas
terminals and rising
"We're going to end up starting a bidding war
against ourselves," Paul Corby, senior vice president of Planalytics, which provides risk management and consulting
services to gas users, producers and distributors, said in remarks to the LDC
Forum in Boston. LNG is a price-driven commodity,
In his remarks,
"The industry is in so much turmoil right
now," he said adding that "the biggest problems start with the
government," which he believes has failed in its duty to oversee the
energy markets to ensure they are free of manipulation.
He singled out for particular scorn FERC Chairman
Joseph Kelliher, who has argued that speculators,
such as hedge funds, help the market by providing liquidity. "I can't wait
to see that guy go,"
In addition, he told the forum that the industry can
expect to begin the heating season with a record-high 3.6 Tcf
in storage if the US fills natural gas stocks to weekly levels equal to or
higher than the five-year average.
"Same time last year, we had [3.44 Tcf] in storage and that was after one of the hottest
summers on record and we even had a withdrawal" during injection season.
"Barring any catastrophe, we're on for another record."
**********************************************************************************************************
3/
http://news.bbc.co.uk/1/hi/business/6764549.stm
Comment: I did not note the original
title for this article, on the BBC Business page, but I am sure that it was
something like ‘Huge oil field discovered offshore
Article:
Reserves in the Mahogany exploration well were far
greater than the 250 million barrels than the firm had earlier forecast, it
said.
Tullow
- which saw its shares rise 10% on the news - jointly owns the
It was one of the biggest oil finds in
Tullow
and Anadarko firms share rights to the adjacent Tano
basin, which could yield more oil.
"Based on evidence to date, ultimate reserves are
likely to be materially in excess of previous estimates, with some high potential
zones still to be drilled," said Tullow chief
executive Aidan Heavey.
However, Mr Heavey warned
that it could be up to seven years before the oil started to flow.
'Boost to economy'
"Oil is money, and we need money to do the
schools, the roads, the hospitals. If you find oil, you manage it well, can you
complain about that?
"Even without oil, we are doing so well, already.
Now, with oil as a shot in the arm, we're going to fly," he said.
Tullow
Oil holds a 22.9% stake in the West Cape Three Points licence and just under
50% in the Deepwater Tano licence.
The move comes as foreign firms are increasingly
tapping into
Tullow
shares closed up more than 12% on the news in trading in
**********************************************************************************************************
4a/ Lies, damned lies and BP statistics
(The Oil Drum:
http://europe.theoildrum.com/node/2666
Comment: Euan Mearns at The Oil
Drum: Europe discusses the BP Statistical Review of World Energy (2007),
and in particular its reporting of Saudi oil reserves, and last week’s
Peak Oil article in the Independent newspaper. “… and
Colin Campbell (Association for Peak Oil or ASPO)”. Colin Campbell is an
ODAC Board Trustee, and on this occasion had his ODAC hat on. Euan mentions
that the Peak Oil story of the Independent made the TV news – a
bonus we at ODAC did not know about.
Article: I almost choked on my whisky
when I heard on the
The news item was referring to a story in
Thursday’s Independent (14/06/07) (a national UK newspaper) by Daniel
Howden titled “Scientists challenge major review of global reserves and
warn that supplies will start to run out in four years’ time.”
Howden refers to the work of Chris Skrebowski (Oil Depletion Analysis Centre or
ODAC) and Colin Campbell (Association for Peak Oil or ASPO). Kudos to Chris and
to Colin for getting this news onto the front page.
... So what is this all about? If you are unfamiliar
with the Middle East OPEC reserves reporting scandal and the culpability of BP
and OECD institutions in perpetuating myths about global oil reserves then this
is explained below using
In its purestst form, oil
reserves accounting follows a simple convention:
Reserves at start of period
Less production
Plus new discoveries
Plus or minus revisions
Equals reserves at end of period
Oil reserves therefore, are a dynamic variable,
relentlessly pulled down by production when the rate of new discoveries
declines, as it inevitably does in every oil region.
Revisions are a wild card that allows companies or
countries to correct for past mistakes or to take account of new technologies
that may boost recovery or changes in oil price that may make recovery more or
less economic.
The chart shows two lines that provide very different
pictures of Saudi oil reserves. Both lines are anchored on 1980 – the
year that the Saudi government took 100% control of Aramco – the state
run Saudi oil company...
4b/ Pay Attention To the Oil Price Naysayers
(Yahoo Finance, Wed 20 Jun)
http://biz.yahoo.com/seekingalpha/070620/38895_id.html?.v=1
Comment: Yahoo picks up on Euan’s article at TOD.
**********************************************************************************************************
5/ Senate OKs plan to sue OPEC for price-fixing
(Washington Post, Tue 19 Jun)
http://www.washingtonpost.com/wp-dyn/content/article/2007/06/19/AR2007061901595.html
Article: The U.S. Senate on Tuesday
approved a plan that would enable the federal government to sue OPEC for price
manipulation, but the White House has threatened to veto the measure and
opponents warned OPEC members could retaliate by turning off the taps.
The bill, sponsored by Democrat Herb Kohl of Wisconsin
and Republican Arlen Specter of Pennsylvania, would
revoke the sovereign immunity members of the Organization of the Petroleum
Exporting Countries enjoy from
The Senate voted 70-23 to attach the proposal to
energy legislation the chamber is expected to vote on by the end of the week.
The body had approved a similar measure in 2005 but it was dropped before the
bill was finalized.
The House of Representatives last month voted 345-72
to approve the "No Oil Producing and Exporting Cartels Act of 2007,"
or "NOPEC." The White House has threatened to veto the measure, and
even if it became law, the Bush administration's Justice Department would have
to initiate any lawsuit.
... "This is one of those feel-good amendments
where you can tell your constituents you struck a blow for freedom against
OPEC," said Sen. Jeff Bingaman, chairman of the
Senate Energy Committee. "But they would do the same thing to us."
Sen. Pete
Domenici of
"OPEC producers could just decide not to sell oil
to us any longer," Domenici said. "They would suffer the loss of some
profits but our entire economy could come to a grinding halt."
The
The White House has been hesitant to chide OPEC even
with
If the bill becomes law, it would give the Justice
Department the authority to sue oil cartels, and the measure is aimed squarely
at the 12-member OPEC group.
A labor group sued OPEC in
1978 under the Sherman Antitrust Act, but a
The House and Senate plans would revoke that immunity
and allow the Justice Department to file a lawsuit if it sees fit.
**********************************************************************************************************