Peak oil & the energy crisis
More on oil and Wednesday-night.com Oil Notes
For several years, Wednesday Nights have witnessed often passionate discussions on the validity of M. King Hubbert’s prediction of the early depletion of (easily accessible – ‘cheap’) fossil fuels. With current rising oil prices, Hubbert’s Peak has become a familiar term far beyond the circles of energy experts. While we are in the camp of believers in Hubbert’s Peak, in the interests of continued debate, we present an array of news and views, including Greg Palast’s vitriolic accusations of complicity between governments and oil companies, and the role of what he terms the “McCain-Bush surge”
Saudi Sees Threat Of Shale Oil Revolution
(Planet Ark) Saudi Arabia’s state energy company said on Monday that its dominant role in world oil supply had been altered by large new reserves in North America, sapping the urgency to develop the kingdom’s own reserves.
The speech by Saudi Aramco’s chief executive was the first from the globe’s top oil exporter to acknowledge that unconventional oil was set to shift the energy balance of power and cut U.S. dependence on Middle East crude.
Richard Stuebi — The Petroleum Industry: Past the Tipping Point?
(HuffPost) Though I don’t always agree with its perspectives, one of the better (i.e., more well-informed and reasoned) weekly energy newsletters I receive is “Musings from the Oil Patch“, written by Allen Brooks, Managing Director of the boutique investment banking firm of Parks Paton Hoepfl & Brown.
In the June 8 issue, Brooks provides an excellent analysis of the future of the petroleum sector, entitled “BP Oil Spill Pushes Industry Beyond Tipping Point“. The main conclusion of the essay is that the oil industry will never be the same – and all of the ways in which it will change should drive up the price of oil.
While true in previous decades, price-cutting in the oil markets may not be so inevitable in the future. With the insatiable appetite for oil and the increasing challenges of supplying it from more difficult and remote resources, I don’t think even manipulative actions by OPEC to “keep America hooked” via lowered oil prices can or will work for very long — in a future world of ever-tightening supply/demand balances for black gold.
What American politicians can’t do via the laws of man, the laws of petroleum engineering and the laws of economics can and will eventually do.
I doubt that there will ever be a discrete tipping point for the petroleum industry, but rather a gradual ebbing. Perhaps the ebbing has begun. If there is a tipping point, as noted petroleum analyst and banker Matthew Simmons likes to say, it will only be obvious in the rear-view mirror.
The Oil Drum: What happens when energy resources deplete?
One view is that energy prices will rise, substitutes will be found, and prices will come back down again, perhaps settling at a somewhat higher equilibrium reflecting the cost of producing the substitute energy source. The economy will continue to function pretty much as before. The catch is that we aren’t finding reasonably-priced, scalable substitutes, so this isn’t happening. Oil prices are down, but not because of substitutes.
Another view, popular among those concerned about peak-oil, is that oil and energy prices will just keep rising. If scalable substitutes aren’t found, some expect that oil prices will rise from their current price of $75 barrel, to $100 barrel, to $200 barrel, to $300 barrel, and eventually to $1,000 barrel or more.
The problem with this view is that it doesn’t take into account the amount of money people actually have available to spend. Just because oil or energy prices rise doesn’t mean that people will get additional income to cover these higher expenditures. In real life, prices can’t keep going up.
How The Global Oil Watchdog Failed Its Mission
12 years ago, the International Energy Agency (IEA) discovered that Peak Oil would threaten the prosperity and stability of our societies. Yes, they knew it. While some IEA officials tried to inform the world about this game-changing event, it appears that others had different priorities.
Falklands oil disappointment for UK company
The value of shares in a British company drilling for oil off the Falkand islands halved Monday, after it revealed the existing supply may not be commercially viable.
In a statement on its Web site, Desire Petroleum said “oil may be present in thin intervals but that reservoir quality is poor.”
Falkland Islands: Imperial pride
(The Guardian) It is time for both Britain and Argentina to grow up
Falkland Islands: Oil boom or no oil boom?
(BBC) Anticipation of a big oil find off the coast of the Falkland Islands is once again reaching fever pitch.
The Argentine government has imposed new restrictions on all ships heading to the Falklands, in a move that revives memories of the 1982 war it fought with Britain. Argentina is clearly furious at the prospect of being excluded from an oil boom in a territory over which it still claims sovereignty.
Beyond the black stuff: Big Oil is being forced to rethink its future
(The Economist) The big western oil companies are trying to expand through acquisitions and investment, but the opportunities do so are becoming scarcer. And where new opportunities emerge, such as in Iraq, Western oil giants are scrambling to pay big sums at auctions for drilling rights in territory where the local government tightly limits their returns. One option is to deploy their expertise in the hunt for oil that is harder to reach, for example deep offshore, or to go for reserves such as tar sands that are trickier, and so much pricier, to refine. Another route is to speed up the quest for other energy reserves.
Iraq eyes huge oil capacity rise
Iraq could produce 12m barrels of oil per day in 2015, the oil minister says, making it the world’s second-largest producer. The contracts awarded over the past two days, with those from the last auction in June and government efforts, would allow Iraq to boost daily production from 2.5m barrels to 12m.
Monbiot: If Nothing Else, Save Farming
It’s probably too late to prepare for peak oil, but we can at least try to salvage food production.
Foreign Policy (September-October 2009)
A special edition on oil, includes Daniel Yergin on Oil is the one
… just as we need more oil than ever, it is changing faster than we can keep up with.
Viewpoint on peak oil by Etienne Bernier
(Montreal Economic Institute) The price of oil has been swinging for a number of years. Alarmist talk about resource depletion and overpopulation is coming back into fashion after an earlier peak in the 1970s. However, the Earth contains all the resources required to produce oil (synthetic oil, if need be) in any quantity demanded. Economic logic indicates that lack of demand, rather than of supply, will cause oil production to decline, with no particularly harmful impact on our standard of living. Let’s take a look at what could well be the non-event of the century.
Washington Capitulates: Peak Oil Is Real
by Doug Hornig
Each year, generally in May, the Energy Information Administration publishes a less-than-eagerly-anticipated tome called the International Energy Outlook, 250+ pages of mind-numbing text, charts, graphs, and tables.
No one reads it. The mainstream media ignore it.
It’s the product of the best prognosticators in the Department of Energy. Okay, that may be what puts most people off. But if you’re patient enough to dig into it, it will cough up some fascinating nuggets of information. The present edition is no exception. The report refrains from spelling out the conclusion that seems most obvious from its data. However, confirming a trend begun just last year, the 2009 edition clearly reveals that the government has been forced to admit that Peak Oil is coming. Moreover, it’s expected to arrive much faster than was believed as recently as two years ago.
Michael Lynch, Daniel Yergin – The denizens of peak oil denial
by Randy Udall
(Energy Bulletin) Last week Michael Lynch and Daniel Yergin pummeled the concept of peak oil in two mainstream media outlets. Lynch’s feisty but nearly fact-free op-ed for the New York Times and Yergin’s more scholarly reflection in Foreign Policy whipped up further discussion in the blogosphere. Although the majority of on-line responses to Lynch’s piece were negative, peak oil advocates were put on the defensive.
The two critics employ distinctly different separate styles — Yergin is a Pulitzer Prize-winning historian and suave, savvy corporate schmoozer, while Lynch resembles the kind of pit bull that enjoys attacking bicyclists from behind. Both have been pounding away at peak oil since its “modern renaissance” began with the March 1998 article in Scientific American, “The End of Cheap Oil.” These two masters of denial enjoy flogging peak oil. It’s clearly what their paying clients in Big Oil want to hear, and sometimes the peak oil community inadvertently hands them ammo that is too good to pass up.
‘Peak Oil’ Is a Waste of Energy
By Michael Lynch, the former director for Asian energy and security at the Center for International Studies at the Massachusetts Institute of Technology, and an energy consultant
(NYT Op-Ed) Like many Malthusian beliefs, peak oil theory has been promoted by a motivated group of scientists and laymen who base their conclusions on poor analyses of data and misinterpretations of technical material. But because the news media and prominent figures like James Schlesinger, a former secretary of energy, and the oilman T. Boone Pickens have taken peak oil seriously, the public is understandably alarmed. A careful examination of the facts shows that most arguments about peak oil are based on anecdotal information, vague references and ignorance of how the oil industry goes about finding fields and extracting petroleum.
Is Peak Oil Real? A List of Countries Past Peak
Only 14 of the 54 oil producing nations in the world are still increasing their oil production. The era of cheap oil is definitively over, as shown below. The BP Statistical Review of World Energy provides the data.
……Only 14 out of 54 oil producing countries and regions in the world continue to increase production, while 30 are definitely past their production peak, and the remaining 10 appear to have flat or declining production …. Since 2008 capped a record run for oil prices, most countries and oil companies were trying all-out to increase production. While a handful of producers (think Iraq) might be limited by above-ground factors, the majority of producers simply couldn’t do any better in 2008. The evidence of the demise of the cheap oil era has become insurmountable. In the face of the highest oil prices on record, the great majority of the world’s oil producers were incapable of taking advantage and producing more oil.
For the first time, the International Energy Agency has produced a date for peak oil. And it’s not reassuring.
By George Monbiot
… between 2007 and 2008 the IEA radically changed its assessment. Until this year’s report, the agency mocked people who said that oil supplies might peak. In its 2007 World Energy Outlook, the IEA predicted a rate of decline in output from the world’s existing oilfields of 3.7% a year. This, it said, presented a short-term challenge, with the possibility of a temporary supply crunch in 2015, but with sufficient investment any shortfall could be covered. But the new report, published last month, carried a very different message: a projected rate of decline of 6.7%, which means a much greater gap to fill.
Brazil’s plans to control oil could cause delays
BRASILIA (Reuters) – The Brazilian government’s plan to take greater control over huge new oil discoveries will face obstacles in Congress and could delay its ambitions to become a global oil player, experts said on Thursday.
President Luiz Inacio Lula da Silva wants to change the structure of oil control to give the government more funds for social welfare and education while reducing the power of state-owned oil firm Petrobras and its partners.
Kurds claim responsibility for oil line blast
(FT) Kurdish separatists claimed responsibility on Thursday for an explosion that has halted the flow of oil through the Baku-Tbilisi-Ceyhan pipeline, helping to push up oil prices amid uncertainty over the security of the supply route.
‘Blood oil’ dripping from Nigeria
Nigeria is losing billions of dollars every year to oil smuggling.
The illegal “bunkering”, as it is known, makes a huge profit for Nigerian syndicates and rogue international traders.
It leaves in its wake chaos and misery for the people of the Niger Delta.
Arctic’s Oil Could Meet World Demand for 3 Years
WASHINGTON – The Arctic Circle holds an estimated 90 billion barrels of recoverable oil, enough supply to meet current world demand for almost three years, the US Geological Survey forecast on Wednesday. The government agency also said the area could contain 1,670 trillion cubic feet (Tcf) of natural gas.
Shell in C$5.9bn Canada gas deal
(FT) It illustrates the growing importance of “unconventional” resources that require greater investment and more sophisticated technology to access.
Duvernay, based in Calgary, has substantial assets in Alberta and British Columbia in “tight gas” – gas trapped in rocks from which it will not flow easily.
Bush to Lift Offshore Drilling Ban in Symbolic Move
(Planet Ark/Reuters) WASHINGTON – President George W. Bush plans to lift a presidential ban on offshore drilling on Monday to combat soaring energy prices, a largely symbolic move unlikely to have any short-term impact on the high cost of gasoline.
Bush’s move is largely symbolic because Congress also has a ban on offshore drilling and while it expires on Sept. 30, it could be renewed. Government officials also say it would take years for any oil to be produced in those areas.
Democrats Dig In as G.O.P. Presses for Oil Exploration in Protected Areas
A significant divide remains between the parties’ leaders. Republicans are rallying behind a demand for lifting a longtime ban on drilling offshore along much of the nation’s coastline and in the Arctic National Wildlife Refuge.
Two very bitter commentaries on the manipulation of oil supplies and prices from opposite sides of the globe. Worth pondering.
Exposing the oil conspiracy – Oil cartel making windfall profits (no longer available)
By M.D. Nalapat
The anti-humanity activities of the oil speculators, who have been taking in billions of dollars in profit since 2003, need to be exposed and countered, including by the people of the US and the EU. The population in both is suffering at the expense of the greedy few who have placed their own financial gain above the future of the world.
Happy Oil Dependence Day
(Truthdig) As we head into the Fourth of July weekend … Why not take a moment to heed the cautions of our founding father, George Washington’s “Farewell Address” to the new nation … about the threat of American imperial ambitions and a declaration of his high expectations for a republic of free men: “In offering to you, my countrymen, these counsels of an old and affectionate friend, I dare not hope they will make the strong and lasting impression I could wish; that they will control the usual current of the passions, or prevent our nation from running the course which has hitherto marked the destiny of nations. But, if I may even flatter myself, that they may be productive of some partial benefit, some occasional good; that they may now and then recur to moderate the fury of party spirit, to warn against the mischiefs of foreign intrigue, to guard against the impostures of pretended patriotism. …”
(Foreign Policy June 2008) The New World Energy Order
Why are oil prices soaring so high, and will they ever return to Earth? Fatih Birol, chief economist at the International Energy Agency in Paris, explains why peak oil is real, why biofuels are indispensable, and how China determines what you pay at the pump.
FP: Do you believe in peak oil?
FB: Of course, but the question is when? Global oil resources are limited. We have conventional oil; we have unconventional oil. We have oil in the North Sea, in the Gulf of Mexico. We have more oil in the OPEC countries. What I can tell you is that one day global conventional oil will peak. This will depend on many factors, including the role of technology, investment, and production policies. When we look at oil outside of the OPEC countries, when you put all of them together, I think it is going to peak very soon. But we have unconventional oil, and we have oil in the Middle East as well. How much will come to the market from unconventional oil?
Drilling Deeper by The Editors
(The New Republic) This past Wednesday, President Bush called for ending a federal ban on offshore oil drilling, two days after John McCain flip-flopped to take the same position. The idea may or may not have merit in the long run, but what it won’t do is lower gas prices in the short term: The Department of Energy estimates that it would take more than 20 years for either production levels or prices to be affected by a repeal of the ban on offshore drilling. Because the amount of oil at stake is so tiny (about 19 billion barrels, equivalent to around seven months of global consumption), it won’t do much at all to ease jitters or help deflate a bubble in oil markets.
Bush Calls for End to Ban on Offshore Oil Drilling
(NYT) WASHINGTON — President Bush urged Congress on Wednesday to end a federal ban on offshore oil drilling and open a portion of the Arctic National Wildlife Refuge for oil exploration, asserting that those steps and others would lower gasoline prices and “strengthen our national security.”
Deals With Iraq Are Set to Bring Oil Giants Back
(NYT) BAGHDAD — Four Western oil companies are in the final stages of negotiations this month on contracts that will return them to Iraq, 36 years after losing their oil concession to nationalization as Saddam Hussein rose to power.
Exxon Mobil, Shell, Total and BP — the original partners in the Iraq Petroleum Company — along with Chevron and a number of smaller oil companies, are in talks with Iraq’s Oil Ministry for no-bid contracts to service Iraq’s largest fields, according to ministry officials, oil company officials and an American diplomat.
World crude production has peaked: Pickens
WASHINGTON (Reuters) – World crude oil production has topped out at 85 million barrels per day even as demand keeps climbing, helping to drive a stunning surge in prices, billionaire oil investor T. Boone Pickens, who heads BP Capital hedge fund with more than $4 billion under management, said during testimony to the Senate Energy and Natural Resources Committee.
Kuwait Says Oil Over $100 Is Too High; Support Saudis
(Bloomberg) — Kuwait followed Saudi Arabia in saying crude oil prices are too high as evidence mounts that energy costs are restraining growth and accelerating inflation.
Every $1 increase in oil prices earned by Kuwait would equal $2.59 million a day, or about $79 million a month. For Saudi Arabia, a $1 increase in the selling price of the 9.7 million barrels a day it plans to pump would add about $295 million a month to the treasury.
Saudi King: ‘We will pump more oil’
Saudi Arabia will raise oil production to record levels within weeks in an attempt to avert an escalation of social and political unrest around the world. King Abdullah signalled the commitment to the UN secretary general, Ban Ki-moon, at the weekend after the impact of skyrocketing oil prices on food sparked protests and riots from Spain to South Korea.
(Bloomberg) Saudi Arabia, the world’s largest oil exporter, has said the surging price of the commodity is “unjustified” and will host a meeting of producers and consumers in the coastal city of Jeddah on June 22 to help stabilize prices.
Plan Would Lift Saudi Oil Output
The increase could bring Saudi output to a production level of 10 million barrels a day, which, if sustained, would be the kingdom’s highest ever. The move was seen as a sign that the Saudis are becoming increasingly nervous about both the political and economic effect of high oil prices. In recent weeks, soaring fuel costs have incited demonstrations and protests from Italy to Indonesia.
While they are reaping record profits, the Saudis are concerned that today’s record prices might eventually damp economic growth and lead to lower oil demand, as is already happening in the United States and other developed countries. The current prices are also making alternative fuels more viable, threatening the long-term prospects of the oil-based economy.
The end of cheap oil helps renewables, but makes far dirtier alternatives viable. A low-carbon future will demand brave leadership
(New Statesman) There are two competing explanations for today’s high oil prices. One sees the price rise as the result of a temporary imbalance between supply and demand, exacerbated by a weak dollar and a bubble of speculative commodities trading. Fix these problems, adherents suggest, and the price can return to previous low levels, allowing business to continue as usual. The other sees the current price spike as symptomatic of a much deeper crisis, one that could end life as we know it in the rich, consuming west as global supplies of cheap oil begin to run short, not temporarily, but for ever. As Chris Skrebowski, editor of the UK Petroleum Review, puts it: “This is what I would describe as the foothills of peak oil.” An imminent oil peak is no longer just a fringe theory: increasing numbers of experts view the topping out point as very close, if not actually upon us. “Easy, cheap oil is over, peak oil is looming,” warns Shokri Ghanem, head of Libya’s National Oil Corporation. If they are right, we are about to move into a very different world.
Why the Oil Price Is High
By Paul Craig Roberts, Assistant Secretary of the Treasury during President Reagan’s first term and former Associate Editor of the Wall Street Journal.
How to explain the oil price? Why is it so high? Are we running out? Are supplies disrupted, or is the high price a reflection of oil company greed or OPEC greed? Are Hugo Chavez and the Saudis conspiring against us?
In my opinion, the two biggest factors in oil’s high price are the weakness in the U.S. dollar’s exchange value and the liquidity that the Federal Reserve is pumping out.
The problem seems to be getting to enough of the oil that is known to exist
(The Economist) The root of the high oil price in BP’s view [see below] is not a mismatch between strong demand and feeble supply, but failure on the part of various governments to allow markets to work their magic. There are hints of an improvement on the demand side: several Asian governments have recently decided they can no longer afford subsidies. But it is hard to imagine the world’s ardent energy nationalists suddenly throwing their doors open to foreign investment.
That obliges the likes of BP to concentrate on marginal projects, either in difficult surroundings (the Arctic or deep water, for example), or with trickier forms of oil (such as tar sands). The development of such fields has been hampered of late because of a shortage of qualified engineers and suitable equipment. The traders who have been driving up the oil price believe that these bottlenecks will prevent global output from keeping pace with the developing world’s thirst for oil. For the past few years, BP’s number-crunching suggests, they have been right. But by the firm’s own admission, its statistics, although illuminating about the past, are no guide to the future.
Let the markets solve the energy crisis
By Tony Hayward, CEO of On Wednesday, BP is launching the latest edition of the BP Statistical Review of World Energy*. … At times such as these it is a useful analytical tool for those both inside and outside the industry.
It also exposes some myths that need to be put to rest if we are to find the right solutions to big global problems such as energy security and climate change.
The first myth is that high prices are caused by technical factors, such as speculation. While these factors may have an impact on the margins, the data clearly show that high prices are really caused by economic fundamentals.
Oil shortage a myth, says industry insider
There is more than twice as much oil in the ground as major producers say, according to a former industry adviser who claims there is widespread misunderstanding of the way proven reserves are calculated.
(The Independent) Although it is widely assumed that the world has reached a point where oil production has peaked and proven reserves have sunk to roughly half of original amounts, this idea is based on flawed thinking, said Richard Pike, a former oil industry man who is now chief executive of the Royal Society of Chemistry.
Current estimates suggest there are 1,200 billion barrels of proven global reserves, but the industry’s internal figures suggest this amounts to less than half of what actually exists.
… Dr Pike said there was anecdotal evidence that big oil producers were glad to go along with under-reporting of proven reserves to help maintain oil’s high price. “Part of the oil industry is perfectly familiar with the way oil reserves are underestimated, but the decision makers in both the companies and the countries are not exposed to the reasons why proven oil reserves are bigger than they are said to be,” he said.
Dr Pike’s assessment does not include unexplored oilfields, those yet to be discovered or those deemed too uneconomic to exploit.
The environmental implications of his analysis, based on more than 30 years inside the industry, will alarm environmentalists who have exploited the concept of peak oil to press the urgency of the need to find greener alternatives.
Proven oil reserves are likely to be far larger than reported because of the way the capacity of oilfields is estimated and how those estimates are added to form the proven reserves of a company or a country. Companies add the estimated capacity of oil fields in a simple arithmetic manner to get proven oil reserves.
However, mathematically it is more accurate to add the proven oil capacity of individual fields in a probabilistic manner based on the bell-shaped statistical curve used to estimate the proven, probable and possible reserves of each field. This way, the final capacity is typically more than twice that of simple, arithmetic addition, Dr Pike said. “The same also goes for natural gas because these fields are being estimated in much the same way. The world is understating the environmental challenge and appears unprepared for the difficult compromises that will have to be made.”
Jeremy Leggett, author of Half Gone, a book on peak oil, is not convinced that Dr Pike is right. “The flow rates from the existing projects are the key. Capacity coming on stream falls fast beyond 2011,” Dr Leggett said. “On top of that, if the big old fields begin collapsing, the descent in supply will hit the world very hard.”
[See also Jeremy Leggett What they don’t want you to know about the coming oil crisis in The Independent, Jan. 2006]
Peak oil debate will rage as long as doubts remain over Opec’s reserves
The Organisation of Petroleum Exporting Countries (Iran, Iraq, Kuwait, Saudi Arabia, Venezuela, Qatar, Libya, the UAE, Algeria, Nigeria, Ecuador and Angola) produces 40pc of the world’s oil, about 32m barrels per day (mbd).
The de facto leader of Opec, Saudi Arabia, produces the most at around 9.25mbd, or 30pc of total Opec output. “Effective Opec spare capacity stands at 2.3mbd on paper, although refinery outages, crude quality and high prices mean much of this oil would be difficult to [bring to] market,” said the International Energy Agency in its May oil market report.
The Geopolitics of $130 Oil
(Stratfor) Oil and food differ from other commodities in that they are indispensable for the functioning of society. Oil and grains — where the shortages hit hardest — are not merely strategic commodities. They are geopolitical commodities. All nations require them, and a shift in the price or availability of either triggers shifts in relationships within and among nations.
Majesty, We Have Gone Mad
An open letter to King Abdullah of Saudi Arabia
By George Monbiot. Published in the Guardian
In common with the leaders of most western nations, our prime minister is urging you to increase your production of oil. I am writing to ask you to ignore him. Like the other leaders he is delusional, and is no longer competent to make his own decisions.
You and I know that there are several reasons for the high price of oil. Low prices at the beginning of this decade discouraged oil companies from investing in future capacity. There is a global shortage of skilled labour, steel and equipment(1). The weak dollar means that the price of oil is higher than it would have been if denominated in another currency. While your government says that financial speculation is an important factor, the Bank of England says it is not(2), so I don’t know what to believe. The major oil producers have also become major consumers; in some cases their exports are falling even as their production has risen, because they are consuming more of their own output(3).
Driving the surge in gas prices?
The Bush-McCain surge in Iraq
Again and again, year after year, the world price of oil has been boosted artificially by keeping a tight limit on Iraq’s oil output. Methods varied. The 1928 “Redline” agreement held, in various forms, for over three decades. It was replaced in 1959 by quotas imposed by President Eisenhower. Then Saudi Arabia and OPEC kept Iraq, capable of producing over 6 million barrels a day, capped at half that, given an export quota equal to Iran’s lower output.
… the recent engorgement in oil prices and profits goes right back to the Bush-McCain “surge.” The Iraq government attack on a Basra militia was really nothing more than Baghdad’s leaping into a gang war over control of Iraq’s Southern oil fields and oil-loading docks. Moqtada al-Sadr’s gangsters and the government-sponsored greedsters of SCIRI (the Supreme Council For Islamic Revolution In Iraq) are battling over an estimated $5 billion a year in oil shipment kickbacks, theft and protection fees.
Peak Oil Overview – March 2008
March 12, 2007
The new seven sisters: oil and gas giants that dwarf the west’s top producers
(FT) The “new seven sisters”, or the most influential energy companies from countries outside the Organisation for Economic Co-operation and Development, have been identified by the Financial Times in consultation with numerous industry executives. They are Saudi Aramco, Russia’s Gazprom, CNPC of China, NIOCof Iran, Venezuela’s PDVSA, Brazil’s Petrobras and Petronas of Malaysia.
Overwhelmingly state-owned, they control almost one-third of the world’s oil and gas production and more than one-third of its total oil and gas reserves. In contrast, the old seven sisters – which shrank to four in the industry consolidation of the 1990s – produce about 10 per cent of the world’s oil and gas and hold just 3 per cent of reserves. Even so, their integrated status – which means they sell not only oil and gas, but also gasoline, diesel and petrochemicals – push their revenues notably higher than those of the newcomers.
17 December 2006
Ice cold black gold
(Washington Times) Russia has just begun to unlock the vast oil and gas resources of its remote Arctic and eastern Siberian plains and ocean shelves. Developing those resources will require overcoming harsh, even brutal, conditions and building costly and extensive pipelines and transportation networks to deliver them to consumers in Asia, Europe and the United States. These importers look to Russia increasingly for the fuel that keeps their cars running and the world economy growing.
… The U.S. Energy Information Administration estimates Russia’s proven oil reserves at 67 billion barrels — seemingly modest at less than a third the size of Saudi Arabia’s. But a U.S. geological survey in 1998 concluded that Russia’s vast unexplored regions most likely contain undiscovered reserves of oil that are “larger than any other country in the world.”
British Petroleum, which recently signed a letter of intent with Rosneft to explore for oil and gas in Russia’s Arctic, estimates that 25 percent of the planet’s undiscovered oil and gas are within the Arctic Circle.
BP says the Arctic may hold 250 billion barrels of oil-equivalent reserve, and a further 250 billion on the Yamal Peninsula, in northwestern Siberia. If BP is correct, that supply would rival the oil reserves of the entire Middle East. In addition, a recent study by energy advisory firm Wood Mackenzie said the Yamal has massive reserves of gas. Russia already owns a quarter of the world’s known gas reserves.