Oil that is ... I feel like Joan Rivers, Can we talk?
Sunday January 26, 2003
The Observer
Facing its most chronic shortage in oil stocks for 27 years, the US has this month turned to an unlikely source of help - Iraq.
Weeks before a prospective invasion of Iraq, the oil-rich state has doubled its exports of oil to America, helping US refineries cope with a debilitating strike in Venezuela.
After the loss of 1.5 million barrels per day of Venezuelan production in December the oil price rocketed, and the scarcity of reserves threatened to do permanent damage to the US oil refinery and transport infrastructure. To keep the pipelines flowing, President Bush stopped adding to the 700m barrel strategic reserve.
But ultimately oil giants such as Chevron, Exxon, BP and Shell saved the day by doubling imports from Iraq from 0.5m barrels in November to over 1m barrels per day to solve the problem. Essentially, US importers diverted 0.5m barrels of Iraqi oil per day heading for Europe and Asia to save the American oil infrastructure.
The trade, though bizarre given current Pentagon plans to launch around 300 cruise missiles a day on Iraq, is legal under the terms of UN's oil for food programme.
http://observer.guardian.co.uk/iraq/story/0,12239,882517,00.html
To the victor of course go the spoils. Are they spoiled?
"Oil experts acknowledge that Iraq's oil sector is being held together by 'Band-Aids,'" said a recent study by the James A. Baker III Institute for Public Policy of Rice University.
As a result, Iraq's production capacity has been steadily shrinking, from about 3.5 million barrels a day in 1990 to about 2 million barrels a day in 2002.
And some of the methods used to keep the oil flowing -- including "water flooding," in which lighter, refined oil products are pumped into oil reservoirs to push the crude oil to the surface -- may have done long-term damage to the oil reservoirs, according to Saybolt International, a Dutch consulting firm that has monitored Iraq's oil infrastructure for the United Nations.
Additionally, the Baker Institute study warned that sudden production shutdowns -- which might have occurred at many fields during the latest war -- could do even more damage to oil reservoirs.
6 million barrels a day could be a pipe dream.
http://money.cnn.com/2003/04/16/news/economy/war_oil_primer/
We are not alone in our quest for cheap oil.
Japan's struggle to secure future oil supply ...
On July 1, Japan suggested a compromise aimed at securing the deal while allaying American concerns: Japan would sign the deal if Iran would sign an additional protocol to the Non-Proliferation Treaty allowing for surprise visits to suspected nuclear sites. Iran refused. Two days later, Japan announced the deal would be "prolonged" while concerns about Iran's nuclear program were addressed. Iran responded by playing down Japan's decision. As of this writing it is not yet clear if the deal will fall through, but there are signs that due to Iran's difficult economic problems some influential Iranians are coming round to the idea of signing the additional protocol. Iranian Oil Minister Bijan Namdar Zanganeh has said Iran and Japan are close to an agreement despite U.S. objections.
Were the deal to fall through, Chinese, Indian and Russian oil and gas companies would likely compete over rights to develop Azadegan. China Petroleum & Chemical Corp., known as Sinopec, has announced it is "more willing than ever before'' to enter into joint ventures with Iran. India's petroleum ministry, for its part, announced that India will be "perfectly happy" if given the field.
The obstacle to its deal with Iran comes at a pivotal moment for the future of Japanese oil supply. Due to its excessive reliance on the Middle East, Japan has sought to diversify its sources of oil, looking particularly to Russia. However, Japan's Russian prospects plummeted in May, when China's National Petroleum Corporation (CNPC) signed a $150 billion preliminary agreement with the Russian company Yukos to pump oil from Siberia to Daqing. Japan, which had proposed a pipeline from Siberia to Nakhodka (a port in Russia's Far East,) had been competing with China for the deal.
http://www.iags.org/n0805033.htm
Saudi Arabia just completed a deal with China and Russia for exploration.
As the lights go out in Phoenix, Greenspan formally acknowledged what others have been telling us for years: We are running out of Natural Gas.
U.S. demand is similarly expected to rise from 22.8 trillion cubic feet (tcf) in 2003 to about 33.8 tcf by 2020. U.S. Department of Energy figures paint a bleak picture for U.S. dependence on imported energy in the coming decades. According to American petroleum statistics, existing well-heads are currently depleted at 29% annually while demand for natural gas is expected to rise 2% a year. Imports from Canada, whose own energy demand is increasing, are projected to pick up some of the burden. Major other sources are Nigeria, Sao Tome, Trinidad, Venezuela and most probably the Persian Gulf.
U.S. Federal Reserve Chairman Alan Greenspan has drawn attention to the natural gas supply crisis and called for increasing liquefied natural gas (LNG,) imports to the U.S. LNG, natural gas supercooled for transport purposes, accounts for about 5% of global natural gas consumption, according to the BP Statistical Review of World Energy. The U.S. accounts for 1% of that. In 2000, the U.S. imported 226 billion cubic feet (bcf) of LNG - less than 10% of the 2.6 trillion cubic feet (tcf) imported by Japan.
At present there are not more than a handful of LNG import terminals in the U.S.: Lake Charles, Louisiana; Everett, Massachusetts; Chesapeake Bay, Maryland; Elba Island, Georgia. Most routes of LNG tankers would traverse populated areas, presenting potential risk factors. Due to the fact that most LNG producing areas are in Africa, the Middle East or Latin America, tankers have to be used to transport the LNG to the appropriate markets. Most production facilities are based in the Middle East, Africa and the Far East.
http://www.iags.org/n0929034.htm
Is LNG a pipe dream too?
America now comes to the realization that oil companies have been inflating their numbers Arthur Anderson style:
Published on Monday, April 19, 2004 by the Associated Press
Shell Report Exposes Lies on Oil Reserves
by Beth Gardiner
LONDON - A top executive of Royal Dutch/Shell Group of Cos. wrote in an e-mail that he was "sick and tired about lying" about the company's inflated oil and gas reserves estimates, an investigation commissioned by Shell reported Monday.
The investigation, whose findings Shell accepted in full, found that some bosses knew for almost two years the company had publicly overstated the size of its reserves. The shaken oil giant also announced that its chief financial officer had stepped down, the latest in a string of high-level casualties since Shell's announcement in January that its confirmed oil and gas holdings were much smaller than it had claimed.
The company said Monday that it had now downgraded a total of 4.35 billion barrels, or about 22 percent of its reserves, from "proven" to less certain categories. That is 200 million barrels more than its previous estimate.
Shell said in January that it was downgrading 3.9 billion barrels, or about 20 percent of its total holdings. A March announcement brought the total downgraded to 4.15 billion barrels.
http://www.commondreams.org/headlines04/0419-08.htm
Lying? Seems to be a great deal of that floating about these days.
What people fail to realize is that the method the Arab States have been employing on their older fields, the ones we depend on, is called "bottle brush" drilling:
Saudi Arabia
Saudi Arabia's promise to increase production to meet US and world economic needs was the hot topic. Much discussion and hard data was devoted to the fact that Ghawar, the largest field in the world, along with all of Saudi Arabia's other large fields, was old and tired. In recent years both water injection and so-called "bottle-brush" drilling have been employed to maintain production and both of these techniques tend to accelerate decline and damage the reservoirs. They are desperate measures.
With bottle brush drilling, a shaft is drilled horizontally over long distances with a number of brush-like openings. As water is forced under pressure into the reservoir, the oil is forced upwards toward the well heads and extraction is thereby increased. However, when the water table hits the horizontal shaft, often without warning, the whole field is virtually dead and production immediately drops off to almost nothing. This comes as surprise in most cases. As several at the conference noted, this is exactly what had already happened in Oman, Syria and Yemen.
As William Kennedy, a UK observer at the conference noted afterwards, "For the record, Ghawar's ultimate recoverable reserves in 1975 were estimated at 60 billion barrels - by Exxon, Mobil, Texaco and Chevron. It had produced 55 billion barrels up to the end of 2003 and is still producing at 1.8 billion per annum. That shows you how close it might be to the end. When Ghawar dies, the world is officially in decline."
http://www.fromthewilderness.com/free/ww3/062104_berlin_peak.html
So with bottle brush drilling, production could fall off at any time. We know this from other stats like Yemen. One day its ok and the next pffft ... Bye Bye Miss America Pie ... Still think the war is about terrorism?