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Something fishy about Saudi oil production
James Hamilton, Econbrowser
There’s something fishy about the story in Monday’s Wall Street Journal.
The Wall St. Journal reported Monday that Saudi Arabian oil minister Ali Naimi acknowledged that Saudi Arabia only produced 9.1 million barrels of crude oil per day in April. That’s 400,000 barrels less than they have typically been producing over the last two years, which would be a significantly bigger supply reduction than that resulting from conflict in Nigeria in February and March.
The Journal reported:
In an interview after a meeting here of the Organization of Petroleum Exporting Countries, Ali Naimi said other cartel members are having trouble finding buyers for all the crude they are producing, at a time when global stores are near full and many refiners have closed facilities for routine maintenance. One Saudi official said an estimated three million barrels a day of refining capacity is out of action and unable to process crude, at a time when the world is using some 84 million barrels a day of oil products like gasoline and jet fuel.
“It’s not just heavy oil. Even light oil is having problems” finding buyers, Mr. Naimi said, referring to premium grades of crude known as light crude that are highly prized by refiners because they have high gasoline yields…
Now, what’s wrong with this picture? Oil is selling at near-record high prices, and the Saudis are complaining that nobody wants to buy their oil.
(7 June 2006)
Suburbia’s Worst Enemy: Kunstler
Charles Montgomery, The Tyes
… Q:We’re producing more oil in Canada than ever before. We’ve barely touched the huge reserves in the Alberta oil sands. And you write in your book that we are never actually going to run out of oil. So what do you mean by peak oil, and why the alarm?
Kunstler: You’re flattering yourself about the tar sands. And there is a great deal of misinformation flying around out there that is a great disservice to the public. For instance, the CBS Sixty Minutes TV program ran a segment this past winter saying the tar sands had the equivalent of two trillion barrels of oil. This was just flat-out untrue. The best real estimates are between 150 to 200 billion barrels, of which 50 to 70 might be recoverable — and the US alone uses seven billion barrels a year. Do the math.
… Q: So what form of city is best suited to handle an oil-scarce future?
Something about the scale of the Gothic city, but with updated plumbing and electric lights, wherever possible.
Q: Gothic? You mean a return to the medieval city?
Yes, I mean a dense, low-rise (seven story maximum) pattern that we would identify as similar to the medieval city. They may even require fortification. Now, how exactly we might manage the contraction of our hypertrophied mega-cities is a related matter. Our notions these days of what we can “manage” may be grandiose; in reality, circumstances will simply manage it for us, and in a disorderly process. In any case, we have to recognize that the super-gigantic city of the 20th century is an historical anomaly. New conditions will require different arrangements.
… Q: OK, give me your worst-case scenario for life on Canada’s West Coast in 40 years. I do recall a warning of marauding bands of pirates.
Readers seem to have misunderstood what I said, which is that the Pacific Ocean is liable to become a much wilder place, especially as Asian nations melt down politically and their naval equipment falls into the hands of freelancers. There will be a lot of them, and they will be looking for easy pickings along the continental coasts.
James Howard Kunstler will give a public lecture at 7:30 p.m. on June 14 at the MacPherson Theatre in Victoria. He will also deliver a keynote address at Gaining Ground, The Sustainable Development Urban Leadership Summit at Victoria’s Laurel Point Inn on June 15. For more information go here.
Charles Montgomery is the author of The Last Heathen and will be writing about the World Urban Forum for The Tyee.
(13 June 2006)
Kunstler interview number 623.
Brunei: Time Of Easy, Cheap Oil Over
Azaraimy HH, Borneo Bulletin via Brunei Direct
Bandar Seri Begawan – A large percentage of the country’s oil and gas reserves is trapped in mature/marginal reservoirs, which are increasingly more difficult and more expensive to produce.
We must plan in a prudent manner guided by the reality that the time of easy and cheap oil has now passed.
Brunei Minister of Energy Pehin Dato Awg Hj Yahya bin Begawan Mudim Dato Paduka Haji Bakar said this in his speech at the Joint BSP, BLNG, BSM and BST Directors Night 2006 on Saturday night at the ICC.
Asking everyone to shun the belief of “bottomless well”, the minister said the public and private sector can no longer take it for granted that it’s “business as usual”.
(12 June 2006; HT waegari)
Related from Associate Press: Brunei Warns Citizens to Stop Wasting Fuel :
Brunei’s energy minister has warned people of this cradle-to-grave welfare state to curb their “extravagant lifestyle” of wasting fuel and electricity, saying the country’s dwindling oil reserves will not last forever.
Energy Minister Yahya Begawan Mudim said the government expects to spend 226 million Brunei dollars (US$ 144 million; euro114 million) on public subsidies this year to keep retail prices of gasoline and diesel low, up from 167 million Brunei dollars (US$ 106 million; euro84 million) in 2005.
Because of such subsidies, the market price for diesel is cheaper than bottled drinking water, while low energy rates have made this tiny sultanate on Borneo island one of the highest per capita users of electricity in Asia, on par with Japan and South Korea, Yahya said in a speech to corporate leaders Saturday.
Malaysia’s leader warns tussle for energy resources may spark global crisis (era of cheap oil is over)
Associated Press via The Star (Malaysia)
KUALA LUMPUR: Malaysia’s leader on Monday warned of a global crisis over the tussle for energy resources amid declining supply, and urged major oil producers and consumer nations to jointly develop new resources.
Prime Minister Abdullah Ahmad Badawi said the period of cheap oil is “effectively over” as rising demand in Asia and the United States, bottlenecks in the supply chain, speculative trading and political uncertainties have raised prices and sparked concerns over energy security.
Opening a two-day Asia Oil and Gas Conference, he said world consumption is expected to reach more than 100 million barrels of oil a day and some 150 trillion cubic feet of natural gas by 2025.
“The growing demand for depleting oil and gas resources is likely to trigger more intense competition to gain access and control over these resources,” Abdullah said.
“Following the current slim excess capacity situation faced by the industry, the tussle for energy resources could become more acute and may even develop into a global energy crisis.”
(12 June 2006)
Fidel Castro Warns of World Food Crisis
Prensa Latina (Cuba)
Havana – Cuban President Fidel Castro asserted the lack of fuel in the world and its current price will worsen the problem of food.
Grain and cereal productions are increasingly targeting the production of alcohol to be used as fuel for automobiles, stated Fidel Castro in his address to the Cuban People´s Power National Assembly (parliament) seventh period of sessions.
That means automobiles are competing with food and humankind is not prepared to cope with the current energy crisis, noted the leader of the Cuban Revolution.
He said the world is facing this situation because it has been drawn by the consumption models of industrialized nations, which at the same time have driven the Third World into them.
(10 June 2006)
Behind the spin, the oil giants are more dangerous than ever
George Monbiot, The Guardian
The green rebranding of Shell and BP is a fraud. Far from switching to biofuels, it’s drilling and devastation as usual
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For a company that claims to have moved “beyond petroleum”, BP has managed to spill an awful lot of it on to the tundra in Alaska. Last week, after the news was leaked to journalists, it admitted to investors that it is facing criminal charges for allowing 270,000 gallons of crude oil to seep across one of the world’s most sensitive habitats. The incident was so serious that some of its staff could be sent to prison.
Had this been Exxon, the epitome of sneering corporate brutality, the news would have surprised no one. But BP’s rebranding, like Shell’s, has been so effective that you could be forgiven for believing that it had become an environmental pressure group. These companies have used the vast profits from their petroleum business to create the impression that they are abandoning it.
…For the past two or three years, environmentalists (myself included) have been publicising the idea that global oil production might soon peak and then go into decline. This possibility helps to demonstrate, we argue, that our dependence on oil is unsustainable, and we must find means of giving it up. The oil companies have seized our arguments and are using them for the opposite purpose: if oil supplies are in danger, they must be permitted to prospect in new places.
Whatever happens, they can’t lose. If they invest in new exploration and production, they secure lucrative control over a diminishing asset. If they fail to invest, as they have done over the past 10 years, the price rises and they do even better. In either case, they make so much money that they can throw a few billion into developing alternative technologies without gulping, thus cornering the future energy markets as well.
Please don’t misunderstand me. I am glad they are spending some of their money this way. They are among the few companies able to achieve the economies of scale required to bring down the price of expensive new technologies, such as solar power and hydrogen fuel cells. The problem is that they are developing these new capacities not in order to replace their production of oil, but in order to supplement it. Their share price depends on the current and future value of their assets. To sustain the future value, they aim for a “reserve replacement rate” of 100%. In other words, however much oil they produce, they seek to replace it with new discoveries.
(13 June 2006)
