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Oil sets new record above $120 a barrel
James Jukwey, Reuters
Oil set a new record high above $120 a barrel for a second day on Tuesday, resuming its advance after a sharp downward move last week.
Supply disruptions in Nigeria, where a strike and attacks by militants hit production, has continued to support a market that is nervous about any threats to supply.
Tensions with Iran appeared to ratchet higher …
(6 May 2008)
Tracking Saudi Oil From Space
Neil King Jr., Wall Street Journal
Satellites Check
Big Field’s Health;
Jitters Over Supply
—
At a time of high anxiety over soaring fuel prices and scarce supplies, oil analysts are resorting to satellite imagery to crack one of the industry’s biggest unknowns — whether Saudi Arabia’s massive Ghawar field is slipping into depleted old age.
Saudi Arabia has long contended that its famed Ghawar field, responsible for around 7% of global supply, remains in fine shape and will continue to churn out around five million barrels a day for years.
But Saudi Arabia doesn’t publish data to back that up. Skeptical analysts in the West insist the field is in decline, an event they say presages a peak in world oil production.
Analysts at Sanford C. Bernstein Ltd., a New York-based investment research firm, just spent months trying to resolve the debate. Their tools? Cameras fixed to satellites that hover miles above the Saudi desert.
Combing through dozens of high-resolution satellite images of Ghawar going back to 2001, the Bernstein team has concluded in a study sent to clients at the end of April that only part of the vast field “is suffering signs of old age.” On the whole, Bernstein says, the field “is being properly managed” and is experiencing only “mild production-decline rates at worst.”
Critics of the study, including some who have crunched their own overhead imagery, say the Bernstein study is insufficient and the debate over Ghawar’s health is far from over.
“This is junk science,” says Houston investment banker Matthew Simmons, who insists that only detailed, on-the-ground records can speak to the field’s real condition. Mr. Simmons’s 2005 book, “Twilight in the Desert,” cited technical papers to argue that Ghawar and Saudi Arabia’s other giant fields were showing signs of increasing stress and would soon slip into decline. Mr. Simmons is a well-known proponent of the theory that world-wide oil production may already have hit its all-time peak.
This latest tiff over Ghawar comes as alarm grows on Wall Street and in Washington over whether the world’s big crude producers can keep pace with the growing demand for oil in Asia and the Middle East.
(6 May 2008)
New Report from Raymond James: No Chance Oil Supply Will Grow Faster Than Demand; More Crude Price Rises Loom
Energy Tech Stocks
With oil production in non-OPEC countries “permanently” peaking in five years or less, and with OPEC “struggling to bring fresh capacity online,” there is no chance the world will build an oil supply “cushion” in the foreseeable future, thus “even minor supply disruptions are bound to have a large impact on prices.”
That’s the grim assessment of the Houston-based energy analysts at Raymond James & Associates, the brokerage firm. Their report, issued yesterday, spells further trouble for all concerned, but especially for American motorists who are already struggling under the weight of $4-a-gallon gasoline, for it is bound to give the oil market’s financial players further reason to bid up light sweet crude, which yesterday again set a record, topping $120 a barrel on news of possible supply disruptions in Nigeria.
… Indeed, the Raymond James report suggests that the market may be about to raise the risk premium on a barrel of crude, which now stands at very roughly $10 to $20 a barrel, as “overall growth in global oil supply appears . . . barely sufficient to keep up with demand,” to quote Raymond James. This might raise the spot crude price to $130 to $150 a barrel this summer …
(6 May 2008)
OTC: $100 trillion needed to rebuild energy infrastructure
Uchenna Izundu, Oil & Gas Journal
The oil and gas industry will need to invest $50-100 trillion to rebuild its ageing infrastructure within the next 7 years and stave off a serious drop in oil and gas production, Matt Simmons, chairman of Simmons & Co. International, told OGJ May 5 at the Offshore Technology Conference in Houston.
In a worst-case scenario, Simmons said, oil and gas output could fall by 10-20% by 2013 if industry does not replace its rusting, corroded assets. Spare capacity also has run out because formerly cheap prices for oil and gas precluded upgrading and construction of new facilities.
… However, the upward trend in prices can help pay for the rebuilding of the energy system, Simmons stated.
“There is no blueprint in place, and this is a global problem. The longer the blueprint is postponed, the more acute the crisis will get,” he said.
(5 May 2008)
Demand is slowing but still there are risks
Metin Gezen, The Journal of Turkish Weekly Opinion
Peak oil or not, there is a rising concern about energy security in all continents. The price movement is out of control and we all got used to read “Oil price records” news everyday.
The [gas] stations keep changing the prices for higher figures. OPEC is blamed, Russian production is down, speculators are in, dollar’s value is a factor and you can name hundred reasons for this.
Even if the supply arrives on time, which is not likely, supply is bound with other factors. It may look like a liquid coming from a pump station for ordinary customer, but energy is a big and complex business. The investment made today involves lots of risks, competition and sometimes cruel tactics.
… There may be rumors about 200 dollars of a crude, which also corresponds to 20$ to 33$ per mmbtu of natural gas. Our senses may whisper that the trend will continue to built up. But it can not last to long, because from the consumers side, it is starting to hurt us and our way of life. We have started to make sacrifices. The consumer society, we enjoyed may need a breath. The roller coaster is getting slower, the fall may not be steep, but it is coming.
(5 May 2008)
