pstarr wrote:I believe the problem is sulfur and nimbyism. Fancy Caspian seaside vacationers (think Hamptons in the Balkans) do not look forward to swirling clouds of sulfur dust ruining their cocktail hours. No one wants yellow yellowtail.
In Kazakhstan, petroleum engineers are braving wild temperature swings in the shallow waters of the Caspian Sea to tap the biggest oil discovery of the last 30 years. They are drilling wells six miles deep in the Gulf of Mexico. And on the island of Sakhalin, off far eastern Russia, they have drilled horizontal wells through miles of rock to produce oil from a stretch of ocean notable for giant icebergs.
But as the industry extends its reach, the quest is becoming more arduous. The cost of producing new oil and gas is rising fast, and companies are troubled by worsening delays. Drilling rigs are scarce. Engineers, geologists and petroleum specialists are in critically short supply.
...“There are no easy barrels left,” said J. Robinson West, chairman of PFC Energy, an industry consulting firm in Washington. “The only barrels are going to be the tough barrels.”
...At the same time, the big discoveries of the last three decades, like those in the North Sea and on the North Slope of Alaska, are drying up. This is leading oil companies to remote places like Hammerfest.
Ferretlover wrote:The Oligarchs Go on Safari
Russians take their place alongside the Chinese in a battle for resources to fuel their growing empires.
Under the original optimistic plans, nearly half a million barrels a day of crude oil should now be flowing from Kazakhstan's Kashagan field, which contains the world's largest untapped reserves.
Despite record crude prices, however, not a single barrel has made it out of the ground. Rather than stimulate production, the rising price of oil has actually contributed to lengthy delays with the Kashagan project.
The problems facing the Kashagan project are increasingly common in today's global oil industry. Despite a six-year runup in crude prices, which hit a record $110 (U.S.) a barrel last week, oil companies – both publicly traded and state-owned – are having difficulty keeping up with rising world demand.
There are myriad reasons for the surprisingly weak supply response to high prices: a paucity of major discoveries in the past several decades; the more costly and complicated nature of developing resources from unconventional sources like oil sands and deep-water fields; the rise of nationalism in resource-rich countries; and the innate conservatism of oil industry executives, who have been burned by oil price collapses in the past.
The UBS team, led by London-based analyst Jon Rigby, compiled a roster of major projects – those with expected production of more than 100,000 barrels a day – due to come on stream through 2015.
But relying on major projects won't meet that target. In the current year, the UBS analysts estimate new supply sources will produce 4.4 million barrels a day, but that figure drops to 2.9 million in 2009 and a paltry 1.7 million in 2010.
That suggests prices could ease this year, as new additions in Saudi Arabia and the former Soviet Union provide a cushion in the face of demand weakened by the global economic slowdown.
Thereafter, the market will tighten again as new production is unable to keep up with demand growth.
Among OPEC members, only Saudi Arabia – and new members such as Angola – have a large slate of new crude oil projects coming on stream in the near future.
Canada is well represented in the UBS list, with some two-dozen oil sands projects forecast to add 2.3 million barrels a day by 2016.
“You just see some deeply ingrained conservatism in what oil price forecast you use when you are pursuing future projects,” Mr. Kirsch said. “And I don't see that culture changing over night.”
Non-OPEC Supply. About 0.7 million bbl/d of non-OPEC supply growth is projected in 2008, revised down by 0.2 million bbl/d from the last Outlook. This change represents a revision to expected project schedules as well as a re-evaluation of decline rates at existing fields. Brazil is expected to account for about half of the expected gain in non-OPEC supply in 2008. Azerbaijan, Sudan, and Russia are also expected to record net additions to capacity, while the United Kingdom, Mexico, and Norway are among countries expected to experience declines. The pace and timing of non-OPEC supply growth will continue to be subject to possible delays in key projects. EIA’s Outlook incorporates an expectation of some further delays. As a result, uncertainty about non-OPEC supply growth introduces both upside and downside risk to our price outlook.
OPEC Supply. EIA projects that OPEC crude oil production will average about 32.2 million bbl/d during the first quarter of 2008, or about 0.6 million bbl/d above fourth quarter 2007 levels. The increase mainly reflects higher production from Saudi Arabia, Angola, and the United Arab Emirates. Based on EIA projections of consumption and non-OPEC supply, OPEC crude production is expected to average slightly above first quarter levels for the remainder of the year. If consumption rises more slowly than expected and OECD inventories climb relative to the 5-year average, OPEC members would be likely to consider holding their output below our projected level. Based on country plans, EIA expects OPEC crude production capacity to rise in 2008 by 1.2 million bbl/d and by 0.8 million bbl/d in 2009. OPEC’s non-crude liquids production is also expected to increase by about 0.3 million bbl/d in 2008 and by 0.8 million bbl/d in 2009.
OilFinder2 wrote:The reason why there are few big projects shown after 2012 is because it takes several years to plan such a project. The projects which will come online this year and next were largely planned ~5 years ago. But before that, little or nothing was known about them - often even to the companies producing them. In other words, if someone had made this same chart 5 years ago, it would have shown a paucity of projects coming online after 2006 or 2007. But in the meantime, a lot of projects were planned, which have since started to show up on the megaprojects list, so we now see a big spike in added capacity planned for this year and next.
OilFinder2 wrote:In other words, you can't plan for something 5 or 10 years ahead when you don't even know it exists yet.
Twilight wrote:OilFinder2 wrote:In other words, you can't plan for something 5 or 10 years ahead when you don't even know it exists yet.
But we assume it will exist, for the purposes of planning something else. As the cushion of past discovery is depleted, we are not updating our infrastructure planning philosophy to account for the possibility that there may at some point be a lengthy gap in such additions with less than five years' warning.
OilFinder2 wrote:I mean - DUH! For something like this it's basically impossible to plan that far ahead, which is why right now there seems to be a paucity of projects coming online after 2012. That doesn't mean there won't be a lot of new projects coming online after 2012, it's just that it's too early to be able to make plans for something after around that time.
OilFinder2 wrote:*sigh*
You still don't get it. What do you expect oil company executives to do?
[url=http://www.iht.com/articles/ap/2008/05/19/business/AS-FIN-Kazakhstan-Fuel-Ban.php[/url]Kazakhstan on Monday banned the export of all refined oil products, news agencies reported, as the energy-rich Central Asian nation grapples with soaring fuel costs. The announcement, made by Prime Minister Karim Masimov at a government meeting, comes just days after opposition parties called on his government to resign amid what they call a worsening economic climate.
Kazakhstan has huge oil and gas resources, but soaring prices for consumer products like diesel and other fuel are having a knock-on effect on the country's agricultural sector.
The increase in the cost of diesel and gasoline have outstripped the rate of inflation in recent months. Inflation already looks set to hit last year's rate of 18 percent.
Industry insiders insist rising fuel costs are caused by foreign demand, but the head of Kazakhstan anti-monoply body said Monday he believed there have been instances of price-fixing for some forms of fuel.
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