We aim to please: http://www.peakoil.com/post167450.html#167450

You'll get my bill.
Inventories have been rising, and are now close to 1999 levels (recent record). Katrina will slow that slightly.
Every year, the oil industry adds capacity close to that of Ghawar, which is ignored by the alarmists. There are a number of fields coming online this fall/winter, including off Brazil and Angola, in the Caspian, and the Gulf of Mexico (see Katrina stories, though).
Also, demand is getting weaker.
If my price prediction is wrong, my supply stance won't change much. If my supply expectations prove incorrect, I will reassess. But you will note that supply has surged in the past two years, about 6 mb/d, a huge increase. So when Campbell argues that reflects resource scarcity, he's talking through his hat.

Mike Lynch

I think Matt would agree... it's his battle cry.

transparency

You would agree that more aggressive production can lead to more rapid depletion after peak yes? (at least on a per field basis.)

it is odd?

is this a sign of speculative behaviour?

is the rate of consumption keeping the value of inventories in number of days supply the same despite inventory growth?

Boris
london

The Lord giveth and the Lord taketh away.
More efficient wells drain faster, but the new ones add more production. There's an offset, which Matt and others ignore.
We haven't seen any production collapse of the type that Matt implies is occurring, and there's plenty of field data available. Nor do any SPE papers say that this is a problem, nothing that I've seen.
Mike Lynch

Yes, it's odd and does support the hypothesis that speculation is the main driver of higher prices at present (Katrina excepted). Consumption has risen somewhat, but inventories in days of consumption are well above their lows, while prices are at all-time highs.
Mike Lynch

A couple of reasons for the high inventories have been suggested.

1. It is a response to the contango in the futures market.

2 It is a response to the lack of spare production capacity. In essence it is an addendum to the SPR and is due to the increased risk of a disruption.

It seems to me that both of these actions are rational behaviours and while speculative are not part of any irrational "bubble" that is about to collapse. What credence do you give to such explanations for the inventory build?

Agreed.

But... would you would agree that more aggressive production can lead to more rapid depletion after peak yes? (at least on a per field basis.)

Those are strong words...

Supply did raise, but how do you reach the number of 6 mb/d in the last 2 years?
The numbers I find (in IEA and EIA) point to less than 5 mb/d...

However, that is not the most important point.
2 years ago, there was a significant extra production margin on call to cover production problems. (For example: the loss of 3mb/d during the Venezuela strike was not a drama, back then…)
Now that margin has eroded to some 1mb/d (with the recent increases in production from SA).

So, considering a 5mb/d increase in production and subtracting the margin lost during those 2 years (a decline from some 4mb/d of margin to some 1 mb/d now) we reach an increase in the world production capability of only 2 md/d in the last 2 years.
(Even if we want to be really kind, and consider a reduction of margin from 3.5 to 1.5 mb/d, we only get an increase in the world production capability of 3 md/d in the last 2 years...)

And that was before the recent (strong and mostly unexpected) production declines in the North Sea, Canada and so on…

I think this is the correct thread for this... Another oil research firm predicting undulating but adequate supply with inproved production by 2010... Has this report been discussed and dismissed previously? It seems to be separate from the group Mr. Lynch is associated with...

http://www.gasandoil.com/goc/features/fex52722.htm

An audio file of an interview with a CERA spokesman... NPR interview.
http://www.npr.org/templates/story/stor ... Id=4713059

Quote: "Cambridge Energy Research Associates, based near Boston, is sceptical, and released highlights of a report that concludes the world's capacity to produce oil will likely easily exceed the world's voracious demand for the product that fuels cars, ships and planes.
Increasing oil production capacity "will comfortably meet volatile and expanding demand in the next five years and beyond," Peter Jackson and Robert Esser, the authors of the report, write in their introduction. Total capacity will surge by almost 20 % to 101.5 mm bpd by 2010, the widely respected and closely followed consultancy predicted, basing its assessment on field-by-field research. In 2010, capacity could be seven mm barrels or so higher than demand -- a huge surplus....

The report also took aim at peak-oil theorists, who espouse the view that the world's oil production will hit a high, possibly as early as this year, and then decline rapidly. While no one argues that oil is anything but a finite resource, Cambridge Energy Research doesn't see a peak at all. Instead, it projected an "undulating plateau," extending for several decades."

actually this is not the thread for this. do a search on CERA in these forums and you will find that their data is no more transparent than the Saudi's.

From my personal point of view, CERA's report is totally wrong (and is totally irrelevant).

Mike/spike,
I was wondering if the negative economic effects of hurricane Katrina had changed/altered your SLC$ outlook for 01/01/06?

So,
A. we will have more oil/capacity buffer = lower price
or
B. we will have less oil/capacity buffer = higher price
as a result of the economic effects of hurricane katrina.

I hope my logic isnt flawed
IMHO and Assuming PO is fact - any economic slowdown is a good thing wether PO is 30 years or 3 months in our future.
Thank you again for your time and participation on this forum.

If drilling stops, yes. But in most fields there are opportunities for continuing investment which at least in part offsets rapid decline rates.