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Oil industry leaders are seeking to play down fears that the world will run out of oil in the not too distant future. The claim, known as peak-oil theory, combined with the surge in oil prices since 2003, has fuelled attention to finding alternative energy sources and in the State of the Union message last January, former oilman President George W. Bush said that the US is "addicted to oil." This week, both Saudi Arabia and oil giant ExxonMobil sought to counter what has become a conventional wisdom. On Wednesday, Abdallah S. Jum'ah, chief executive of Saudi Arabian state-owned Saudi Aramco, the world's largest oil company by production, said in a speech in Vienna that the world has more than a century's worth of crude left at current production rates. Jum'ah's speech followed similar comments by a senior Exxon executive this week. Demand recently slackened as the US economy has begun to slow and the price of light crude has fallen from a record $78.40 a barrel on the New York Mercantile Exchange since July 14th. However, stripping out inflation, the all-time record peak is the equivalent of $86.99 in today’s US dollars, set when oil was $38.85 a barrel in January 1981, according to the US Energy Information Administration. The price of light crude for October delivery on the New York Mercantile Exchange (NYMEX) is trading early afternoon Friday, Dublin time has fallen to $62.86 a barrel. In London, Brent is trading at $61.76.
Source: US Energy Information Administration (EIA) According to EIA’s most recent Short-Term Energy Outlook released yesterday, EIA expects the price of WTI crude oil during the fourth quarter of 2006 to average around $70 per barrel, gasoline prices to average below $2.60 per gallon, and diesel prices to approach $2.80 per gallon by the end of the year. EIA is expecting the recent price decline to slow, with prices then leveling off and possibly increasing later this year. This outlook reflects an analysis of the factors driving the current price decline. For crude oil markets, the EI says that the global situation is about as rosy as has been the case in the last several months. Almost every concern that existed in crude oil markets this summer is much more benign now. Concerns about a possible oil disruption from Iran have faded, as the diplomatic push to get Iran to halt enrichment of nuclear material has not yet led to sanctions imposed by the United Nations Security Council, and Iran has stated recently its willingness to continue negotiations with the United Nations. Mid-September has arrived without a single hurricane affecting oil facilities in the Gulf of Mexico and with no storms likely to arrive within at least the next week. Nigeria, where significant disruptions have occurred with some frequency over the past several years, has been quiet. The oil situation in Iraq is as positive as it has been in nearly 2 years, with EIA estimating Iraqi crude oil production in July and August at its highest levels since the fall of 2004. Even the one disruption that did make news recently, the BP pipeline leak in Alaska, now appears to be much less of a problem than originally thought. Initially, concerns were raised that Prudhoe Bay production might be stopped altogether, but it was soon determined that only a part of production would have to be taken offline for an extended period. According to the State of Alaska, Prudhoe Bay production for the month of August averaged 189 thousand barrels per day, which is about half of its August 2005 level. BP recently announced plans to begin to bring more production online soon and hopes to have full production restored by the end of October. The Organisation of the Petroleum Exporting Countries oil cartel(OPEC) today lowered its forecast for demand for its oil next year. Demand for OPEC crude, in 2007 will average 28.1 million barrels per day, 200,000 bpd less than forecast in August, the 11-nation cartel said in its September monthly report. US Energy Department orders investigation of Peak-Oil claims The Department of Energy has asked the National Petroleum Council, an oil-and-gas-industry research group, to investigate peak-oil claims. The council has launched a study that includes different industries and environmental groups and has appointed Lee Raymond, retired Exxon CEO to head the investigation. It will survey existing studies and examine why they differ on how much oil and gas the world holds and what the response should be. At Wednesday's OPEC seminar in Vienna, Saudi Aramco's Jum'ah said the world had produced only about one trillion barrels, or about 18%, of the earth's producible potential of 5.7 trillion barrels of oil. "That fact alone should discredit the argument that peak oil is imminent, and put our minds at ease concerning future petroleum supplies," he said. The remaining 4.7 trillion barrels should be enough to last more than 140 years at current output rates, he said.
Saudi Arabia, with a quarter of the world's proven crude reserves, is of course interested in maintaining demand for oil and some 3.5 trillion of the roughly 4.7 trillion barrels of oil referred to by Jum'ah is going to depend on the development of new technologies. "I believe we will eventually tally about one trillion barrels each from yet-to-be-discovered fields and higher recovery rates" from existing fields, he said in the speech. He also included 1.5 trillion barrels from non-conventional sources, such as Canadian tar sands. On Monday, ExxonMobil's Australia head, Mark Nolan, told a conference in Adelaide, Australia, that "the end of oil is nowhere in sight." Nolan cited a US Geological Survey estimate of more than three trillion barrels of conventional recoverable oil resources, of which one trillion barrels has been produced. Conservative estimates of heavy-oil and shale-oil resources push the total to four trillion barrels, while a 10% increase in recoverability will deliver an extra 800 billion barrels, Nolan said. © Copyright 2007 by Finfacts.com | ||||||||||||||||||||||||||||||||||||
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