Comment...

In 2008 the price of crude oil to $140/bbl, then crashed to $40/bbl. Now throw these facts into the mix:

• America imports almost 2/3s of its oil
• Domestic oil companies are extracting less oil
• More and more oil is being controlled by national governments
• Production is declining at most existing oil fields
• Oil discoveries aren't coming on-line fast enough

What does it all mean to America? Nothing good.

Common sense tells us that our oil appetite and dependence on the Middle East oil endangers national security and our way of life.

It could not be more clear. We need to develop alternative fueled cars and produce more oil domestically. Smart energy policies can reduce America's dependence on oil, reduce emissions, stimulate our domestic economy, and make our nation safer.

Oil's Here to Stay
Our use of oil need not disapear overnight. Nor need it ever disappear. Oil and gasoline are just too good energy sources. Each packs more wallop and are cleaner than coal. Each is easier to utilize than nuclear energy, wind or solar power. No other fuel can completely fullfill our transportation needs.

Science and technology have made great strides in controlling pollution from internal combustion engines while at the same time making them more efficient. This will continue.

If we replace 50% of our transportation fleet with natural gas and electric powered cars and trucks AND focus on retiring the dirty coal plants, oil will no longer be a global warming, hot button issue. Plus, if we both reduce demand and focus on developing our own domestic oil supplies we can free ourselves of the OPEC stanglehold. Then, perhaps, we can start treating the Middle East at arm's length.

— Robert Moen, Founder        
rmoen@energyplanUSA.com

Oil Becoming the Realm of Despots
Financial Post 2008
Petroleum Intelligence Weekly's annual list of the world's Top 50 oil companies confirms an alarming trend: The world's petroleum riches are sliding further into the hands of state-owned oil companies.

Three major reasons we should care: energy security, climate change and the market. Indeed, the world's six oil majors - Exxon, BP, Shell, ConocoPhillips, Chevron, Total - control a puny share of the world's oil reserves, 3.7%, down from 4.7% a decade ago; produce 14.6% of the oil, down from 16.6% a decade ago; and 14.4% of the gas, down from 18.9% a decade ago, according to PIW.

The shrinkage of Western companies is also bad news for development of technologies to reduce carbon emissions. It's shareholder-owned oil companies that are the most likely to make the investment, while state-owned companies have a long history of funneling oil revenue to support state programs and under-investing in their own operations.

Mexico May Have to Halt Oil Exports
Houston Chron 2008
Mexico, the third-largest foreign supplier of U.S. oil, faces the real possibility of having to halt oil exports in four years. Mexico has long relied on production from the country’s largest oil field, the offshore Cantarell field in the Bay of Campeche. But Cantarell’s output has been dropping precipitously. With a population expected to top 110 million by 2010, Mexico’s thirst for gasoline and other refined products is on the rise. Mexico is the United States’ third-largest foreign oil supplier after Canada and Saudi Arabia, providing 1.4 million barrels of petroleum products a day, or about 11 percent of U.S. oil imports.

Oil Majors Output Fall
Reuters 2008
The world's largest fully public-traded oil company, Exxon Mobil reported an 8 percent fall in oil and gas production, compared to the same period in 2007. Industry No 2 Royal Dutch Shell said output dropped 1.6 percent while No 3 BP Plc's was flat. The weak production figures reflect a sea-change in the oil industry in recent decades, as resource holders increasingly reserve their richest fields for their state oil companies. In response, oil companies are being forced to look at projects which they would previously not have considered due to the high costs and technical challenges involved. Exxon's capital investment per barrel was the lowest among the supermajors.

Saudi Project
Brings Skepticism
Herald Tribune 2008
The Saudis say the Khurais oil field holds more oil than all the proven reserves of the United StateSome oil traders and analysts doubt that. Starting in June 2009, the Saudi's expect the field will produce 1.2 million barrels a day, enough to satisfy the expected growth in global demand next year. The Saudis are deploying an extraordinary engineering effort to bring Khurais's mile-deep oil to the surface. Seawater will be carried through new pipelines from the Gulf and injected into oil-bearing rock to pressure the oil upward. Usually Aramco pumps seawater into a field only after several years of production, and some skeptics point to this as a reason to doubt that Khurais will live up to its billing. Aramco officials acknowledged that they faced unusual challenges here but they also vehemently disputed the claims of oil-supply skeptics.

Oil Output Outside OPEC at Risk of No Growth in 2008
Reuters 2008
Oil supply from countries outside OPEC, source of three in every five barrels, is stalling this year and may even decline, keeping the heat under record-high oil prices. The International Energy Agency (IEA) has cut forecasts for supply growth in 2008, in part due to delays at new fields and declining output at existing ones. Signs that oil supply is faltering in parts of the world are leading to growing interest in peak oil, the view that production is nearing a high point and will then fall. There are several reasons why supply from non-OPEC has fallen short of forecasts in recent years. Delays at new fields, faster-than-expected declines at existing ones and unforeseen events such as hurricanes in the U.S. Gulf of Mexico have meant production came in lower than first thought. Oilfields in places such as the North Sea and Mexico are seeing declines while output in Russia, the world's second-largest exporter and the engine of growth outside OPEC in recent years, has faltered

Using Smokestack Gases to Pump Oil
Wall Street Journal 2010
For decades, companies have pumped naturally-occurring carbon dioxide from geological basins into existing oil wells. The gas acts like a solvent for the oil, removing it from rock formations. Denbury Resources, a Texas oil and natural-gas producer, is hoping to add to that finite supply by using carbon dioxide recovered from industrial plants.

Reusing industrial pollution for oil production has its critics, because the carbon dioxide isn't permanently eliminated. It returns to the air in the form of car exhaust from the oil retrieved. But backers point out that it can boost domestic oil supply, and Denbury says it uses a technology that puts more carbon dioxide in the ground than it takes out.

U.S. Drilling Activity
Off Sharply
Wall Street Journal 2008
As oil and gas prices fall, drilling activity in the U.S. is slowing more than expected, battering shares of drilling companies, hurting economies in energy-producing states and sowing the seeds for supply shortages when the economy recovers. Baker Hughes Inc. reported that the number of drilling rigs working in the U.S. had fallen to 1,790, down 12% from the September peak. The slowdown is being driven by the collapse in energy prices, which has made many higher-cost oil and gas fields uneconomic while companies have less cash to pursue even those wells that are still worth drilling. At the same time, the credit crisis has made it harder for companies to borrow money, further constraining spending.

The drop-off in drilling activity could lead to supply shortages – and rapidly rising prices – when the economy recovers. "This sets up the mother of all price recoveries," Chesapeake's Mr. McClendon said.

Nuclear Energy Growth Seen after Peak Oil
Reuters 2008
French oil and gas giant Total is targeting nuclear energy to drive growth long after oil and gas output peak. Total had said previously they expected global oil production to level off just short of 100 million barrels per day around 2020, up from current output of about 85 million bpd. "It's easier to convert oil and gas experts into nuclear than the other way round," said a Total excutive. "Nuclear and solar are the two areas we'd like to develop. Those are the two areas we feel we can add value."

Alaska Helps Boost
U.S. Reserves
Forbes 2008
The U.S. boosted its proved oil reserves last year for the first time since 2007, in part thanks to new discoveries in Alaska. The U.S. Energy Information Administration says domestic proved oil reserves grew by 2 percent while natural gas reserves increased 13 percent over the previous year. It's the largest one-year increase since this Energy Department agency began tracking proved reserves in 1977.

Decline of North Sea Oil
The Oil Drum 2008
Rising North Sea oil production was a significant factor in keeping oil prices under control in the 1970s, 80s and 90s. Production peaked at 6.4 million barrels per day in 2000 and since then, declining North Sea oil production is one significant reason that oil prices are now rising exponentially. It is a sobering thought that by the time the sun sets upon the whole of the North Sea, it will have produced enough oil to fuel planet Earth for just 2 years. To keep the oil party going we need to discover a "new North Sea" every two years and the last time we managed that rate of discovery was in the late 1980s.

New Find Fuels Speculation Brazil Will Be an Oil Power
Wall Street Journal 2008
Emerging oil giant Petrobras announced its latest discovery, saying it struck oil some 155 miles off the coast of São Paulo state. The new field is close to the company's massive Tupi field, which was discovered two years ago and remains the world's largest find in the Western Hemisphere since 1976. The focus of attention is the Santos Basin, a collection of potential oil fields buried under miles of ocean water, earth and a stubborn layer of salt. Exploratory drilling in different fields has produced very similar oil, fueling a tantalizing new theory: that the basin could be one contiguous megadeposit of crude. This week, the company, which has already leased about 80% of the world fleet of vessels capable of drilling in deep water, announced plans to lease 40 more drilling vessels and semi-submersible oil platforms starting in 2017. Adding to the excitement was an apparent slip of the tongue by Brazil's oil regulator, Haroldo Lima. Mr. Lima said the Santos Basin could contain about 33 billion barrels of oil, which would make it the world's biggest find in decades.

Tupi Field to Produce 500,000 bpd by '20
Reuters 2008
Brazil's state-run oil company Petrobras plans to have its giant Tupi oil field fully operational by 2015, with output of at least 500,000 barrels per day by 2020, according to exploration and production director, Guilherme Estrella. "Despite the technological challenges of extracting oil from the subsalt cluster, its exploration is financially viable even with oil prices below $35 per barrel." Petrobras has put estimated recoverable reserves at the subsalt Tupi field at between 5 billion and 8 billion barrels. Geologists say Brazil's total subsalt potential could be 70 billion barrels or more, but experts agree that production could be technologically challenging and costly. Production from above the salt level is easier.

The Bias Against Oil and Gas
Washington Post 2009
Considering the brutal recession, you'd expect the Obama administration to be obsessed with creating jobs. And so it is, say the president and his supporters. The trouble is that there's one glaring exception to their claims: the oil and natural gas industries. The administration is biased against them -- a bias that makes no sense on either economic or energy grounds. Almost everyone loves to hate the world's Exxons, but promoting domestic drilling is simply common sense.

World Needs a Kuwait a Year to Meet Demand
Bloomberg 2008
The world must find an extra 64 million barrels a day of oil production by 2030, equivalent to replacing Kuwait's output every year, to meet demand growth and counter the decline of existing fields, the International Energy Agency said. The agency, an adviser to 28 nations, forecasts global oil demand will rise by 1 percent a year through 2030, while the output decline at existing fields will accelerate to 8.6 percent from 6.7 percent.The world may face a ``supply crunch'' sooner than expected if investment in new production is delayed, IEA Chief Economist Fatih Birol. Oil prices, which have dropped by more than half from a record $147.27 a barrel in July, may exceed $200 a barrel in nominal terms in 2030, the agency said.

Occidental Announces Big Find
Wall Street Journal 2009
Occidental Petroleum Corp. said it had discovered a major new oil field in one of California's oldest oil-producing regions. The Los Angeles company believes the field contains the equivalent of 150 million to 250 million barrels of oil and gas, which Occidental Chairman and Chief Executive Ray Irani called "the largest new oil and gas discovery made in California in more than 35 years."

The field is small compared with the biggest recent global finds, such as the Tahiti field in the Gulf of Mexico, thought to hold as much as 500 million barrels, or the Jubilee field in Ghana, which could be several times that size. But unlike those fields, Occidental's discovery is on shore, where wells are far cheaper to drill.

OPEC Angry
at Oil Report
The Times 2008
Opec has made a scathing attack on a report from the International Energy Agency which says that the world's existing oil producers face a “huge challenge” to keep up with a projected rise in global demand. The respected Paris-based energy advisor said that to compensate for the depletion of existing oilfields, by 2030 the world would need to find new production equivalent to 45 million barrels per day, or the output of four Saudi Arabias, to maintain present levels of supply. An additional production equivalent to six Saudi Arabias would be required if a projected rise in oil demand from 85 million barrels a day to 106 million was taken into account. The IEA, which based its findings on a landmark study of decline rates at 800 of the world's largest oilfields, said that there was, in theory, enough oil left in the ground to meet demand. However, it would require investment of about $450 billion (£300 billion) a year, with the bulk of this spent in the 13 member states of Opec, where most of the world's remaining supplies lie. Abdullah al-Badri, Opec's secretary-general, gave a withering verdict on the study. “I don't trust this report,” he said. “I don't think the IEA is equipped to review these oilfields. We have the reserves, we have enough oil for the foreseeable future.” Opec has traditionally adopted a much rosier view of the prospects for future global oil production growth. For years, it has also been accused of overstating its reserves for political reasons and to discourage the development of alternatives.

Depletion of Saudi Oil Field Denied
Dawn.2008
The Ghawar field that has been producing well above 5 million bpd for decades has remained at the centre of the recurring oil debate. Proponents of the peak oil theory argued that Ghawar was undergoing rapid depletion implying the world was soon to run out of oil. Indeed, any rapid depletion in Ghawar would have made a significant impact on the overall global energy balance. Found in 1948, Ghawar accounts for 55-60 per cent of the total Saudi production. Its current proven reserves are 12 per cent of the world’s total reserves. The IEA report on Ghawar is reassuring in many, many ways. The report does not include Ghawar among the post plateau fields, as production in 2007 was still less than 15 per cent below the peak of 5.6 million bpd reached in 1980. Ghawar is still at the plateau phase of production. The IEA report specifies that Ghawar has been developed in distinct stages, which have progressively raised its capacity keeping the field at plateau. The most recent project involving the Haradh area in the southern part of the field was completed in 2006, tripling capacity to about 900,000 bpd. This has helped to offset natural declines in other parts of the field, the report agreed.

Glimpse Of Future: More Work, Less Oil
Wall Street Journal 2008
Chevron's $3 billion Frade (pronounced Frah-jay) project is a mediocre prospect compared with the huge pools of easy-to-get oil the company has tapped in the past. Even if it fulfills its greatest promise, the deep-water oil field will contribute only a trickle to the global river of petroleum. For oil companies seeking to reverse years of falling production, the consuming and expensive birthing of Frade has become the norm. What does all the effort buy? Chevron believes it can extract about 270 million barrels out of Frade over the next 18 years. The world guzzles that much every three days. The daily struggle of replacing production declines in aging fields is a problem that isn't going away. And cuts to capital budgets to cope with the downturn in prices could hobble the industry's ability to ramp up supply when demand returns. The result could be "a serious supply crunch" in as little as two years, says Paul Horsnell, commodities research head for Barclays Capital. The five largest Western oil companies produced 3.2% less oil and natural gas last year than they did five years earlier, despite spending billions of dollars a year on the effort. Projects are more complex and costly, but oil prices – a huge factor in returns – are harder than ever to predict. Still, Frade's budget more than doubled over the past four years.