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reliance on fossil fuels could have “severe consequences”

feb. 11 2010

Bloomberg -- Climate change and U.S. reliance on fossil fuels could have "severe consequences," including potential surges in oil prices and risks to national security, the White House Council of Economic Advisers said today.

"Continued reliance on fossil fuels is leading to the buildup of greenhouse gases in our atmosphere and is changing our climate," the CEA said in its annual report to President Barack Obama. "Left unaddressed, these trends will have increasingly severe consequences over time."
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Mexican Oil still in decline

Mexican Oil: World's 3rd largest oil reserve

Bloomberg -- Petroleos Mexicanos, the state-owned oil company, may pump 2.3 million barrels of oil a day this year, Standard & Poor’s analyst Jose Coballasi said.

“This reflects a dose of reality that in general Pemex has had to lower its forecasts in previous years,” Coballasi said today at an event in Mexico City. S&P’s crude forecast would represent an 11.6 percent decline from 2009, according to Bloomberg calculations.

International Energy Agency (IEA) Warning: Oil supplies are running out fast

Published Aug 3 2009 by Energy Bulletin; Steve Connor, The Independent

The world is heading for a catastrophic energy crunch that could cripple a global economic recovery because most of the major oil fields in the world have passed their peak production, a leading energy economist has warned.

...There is now a real risk of a crunch in the oil supply after next year when demand picks up because not enough is being done to build up new supplies of oil to compensate for the rapid decline in existing fields.

The first detailed assessment of more than 800 oil fields in the world, covering three quarters of global reserves, has found that most of the biggest fields have already peaked and that the rate of decline in oil production is now running at nearly twice the pace as calculated just two years ago. On top of this, there is a problem of chronic under-investment by oil-producing countries, a feature that is set to result in an "oil crunch" within the next five years which will jeopardize any hope of a recovery from the present global economic recession, he said.
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Europe`s OIL CEO Predicts Approach of Peak Oil

February 17, 2009
see Global Peak Oil Production: July 2008 -- a month to remember

Hydrocarbures The CEO of Europe`s third largest energy group predicts the world will never be able to produce more than 89 million barrels of oil a day, says the Financial Times.

Christophe de Margerie, Total`s Chief Executive, noted that the economic crisis makes it harder to finance both the production of existing reserves as well as the development of new sources. Citing the high costs of developing Canadian tar sands and political restrictions in Iran and Iraq, he predicts expensive and environmentally challenging projects will continue to be delayed. Meanwhile older fields in the North Sea will decline in production as their oil becomes more expensive to produce.

Three years ago, the International Energy Agency (IEA) predicted rates of 130m b/d by 2025. It has since revised that forecast down to just over 100m b/d by 2030.

Last week, the IEA dropped its forecast for 2009 down to 84.7 million barrels a day, predicting global demand will fall 1.2% this year, the biggest annual drop in 27 years.

Oil falls below $40 despite OPEC output cut

The Associated Press, 18 Dec 2008

Oil prices fell to 4 1/2-year lows Thursday in Asia as investor pessimism over global crude demand outweighed OPEC`s largest-ever production cut.

Light, sweet crude for January delivery was down 15 cents to $39.91 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore. At one point, it fell as low as $39.19 - a level not seen since at least July 2004.

Overnight, the contract fell $354 to settle at $40.06 a barrel, after touching $39.88.

The 13-nation Organization of Petroleum Exporting Countries, which accounts for about 40 of global oil supply, said Wednesday it planned to reduce its output quotas by 2.2 million barrels a day.

But markets had already expected a vastly reduced flow of oil and traders focused instead on troubling economic data that points to a long and severe global economic slump.

"The market apparently had already priced in this cut," said Peter McGuire, managing director at investment firm Commodity Warrants Australia in Sydney. "I think OPEC will have to have another meeting in January, and I wouldn`t be surprised to see possibly a 3 million cut next time."

OPEC`s next official meeting is scheduled for March. The group had already announced cuts totaling 2 million barrels earlier this year, also with little effect. The unprecedented production cuts and the maket reaction show just how fast energy demand has fallen during the worst economic downturn in at least a generation.

Oil prices have tumbled 73 percent since July. What started as a crisis in the U.S. sub-prime mortgage sector last year has mushroomed into a recession in most developed countries and a sharp downturn in emerging nations.

Companies across the world are laying off workers and banks are reluctant to lend. Plunging property values and high debt levels have led many consumers to pull back spending.

"I`m worried about growth," McGuire said. "You have to get people spending."

Oil prices may fall as low as $35 a barrel during the next few weeks, he said.

U.S. crude inventories rose slightly last week and gasoline reserves increased as demand stayed below year-ago levels, according to government data released Wednesday.

Analysts had expected crude stocks to fall 900,000 barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

Oil production peaked and going downhill at Medco oil

The Jakarta Post, 18 Dec 2008

Publicly listed oil and gas company PT Medco Energi Internasional, founded by tycoon Arifin Panigoro, forecasts that its oil and gas production next year could drop by as much as 10 percent due to asset sales and aging fields.

Medco finance director Cyril Noerhadi said on Wednesday the company had sold participating shares in the Tuban block to state oil and gas company PT Pertamina, and in the PSC Simenggaris block to Salamander Energy Ltd.

"Aside from that our fields, on average, are already at the aging stage and can no longer produce optimally," he said.

During the first nine months of the year, Medco oil and gas production totaled 65.46 thousands of barrels of oil equivalent per day (mboepd), down by 6.4 percent from 69.97 mboepd in the same period of last year.

Last year, the company`s oil lifting output reached 50,411 barrels of oil per day (bopd), down from 56,367 bpod in 2006. Gas sales amounted to 117.5 (thousands of British Thermal Units per day) bbtupd, down from 127,15 bbtupd.

Cyril said the company`s oil and gas output would likely start picking up again in 2011 after completing seven key projects some of which were already under construction.

The company completed one of its new projects, a bioethanol plant in Lampung, in November with the first shipment due in January 2009, according to Medco president director Darmoyo Doyoatmojo.

He also said the development of gas facilities in the Lematang block in South Sumatra would be completed in June 2009.

According to Darmoyo the remaining projects will be completed in 2011 and 2012, including the Block A gas field in Aceh, the enhanced oil recovery project in Block Rimau in South Sumatra, Area 47 in Libya, the Senoro gas field in Central Sulawesi, and a power project in Sarulla, North Sumatra.

He said the company would intensify the hunt for overseas oil and gas fields because the success rate for confirming feasible reserves in Indonesia remains very low at between 10 percent and 15 percent.

Medco recorded a revenue of $972.2 million during the first nine months of the year, up by 51.6 percent from $641.4 million in the same period last year.

While refusing to specify the amount of capital expenditure next year, Cyril said the company normally spent between $250 million and $300 million annually.

"The current economic conditions will narrow down alternatives for capital access," he said, adding the company was also on the lookout for rupiah financing.

OPEC to cut production by another 2 million barrels per day

Reuters, 16 Dec 2008

Oil steadied below $45 on Tuesday, bolstered by expectations that OPEC will agree its largest supply cut ever, after dropping 4 percent the previous day on persistent worries of a deepening economic slump.

A weaker dollar, which tends to support commodities, also lent a hand.

U.S. light crude for January delivery rose 25 cents to $44.76 a barrel at 1:47 a.m. EST after falling as low as $44.10 on Monday.

London Brent crude was flat at $44.60 at the same time.

Oil dropped to a four-year low of $40.50 on December 5 -- more than a $100 slide from its July all-time high -- as global economic turmoil depresses demand in large consumer nations such as the United States and Japan.

On Monday, China, long a major engine for rising crude prices, joined ranks with those top consumers. Its apparent oil demand fell last month for the first time in nearly three years.

"OPEC could achieve limited success on Wednesday. They might do enough to stop prices from sliding further," said UBS economist Jan Stuart.

In an attempt to build a floor under prices, OPEC ministers, who meet on Wednesday in Algeria, are calling for the largest output cuts ever to combat shrinking demand and bulging inventories.

For many in the Organization of the Petroleum Exporting Countries, up to 2 million barrels per day (bpd) must be removed to keep up with a slump in consumption that has knocked two-thirds off prices since a July record above $147.

That would come on top of a combined two million barrels daily that OPEC has already slashed at two previous meetings.

In another sign that Russia is willing to clinch a deal to protect prices, the world`s top non-OPEC producer is sending its highest ranking delegation ever to the meeting -- including heads of its five top oil companies.

The market will also be watching the U.S. Federal Reserve, which is expected to drop interest rates close to zero on Tuesday. But anticipated remarks on unconventional methods to dispel a year-old recession are what will really matter..

The announcement is expected around 1915 GMT.

Looking ahead to Wednesday, U.S. crude oil stocks probably rose by 300,000 barrels as a contango price structure prompted refiners to fill up storage tanks, a preliminary Reuters poll of analysts showed ahead of the data`s release.

Global Peak Oil Production: July 2008 — a month to remember

The peak oil crisis: July 2008 -- a month to remember

Dec 4 2008 by Falls Church News-Press; Falls Church, Virginia
by Tom Whipple

There is a growing consensus among those who follow such things, that the new high of world oil production (87.9 million barrels a day) reached last July is likely to go down in history as the all-time peak.

Most students of the subject at first thought that world oil production was going to peak for geological reasons --- the inability to find and produce enough oil to keep our annual consumption of 30 billion barrels increasing. In recent years, "above ground" factors such as wars, nationalistic governments, and failure to invest have become the popular reasons for constraints on increasing world oil production among those who for one reason or another do not like the geologic (running out of reserves) argument.

While all these factors are contributing to the likelihood that from here on out less and less oil will be produced, it seems that the initial decline in production will come because the world economic situation has deteriorated so much that we simply don't need 87.9 million barrels a day (b/d) of oil anymore.

At the minute, OPEC is scrambling to figure out how to enforce an equitable production cut to drive prices higher again. Current talk is that it will take cuts totalling 3 million b/d or more to balance supply and demand. If reductions on this order actually take place in the near future, then world production which has been declining since July will have started on a downward slope from which it is unlikely to ever recover.

New oil production and refining projects are being cut back right and left due to low prices, lack of demand, and the inability to borrow money. It will take several years for these cutbacks in investment to affect oil production; in the meantime, depletion will take over and cause irreversible declines in oil production in the next five to ten years.
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Bread and Oil: Rising Food Prices and Riots

by Yair Wallach, The Oil Drum, on March 3, 2008

Bread and Oil: Rising Food Prices and unrest in the Middle East

Yair Wallach is completing his PhD in Cultural History in Birkbeck College, the University of London. He currently makes his living by writing articles of economic analysis on the Middle East.

Abstract
The use of food crops for biofuels is one of the key factors driving a dramatic increase in the global price of cereals. This trend is set to intensify. This article will look at the potential implications of rising wheat prices for countries in the Middle East, taking Egypt and Morocco as examples. Government food subsidies in both countries have so far protected the poor urban population from much of the global hike in cereal prices. However, as food prices continue to spiral, subsidies will demand a growing share of national budgets. Subsidies cuts seem inevitable, leading to riots and political instability.

The further development of biofuels could make food too costly for millions of poor in the Middle East, and destabilise the region which supplies most of the world`s oil exports.
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Minnesota State Legislators Discuss Oil Reserves Drying Up

Feb 5, 2008

Today, state legislators listened to the dire warnings of an energy leader at the Minnesota State Capitol.

The world's oil reserves are drying up according to Matthew Simmons, an energy investment banker from Houston who has recently written a book on the subject.

Simmons says oil production has already peaked and soon supply won`t be able to keep up with demand.
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Worldwide Peak Oil May Already Be Here – Now What?

Tuesday, February 05, 2008

RedOrbit -- OPEC's global oil production has not increased since 2005
By Ronald G. Nelson

Houston recently hosted the 2007 US.-World oil Conference of the Association for the Study of Peak Oil & Gas - USA (ASPO) at the Hilton Americas hotel. The event included four days of presentations and field trips by several hundred participants. Yet, despite the compelling significance of this issue - that the world's supply of petroleum is due to "peak" at some point during this decade, at which point total world production will officially be declining toward depletion - there was amazingly little press coverage or US. public interest. ASPO boasts more than 20 chapters in the world, many of which are in Europe. Most members are retired and active professionals of the oil industry and academia. They are united in their efforts to educate the public and governments about the urgent need to begin steps to alleviate a massive potential crisis that is already apparent in the rapid price increases for crude oil and natural gas, two leading indicators measuring our advanced industrial economy.
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