Oilisms
Adam Porter's occasional column wades into the oilfields.
Well, you read it here first. The NI is up for a prize from Sonoma University in California for its piece on oil depletion in Pipeline cowboys (NI 361).
Oilisms was talking to a typical free market economist recently – in fact we can name him: Fatih Birol, the Chief Economist and Head of the Economics Analysis Division from the International Energy Agency. He maintains that ‘Saudi Arabia has to increase production by three million barrels a day by the end of the year, or we will face difficult times.’ Three million barrels a day? That’s an increase of over 33 per cent. By the end of the year? It is a total impossibility.
Production in the North Sea fields is falling at a faster rate than expected. Data will soon confirm that rather than a nice slow decline of around 7 per cent a year (the expected rate), output went down by 11 per cent in 2003. It is being called a ‘production waterfall’. For Britain this means more imports and lower tax revenues.
At a recent Berlin conference of geologists, statisticians and former oil executives belonging to the Association for the Study of Peak Oil, speakers from the major oil companies were invited to give their views about the decline in oil. The response in effect was: ‘Oil will go on for ever, don’t worry, everything is OK, buy a four-wheel drive.’
Before speaking, Jeffrey Johnson of Exxon (Operations Manager of Production Geoscience) asked all those with film cameras not to film him. When Oilisms asked him why, he said it was ‘because I’m not a very good public speaker’.
Another little bit of information that has not been making headlines is oilfield discoveries. They have not just dwindled, gone down a bit or slowed. They are at zero. Nil. Nada. A source told Oilisms that: ‘When the market digests the fact that despite all the new technology they can’t find a single new drop of oil, well, stick another zero on the barrel price.’
We were also speaking to a senior EU figure (who didn’t want to be named because ‘they will sack me’.) He was not hopeful about oil prices. ‘The oil companies are sitting on their oil, drip feeding it. Why pump it now – why not wait until it is $80 a barrel, then pump it? It makes perfect sense.’
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