tag:blogger.com,1999:blog-8861605.post7006161340633178624..comments2024-03-24T11:01:27.668-04:00Comments on Resource Insights: Days of world consumption: A warning label for oil and gas discoveriesKurt Cobbhttp://www.blogger.com/profile/05330759091950742285noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-8861605.post-20387167811317522542010-01-26T10:19:17.521-05:002010-01-26T10:19:17.521-05:00Rice Farmer,
I, like you, am skeptical that Iraq ...Rice Farmer,<br /><br />I, like you, am skeptical that Iraq will produce the huge flowrates that are now being touted in the media. But if it does, then I think the effect will be to hold down the price of oil and thereby discourage investment in new capacity elsewhere. We're experiencing that now because of the recession/depression which brought down prices and therefore discouraged investment.<br /><br />It is precisely the boom/bust cycle which makes it difficult for exploration companies to commit to long-term exploration plans. Ultimately, that will mean lower flowrates than might have otherwise been the case because of lack of sustained exploration effort.Kurt Cobbhttps://www.blogger.com/profile/05330759091950742285noreply@blogger.comtag:blogger.com,1999:blog-8861605.post-66529931355252189312010-01-25T21:31:52.779-05:002010-01-25T21:31:52.779-05:00The correct answer was 12 days.
Would you believe ...<i>The correct answer was 12 days.</i><br />Would you believe that this is exactly the same question and answer I used in peak oil lectures to civic groups here in Japan? And the response was... exactly the same. The general public has no idea.<br /><br />Another thing to consider is that even after reserves are discovered and confirmed, there is a time lag in bringing the oil (or gas) to market.<br /><br />Interestingly, there is much encouraging talk these days about how Iraq will change the equation. Indeed, Iraq has a great deal of oil that can be developed for relatively low capital cost. But there are many things that can go wrong in Iraq. Nevertheless, let's say that everything goes swimmingly and Iraq starts pumping vigorously, which depresses the price of crude. Is that a good thing? Recall that most oil-producing countries are in decline, which means their capital costs are rising. If Iraq pumps a lot of cheap crude, that would further discourage investment by other oil producers. Remember that after the crash of 2008, 60% of oil development projects in the Persian Gulf region were shelved because the drop in oil price removed the incentive. So I think counting on Iraq to supply us with lots of cheap crude is a mistake. What's your take on this, Kurt?Rice Farmerhttps://www.blogger.com/profile/09172342023074235356noreply@blogger.comtag:blogger.com,1999:blog-8861605.post-64348609964544805102010-01-25T16:41:10.442-05:002010-01-25T16:41:10.442-05:00If you take the most optimistic estimates for the ...If you take the most optimistic estimates for the oil finds only from the table and then add them up, you should get a little over 16 months of supply. But keep in mind my specifications for the warning label that the days of world consumption is based on the previous year's consumption. So, for the older finds, the days of world consumption would be a smaller number since overall world consumption has grown since then.<br /><br />As for the natural gas finds, I used numbers as indicated by the double asterisks that reflect domestic U. S. consumption since I would expect virtually all this gas to be marketed within the United States. Using the most optimistic natural gas numbers yields about 20 months of domestic supply for both entries combined.<br /><br />Naturally, there are many smaller discoveries of oil and natural gas. But what I haven't done and could be done is to add all of them up (assuming we could find the appropriate data) and <i>and then subtract the number of days of supply we are losing to depletion over the period covered</i>. That would give us a better idea if are running in place, making additions or falling behind.<br /><br />Discoveries vs consumption for oil is a pretty clear case. If we backdate so-called reserve growth to when the field from which this growth comes was first discovered, we find that discoveries have been dramatically lagging consumption, about one barrel discovered for every three consumed in the last decade.Kurt Cobbhttps://www.blogger.com/profile/05330759091950742285noreply@blogger.comtag:blogger.com,1999:blog-8861605.post-440466074047802662010-01-25T10:17:50.233-05:002010-01-25T10:17:50.233-05:00Best idea I have heard all day (maybe all year!)Best idea I have heard all day (maybe all year!)ebikeguruhttps://www.blogger.com/profile/09287545925693281736noreply@blogger.com