With oil production in non-OPEC countries =93permanently=94 peaking in
five years or less,
(note: a German government study says it already peaked in 2006, see
"The Energy Watch Group Report) and with OPEC =93struggling to bring
fresh capacity online,=94 there is no chance the world will build an oil
supply =93cushion=94 in the foreseeable future, thus =93even minor supply
disruptions are bound to have a large impact on prices.=94
That=92s the grim assessment of the Houston-based energy analysts at
Raymond James & Associates, the brokerage firm. Their report, issued
yesterday, spells further trouble for all concerned, but especially
for American motorists who are already struggling under the weight of
$4-a-gallon gasoline, for it is bound to give the oil market=92s
financial players further reason to bid up light sweet crude, which
yesterday again set a record, topping $120 a barrel on news of
possible supply disruptions in Nigeria.
=2E.. Indeed, the Raymond James report suggests that the market may be
about to raise the risk premium on a barrel of crude, which now stands
at very roughly $10 to $20 a barrel, as =93overall growth in global oil
supply appears . . . barely sufficient to keep up with demand,=94 to
quote Raymond James. This might raise the spot crude price to $130 to
$150 a barrel this summer ...
(6 May 2008)
Neil King Jr., Wall Street Journal
Satellites Check
Big Field's Health;
Jitters Over Supply
---
At a time of high anxiety over soaring fuel prices and scarce
supplies, oil analysts are resorting to satellite imagery to crack one
of the industry's biggest unknowns -- whether Saudi Arabia's massive
Ghawar field is slipping into depleted old age.
Saudi Arabia has long contended that its famed Ghawar field,
responsible for around 7% of global supply, remains in fine shape and
will continue to churn out around five million barrels a day for
years.
But Saudi Arabia doesn't publish data to back that up. Skeptical
analysts in the West insist the field is in decline, an event they say
presages a peak in world oil production.
Analysts at Sanford C. Bernstein Ltd., a New York-based investment
research firm, just spent months trying to resolve the debate. Their
tools? Cameras fixed to satellites that hover miles above the Saudi
desert.
Combing through dozens of high-resolution satellite images of Ghawar
going back to 2001, the Bernstein team has concluded in a study sent
to clients at the end of April that only part of the vast field "is
suffering signs of old age." On the whole, Bernstein says, the field
"is being properly managed" and is experiencing only "mild production-
decline rates at worst."
Critics of the study, including some who have crunched their own
overhead imagery, say the Bernstein study is insufficient and the
debate over Ghawar's health is far from over.
"This is junk science," says Houston investment banker Matthew
Simmons, who insists that only detailed, on-the-ground records can
speak to the field's real condition. Mr. Simmons's 2005 book,
"Twilight in the Desert," cited technical papers to argue that Ghawar
and Saudi Arabia's other giant fields were showing signs of increasing
stress and would soon slip into decline. Mr. Simmons is a well-known
proponent of the theory that world-wide oil production may already
have hit its all-time peak.
This latest tiff over Ghawar comes as alarm grows on Wall Street and
in Washington over whether the world's big crude producers can keep
pace with the growing demand for oil in Asia and the Middle East.
(6 May 2008)
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