Oil, More and Less
Another post of interest from the In Session archives:
Oil is a tale of more and less.
Here's the more:
Saudi Arabia has started production from its giant Khurais oilfield, the largest ever single addition to global oil supplies, Saudi Aramco's top executive said in remarks broadcast on Wednesday.
“I am happy to report today that Khurais has entered the stage of operation,” Khalid al-Falih told Al Arabiya television in an interview. “Oil will reach Aramco terminals in a few days for exports... it did not reach the stage of export (yet).”
“The oil from the plant is now being pumped into tanks that are at the project,” he said, adding that the field's capacity can now be seen as part of Saudi Arabia's total output capacity.
The kingdom does not need to use the extra capacity at current demand levels, the head of the state oil company said.
The 1.2 million barrels per day (bpd) Khurais field contains highly prized Arab Light crude, which is easily converted into transport fuel.
Khurais would also produce 315 million cubic feet per day (cfd) of sour gas and 70,000 bpd of natural gas liquids (NGL) to be processed at Shedgum and Yanbu gas plants.
The field can supply over 1.5 percent of daily global oil demand and pump more than two of OPEC's smallest members.
“It's the single largest development that they have ever had,” said Raja Kiwan, an analyst with PFC Energy.
The project brings to a close the latest expansion in oil output capacity in the top oil exporter and the most influential member of the Organization of the Petroleum Exporting Countries.
Saudi capacity has reached 12.5 million bpd. The kingdom has no immediate plans to raise its output potential further, but has outlined how it could reach 15 million bpd capacity when global oil demand requires.
I am a little bit doubtful of even the 12.5 mbd claim, let alone the 15 mbd claim. I have not yet seen any field-by-field analyses that support either of those two numbers. Perhaps they have been missing something. Perhaps this article is repeating a boastful Saudi Claim direct from the Oil Ministry.
2008 was a year of declining oil use, and, presumably, pumping. I would assume this means that more was left in the ground.
Oddly, we get this finding:
The world's proved oil reserves fell in 2008, the first drop in a decade, oil company BP PLC said Wednesday.
Proved reserves of 1.258 trillion barrels in 2008 was 3 billion barrels less than in 2007, the company said.
Meanwhile, energy consumption by members of the advanced economies – defined by membership in the Organization for Economic Cooperation and Development – fell behind consumption by all other nations including China for the first time, BP said in its Statistical Review of World Energy.
“In 2008 the world was no longer supply-constrained, as production growth exceeded that of consumption for all fossil fuels, particularly later in the year,” Tony Hayward, BP's group chief executive, said in an introduction to the report.
“Our data confirms that the world has enough proved reserves of oil, natural gas and coal to meet the world's needs for decades to come,” Mr. Hayward added.
There are two other things of note in that article. The first is that OECD consumption fell behind consumption of all other nations...for the first time. That's a pretty big shift. Maybe somebody should ring a bell?
The second is that the claim that the world has enough oil, gas, and coal to meet its needs "for decades to come" is not supported by any analysis that I've yet seen. Perhaps Mr. Hayward has access to a better model than everybody else, but for now, there are very large concerns about meeting the world's need for growth, given the current production capabilities and known projects.
Such 'happy talk' seems especially out of place these days, almost like a cheery pep talk from the captain of a sinking ship about how "everything is going to be just fine."