The Oil Drum: Australia/New Zealand

The November 2008 edition of Oilwatch Monthly can be downloaded at this weblink (PDF, 1.55 MB, 24 pp).

Figure 1 - World Liquids production from January 2004 to October 2008.

The Oilwatch Monthly is a newsletter that is available free of charge with the latest data on oil supply, demand, oil stocks, spare capacity and exports. Readers who want to receive the Oilwatch Monthly in their e-mail box each month can subscribe at this weblink, by filling in their first name, last name, email adress and selecting the oilwatch monthly in the mailing list box. To finalize your subscription push the 'inschrijven' button below the form.

A summary and latest graphics below the fold.

The October 2008 edition of Oilwatch Monthly can be downloaded at this weblink (PDF, 1.42 MB, 24 pp).

Figure 1 - World Liquids production from January 2004 to September 2008.

A summary and latest graphics below the fold.

At this year's ASPO conference, I was twice asked about the gasoline supply situation - once at a panel session and once by a reporter. At the time, there were gas shortages throughout the Southeast, and some of the speakers gave the impression that this was the beginning of the end: Gas shortages are here to stay, and we are on the verge of the entire country running out of gasoline. There were a number of predictions along the lines of "It's going to get a lot worse before it gets better."

While first discussing the source of the gas shortages - low inventories followed by a hurricane that sidelined a significant source of refining capacity - I answered the question as follows: "This is a temporary event. We will see imports start to pick up and fill the shortfall. We will see refining capacity start to come back online, and I predict that a month from now gasoline inventories will be higher than they are today."

VLCC Tanker - capable of transporting 2 million barrels

Tomorrow at 10:30 EDT we will get our first official report of crude/product inventories since Hurricane Ike and second since Hurricane Gustav. Below the fold are some brief thoughts on what has transpired in the past week, followed by an open thread.

An update on the latest production numbers from the EIA along with graphs/charts of different oil production forecasts. 

World oil production (EIA Monthly) for crude oil + NGL. The median forecast is calculated from 14 models that are predicting a peak before 2020 (Bakhtiari, Smith, Staniford, Loglets, Shock model, GBM, ASPO-[70,58,45], Robelius Low/High, HSM). 95% of the predictions  sees a production peak between 2008 and 2010 at 77.5 - 85.0 mbpd (The 95% forecast variability area in yellow is computed using a bootstrap technique). Click to Enlarge. 

The August 2008 edition of Oilwatch Monthly can be downloaded at this weblink (PDF, 1.34 MB, 26 pp). In this edition I have added more demand, oil stock and production revision data.

Figure 1 - OECD crude oil stocks from January 2002 to June 2008.

A summary and latest graphics below the fold.

_{Annual rates of total drilling for and production of oil and gas in the US, 1949-2005 (R² of the two = 0.005; source: U.S. EIA and N. D. Gagnon). Since drilling and other exploration activities are energy intensive, other things being equal EROI is lower when drilling rates are high.}

As oil prices increase and the presidential campaigns heat up there is a lot of discussion about increased drilling for oil. In economic theory higher prices will give market signals to increase exploration and exploitation of resources and hence deliver more to society, although at a higher price. Will this in fact occur with oil for the United States? Of course we will not know until we do it, but we can look to the past for hints. The enclosed figure represents the history of drilling and production for oil and gas in the United States. The answer seems inescapable: the rate of drilling for oil in the United States has been unrelated to finding or producing oil and gas, which is determined principally by geology. Mother nature, not market theory, determines resource availability, at least in this case and probably many more. (Source: Hall, Powers and Schoenberg (in press))

Yesterday, August 6, the EIA published new International Petroleum Monthly data. The new data revised downward previously published estimates, all the way back to 2002, with the biggest revisions in 2007 and 2008. With the revisions, the latest month, May 2008, shows new record-high oil production. Other recent months which had previously set records are now 67,000 barrels per day to 417,000 barrels per day lower than reported just a month ago. In this post, I offer a few thoughts on what the new data suggests.

Figure 1. World crude and condensate production, based on August 2008 EIA International Petroleum Monthly

I have seen the question frequently arise as to whether the ethanol blending mandate is based on rigid numbers (e.g., 9 billion gallons in 2008) or whether it is actually a percentage requirement, and the number is an estimate based on projected gasoline sales. In other words, let's say that hypothetically gasoline sales this year are only half the level of last year. Is the mandate still for 9 billion gallons, or does it drop to 4.5 billion gallons?

Also, a claim was recently made here that refiners are underblending ethanol this year, and are likely to end the year in violation of the mandate. So, I also sought some clarification around this issue. I contacted Peter Gross at the EIA, who seemed to be their expert in this area. He was kind enough to reply, and clarified both issues:

The July 2008 edition of Oilwatch Monthly can be downloaded at this weblink (PDF, 1.34 MB, 22 pp). In this edition I have added biofuels, monthly production revision charts and a barrel to BTU conversion section.

Figure 1 - World Liquids Fuel Production excluding biofuels January 2004 - May 2008

A summary and latest graphics below the fold.