ODAC News
Monday 03 Sept
The Oil Depletion Analysis Centre
Global Oil and Gas Reserves v Costs,
2006
1a/ Upstream Spending Surge Fails to Deliver
(Energy Intelligence [Oil Daily], Thu 30 Aug)
1b/ Global Upstream Performance
Review 2007 (Harrison Lovegrove + co,
Wed 29 Aug)
1c/ Global oil reserves up only
1% last year (Financial Post [
The Iraqi Conflict
2/ "Iraq Does Not
Exist Anymore"
(Democracy Now, Tue 21 Aug)
Food – Drought in
3/ Drought Catastrophe
Stalks Australia's Food Bowl (
Natural Gas -
4/ Oversupply of gas does
not mean price cuts (The Telegraph, Mon 03 Sep)
Food – Wheat in
5/ Moscow considers wheat
export ban (The Financial Times, Sun 02 Sep)
Food - Milk Prices
6/ In a growing world, milk
is the new oil (International Herald Tribune, Fri 31 Aug)
Natural Gas -
7/ Bangladesh: No Gas for
Eight Proposed Large & Medium Power Plants
(Energy Bangla [
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1a/ Upstream Spending Surge Fails to Deliver
(Energy Intelligence [Oil Daily], Thu 30 Aug)
From newsletter, no link.
Article: Worldwide upstream oil and
gas investment continues to skyrocket, but it is failing to generate
significant increases in reserves volumes, according to a report released
Wednesday by John S. Herold and Harrison Lovegrove & Co. Worldwide upstream investment rose 45%
to a record $401 billion in 2006, but proved reserve volumes increased just 2%
to 263 billion barrels of oil equivalent, according to the report.
1b/ Global Upstream Performance Review 2007
(Harrison Lovegrove + co, Wed 29 Aug)
http://www.hargrove.co.uk/hlc_presentations.asp
Harrison Lovegrove + co website, publications page.
http://www.hargrove.co.uk/countPressRelease2007.asp
Press Release
http://www.hargrove.co.uk/countPRESENTATION2007.asp
Presentation
http://www.hargrove.co.uk/counterGUPR2007presentation.asp
(PDF, 514 Kb) Abridged version
of the full study
Comment: This is the study referred to
above. The Press Release contains a pretty good summary, the abridged version
of the report is still fairly detailed. See first link above, H L & co’s publications page, if you want to buy the full report.
Article: [From the Press Release]
… Key regional findings of the 2007 Global Upstream
Performance Review are:
• The
• Oil reserves and production in
• Oil and gas reserves in Europe are dropping sharply
as cash flow exceeds capital spending, but new
• Capital investment in the Africa & Middle East
region is being redirected toward exploration and acquisitions as proved
reserves continue to decline.
• Asia-Pacific is the most profitable region due to
relatively lower costs and tax rates, but lower rates of reinvestment indicate
opportunities are constrained.
• Oil and gas reserves in South & Central America
continue to fall as production flattens, but profitability more than doubled as
costs have been contained.
• Government take in the Russia & Caspian region
is high and rising, limiting profitability, but the resource potential is so
substantial that capital investment is growing rapidly.
[From the abridged version of the report, Foreword,
page 9]
The debate over peak oil continues, and, in fact, has
become quite heated. Without expressing a position on the matter, we believe
that the issue has become part of the industry’s long-term planning. If the
peak oil theory is correct, and a decline in world production is imminent, a
company must choose among four alternatives – try to become a dominant
participant, find a niche operational talent, harvest assets, or liquidate
quickly.
1c/ Global oil reserves up only 1% last year
(Financial Post [
Comment: Whereas most official energy
studies either downplay Peak Oil, or ignore it altogether, this one takes the
point of view – what if it is here, now. And
"If the peak oil theory is correct, and a decline
in world production is imminent, a company must choose among four
alternatives…”
Article: Record global oil and gas
profits of US$243-billion and record spending of US$401-billion have resulted
in a marginal 1% increase in world oil reserves last year -- all of it coming
from a 1.9-billion-barrel addition from Canada's oilsands,
according to a new study.
Without Canada's contribution, 228 public oil and gas
companies active globally and included in the study would have collectively
produced more oil than they found, John S. Herold, a
U.S.-based independent petroleum research company, and Harrison Lovegrove & Co., a global oil and gas advisory firm,
said in the 2007 Global Upstream Performance Review, released yesterday.
"With many prospective regions still off-limits,
oil reserve and production growth remains infinitesimal," says the study,
the 40th conducted annually by the two organizations and based on data filed with
the U.S. Securities Exchange Commission and similar agencies worldwide.
"Global oil reserves would have fallen by 2.1%
over the last two years without a 6.4 billion barrel increase in
The industry had disappointing reserve addition
results despite looking hard for new deposits: Exploration spending grew by
39%, the largest jump in five years.
... The challenges are heating up the debate over peak
oil, the report says.
"Without expressing a position on the matter, we
believe that the issue has become part of the industry's long-term
planning," the study says.
"If the peak oil theory is correct, and a decline
in world production is imminent, a company must choose among four alternatives
-- try to become a dominant participant, find a niche operational talent,
harvest assets or liquidate quickly."
The picture is brighter for the natural-gas industry
globally. Reserves and production grew by 3% in each of the past four years,
thanks to the success of so-called "resource plays" that rejuvenated
the
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2/ "
http://www.democracynow.org/article.pl?sid=07/08/21/1349252
Comment: Full title:
<<"Iraq Does Not Exist Anymore": Journalist Nir
Rosen on How the U.S. Invasion of Iraq Has Led to Ethnic Cleansing, a Worsening
Refugee Crisis and the Destabilization of the Middle East.>>
You can either read the transcript or listen to the
whole interview. The interview does not mention oil or gas, that is not the
theme. However, it does explain clearly why the current problems in
Article:
AMY GOODMAN: What do you think of Senator Levin
calling for the Maliki and the whole government to
disband?
NIR ROSEN: Well, it’s stupid for several reasons.
First of all, the Iraqi government doesn’t matter. It has no power. And it
doesn’t matter who you put in there. He’s not going to have any power.
... The government doesn’t do anything, doesn’t
provide any services, whether security, electricity, health or otherwise.
Various militias control various ministries, and they use it as their fiefdoms.
Ministries attack other ministries.
…
NIR ROSEN: … So I think it’s wrong to think of
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3/ Drought Catastrophe Stalks
http://www.planetark.com/dailynewsstory.cfm/newsid/44022/story.htm
Comment: It is four months since that
last bout of warnings about the drought in
Threat to food crops as Australia prepares to turn off farmers’
water (The Times, Fri 20 Apr)
Australia's epic drought: The situation is grim
(The Independent, Fri 20 Apr)
Article: A thin winter green carpets
Sheep and cattle farmer Ian Shippen
stands in a dying ankle-high oat crop under a mobile irrigation boom stretching
nearly half-a-kilometre, but now useless without water.
"I honestly think we're stuffed," he says
grimly.
... The Murray-Darling normally provides 90 percent of
But with some crops now just 10 days from failure,
farmers are to receive no water at all for irrigation through the summer, while
others will get a fraction of their regular entitlement to keep alive vital
plantings like citrus trees and grapevines.
The massive Hume Weir, which can hold enough water to
fill seven
"It's grim. The water is not there," says
Wendy Craik, the head of the Murray-Darling Basin
Commission which oversees storage in the country's longest river and dam
system.
... Reserve Bank figures show rural debt has risen
sharply from A$26 billion in 1999 to A$43 billion in 2005. "We are hearing
stories of farmers defaulting on lease payments," Warne says. Adding to
the economic vice are rising interest rates, with most farmers already heavily
in debt for millions of dollars worth of tractors, harvesters and irrigation
equipment…
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4/ Oversupply of gas does not mean price cuts
(The Telegraph, Mon 03 Sep)
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/03/cngas103.xml
Comment: The Telegraph discusses just
how precarious the
“LNG promises to make the international gas market far
more liquid, meaning such price spikes are far less likely.” Several
reports over the last year or so have pointed to an upcoming shortage of LNG, I
have not seen any that have pointed to a glut.
The main problems for
<< "We could well be in a boom period where we have
some excess supply, but then you always have to be sceptical about these kinds
of things," he said.
"Demand can always be unpredictable. We don't
know how chilly the winter will be. And remember that much of the gas that
comes here doesn't have to. It could easily go to the Continent if that would
be more profitable.">>
Article: ... Call it bad luck, call it
a terrible foul-up, but moments later the anchor smacks into one of the biggest
pipelines taking gas into land from the
Soon enough, as it becomes clear that the so-called
Central Area Transmission System (Cats) is damaged, the pipeline, which
provides around 8pc of
Prices almost instantly shoot up, nearly doubling. The
market, which was serenely sailing on, hoping that the days of record high
prices were gone, has suffered a nasty shock.
As well it might. Cats is one of the essential
invisible links which helps keep
... Meanwhile, wholesale spot gas prices - which in
turn decide what the major utility companies charge for their own supply, and
electricity - rose to as high as 35p a therm, higher
than they had been at the height of last winter.
The accident served as an important reminder of how
fragile
With all of them set to come on-stream this winter,
many in the gas industry expect the market to be over- rather than
under-supplied for the next four years. It also means
... "On paper, for the next four years there will
be fairly massive oversupply," says Patrick Heren
of the Heren Report. The implication is lower, and
more stable, gas prices.
... But according to Matthew Monteverde
of Argus European Natural Gas, it is still too early to assume that prices will
stay low in the coming years.
"We could well be in a boom period where we have
some excess supply, but then you always have to be sceptical about these kinds
of things," he said.
"Demand can always be unpredictable. We don't
know how chilly the winter will be. And remember that much of the gas that
comes here doesn't have to. It could easily go to the Continent if that would
be more profitable."
The gas price is closely linked to the oil price, and
with crude close to record levels, there remains plenty of upward pressure on
gas...
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5/
http://www.ft.com/cms/s/0/9cc469a6-597a-11dc-aef5-0000779fd2ac.html
Comment: Wheat prices reached new
record highs last Friday. With elections coming up later this year, and
presidential elections in March 2008,
Article:
Cereals traders said
European-based cereal traders said the mere discussion
of an export tariff would limit Russian foreign sales. Russian merchants would
avoid new export commitments on fears that the sales could be taxed and
unprofitable, the traders said.
The discussion of an export ban is also fuelling panic
buying by some food-importing countries, such as
In
Global wheat inventories have fallen to the lowest
level in 26 years as robust demand from emerging countries coincides with lower
supplies as the Australian, European and Canadian crops were hit by bad
weather.
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6/ In a growing world, milk is the new oil
(International Herald Tribune, Fri 31 Aug)
http://www.iht.com/articles/2007/08/31/business/wbmilk.php?WT.mc_id=newsalert
Comment: Interesting review of the
increase in global milk prices. The focus is
Article: ... Driven by a combination
of climate change, trade policies and competition for cattle feed from biofuel
producers, global milk prices have doubled over the past two years. In parts of
the
"There's a world shortage of milk," said
Philip Goode, manager of international policy at Dairy Australia in
... But the biggest force driving up milk prices is
the same one that has driven up prices for conventional commodities like iron
ore and copper: a roaring global economy. Rising incomes, from
... That is a lot of milk.
Others say there are plenty of places where more milk
can be produced if the price is right. One thing they agree on is that milk
prices are likely to stay high and rise even higher.
... What is unusual, and somewhat confusing, about the
milk boom compared with other booming commodities is that milk is not like oil:
You can't stick it in barrels and stockpile it. It goes sour. Even in powder
form, the most commoditized version, milk has a shelf life. As a result, only
about 7 percent of all the milk produced globally is traded across borders. The
rest is consumed in domestic markets, which are protected by geography and just
as often by tariffs or subsidies.
... But because of the local nature of the market,
there is very little spare capacity. In the past, the world could always count
on the
...
... At the same time, rising demand for biofuels is
pushing up the price of corn and other grains, which is what farmers in the
... Hemme at IFCN estimates
that both the U.S. Midwest and
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7/
http://www.energybangla.com/article_det.asp?aId=676
Comment: Quite a few countries face
gas shortages right now, for some all year round, for others it tends to be
seasonal.
Article: The Power Division of
Bangladesh is set to face a major setback in implementing at least eight large
and medium power plant projects to generate a total of 1,700MW electricity as Petrobangla has informed the Power Development Board that
it will not be possible to supply gas to the plants.
The country is likely to face an acute gas shortage by
2011 and with the current reserve of gas it will not be possible to supply gas
to a number of proposed power plants, including the 450MW Meghnaghat-II
independent power plant, Petrobangla chairman Sheikh Abdur Rashid informed the PDB in a letter last week.
... Petrobangla officials
said it would not be possible to supply gas to the proposed Ashuganj
and Ghorashal power plants as it would result in a
severe gas crisis in the capital.
About the Meghnaghat-II
plant, they said Petrobangla would be able to supply
gas to only one of the two 450MW plants at Meghnaghat.
A Petrobangla high official
said they would be able to supply gas to the proposed power plants if any new
gas fields were discovered in the country. At present power plants consume 40
per cent of the 1,660–1,690mmcfd of the Petrobangla
gas.
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