Thursday April 21, 2005

White House : "Saudi Near Capacity"

There. None other than U.S. President George Bush himself has come out and said it. Do you believe in Peak Oil now? For those who have disagreed with the peak oil viewpoint in the past, the simple phrase "I told you so" comes to mind.

nasdaq.com :

The Bush administration said Wednesday that Saudi Arabia is producing oil at close to its capacity.

"You have to look the situation in Saudi Arabia as well, and I think most people recognize they are producing at near capacity already," White House spokesman Scott McClellan said.

McClellan's comments came a day after President George W. Bush said he doubted Saudi Arabia was producing as much oil as it possibly could and said one question that has to be answered is exactly how much oil Saudi Arabia could produce if it went flat out.

Bush did say that it was clear that Saudi Arabia doesn't have millions of barrels of spare capacity like it has in the past.

See also :

1. Bank says Saudi's top field in decline
2. Saudi Arabia : Hubbert Peak arrived ...
3. Peak Oil May Be Now : Matt Simmons

(2005-04-21 11:12:24 SGT) [Energy] Permalink

The end of oil is closer than you think

guardian.co.uk :

The one thing that international bankers don't want to hear is that the second Great Depression may be round the corner. But last week, a group of ultra-conservative Swiss financiers asked a retired English petroleum geologist living in Ireland to tell them about the beginning of the end of the oil age.

They called Colin Campbell, who helped to found the London-based Oil Depletion Analysis Centre because he is an industry man through and through, has no financial agenda and has spent most of a lifetime on the front line of oil exploration on three continents.

Campbell reckons global peak production of conventional oil - the kind associated with gushing oil wells - is approaching fast, perhaps even next year. His calculations are based on historical and present production data, published reserves and discoveries of companies and governments, estimates of reserves lodged with the US Securities and Exchange Commission, speeches by oil chiefs and a deep knowledge of how the industry works.

"About 944bn barrels of oil has so far been extracted, some 764bn remains extractable in known fields, or reserves, and a further 142bn of reserves are classed as 'yet-to-find', meaning what oil is expected to be discovered. If this is so, then the overall oil peak arrives next year," he says.

If he is correct, then global oil production can be expected to decline steadily at about 2-3% a year, the cost of everything from travel, heating, agriculture, trade, and anything made of plastic rises. And the scramble to control oil resources intensifies. As one US analyst said this week: "Just kiss your lifestyle goodbye."

The study of "peak oil" - the point at which half the total oil known to have existed in a field or a country has been consumed, beyond which extraction goes into irreversible decline - used to be back-of-the envelope guesswork. It was not taken seriously by business or governments, mainly because oil has always been cheap and plentiful.

In the wake of the Iraq war, the rapid economic rise of China, global warming and recent record oil prices, the debate has shifted from "if" there is a global peak to "when".

"The first half of the oil age now closes," says Campbell. "It lasted 150 years and saw the rapid expansion of industry, transport, trade, agriculture and financial capital, allowing the population to expand six-fold. The second half now dawns, and will be marked by the decline of oil and all that depends on it, including financial capital."

(2005-04-21 11:00:46 SGT) [Energy] Permalink

Can China outsourcing overtake India?

- What is Mr Lowem doing reading Indian news? Well, you never know what you might find ...

indiadaily.com :

China is eager to take control of the worldwide lucrative business process outsourcing and offshore IT projects. Tha's the gold of export revenue. China understands that in twenty years, they will be lagging behind India badly unless they can turn it around now.

[my notes : actually in 5 years or less, the effects of peak oil will be making things "a lot more interesting" than that]

China is excellent in manufacturing and utilizing low cost Chinese labors sometimes in subhuman conditions. But in the long run America and Europe will replace Chinese labors by fully automated robots and nothing can be cheaper than that. The next phase of manufacturing revolution is introduction of intelligent robots in massive scale. Japan will excel there and the factories will start moving back to America and Europe where qualified workers are available and the backlash from local consumers are gone.

China understands the new Robot wave of manufacturing. They are panicked and want really to get into Business Process Outsourcing and offshore IT projects. This part of the export business cannot be replaced by Robots in the next thirty years, Now the million-dollar question is how can they do it?

For Business Process Outsourcing, you need two things. A Government ready to provide the infrastructure and flexible policies towards international companies. The second component is an English speaking elite middleclass that is well educated and intelligent to perform high-end white-collar jobs. China and India both have the first component. What China really lacks is the second component. They just do not have the English speaking elite middleclass that is well educated and intelligent to perform high-end white-collar service jobs helping the Western companies. It will take more than seventy five years for China to build that capability. It was a mistake for the Chinese to avoid English and not spreading higher education to all in the country. India must thank Late Pandit Nehru and Indira Gandhi for that far sight. No one understood why India took money from starving farmers in fifties and sixties to develop and focus on engineering and medical universities all over the country and make higher education free for all students in the country.

My notes :

1. China is trying desperately to catch up on the English part. Lots of English classes springing up over there. But yes, it does take years. You don't get widespread English proficiency in a large nation overnight. 75 years may or may not be right (also see peak oil note above).

2. I wouldn't put "elite" and "middle-class" together in the same phrase. The real elite are the Rockefellers and the Rothschilds of the world.

3. Inflation due to USD flooding the China and India economies will lead to rising prices, while making the Americans poorer (due to currency devaluation). An equilibrium will be reached somewhere. The outsourcing trend will not "grow forever".

(2005-04-21 10:49:33 SGT) [Biz] Permalink

Venezuela, India to start heavy oil exploration project

The BRIC Alliance (Brazil, Russian, India, China, +Venezuela, possibly +Iran) seems to be coming along nicely.

indiadaily.com :

Venezuela and India would start a pilot project on heavy oil exploration in Rajasthan in August ... as per the initial estimates, there were about 14.60 million tonnes of heavy oil reserves and 33.2 million tones of bitumen.

[Petroleum minister Mani Shankar] Aiyar announced that India and Russia would also work on the underground coal gasification for the states of Gujarat and Rajasthan, and Tamil Nadu as there were huge deposits of lignite and coal-based mines in the country ...

Aiyar also expressed concerns over decreasing oil sufficiency in the country from 50 to 30 per cent and said oil dependence on imports has risen to 85 per cent.

(2005-04-21 10:33:30 SGT) [Energy] Permalink

Energy conversion table

Found at indiainfoline.com :

	Tonnes	Long tons	Barrels	Gallons (Imperial)	Gallons (US)	Tonnes/year
Tonnes (metric)	1	0.984	7.33	256	308	-
Long tons	1.016	1	7.45	261	313	-
Barrels	0.136	0.134	1	35	42	-
Gallons (Imperial)	0.00391	0.00383	0.0286	1	1.201	-
Gallons (US)	0.00325	0.00319	0.238	0.833	1	-
Barrels/day	-	-	-	-	-	49.8

Good for those news articles (especially from Asian news sources) which keep mentioning "tonnes" or "metric tonnes" but all the other figures that you know of (total global reserves, global consumption, etc.) are in terms of barrels.

(2005-04-21 10:22:43 SGT) [Energy] Permalink

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