The Peak Oil Crisis: The word begins to spread

Last week Bloomberg, "the leading global provider of data, news and analytics," published a balanced, carefully researched, 4,200 word article on peak oil. For those of us who follow the peak oil story, this was an event of earth shaking proportions. The article covers most aspects of the peak oil story including extensive quotes from all sides of the issue. The piece is entitled "Peak Oil Forecasters Win Converts on Wall Street to $200 Crude."

The author, Deepak Gopinath, captures the essence of peak oil in one succinct paragraph: "Proponents of this controversial idea say global oil production is now at or near its zenith. Once the flow crests and starts to decline - and some geologists say it already has - oil will no longer be able to slake the world's growing thirst for energy. The result will be the oil shock to end all oil shocks. The price of a barrel of crude will spiral to $200 - and keep rising. To the peaksters, today's energy crunch is nothing next to the pain that will follow."

Nearly everything in the peak oil mantra is mentioned in the story. On balance this story is about 90 to 10 pro peak oil. The evidence peak oil is for real and imminent is laid out in some detail while the doubters simply assert their beliefs all is well and that no peak is in sight. Obviously thousands of influential opinion makers, financial analysts and policymakers are aware of this story and have taken the message at least partially aboard.

- This Bloomberg article is a milestone in advancing peak oil awareness. It is the latest big step forward in a process that National Geographic started back in May 2004 with its "End of Cheap Oil" issue.

(2006-09-09 23:31:58 SGT) [Energy] Permalink

Clarification of the huge Chevron gulf oil discovery

energybulletin.net :

The September 5th announcement of the huge Gulf of Mexico discovery should be clarified. The announcement claims that the discovery could increase US proven reserves of oil by as much as 50%. However, the total amounts are highly speculative. The area is very deep: 7000 feet of seawater and a further 20,000 feet below the ground. The normal time to accurately estimate oil and gas field size is months. Production will only start in 2010 at the earliest; full production in 2013 at the earliest.

The US Senate is weeks away from voting on the lifting of the 25-year ban on offshore drilling off the majority of the coasts in the US. The announcement is reminiscent of the Mexican "huge oil discovery" announced last year of a possible 10 billion barrels, which was quietly revised this year to around 43 million barrels, a downward revision of 99.57%. That announcement was made a few months before the Mexican parliament was to vote on Pemex (state oil co)'s budget and rights to expand drilling. This illustrates the potential political pressure to announce oil and gas discoveries.

The wells are most likely mainly natural gas, as they are very deep. Oil tends to form closer to the surface, gas deeper. Therefore the discovery is likely to impact natural gas markets, not oil, if the gas exists in meaningful quantities. The wells are estimated to cost between $80M to $120M each. Payback period with gas at $7 is about 3 to 5 years, not taking into account new technical issues at these record depths, and very high insurance rates for these depths in the Gulf.

(2006-09-09 23:16:20 SGT) [Energy] Permalink

Peak Oil on Business Times

Two articles on peak oil were published on 7 Sep 2006 on Business Times, Singapore's business newspaper. One of the articles is a partial reprint of the Bloomberg exclusive that was blogged earlier. The original Bloomberg article was titled "Peak oil forecasters win converts on Wall Street to $200 crude". The Business Times one was titled "Is the end of the Oil Age nigh?", with the intro : "Proponents of a geologic theory known as peak oil say global oil production is now at or near its zenith".

The other article is an editorial titled "Dire need for more non-oil energy sources". This one was apparently written in-house, but without any author being credited. An excerpt follows.

business-times.asia1.com.sg :

The 12 per cent reversal in oil prices from last month's historic peak may hearten consumers, but that should not lull anyone into a false sense of security. The trend is clear: the five-year upward move in prices has shown that neither OPEC nor non-OPEC producers are in a position to tackle the looming energy challenge.

Barring a crash landing of the US economy via destruction of home values, the current economic drivers will keep oil demand strong. The peak oil theory - that oil production is about to hit an inevitable downward arc - is gaining currency even with Wall Street, so much so that even the prospect of a US$200 barrel is not discounted. Non-Opec production of crude is expected to peak in the next 10 years.

In the long term, consumers need non-oil energy resources. The extent of future demand can be gauged when it is realised that China, with a much larger population than the US, consumes just 2 barrels of oil per capita compared with 26 barrels in the US. So even the just-announced discovery of a huge oil find deep down the Gulf of Mexico will still leave the US dependent on imports for half of its oil. The need for alternative energy sources couldn't be more painfully obvious.

(2006-09-09 18:58:14 SGT) [Energy] Permalink

Temasek portfolio value up 24% at $129b

business-times.asia1.com.sg :

Temasek Holdings reported a 24% increase in its net portfolio value from $103 billion to $129 billion for financial year ended March 31. This pace exceeds the 15% growth in the previous financial year. Net profit rose 71% over the previous year to $12.8 billion.

Temasek's total shareholder return by market value over the most recent three year period was a compound annual return of 28% compared with 18% over the 32 years since its inception.

(2006-09-09 16:28:14 SGT) [Biz] Permalink

Malaysian government may revoke some biodiesel licences

biz.thestar.com.my :

Malaysia may revoke some of the 52 licences it issued to companies to develop biofuel as they aren't committed to the business. "I think some of them are not really serious" about investing, Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui said in an interview.

Malaysia, the world's largest producer of palm oil, is boosting the use of alternative energy sources such as biofuel after crude oil prices tripled since 2002, and the cost of capping fuel prices increased.

(2006-09-09 16:23:22 SGT) [Energy] Permalink

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