World Oil

World Oil

Link to syllabus

Link to WDI

R&W pp. 46-57

Adelman, Ross, Krane, Downs

U.S. Oil Production, Consumption, Imports

Source: U.S. DoE

World Productionof Oil

Sources of U.S. Oil, 1973-99: (DOE)

Oil Production and Exports, 20053.1 World Petroleum Supply and Disposition, 2005(Thousand Barrels per Day)

Crude Crude Oil Oil Oil Oil

Region/CountryProductionExports ProductionExportsCanada 3,092 1,360 Iraq 1,889 1,432United States8,322 32 Kuwait 2,672 1,642Mexico 3,784 2,022 Qatar 1,111 933Venezuela 2,867 1,571 Saudi Arabia11,096 7,690Norway 2,978 2,339 United Arab Emirates2,845 2,315United Kingdom1,861 987 Algeria 2,091 1,430Kazakhstan 1,337 1,147 Angola 1,261 1,220Russia 9,511 5,222 Libya 1,721 1,351Iran 4,239 2,574 Nigeria 2,631 2,428

World Total84,579 44,321

Source: US DoE

Changes in Net Exports of Oil 1997-2004 (1,000 b/d)

Petroleum Net Exporters   Net Importers

Increase Russia 3,077   Brazil 573

Saudi A. 717   Japan 473Iraq 861      

Algeria 458      

Mexico 285      

Qatar 271      

Decrease Indonesia -707   USA -2,925U.K. -676   China -2,592

Venezuela -466   India -707

Source: Calculated using BP data.

Change in Net Exports of Natural Gas, 1997-2004 converted to oil equivalent, in thousand barrels/day

  Net Exporters   Net Importers

Increase Norway 740      

  Qatar 454      

  Trinidad 433      

  Canada 243      

Decrease Mexico -221   S. Korea -323

Source: Calculated from BP Statistical Review, 2005

Shale oil and shale gas resources are globally abundant

June 10, 2013

World Reserves

Proved oil reserves at end 2003

Source: BP. Data is obviously out of date.

Canadian Oil SandsAnd the Country with the Second Greatest Proved Oil Reserves Worldwide Is . . . Six months ago, “Iraq” was the correct completion of the above phrase. Its 112.5 billion barrels of proved oil reserves was second only to Saudi Arabia’s imposing 259.3 billion barrels. However, in the December 23, 2002, issue of the Oil & Gas Journal, proved oil reserves in Canada catapulted from an estimated 4.9 billion barrels in 2002 to an amazing 180 billion barrels in 2003. How was this possible? A methodology change by the Oil & Gas Journal now includes western Canada’s oil sands in its definition of proved oil reserves. Heretofore, oil sands were considered “nonconventional” and were not counted as proved oil reserves; however, dramatic reductions in development and production costs have brought oil sands into the realm of economic viability. With today’s technologies and oil prices, it is entirely appropriate to consider western Canada’s vast oil potential as being commensurate with “conventional” crude oils.a

Source: US DoE http://www.eia.doe.gov/oiaf/ieo/oiltext_box.html

PRICES

Real and nominal prices

Lots of the U.S. price goes to taxes; about half goes to production

Cost of production in MENA is quite low

Dramatic differences in output/well

Fig. 3.3 p. 52 (R&W). Crude Oil Real Prices, 2004 US$

Embargo

Fall ofShah

Iran-IraqWar

New Supplies,World Recession

Iraq-Kuwait

Asian Crisis

Nominal and Real Oil Prices, 1860-2010

Source: BP: Statistical Review of World Energy, 2011

U.S. Breakdown of the price of gasoline at the pump

Price of Gasoline/World Price 2000-08

Iran 0.18 Canada 0.85 Germany 1.63Saudi Arabia 0.28 Mexico 0.85 France 1.63Egypt 0.37 India 1.05 Italy 1.67Algeria 0.37 Brazil 1.19 Korea, 1.70United Arab Emirates 0.40 Spain 1.29

United Kingdom 1.78

United States 0.66 Poland 1.37 Netherlands 1.79

Russia 0.69 Japan 1.52 Norway 1.89Jordan 0.77 Sweden 1.61

Source: WDI. The world price averaged about US$ 0.90/liter

Costs of Production, (US$/barrel) 1960

Middle East 0.15United States 1.63Venezuela 0.24Canada 2.53Far East 0.62

“Unit costs of maintaining and expanding crude petroleum production in Middle East and other areas.”

Source: Issawi (1963) Economics of Middle Eastern Oil (p. 54) citing Chase Manhattan Bank

Posted prices in the Middle East were about $1.80; in US it was $3.28

Exploration and Development Costs

Source: OECD/IEA: WEIO Time period is early 2000s

Output/Well (barrels/day). 2003

Output/day# WellsQ/well Output/day# WellsQ/well

Canada 1,652 55.9 30 Nigeria 2,180 2.7 823Mexico 3,789 3.1 1,209 Iran 3,780 1.4 2,671USA 5,777 520.3 11 Kuwait 1,870 1.0 1,968Brazil 1,496 8.9 169 Oman 821 2.6 322Venez. 2,230 11.6 193 Qatar 892 0.6 1,581U.K. 2,065 1.0 2,001 Saudi A. 8,480 1.8 4,764Russia 8,426 119.0 71 Abu Dhabi 1,925 1.3 1,481Algeria 1,560 1.4 1,114 China 3,130 82.4 38Libya 1,420 1.5 925 Indonesia 1,150 8.3 139

Source: World Oil Sept 2004. Output and #wells in thousands.

Surplus Capacity - OPEC

OPEC Spare Production Capacity, 2011, 2003

Source: Energy Economist.com

Opec Capacity Utilization Rates

Source: Shihad-Eldin (2004) Oil Output and Investment Prospects

U.S. Strategic Petroleum Reserve (in days)

Source: U.S. D.o.E.

Joined Population ProductionOPEC (millions) (mn brl/day)

Algeria 1969 37.4 2.13Angola 2007 18.1 1.94Ecuador 2007 15.2 0.49Iran 1960 78.9 4.17Iraq 1960 31.1 3.20Kuwait 1960 2.6 2.49Libya 1962 5.6 2.21Nigeria 1971 170.1 2.21Qatar 1961 2.0 1.21Saudi A 1960 26.5 8.80U.A.E. 1967 5.3 2.80Venezuela 1960 28.0 2.47

Total 33.27

Former Members Left OPECGabon 1994Indonesia 2009

OPEC Members

(formed 1960)

OPEC

Secretary General Abdalla Salem El-BadriLibyan, born 1940. Bus Ad. Degree from Florida Southern U.First professional job was with Esso (Exxon/Mobil)

c.v.

OPEC Countries: Crude OilOPEC Countries: Crude Oil Production

(1,000 b/d)

0

4,000

8,000

12,000

1970 1980 1990 2000 2010

IranIraqKuwaitLibyaNigeriaSaudi ArabiaU.A.E.Venezuela

Iran

Iraq

Saudi Arabia

Saudi oil minister rules out output hike

Friday, April 11, 2008 Compiled by Daily Star staff Saudi Oil Minister Ali Naimi said on Thursday that there were not enough buyers of oil to justify an increase in oil production, despite high prices, and he added that fossil fuels should supply the bulk of global energy needs for at least the next 50 years. Naimi also slammed biofuels, saying they did not protect the environment or help supply security, but added that solar power had to be considered one of the best clean-energy sources. Speaking outside an international oil conference in Paris as the price of oil hovers at near-record levels, he said there were not enough buyers of oil in the market to absorb extra output.Asking where the buyers were, he said that if more buyers emerged, then "we" would sell. But there were no such buyers, he argued.

Refiner Acquisition Cost, 1996-2002

It used to be said that OPEC has a target price range.mt prefers a description that Saudis are price setters, and otherOPEC countries accept that price, without significant production Changes..

Non-OPEC Production

Soviet Oil Production

Russian Oil Production, 1994-

Oil Corridor

Gulf Oil

Source: Longrigg (1967) Oil in the Middle East p. 493

Mediterranean Gas Finds

Source: Antreasyan Journal of Palestine Studies Spring, 2013

Egyptian Claim Palestinian Claim

IsraeliClaim

Lebanon’sClaim

Disputed betweenLebanon & Israel

SyrianClaim

Europe & Russia: Petroleum EconomistGreen is Oil,Red is Gas

New Energy Pipelines for Europe

Source: Der Spiegel online, March 14, 2010

Oil & Gas: MENA & North Africa. Petroleum Economist

Green is Oil,Red is Gas

Africa Oil. Source: World Oil 2002

North Sea Oil

Source: World Oil2002

Oil and Gas in South-East Asia

Source: World Oil 1984

Mexican Oil

Source: World Oil, 1984

Colombia and Venezuela Oil

Source: World Oil, 2002

Brazil: Off-shore oil. Campos Basin

Source:World Oil

One mile to theocean floor,then anothermile or two.

Off-shore Petroleum Drilling, Brazil

Source: Gail Tverberg (2008) Peak Oil Science Curriculum

Demand

Consumption: Barrels/day/1000 populationCanada 64 Russia 17Mexico 19 Iran 20USA 70 Israel 41Brazil 13 Kuwait 117Belgium 58 Saudi Arabia 64France 34 U.A.E. 123Italy 34 Egypt 9Germany 36 Australia 46Netherlands 51 China 3Sweden 41 India 2Switzerland 38 Indonesia 5Turkey 10 Japan 46United Kingdom31 Korea, S. 49

Source: US DoE consumption; population from IFS

Highest levels in Gulf countries, (not US and western Europe)

Oil Import Dependence for Some OECD Countries for the Year 2003

Country/RegionOil Consumption Net Oil ImportsNet Oil Imports as a(Million Barrels per Day)(Million Barrels per Day)% of Oil Consumption

Net Oil ImportersUnited States 20.034 11.238 56.1%France 2.060 1.865 90.5%Germany 2.677 2.544 95.0%Italy 1.874 1.671 89.2%Spain 1.544 1.506 97.5%Sweden 0.346 0.384 111.0%Switzerland 0.259 0.255 98.5%Turkey 0.653 0.607 93.0%Japan 5.578 5.501 98.6%South Korea 2.168 2.256 104.1%OECD total 41.113 31.508 76.6%OECD Europe 15.502 8.651 55.8%

United States: Petroleum Supply Annual 2003Others: International Energy Agency, Monthly Data Service, February 10, 2005

Energy Consumption in the US 1776-2012

World Energy Intensity, by Region (DOE)

(US?) Energy Consumption per Person (DoE)

U.S. Energy Consumption per $

U.S. D.o.E.

US Automobile Mileage, miles/gallon

Source: Statistical Abstract of the United States, 2012 Table 2.8

1950

1954

1958

1962

1966

1970

1974

1978

1982

1986

1990

1994

1998

2002

2006

0

5

10

15

20

25

mpg

Multinationals

International Oil Companies (IOCs)

vs.

National Oil Companies

TNOC and OPEC Host State Shares of Crude Oil Production

The decade of the 1970s saw major changes

Source: Lax (1988) States and Companies: Political Risks in the International Oil Industry

Oil & Gas Industry Structure

Source: Smith (2003) “Investment from an IOC perspective” OPEC Review Sept. 2003

Oil majors in MENA – pre-1975

Source: Bamberg (2000) British Petroleum and Global Oil 1950-1975

Major Oil Companies’ Shares of World Reserves, 1971

Source: Bamberg (2000) British Petroleum and Global Oil 1950-1975

Other 37% Then was 63%

IOCs nowhave ~20%of worldreserves

Share of Foreign Companies in the Oil and Gas Production of major Producing

Countries

Source: UNCTAD World Investment Report, 2007

Twenty largest Oil Companies, 2007

Source: Smith (2009) World Oil: Market or Mayhem? JEP

Non-OECD International Oil

Companies, 1995, 2005

1995

2005

Source: UNCTAD World Investment Report, 2007

Oil and Gas Production of IOCs outside their home country

World Production of Oil and Gas, by Types of Companies

Production by OECD TNCs is mostly in other countries. Emerging market TNCs are catching up, especially NOCs like Petrobras and CCOOM.

Source: UNCTAD, World Investment Report 2007

Technology

Examples of High Tech in Petroleum Exploration

Deep Water Production: North Sea

Aramco3 New Technology

Brazil Oil: Oil Rig Disaster, early 2001

Brazilian Oil Find, 3 miles down (NYT Jan, 2008)

A Minimum of History

Pennsylvania oil

Source: Danielsen (1982) The Evolution of OPEC page 76

Deconstruction, and re-construction, of Standard Oil

Source:

Exhaustible Resource?

World Oil Discoveries and Production, 1915-1995

Source: Mitchell et al. (2001) The New Economy of Oil page 52

USGS Historical

Comparison of USGS Scenarios in 1994, 2000

Adelman World Production and Reserves

He argues that reserves are growing faster than production.

OPEC supply curves

Source: Adelman (1995) The genie out of the bottle page 26

Hubbert Curve

One half of the lifetime of production in this reservoir.

Egypt – A Typical Life Cycle for an Oil Producing Country

0

100

200

300

400

500

600

700

800

900

1000

1950

1954

1958

1962

1966

1970

1974

1978

1982

1986

1990

1994

1998

2002

Dai

ly P

rodu

ctio

n (m

bopd

)

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

Cum

Pro

duct

ion/

Cum

Res

erve

s

D aily Produ ction

C um Production/Cum Rese rv es

Once large discoveries are no longer made and production rates increase, depletion levels (percentage of oil discovered that has been produced) accelerate – this depletion history has been mapped for every major oil and most minor producing countries

Growth Plateau Decline

Source: Rogers

Production Profiles

In the background isthe important fact that no new giantoilfields have been found for decades.

Source: Simmons,Twilight in the Desert2005.

North Sea

Prudhoe

Russia

North Seas Oilfield Decline Rates

Source: IEA (2003) World Energy Investment Outlook pp. 142, 143

Non-OPEC Countries That Are Either in Decline or Currently in a Plateau

The above bars show the onset and duration of documented production peaks or plateaus – tracking country life cycle shows an acceleration of the number of countries passing from peak to decline

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

USA Tunisia

PeruDem Rep

CameroonOther_Eur

EgyptPNG

SyriaNew_Zeal

GabonArgentina

UKColombiaAustralia

NorwayOmanCongo

PakistanYemen

CanadaDenmark

IndiaChina

MalaysiaBrunei

Mexico

Countries in the decline phase

Countries in the plateau phase

Onset of Plateau

Duration of Plateau

Onset of Decline

Source: Rogers ()

U.S. Oil Well Productivity

Source: U.S. D.o.E.

Caspian Sea Pipelines

Gulf Oil – Source: World Oil August 2002

OPEC Oil Production & Surplus Capacity (early 2005)

Source: US DoE

Middle East Energy and Freshwater

Middle East Oil & Pipelines (1960s)

Source: Longrigg (1967) Oil in the Middle East pp. 490-91

Pipelines (1960s)

Source: Longrigg (1967)Oil in the Middle East p. 492

OPEC’s Excess Capacity, 2002-2005

Map of Russia

Former USSR -- World Oil, August 2002

OPEC Spare Crude Capacity (1,000 b/d)

('000 b/d) 2005 2006 2007 2008 2010Saudi Arabia 1,473 2,032 2,673 3,456 3,218Angola NA NA 0 47 343

Kuwait 0 128 222 300 294Qatar 2 28 17 55 136Libya 30 17 34 72 40Algeria 21 10 3 3 103UAE 21 267 252 339 42Iran 15 143 316 148 40Reliable 1,566 2,680 3,638 4,561 4,332Nigeria 231 653 720 665 207Venezuela 0 0 0 0 0Iraq 0 0 0 0 0Indonesia 0 0 0 0 0Total 1,797 3,332 4,358 5,226 4,539

Source: Oil Market Intelligence

OPEC Surplus Capacity (1,000 b/d)

Sources: Energy Intelligence Group

World Excess Capacity

Source: US DoE, EIA

Average Miles/Gallon. U.S.

US Energy Consumption, 1650-2000

Source: US DoE

Units are Quadrillion BTU

Shale oil and shale gas resources are globally abundant