China Sees Sharp Fall in Output at Daqing

China CNPC Long-Term Plan Sees Sharp Fall in Output at Daqing
by David Winning
Feb 27, 2007

BEIJING - China National Petroleum Corp. (CNPC.YY) said Tuesday that crude oil and natural gas production at its flagship Daqing oilfield may slump by more than 50% in five decades.

The projection is significant because Daqing currently accounts for around a quarter of China's total domestic production, and lower output would have to be covered by new finds or more crude imports.

According to a long-term plan drawn up by CNPC, China's biggest oil producer by capacity, annual crude oil and natural gas production will total between 20 million metric tons and 25 million tons in 2060.

This compares with the 43.38 million tons of crude pumped in Daqing last year, equivalent to 871,000 barrels a day.

Daqing has been in production since 1963 and output has been declining rapidly in recent years despite efforts to drill in peripheral areas and use enhanced oil recovery to keep existing wells in operation.

Crude output at Daqing, which is located in northeastern China's Heilongjiang province, fell 3.5% last year after falling 3% in 2005.

PetroChina Co. (PTR), the listed unit of CNPC, loses about 16 million tons of production capacity each year due to the declining reserves of its aging fields.


© 2007 Dow Jones Newswires.

Noam Chomsky on Iraq and Oil

It’s very hard to predict the Bush administration today because they’re deeply irrational. They were irrational to start with but now they’re desperate. They have created an unimaginable catastrophe in Iraq. This should’ve been one of the easiest military occupations in history and they succeeded in turning it into one of the worst military disasters in history. They can’t control it and it’s almost impossible for them to get out for reasons you can’t discuss in the United States because to discuss the reasons why they can’t get out would be to concede the reasons why they invaded.

We’re supposed to believe that oil had nothing to do with it, that if Iraq were exporting pickles or jelly and the center of world oil production were in the South Pacific that the United States would’ve liberated them anyway. It has nothing to do with the oil, what a crass idea. Anyone with their head screwed on knows that that can’t be true. Allowing an independent and sovereign Iraq could be a nightmare for the United States. It would mean that it would be Shi’ite-dominated, at least if it’s minimally democratic. It would continue to improve relations with Iran, just what the United States doesn’t want to see. And beyond that, right across the border in Saudi Arabia where most of Saudi oil is, there happens to be a large Shi’ite population, probably a majority.

http://www.fpif.org/fpiftxt/3999

Kashagan Oil Field Problems

The following from a WSJ/DJ Newswire piece Feb 2007:

Eni confirmed that its most important exploration project, the Kashagan field in the Caspian Sea with proven reserves of more than 13 billion barrels, won't begin pumping until the second half of 2010, a full two years later than had previously been disclosed.

That is the latest in a series of setbacks at Kashagan, where Eni had initially expected to start pumping oil in 2005.

In addition, the price tag for the project keeps climbing. Though the company didn't disclose exactly how far over budget the project had come, its effect can be seen in Eni's overall capital expenditure plan, which has shot up to EUR44.6 billion for the 2007-2010 period, a 27% hike over the amount it had forecast to spend during the 2006-2009 period.

Still, Chief Executive Paolo Scaroni was upbeat about Kashagan, saying that the company was now confident that the reserves would be greater than previously estimated, and that production would plateau at 1.5 million barrels a day in 2019, instead of its previous estimate of a 1.2 million barrel per day plateau in 2016.

http://www.rigzone.com/news/article.asp?a_id=41778&rss=true

Iran's Oil Production Is Drying Up

02/20/2007
Filed by Michael Roston

A report in today's Wall Street Journal paints a picture of an Iran in the early stages of an energy crisis. Although long considered an energy giant, the Persian Gulf country is facing the prospect of an oil output crash within a decade, and it may start rationing gasoline next month.

Bill Spindle writes in the Journal this morning that Iran's oil production is stagnating. Demand in the country is high because the government makes the price of gasoline very cheap. At the same time, "a combination of Western sanctions and Iranian policies has discouraged foreign investment in oil fields," resulting in a lull in production growth. The problem is so severe that Iran's government "shelled out at least $7 billion on gasoline imports alone so far this fiscal year."

In response, Iran is hoping to expand its production abilities. But the US government and others see political implications from the current state of affairs in the Iranian energy sector. "Iran's energy woes could make it more vulnerable to international
economic sanctions," Spindle writes. "Even many Iranian officials concede that
the longstanding ban the U.S. has placed on American oil companies working in
Iran has hampered the country's ability to develop its oil fields adequately."

The full article can be accessed by Wall Street Journal subscribers at this link. An excerpt is provided below.

At the same time, a combination of Western sanctions and Iranian policies has discouraged foreign investment in oil fields, causing production to stagnate. The result: Iran's oil exports could dry up in as little as a decade, according to some who have studied the situation. That's a looming disaster for Iran, which derives about 85% of its export income from the sale of oil. "The industry is in a crisis," says Mehdi Varzi, a
former Iranian diplomat and national oil company official who heads a London-based consulting company, Varzi Energy.

The impact would be felt far beyond Iran. The country produced 3.8 million barrels of oil a day in 2006, almost 5% of the world's total supply, according to the Organization of Petroleum Exporting Countries. It exported an average of about 2.5 million barrels of that each day. Should those sales decline, Iran's largest customers, Japan and China, would scramble for other supplies, pushing up prices for everyone.

Avoiding an export squeeze is one reason Iran argues it needs to consider nuclear energy. But that ambition has contributed to a diplomatic impasse with the West. Bush administration officials describe Iran's nuclear program as little more than a ruse to conceal what they say is a hidden effort to build nuclear weapons. Iranian officials deny that, arguing that nuclear plants could handle some of the soaring domestic energy demand, leaving more oil and gas to export and avoiding difficult domestic choices.

CERA and Daniel Yergin

Probably one of the most fascinating stories in the world of oil is that of Daniel Yergin. In 1991? he penned the masterpiece The Prize. If ever there was a book about oil, this is it.

Today he is considered by some the goto guy for words of wisdom and by others as somewhat of a villain.

More to be said about this quirky deal in the future. For now I just wanted to get something posted for this CERA link that has been staring me in the face since I started this blog.

CERA (or Cambridge Energy Research Associates) is most reviled for its forecast of future global oil-production capacity extending to 2010 and then 2015. The original 2010 version was published in early 2005. As of this writing(March 2007, 2 years later) I think it is safe to say that it was very wrong.

But I don't want to berate them for this. I'd rather explore the reasons why it was so wrong - or maybe even whether it is actually wrong, and then try to figure out what can be done better. To see how easy it is to come up with a five- or ten-year forecast that nails it.

Saudi Arabia

01 - Saudi Arabia




Saudi Arabia, Russia, and Iran are in the "A" Group. These three will be considered swing production.


For a more detailed look at Saudi Oil Production click on this link:
http://saudioilproduction.blogspot.com







From CERA's 2005 Report:

Saudi Arabia is a key component of the outlook, and crude and
condensate capacity (excluding the Neutral Zone) will average 11.3 mbd in 2005
and rise slowly to 11.6 mbd by 2010 (see Figure 7a). Some concerns have been
expressed recently about the ability of Saudi Arabia to expand liquids capacity,
with some commentators suggesting an imminent, dramatic decline. CERA believes
that capacity will not decline until well beyond 2020, with efforts being made
by Saudi Arabia to both replace natural decline and add new capacity in order to
reach a target of 12.5 mbd if necessary by 2010, which the Saudis believe will
provide 1.5–2 mbd of surge capacity.* Having recently inaugurated the Abu
Safah/Qatif fields, the country is expected to expand Haradh Phase 3 (300,000
bd) in early 2006, Shaybah (300,000–900,000 bd) in 2008, and the Khursaniyah
field (500,000 bd of new capacity) by 2007. If needed, the Khurais field will be
brought back onstream at up to 1.2 mbd by 2010. However, CERA believes that this
latter addition will be ramped up slowly or delayed.

USA

03 - USA

Crude and Condensate only

Russia

Number 2
Russia

Russian March Crude Oil Production Rises Annual 3.4 Percent

April 2 (Bloomberg) -- Russia, the world's second-largest oil supplier, produced 3.4 percent more crude oil and oil condensate in March than in the same month last year.

Crude output climbed to 9.87 million barrels a day (41.76 million tons) from 9.46 million barrels a day in the same month a year earlier, according to data released today by CDU TEK, the Energy Ministry's dispatch center.

The monthly gain was 0.1 percent, after the country produced 9.86 million barrels a day of crude in February.

Iran

04 - Iran



From CERA's 2005 Report:

Iranian crude and condensate capacity is estimated to be 4.17 mbd in 2005 and could rise to as much as 5.07 mbd by 2010 (see Figure 7b). However, a number of uncertainties could slow this expansion, including the current political situation, unattractive buyback contracts, and protracted negotiations, all of which have discouraged foreign investment. Indeed, one supermajor has stated in public that it would not invest in Iran at present. The liquids capacity growth story is still dominated by expansion of the mature fields, and a number of feasibility studies involving mature fields are under way. Before any capacity expansion occurs, annual depletion rates of around 350,000 bd have to be counterbalanced. The Azadegan contract was signed in 2004, but delays are already being experienced with drilling contracts, and the start-up will likely be delayed past 2007. Expansions are also expected at Darkhovin, Masjid-i-Suleiman, and more imminently at Nowruz/Souroush, where capacity should to rise to 190,000 bd in mid-2005, and a large increase in NGLs and condensate is expected as the South Pars gas condensate field is developed.

China

Number 6
China

http://www.rigzone.com/news/article.asp?a_id=42765

China's strong demand for energy spurred PetroChina to produce an aggregate of over 1 billion barrels of oil equivalent last year with crude oil accounting for 831 million barrels. Jiang forecast that PetroChina's oil output may rise to 2.3 million barrels a day this year, with gas production reaching 4.56 billion cubic feet a day. Its refineries will process an estimated 2.25 million barrels of crude daily.

From CERA's 2005 Report:

Capacity in China is projected to decline slowly from peak levels of 3.52 mbd in 2005 to 3.30 mbd in 2010. Many of the large onshore fields are in decline, but this will be partially offset by the increasing production from the Bohai Gulf area as the largest development, Peng Lai Phase 2, ramps up, and from the Wenchang and Pearl River Mouth areas.

Canada

07 Canada



From CERA's 2005 Report:

Canadian liquids capacity is projected to increase substantially from 3.48 mbd in 2005 to 4.70 mbd in 2010. As in the United States, there is one major contributor to this increase—in Canada’s case, it is the oil sands. Conventional liquid production, helped by growth of 0.3 mbd in the Newfoundland offshore, will remain essentially flat at 2.30 to 2.40 mbd through 2010. In addition to existing production at Hibernia and Terra Nova, the White Rose field will begin production early in 2006, and the Ben Nevis–Hebron field may be onstream by 2010, along with the shallow Avalon reservoir at Hibernia. Oil sands capacity is projected to increase by 1.12 mbd from 1.18 mbd in 2005 to 2.30 mbd in 2010. Mineable oil sands production is projected to increase from 0.67 mbd in 2005 to 1.20 mbd in 2010, led by expansions in the existing projects and initial production from the Horizon and Kearl Lake projects. Bitumen production from in-situ or steam assisted gravity drainage (SAGD) methods will increase from 0.51 mbd in 2005 to 1.10 mbd in 2010, led by expansions at Cold Lake, Christina Lake, Firebag, and Foster Creek, along with initial production from the Surmont, Long Lake, and Sunrise projects. In the next decade oil sands production is projected to reach 2.7 mbd in 2012 and 4.8 mbd by 2020.

Norway

08 Norway

Venezuela

09 Venezuela

United Arab Emirates

10 UAE

Kuwait

11 Kuwait

Nigeria

Number 12

Nigeria reached its recent highs of production in 2005 at 2.7 mbpd of crude plus condensate, 2.5 mbpd of which was crude oil. In the first quarter of 2006 there were reports of insurgent/rebel violence knocking out up to 800,000 bpd of production. This is not shown in the numbers from either the EIA or IEA, which have averaged about 20,000 bpd different for the last 18 months. The lowest recored production seems to be 2.1 mbpd in March and April, or a drop of 400,000 bpd.

Iraq

Iraq, Nigeria, and Venezuela are in the "B" Group, aka the "P" Group. "P" for political.

Algeria

Number 14
Algeria

Algeria, which has doubled its crude oil production over the past seven years, is aiming to increase its output by another 40 percent by 2010. And while the country is pushing for more oil production, it’s also hoping to dramatically increase mining activity.

Algeria now produces about 1.4 million barrels per day, and Sonatrach, the national oil company, believes the country can add another 600,000 bpd by ramping up foreign investment in new fields. The major foreign oil companies in Algeria include Anadarko Petroleum Corp., BP, Shell, BHP Billiton, ENI, and Hess Corp. Houston-based Anadarko is the biggest foreign operator, with a total Algerian production of 530,000 bpd. Anadarko is now partnering with Sonatrach to develop the El Merk project, expected to add 150,000 bpd by 2010. BP plans to nearly quintuple production at Rhourde El Baguel, Algeria’s second-largest oil field with about 3 billion barrels of proven reserves. Although the field is huge and has been producing for more than four decades, it has only produced 450 million barrels. By 2010, BP expects to raise output from the current 27,000 bpd to 125,000 bpd.

http://www.energytribune.com/articles.cfm?aid=386

Libya

Libya comes in at number 15 on the production list. Number 12 on the exporter list.

1,702 thousand barrels per day average in 2005 according to BP. According to BP this is also their recent peak production.

CERA has this to say:

Libya has suffered from two decades of underinvestment, but now that sanctions have been lifted, there is a feeling that it is "Aladdin’s cave waiting to be opened." Some US operators with major presanction positions have been negotiating to extend their old concessions, which were signed in the mid-1950s and are set to expire between end-2005 and early 2007 (Oasis Group–Conoco/Hess/Marathon and Zuetina Group–Oxy). The issue is not the principle of extension, but its length and the improvement of contractual terms. The Libyans held at the end of January the EPSA-1V upstream licensing round in which 15 new licenses were awarded. It marked the return of American companies, which won 10 out of the 15 areas. Although this round generated major interest, some notable companies either did not participate or bid unsuccessfully. Much of the country remains unexplored, and although non-US investors made progress during the period of sanctions, the level of investment was not enough to expand capacity significantly. Many of the fields are mature, and natural decline may be now be quite high as a result of underinvestment during the sanction period.

A further licensing round is anticipated to start in second quarter 2005, and a mature fields round is in expected in mid-2005. CERA anticipates that liquids capacity will climb from 1.95 mbd in 2005 to 2.47 mbd in 2010. Much of this gain will be sourced in the medium term from rehabilitation of the existing fields, especially those of the Oasis and Zuetina groups, but some capacity will be added from discoveries that will be made in the next two to three years. In the short term, liquids additions from the Elephant and El Saharah fields and the West Libya Gas Project will continue to expand. Perhaps the greatest constraint on progress will be the pace at which the Libyan authorities decide to manage the influx of new investment.

Further analysis:

The EIA has Libya at 1,633 C+C production for 2005, up slightly to 1,684 for 2006(thru November) - roughly in-line with BP numbers, when you figure 68kbpd NGL's(2004). So we're going to go with CERA's forecast to 2010 minus 200kbpd. So 2,270 for 2010. Moving up steadily.

Present production(2006) comes in under CERA's 2005 "capacity" forecast by 200kbpd. The question is whether or not to cut another 200Kbpd.

For now we will compromise at 100kbpd. So 2,170.

Brazil

Number 16
Brazil

The difference between BP's and EIA's numbers are the roughly 250,000 bpd of ethanol Brazil produces.

***
March 22
http://www.rigzone.com/news/article.asp?a_id=42873

Brazil's federal energy company Petrobras (NYSE: PBR) last month saw domestic and international production grow 1.3% to 1.94Mb/d compared to January, the company said in a statement.

xxx Petrobras attributed the performance in part to resumed production at the P-37 platform in the Marlim field following a programmed shutdown in January.

xxx The start of production at the Cottonwood field in the US and improved performance in Ecuador were also behind the increase. xxx Domestic production increased 1.1% to 1.80Mb/d and international output in eight countries climbed 2.7% to 131,306b/d.

xxx Petrobras' international production came from operations in Angola, Argentina, Bolivia, Colombia, Ecuador, Peru, the US and Venezuela. Argentine output made up the bulk of this production with 57,193b/d.

xxx As for domestic production, offshore and onshore output was 1.56Mb/d and 231,900b/d respectively, the statement said.

xxxxxxx

United Kingdom

17 United Kingdom

Kazakhstan

Number 18
Kazakhstan


March 2007 STEO:1.29, 1.35, 1,45, 1.52 mbpd by 2008. I'm lowering target to 1.85 by 2010 from 2.0 on recent Kashagan news.

Three-field spreadsheet analysis.

Angola

Number 19

Angola

Angola, which may soon be joining OPEC, wants to increase its daily oil production to 2 million barrels by 2008. But to meet that goal the country will need about $10 billion in additional annual investment, and it appears the money is forthcoming.

Chevron is among the companies that have increased investments in the country’s oil sector. The company produces about 500,000 barrels per day in Angola (roughly one-third of the country’s output) and its subsidiary, Cabinda Gulf Oil Co., has started producing oil from the Landana North reservoir in the Tombua-Landana development area. Landana is about 50 miles off the coast of Cabinda, an enclave that belongs to Angola (though not contiguous with that country), located north of the Congo River mouth. When Landana’s peak production is reached in 2010, output for its 46 wells should be 100,000 barrels per day.

Posted on Jan. 17, 2007

http://www.energytribune.com/articles.cfm?aid=353


***
Saudi Arabia Warns Angola on Oil Expansion

3/14/2007
URL: http://www.rigzone.com/news/article.asp?a_id=42519

Saudia Arabia, the most powerful member of the Organization of the Petroleum Exporting Countries, has told Angola, its newest entrant, not to assume it will be able to expand production past 2 million barrels a day, The Financial Times reports Wednesday, without citing sources. This is a blow to the world's biggest oil companies, which have already paid Angola billions of dollars for the right to explore and produce its oil. Angola joined the oil cartel in January and should reach the 2 million barrel a day threshold at the start of next year. It had a target ofproducing 2.5 million barrels a day by 2012, a target which has now been thrown into doubt.

Angola, one of the poorest places on Earth, is an oil industry darling
By Jad Mouawad
Published: March 19, 2007

http://www.iht.com/articles/2007/03/19/business/angola.php

Qatar

20 Qatar

Indonesia

21 - Indonesia

"D" Group.

Oman

22 Oman

"D" Group.

Malaysia

23 Malaysia

Argentina

Number 24

Argentina

Currently, Argentina is an energy exporter, but perhaps not for long. According to the national statistical institute, INDEC, in October 2006 the difference between exports and imports for crude oil, natural gas, and electric energy was a positive $530 million. But oil production peaked in 1998 at 850,000 barrels of oil per day, and has declined since then to 700,000 barrels of oil per day. Oil companies have failed to increase production from mature onshore assets. The major stakeholders in Argentinean oil production are Repsol-YPF (a Spanish-owned company) with 41.5 percent of oil production, Pan American (U.S.-owned) with 16.9 percent, and Brazil’s Petrobras with almost 10 percent. Chevron controls 8.6 percent, and a number of smaller oil companies account for the remaining 23 percent.

http://www.energytribune.com/articles.cfm?aid=414

India

25 India

Egypt

26 Egypt

Australia

27 Australia

Group "D."

Columbia

28 Columbia

Group "D."

Ecuador

29 Ecuador

Group "I." Projected at 850 kbpd.

Syria

30 Syria

Group "D." Although with a surprising comeback in 2003. Did that have anything to do with Iraq?

Yemen

31 Yemen

Interesting upswing in the last three months. But a decliner, nonetheless.

Azerbaijan

32 Azerbaijan



Oil & Gas Journal is apparently reporting that Azerbaijan increased its production in 2006 by 180,000 bpd, so that would give us a total of 630,000 bpd if we use BP's 2005 figure as a base.

Denmark

33 Denmark

Vietnam

Number 34
Vietnam

EIA has Vietnam at 340, 353, 403 - 2002 thru 2004 C+C table 22. No NGLs, other liquids, or RPGs, so the differences in numbers are differences in count. Let's bring in the EIA's STEO numbers. 390, 370, 400, 480. That's 2005 thru 2008. OK, now let's bring in EIA's CAB for an explanation...

It appears that Vietnam should be increasing its capacity in the next two to three years to at least 500,000 barrels per day.

More on Vietnam later. Do these numbers actually indicate CERA is calling a peak on a country 2 years previous?

The EIA's latest Short Term Energy Outlook shows Vietnam's capacity rising to 480,000 bpd in 2008.

The EIA also has a decent summary of Vietnam in its country analysis briefs. Rising domestic consumption and a lack of domestic refining capacity are two highlights.

http://www.eia.doe.gov/emeu/cabs/Vietnam/Oil.html

Rigzone has several images of Vietnam's basins and exploration blocks.

Check out Vietnam's production rate. Look at the official reserve numbers. Does this make any sense? Vietnam has more than 600 million barrels or something ain't right.

Gabon

35 Gabon

"D" Group.

Congo (Brazzaville)

36 Congo

Basically the same story as many African nations at one point. Same as EG is now, except on the decline. "D" Group.

Equatorial Guinea

37
Equatorial Guinea





EG is on the "I" List. But near the bottom. CERA has them at 420 kbpd in 2010. They are presently at about 370. Not much of an increase.

Sudan

38 Sudan

Brunei

39 Brunei

I've got Brunei in the "E" Group or "U" Group. "U" for unclear. And it is very clear why I put Brunei in this group. Their production peaked in 2003 at 214, yet they've only been declining for two years and are only down to 206. So, technically, by my definition they are plateauing and are "unclear." It will be interesting to see their June number.

CERA is "in-line" thru 2005. They show very slight increase to 2010 to 225 kbpd. Looks like everybody is in agreement.

Would probably be a good idea to look at reserves/Hubbert situation in this case.

Thailand

40 Thailand




BP has Thailand at 276 kbpd for 2005.

CERA gives Total Liquids capacity for Thailand in 2005 as 200 kbpd, and projects 240 kbpd for 2010.

If we look back on BP's data since 1999, we see Thailand ramping quite substantially. It will be interesting to see the numbers from BP in June. For now they will remain in the "I" group.

Turkmenistan

41 - Turkmenistan

Uzbekistan

Number 44

Uzbekistan currently produces 126,000 bpd. It, along with Turkmenistan, Kazakhstan, and Azerbaijan make up the "Caspian" producers.

With reserves of 600 million barrels, they have 13 years left at current production rates.

Chad

42 Chad

It has been reported that Chad currently produces 240,000 barrels per day.

Trinidad & Tobago

43 Trinidad & Tobago

Peru

Number 47 - Peru

The following news item describes Peruvian oil production possibly increasing to 220,000 bpd by 2010.

http://www.energytribune.com/articles.cfm?aid=388

Chart

Cameroon

Number 50

Cameroon has had declining oil production for a number of years and should continue to drop slightly.



Cameroon chart