Energy & Environmental Law Blog : Energy & Environmental Lawyer & Attorney : Vorys, Sater, Seymour and Pease Law Firm : Oil, Gas & Green Technology

That's the title to an article in BusinessWeek looking at past claims of economic collapse due to exhausted natural resources.  A sample:  "Start with oil. In 1971, the Limits to Growth team forecast that the world’s supply would run out 10 years from today. And yet according to renowned oil analyst Daniel Yergin, technology advances and new discoveries have allowed oil reserves worldwide to keep growing. For every barrel of oil produced in the world from 2007 to 2009, 1.6 barrels of new reserves were added. The World Energy Council reports that global proven recoverable reserves of natural gas liquids and crude oil amounted to 1.2 trillion barrels in 2010. That’s enough to last another 38 years at current usage. Add in shale oil, and that’s an additional 4.8 trillion barrels, or a century and a half’s worth of supply at present usage rates. Tar sands, including some huge Canadian deposits, add perhaps 6 trillion barrels more."

Read the whole thing.

[Update:  (Yes, that was quick ...)  For a similar article written by Peter Orszag, see here.]

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The WSJ has an interesting article on how to think about the world's oil supply:  "But there is another way to visualize the future availability of oil: as a 'plateau.' *** In this view, the world has decades of further growth in production before flattening out into a plateau—perhaps sometime around midcentury—at which time a more gradual decline will begin. And that decline may well come not from a scarcity of resources but from greater efficiency, which will slacken global demand."  Take a look.

[Note:  Subscription may be required.]

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Earth Justice recently filed a citizen suit petition under TSCA asking the USEPA to regulate the chemical substances and mixtures used for oil and gas exploration and production ("E&P").  They seek to have manufacturers and processors of E&P chemicals conduct testing of all chemical substances and mixtures, submit existing health and safety studies and identify chemicals and mixtures used during E&P.  The petition can be found here.

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Bloomberg is reporting that there is a resurgence in the use of railroads to transport oil produced out of the Bakken and Three Forks shales (see here - http://www.businessweek.com/ap/financialnews/D9LUG0RG0.htm).  "Trains have quickly become a huge part in hauling crude from North Dakota's oil patch with producers shipping barrels to more profitable markets not served by pipelines."  Very interesting.

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The Houston Chronicle is reporting that a presidential panel has concluded that:  "The Obama administration rejected government scientists' requests to publicly detail its worst predictions about the oil gushing into the Gulf of Mexico and repeatedly underestimated the size of the spill."

You can finds copies of the four reports here.  From Staff Working Paper No. 3:

The federal government's estimates of the amount of oil flowing into and later remaining in the Gulf of Mexico in the aftermath of the Macondo well explosion were the source of significant controversy, which undermined public confidence in the federal government's response to the spill. By initially underestimating the amount of oil flow and then, at the end of the summer, appearing to underestimate the amount of oil remaining in the Gulf, the federal government created the impression that it was either not fully competent to handle the spill or not fully candid with the American people about the scope of the problem.  (Introductory remarks.)

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The United States is importing less oil this year due to increased domestic production and decreased demand, according to this article in the Kansas City Star.  "For example, in the last three months of 2008, imports were never less than 10.5 million barrels per day, and since Oct. 1 of this year imports have never been higher than 10.1 million and have been as low as 8.84 million barrels per day, according to the Energy Information Administration."

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Research suggests that oil demand peaked in industrialized nations in 2005, according to this article in the NYT.  This is due in large part to efficiency gains in the transportation sector, aging populations and growth in renewable fuels.  Not surprisingly, growth in oil demand will come from the developing world.

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The WSJ has a good article on Chevron's use of new enhanced recovery technologies to extend production in the Kern River field.  Using steam, "The company hopes eventually to coax out as much as 80% of the field's oil compared with the 30% that is typical in many fields around the world."

[Note:  Subscription required.]

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A new report from IHS-Cambridge Energy Research Associates concludes that global oil demand will increase next year and possibly overtake old records by 2012, according to this article in the Houston Chronicle.  The reason - Growing global demand in developing nations like China and India.

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We reported earlier on the possibility of a vast new oil field below the Bakken in North Dakota.  The Houston Chronicle has an interesting article discussing the possibilities of this field as well.

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The LAT has an interesting article on competing theories over the cause of oil price volatility.  The two culprits (as you might expect) - "speculators" and supply/demand imbalances.

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The Bismarck-Tribune is reporting that  North Dakota may have another vast crude-oil bearing formation below the Bakken.   Recent production results from wells in the Three Forks-Sanish formation suggest that many are as good as or better than some Bakken wells according to the state's Department of Mineral Resources.

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The downward demand for oil may be moderating, according to this article in the Washington Post.  OPEC is reportedly "cautiously optimistic" about the future, believing that demand seems to have moderated after months of downward revisions.  The article further reports that earlier this week both the U.S. Energy Information Administration (EIA) and the International Energy Agency (IEA) raised their global oil demand estimates for the year.

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The International Energy Agency (IEA) is warning that cuts in new production investments may lead to significantly higher oil prices, according to this report in the LA Times.  Cuts to planned investments amount to a decline in 2 million barrels of oil per day.

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According to reports in both the Washington Post and the Chicago Tribune, rising oil prices may be the result of market investors and a moderating global economy (e.g., increased imports to China).  Some analysts caution, however, that these price increases may be premature because of a continued weakness in the economy.  Stay tuned.

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This is interesting - The largest refiner in the U.S. Midwest, Marathon Oil Corp., has reported that its margin on a gallon of gasoline was 8-cents last quarter, up from a negative 26-cents a year ago, according to this report in the Houston Chronicle.

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According to this report in the WSJ, higher futures prices relative to near-term prices (contango) may encourage the increased use of supertankers to store crude oil offshore.  [Subscription required.]

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Red Adair was famous in the industry for fighting oil fires.  He can be heard in an interview on Voices of America radio here.  Very cool.

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In USA Today:  Cutbacks in drilling projects and capital investments are likely to lead to future crude oil price increases faster than many analysts expect.  This follows a potential 9% decline in daily crude oil production in 5 years if current trends persist.  An interesting article.

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The yo-yo effect.  CNNMoney.com reports that the International Energy Agency is warning that there could be an oil supply crunch in 2010 once global demand recovers due to the impact of delayed investment in future supplies.

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This report from the Houston Chronicle discusses the disconnect between crude oil and gasoline prices, and how it has more to do with today's upside-down energy market than a conspiracy to defraud.  Provides a good background explanation on how there can be this disconnect because of the sources of supply.
 

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From the Houston Chronicle:  Anadarko announced a discovery today at its Heidelberg prospect in the Gulf of Mexico.  The article goes on to report that the discovery equates to a discovery of 100 million barrels of oil equivalent.

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According to this article from the Austin American-Statesman, some refineries may shut down in the event of a strike by refinery workers, while others may look to non-union workers.  Fortunately, a strike was averted on Saturday when both sides agreed to continue contract negotiations.

[Update.  From the Houston Chronicle:  It appears that the parties reached an agreement giving refinery and chemical plant workers a 3 percent raise each year for the next three years along with a $2,500 contract ratification bonus.]

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Interesting, but not surprising.  According to this article from the AP,  a recent report from API shows that U.S. demand for petroleum fell 6 percent to 19.4 million barrels a day.

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According to this article in the Houston Chronicle, OPEC has agreed to cut 2.2 million barrels from its daily production while Russia and Azerbaijan have announced their own cutbacks as well (in the range of hundreds of thousands of barrels).  Attempted price manipulation?  You bet.

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From the National Regulatory Research Institute:  "Speculation in itself is not a bad thing.  Good speculation provides a valuable market function.  It helps local gas distribution companies and other large gas consumers, for example, to hedge against rising prices, and so to reduce risk - a significant benefit amid highly volatile gas prices and the current economic situation.  By the same token, good speculation provides natural gas producers with more predictable future revenues, allowing them to expand with less uncertainty and borrowing costs.  That trend, in turn, should help to lower the price of natural gas in the long run.  Any attempt to curtail good speculation, therefore, is likely to make life harder for firms and raise natural gas prices."  A copy of the report can be found here (entitled, Speculation in the Natural Gas Market: What It Is and What It Isn’t; When It’s Good and When It’s Bad).

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