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That the timing of this extra production corresponds with them bringing a new field online is as close as we'll get to proof that their existing fields are running flat out.Well for now that seems to be the case,.... with another 500,000 Barrels a day coming out of saudi feilds it should ease some upward pressure on prices,
That the timing of this extra production corresponds with them bringing a new field online is as close as we'll get to proof that their existing fields are running flat out.
It's like someone saying they've got plenty of cash. But for some strange reason they don't want to pay you the $100 they owe until their next pay day. It makes it look awfully like they're close to being broke no matter what claims of wealth they make. Actions speak louder than words and what the Saudi's are doing is awfully similar.
What ought to ring some really big alarm bells though is this. Saudi is brining on new fields to raise production to a level that is still below their peak. That very strongly suggests their other fields have lost production capacity (that is, peaked). If that's true then we're seeing close to the worst case scenario for oil production actually playing out.
I think we have pretty much reached that point now where it's all too hard. That is, to keep the game going is going to require such incredible effort (GTL, CTL, bitumen, shale, tar sands etc) that in practice it just won't happen. In theory it might be possible, but not in practice.Agreed. Major oil producers all over the world are losing production capacity at an ever increasing rate. The Saudis are one of the few who have any capacity to "put a finger in the dyke" - for now - as it were. But the rate of worldwide production decrease at the same time as a rocketing world demand must surely over-run whatever capacity the Saudis have left in the short term....
AJ
I'd compare it to the gas situation in WA right now. In theory it is technically possible to work around that and keep just about everything up and running. But it's nowhere close to happening in practice, hence the unfolding economic disaster with job losses etc.
You applaud the depletion of Indonesia's oil fields?They've only left OPEC because they're now a net oil importer with declining production. They've peaked...
I think there's a point being missed here...What you don't think the major OPEC producers have a vested interest in keeping prices high .........
Indonesia at least produces light sweet , but on the depletion side , every nation that drills for black gold is facing depletion problems . The move was a protest on the inflation caused by OPEC refusing to drop prices.
Unrelated to that, I just re-read my previous post in reply to ithatheekret. Should have been ain there somewhere otherwise it reads a bit harsh I think.
If you exclude the tar sands then Canada is pretty much depleted. Production peak was, I think (from memory), 1973 or thereabouts. The only thing keeping their total production up is tar sands and a bit of conventional heavy oil.If we look at the OPEC nations , pick any one of them and I'll show you a western nation that exports more oil to the US burn off than that member does . That nation is Canada . So how long until the depletion factor comes home to roost there ?
If you exclude the tar sands then Canada is pretty much depleted. Production peak was, I think (from memory), 1973 or thereabouts. The only thing keeping their total production up is tar sands and a bit of conventional heavy oil.
But there's a problem too, the tar sands operations use massive amounts of natural gas. And yep, you guessed it , Canada's production of gas seems to have peaked too. Hence the calls for nuclear power to run the tar sands operations.
There appears to be a fait accompli by some posters regarding the future of the oil price & an ignorance of the data showing that consumption is falling in established western economies and that the rate of consumption is also falling in the so called 'expanding' countries.
Why would you fill your inventories at these prices when demand is falling as well?
..........we have to keep paying the rises in price or life starts grinding to a halt.
Just one big nasty circuit , just like the 70's but with more colours in the spectrum this time round .
I think that this is were we are now, it is working, grinding through the global system - $140 is enough/sufficient to do this? Pivot....to negative circuit? Throw in a global credit crunch, housing bust, credit card defaults, CDS's - the monetary expansion/debasement end game?
What ought to ring some really big alarm bells though is this. Saudi is brining on new fields to raise production to a level that is still below their peak. That very strongly suggests their other fields have lost production capacity (that is, peaked). If that's true then we're seeing close to the worst case scenario for oil production actually playing out.
If there is ignorance of the data it relates to people who do not understand that where demand exceeds consumption, the price of goods typically rise.There appears to be a fait accompli by some posters regarding the future of the oil price & an ignorance of the data showing that consumption is falling in established western economies and that the rate of consumption is also falling in the so called 'expanding' countries.
Why would you fill your inventories at these prices when demand is falling as well?
Agreed in a technical sense but anecdotally there's rather a lot of priced out demand out there. Drop the price back to $50, and it's not long ago that oil was selling for $50, and watch consumption soar.There appears to be a fait accompli by some posters regarding the future of the oil price & an ignorance of the data showing that consumption is falling in established western economies and that the rate of consumption is also falling in the so called 'expanding' countries.
Why would you fill your inventories at these prices when demand is falling as well?
I'm quite familiar with this one. The concern relates to water break throughs which effectively kill the wells. Water flows more easily than oil, so once it breaks through it's much like water going through a rock tunnel - the water flows through but the rock wears very slowly.There are also concerns from leading geologists that the saudis have done longterm damage to the gawfer field by pumping salt water into the field in a way that has separted the pockets of oil which will slow production... its a bit concerning considering how much we rely on this mamoth of an oil field.
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