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Iraq invasion was about oil | Nafeez Ahmed | Environment | theguardian.com

Iraq invasion was about oil | Nafeez Ahmed | Environment | theguardian.com.

Maximising Persian Gulf oil flows to avert a potential global energy crisis motivated Iraq War planners – not WMD or democracy
Tony Blair leaves the Iraq war inquiry

Tony Blair leaves the Iraq war inquiry. Photograph: Carl Court/AFP/Getty Images

Yesterday was the 11th anniversary of the 2003 Iraq War – yet to this day, few media reflections on the conflict accurately explore the extent to which opening up Persian Gulf energy resources to the world economy was a prime driver behind the Anglo-American invasion.

The overwhelming narrative has been one of incompetence and failure in an otherwise noble, if ill-conceived and badly managed endeavour to free Iraqis from tyranny. To be sure, the conduct of the war was indeed replete with incompetence at a colossal scale – but this doesn’t erase the very real mendacity of the cold, strategic logic that motivated the war’s US and British planners in the first place.

According to the infamous Project for a New American Century (PNAC) document endorsed by senior Bush administration officials as far back as 1997, “While the unresolved conflict with Iraq provides the immediate justification” for the US “to play a more permanent role in Gulf regional security,” “the need for a substantial American force presence in the Gulf transcends the issue of the regime of Saddam Hussein.”

So Saddam’s WMD was not really the issue – and neither was Saddam himself.

The real issue is candidly described in a 2001 report on “energy security” – commissioned by then US Vice-President Dick Cheney – published by the Council on Foreign Relations and the James Baker Institute for Public Policy. It warned of an impending global energy crisis that would increase “US and global vulnerability to disruption”, and leave the US facing “unprecedented energy price volatility.”

The main source of disruption, the report observed, is “Middle East tension“, in particular, the threat posed by Iraq. Critically, the documented illustrated that US officials had lost all faith in Saddam due his erratic and unpredictable energy export policies. In 2000, Iraq had “effectively become a swing producer, turning its taps on and off when it has felt such action was in its strategic interest to do so.” There is a “possibility that Saddam Hussein may remove Iraqi oil from the market for an extended period of time” in order to damage prices:

“Iraq remains a destabilising influence to… the flow of oil to international markets from the Middle East. Saddam Hussein has also demonstrated a willingness to threaten to use the oil weapon and to use his own export programme to manipulate oil markets. This would display his personal power, enhance his image as a pan-Arab leader… and pressure others for a lifting of economic sanctions against his regime. The United States should conduct an immediate policy review toward Iraq including military, energy, economic and political/diplomatic assessments. The United States should then develop an integrated strategy with key allies in Europe and Asia, and with key countries in the Middle East, to restate goals with respect to Iraqi policy and to restore a cohesive coalition of key allies.”

The Iraq War was only partly, however, about big profits for Anglo-American oil conglomerates – that would be a bonus (one which in the end has failed to materialise to the degree hoped for – not for want of trying though).

The real goal – as Greg Muttitt documented in his book Fuel on the Fireciting declassified Foreign Office files from 2003 onwards – was stabilising global energy supplies as a whole by ensuring the free flow of Iraqi oil to world markets – benefits to US and UK companies constituted an important but secondary goal:

“The most important strategic interest lay in expanding global energy supplies, through foreign investment, in some of the world’s largest oil reserves – in particular Iraq. This meshed neatly with the secondary aim of securing contracts for their companies. Note that the strategy documents released here tend to refer to ‘British and global energy supplies.’ British energy security is to be obtained by there being ample global supplies – it is not about the specific flow.”

To this end, as Whitehall documents obtained by the Independent show, the US and British sought to privatise Iraqi oil production with a view to allow foreign companies to takeover. Minutes of a meeting held on 12 May 2003 said:

“The future shape of the Iraqi industry will affect oil markets, and the functioning of Opec, in both of which we have a vital interest.”

A “desirable” outcome for Iraqi’s crippled oil industry, officials concluded, is:

“… an oil sector open and attractive to foreign investment, with appropriate arrangements for the exploitation of new fields.”

The documents added that “foreign companies’ involvement seems to be the only possible solution” to make Iraq a reliable oil exporter. This, however, would be “politically sensitive”, and would “require careful handling to avoid the impression that we are trying to push the Iraqis down one particular path.”

Media analyses claiming lazily that there was no planning for the aftermath of the Iraq War should look closer at the public record. The reality is that extensive plans for postwar reconstruction were pursued, but they did not consider humanitarian and societal issues of any significance, focusing instead on maintaining the authoritarian structures of Saddam’s brutal regime after his removal, while upgrading Iraq’s oil infrastructure to benefit foreign investors.

A series of news reports, for instance, confirmed how the State Department had set up 17 separate working groups to work out this post-war plan. Iraq would be “governed by a senior US military officer… with a civilian administrator”, which would “initially impose martial law”, while Iraqis would be relegated to the sidelines as “advisers” to the US administration. The US envisaged “a broad and protracted American role in managing the reconstruction of the country… with a continued role for thousands of US troops there for years to come”, in “defence of the country’s oil fields”, which would eventually be “privatised” along with “other supporting industries.”

The centrality of concerns about energy to Iraq War planning was most candidly confirmed eight years ago by a former senior British Army official in Iraq, James Ellery, currently director of British security firm and US defence contractor, Aegis.

Brigadier-General James Ellery CBE, the Foreign Office’s Senior Adviser to the Coalition Provisional Authority in Baghdad since 2003, had confirmed the critical role of Iraqi oil reserves in alleviating a “world shortage” of conventional oil. The Iraq War has helped to head off what Ellery described as “the tide of Easternisation” – a shift in global political and economic power toward China and India, to whom goes “two thirds of the Middle East’s oil.” His remarks were made as part of a presentation at the School of Oriental & African Studies (SOAS), University of London, sponsored by the Iraqi Youth Foundation, on 22nd April 2008:

“The reason that oil reached $117 a barrel last week was less to do with security of supply… than World shortage.”

He went on to emphasise the strategic significance of Iraqi petroleum fields in relation to the danger of production peaks being breached in major oil reserves around the world:

“Russia’s production has peaked at 10 million barrels per day; Africa has proved slow to yield affordable extra supplies – from Sudan and Angola for example. Thus the only near-term potential increase will be from Iraq.”

Whether Iraq began “favouring East or West” could therefore be “de-stabilising” not only “within the region but to nations far beyond which have an interest.”

“Iraq holds the key to stability in the region”, Ellery continued, due to its “relatively large, consuming population,” its being home to “the second largest reserve of oil – under exploited”, and finally its geostrategic location “on the routes between Asia, Europe, Arabia and North Africa – hence the Silk Road.”

Despite escalating instability and internal terrorism, Iraq is now swiftlyreclaiming its rank as one of the world’s fastest-growing exporters, cushioning the impact of supply outages elsewhere and thus welcomed by OPEC. Back in 2008, Ellery had confirmed Allied ambitions to “raise Iraqi’s oil production from 2.5 million bpd today to 3 million by next year and maybe ultimately 6 million barrels per day.”

Thus, the primary motive of the war – mobilising Iraqi oil production tosustain global oil flows and moderate global oil prices – has, so far, been fairly successful according to the International Energy Agency.

Eleven years on, there should be no doubt that the 2003 Iraq War was among the first major resource wars of the 21st century. It is unlikely to be the last.

Dr Nafeez Ahmed is executive director of the Institute for Policy Research & Development and author of A User’s Guide to the Crisis of Civilisation: And How to Save It among other books. Follow him on Twitter @nafeezahmed

How do ex-Saudi Aramco geologist Dr Husseini’s oil price spike predictions of USD 140 by 2016-17 stack up?

How do ex-Saudi Aramco geologist Dr Husseini’s oil price spike predictions of USD 140 by 2016-17 stack up?.

by Matt Mushalik, originally published by Crude Oil Peak  | TODAY

In an interview with ASPO USA in January 2014 Ex-Saudi Aramco geologist Dr. Sadad-Al-Husseini predicted oil price spikes of $140 by 2016/17. This post shows some graphs explaining why this could happen.

Husseini: My base oil price forecast in 2012 dollars still ranges between $105 and $120/barrel Brent with a volatility floor of $ 95/barrel and more probable upward spiking to $140/barrel within 2016/2017.

Husseini did not elaborate how he arrived at that time frame but this question and answer give us a hint:
ASPO: “In the larger context, how has your view of future world oil production supply evolved over the last four or five years? As a benchmark, I reference your slides from the 2009 Oil & Money Conference slides”
Husseini: “The realities of the 2009 O&M forecast of a limited plateau of oil supplies have been pretty much vindicated since then. The oil plateau may now be inflated by about 1 – 2 Mbd of high cost unconventional oils but all major forecasters see this as pretty much transitional. The plateau itself remains a reality and unfortunately its duration is still unlikely to extend beyond the end of this decade.”
So how did Husseini’s 2009 plateau look like and how does it compare with actual production data? The slides are contained in a presentation titled “Structural realities that define the oil supply outlook”
This was done continent by continent and country by country. In the following graphs, the grey shaded columns are from Husseini’s 2009 projection and the colored columns represent actual production (data from EIA).
Central and South America

Actual production in 2013 was 1 mb/d less than in the 2009 projection, mainly due to limited Brazilian production.
Europe
Actual production in 2013 was 460 kb/d less than in the 2009 projection, mainly due to higher decline rates in UK.
Former Soviet Union

Actual production in 2013 was slightly less (80 kb/d) than in the 2009 projection due to weaker output in Kazachstan. Note that crude oil production in West Siberian fields peaked in the mid 80s, triggering the collapse of the Soviet Union.
Asia
Actual production in 2013 was 300 Kb/d higher than the 2009 projection mainly as a result of higher production in China.
Africa
The 2009 projection estimated a peak of around 11 mb/d in 2015 but actual production in 2013 was only 8.7 mb/d or 1.9 mb/d less than projected for that year. Production was less in Angola, Algeria, Libya and Sudan.
Middle East

Actual production in 2013 was 1.2 mb/d higher than in the 2009 projection. While there was an actual decrease in Iran, Yemen and Syria (together -850 kb/d), this was more than offset by an increase in all other countries including Iraq (+ 440 kb/d), Kuwait (300 kb/d), Qatar (250 kb/d), Oman (290 kb/d), UAE (220 kb/d) and Saudi Arabia (+ 540 kb/d).
North America 
While in the above all of Husseini’s underlying 2009 graphs relate to crude oil, the North American graph includes NGLs .
First, we need to re-stack the columns to show the impact of shale oil:

For 2013, Husseini’s projection for Mexico was spot on and for Canada slightly over-estimated. The big difference is US shale oil, 3.3 mb/d, but that contains NGLs because shale oil is a very light oil as we have seen in recent fires in oil train accidents.

The uptick in crude was less, around 2.6 mb/d. So Husseini’s North America projection for crude and NGL has to be adjusted by the ratio crude/(crude+NGL).
All together now.

We see that total actual crude production was slightly higher than Husseini’s forecast, 600 kb/d or 0.8% in 2013, a small percentage in view of all the uncertainties. As is usual for estimates there is a lot of plus and minus.
The biggest difference is the unforeseen increase in US shale oil which was, however, cancelled out by too optimistic forecasts for Africa and South America.
So how might Dr. Husseini in his interview have come to oil price spikes in 2016/17?
Let’s adjust his original 2009 projection as follows: + 600 kb/d to bring projected production into line with actual production in 2013, then shift his projection by a further +2 mb/d to add unconventional oil as mentioned in the interview.
On the demand side, let us take the long-term view of the IEA WEO 2013 (p. 501): “Demand for oil grows from 87.4 mb/d in 2012 to 101.4 mb/d in 2035 in the New Policies Scenario, but the pace of growth slows steadily, from an average increase of 1 mb/d per year in the period to 2020 to an average of only 400 kb/d in the subsequent years to 2035”.
So for crude oil this means +800 kb/d pa until 2020 and + 300 kb/d pa thereafter. Let’s put that into a simplified graph:
We see that the intersection point is somewhere in 2016. What is more important than the precise year in which the next oil crunch may happen is the widening gap in the 2nd half of this decade.
Conclusion:
Whether the world wants to follow the New Policies Scenario of the IEA WEO 2013 is another question altogether. It seems governments are rather on a current policies track which increases oil demand and therefore pressure on oil prices.
Oil dollars teaser image via shutterstock. Reproduced at Resilience.org with permission.

How do ex-Saudi Aramco geologist Dr Husseini's oil price spike predictions of USD 140 by 2016-17 stack up?

How do ex-Saudi Aramco geologist Dr Husseini’s oil price spike predictions of USD 140 by 2016-17 stack up?.

by Matt Mushalik, originally published by Crude Oil Peak  | TODAY

In an interview with ASPO USA in January 2014 Ex-Saudi Aramco geologist Dr. Sadad-Al-Husseini predicted oil price spikes of $140 by 2016/17. This post shows some graphs explaining why this could happen.

Husseini: My base oil price forecast in 2012 dollars still ranges between $105 and $120/barrel Brent with a volatility floor of $ 95/barrel and more probable upward spiking to $140/barrel within 2016/2017.

Husseini did not elaborate how he arrived at that time frame but this question and answer give us a hint:
ASPO: “In the larger context, how has your view of future world oil production supply evolved over the last four or five years? As a benchmark, I reference your slides from the 2009 Oil & Money Conference slides”
Husseini: “The realities of the 2009 O&M forecast of a limited plateau of oil supplies have been pretty much vindicated since then. The oil plateau may now be inflated by about 1 – 2 Mbd of high cost unconventional oils but all major forecasters see this as pretty much transitional. The plateau itself remains a reality and unfortunately its duration is still unlikely to extend beyond the end of this decade.”
So how did Husseini’s 2009 plateau look like and how does it compare with actual production data? The slides are contained in a presentation titled “Structural realities that define the oil supply outlook”
This was done continent by continent and country by country. In the following graphs, the grey shaded columns are from Husseini’s 2009 projection and the colored columns represent actual production (data from EIA).
Central and South America

Actual production in 2013 was 1 mb/d less than in the 2009 projection, mainly due to limited Brazilian production.
Europe
Actual production in 2013 was 460 kb/d less than in the 2009 projection, mainly due to higher decline rates in UK.
Former Soviet Union

Actual production in 2013 was slightly less (80 kb/d) than in the 2009 projection due to weaker output in Kazachstan. Note that crude oil production in West Siberian fields peaked in the mid 80s, triggering the collapse of the Soviet Union.
Asia
Actual production in 2013 was 300 Kb/d higher than the 2009 projection mainly as a result of higher production in China.
Africa
The 2009 projection estimated a peak of around 11 mb/d in 2015 but actual production in 2013 was only 8.7 mb/d or 1.9 mb/d less than projected for that year. Production was less in Angola, Algeria, Libya and Sudan.
Middle East

Actual production in 2013 was 1.2 mb/d higher than in the 2009 projection. While there was an actual decrease in Iran, Yemen and Syria (together -850 kb/d), this was more than offset by an increase in all other countries including Iraq (+ 440 kb/d), Kuwait (300 kb/d), Qatar (250 kb/d), Oman (290 kb/d), UAE (220 kb/d) and Saudi Arabia (+ 540 kb/d).
North America 
While in the above all of Husseini’s underlying 2009 graphs relate to crude oil, the North American graph includes NGLs .
First, we need to re-stack the columns to show the impact of shale oil:

For 2013, Husseini’s projection for Mexico was spot on and for Canada slightly over-estimated. The big difference is US shale oil, 3.3 mb/d, but that contains NGLs because shale oil is a very light oil as we have seen in recent fires in oil train accidents.

The uptick in crude was less, around 2.6 mb/d. So Husseini’s North America projection for crude and NGL has to be adjusted by the ratio crude/(crude+NGL).
All together now.

We see that total actual crude production was slightly higher than Husseini’s forecast, 600 kb/d or 0.8% in 2013, a small percentage in view of all the uncertainties. As is usual for estimates there is a lot of plus and minus.
The biggest difference is the unforeseen increase in US shale oil which was, however, cancelled out by too optimistic forecasts for Africa and South America.
So how might Dr. Husseini in his interview have come to oil price spikes in 2016/17?
Let’s adjust his original 2009 projection as follows: + 600 kb/d to bring projected production into line with actual production in 2013, then shift his projection by a further +2 mb/d to add unconventional oil as mentioned in the interview.
On the demand side, let us take the long-term view of the IEA WEO 2013 (p. 501): “Demand for oil grows from 87.4 mb/d in 2012 to 101.4 mb/d in 2035 in the New Policies Scenario, but the pace of growth slows steadily, from an average increase of 1 mb/d per year in the period to 2020 to an average of only 400 kb/d in the subsequent years to 2035”.
So for crude oil this means +800 kb/d pa until 2020 and + 300 kb/d pa thereafter. Let’s put that into a simplified graph:
We see that the intersection point is somewhere in 2016. What is more important than the precise year in which the next oil crunch may happen is the widening gap in the 2nd half of this decade.
Conclusion:
Whether the world wants to follow the New Policies Scenario of the IEA WEO 2013 is another question altogether. It seems governments are rather on a current policies track which increases oil demand and therefore pressure on oil prices.
Oil dollars teaser image via shutterstock. Reproduced at Resilience.org with permission.

Heinberg: Peak Oil And How To See The Bigger Picture  |  Peak Oil News and Message Boards

Heinberg: Peak Oil And How To See The Bigger Picture  |  Peak Oil News and Message Boards.

Richard Heinberg explaining everything that you need to know about Peak Oil and how to prepare for it, because we are already deep in Peak Oil time

Heinberg: Peak Oil And How To See The Bigger Picture  |  Peak Oil News and Message Boards

Heinberg: Peak Oil And How To See The Bigger Picture  |  Peak Oil News and Message Boards.

Richard Heinberg explaining everything that you need to know about Peak Oil and how to prepare for it, because we are already deep in Peak Oil time

Peak Oil: The Military Seems Concerned … Just Sayin’ – Peak Oil Matters

Peak Oil: The Military Seems Concerned … Just Sayin’ – Peak Oil Matters.

IMGP1074_watermarked

 

 

 

 

 

 

 

 

An observation worth noting … and pondering, from Dr. Nafeez Ahmed (quoting Lieutenant Colonel Daniel L. Davis):

‘A lot of high-ranking officials are starting to ask exactly these hard questions about the sustainability of the current energy system. You’ve got to remember that for the military, it doesn’t matter what you want to do. What matters is what you can do, and it’s our top priority to make sure we understand potential limits to our operational capability. Even the EIA is forecasting that we could see a peak of shale production by 2018 followed by a plateau and decline, and the Pentagon knows this. But our transport infrastructure is totally dependent on liquid fuels. How are we going to sustain that infrastructure with these decline rates? That’s why serious questions are being asked by high level US military officials as to what exactly the Army, as well as American society in general, is going to do to address this challenge.’

Is this a problem? If it is, thank goodness it will only affect the military and not the rest of us!

The military may be worried about how to transport all of its equipment and fuel along with its broad array of weaponry systems, but here in the general population, we have our transportation concerns pretty much under control. Visionary leaders in both government and industry working hard each and every day to provide citizens with all the information they’ll need to properly adapt to the energy challenges our military leaders are concerned with, and plans are this very moment taking shape to allow us all to seamlessly transition away from fossil fuel dependency and its assortment of costs and risks. Better still, industry leaders aware of those impending difficulties are plowing profits into every feasible research project designed to maximize alternative energy supplies.

So that’s what’s it’s like to spin a fact-free, feel-good story! That can be addicting for anyone who benefits from withholding information at the expense of so many others.

Three years ago, I wrote about this issue [here].

In that piece, I cited these observations:

The impact of peak oil on markets, lifestyles, and even national solvency deserves our very highest attention – but, it turns out, some important players seem to be paying no attention at all. [Chris Martenson] [1]
What Chris suspected, and as was confirmed in a presentation (by Rick Munroe) cited in his article, is that while our military (among other nations’) is definitely concerned about Peak Oil and its impact on the operations and responsibilities it’s currently charged with and will likely face in years to come, nothing is being done at the national political level. (Munroe himself, in another article, offered this: ‘This author has yet to encounter a study conducted by a military analyst which dismisses peak oil as an implausible, alarmist issue.’) There are no governmental departments and no bureaucrats who’ve been assigned the task of figuring out anything about what we should do. 
Acknowledging as have others that electoral politics hampers our officials from dealing with long-range planning and problems, Martenson added:
‘So I came away from the ASPO conference pondering two completely polar trends that combined to create a lasting discomfort. On the one hand we have more and more private and military organizations coming to the conclusion that peak oil is imminent and will change everything, possibly disruptively. On the other hand there appear to be no plans within the civilian government to deal with a liquid fuels emergency.’

More than a bit disappointing that not much has changed. Maybe it’s just me, but starting to plan after the big problems make their presence felt seems not the wisest choice.

~ My Photo: Newport Beach, CA – 02.16.14

 

Blinkered to threat of rising oil prices

Blinkered to threat of rising oil prices.

Oil production in Australia peaked in 2000. It would have peaked worldwide too by now, had it not been for the shale oil boom in the US.

Some interesting work by this country’s most unrelenting peak oil proponent, retired engineer Matt Mushalik, shows that without shale oil – which accounts for 1.5 million barrels a day – world oil production last year was back at 2005 levels. It seems a monumental economic crisis may have been averted.

Still, the price of crude oil has stubbornly hovered around its present mark of $US108 a barrel for the past three years even as shale oil production has ramped up.

For motorists in Australia, should consensus predictions of a falling Australian dollar come to pass, prices will head higher at the petrol pump in coming years.

This currency effect, however, is a sideshow compared with the big question of world oil prices and production.

Thanks to the shale oil boom, the more alarmist cries of the peak oil brigade have been subdued. Even with advancing technology and ever more sophisticated extraction methods though, it is London to a brick that the price of crude oil will rise sharply in the longer term.

You would think then that peak oil might be factored in to major policy decisions about the future of the nation and its infrastructure.

Energy security is paramount.

But it is not so. In early 2012, then industry minister Kim Carr declined to table the federal government’s peak oil report BITRE 117 before a Senate hearing on grounds that it was ”not up to scratch”.

Later that year, the energy white paper also failed to deliver an updated version. Research on oil, perhaps the most critical commodity for Australia’s long-term security, has been abandoned.

As the Abbott government grapples with the tricky question of how to fund big projects ahead of public hearings on infrastructure next month, the question of oil prices is not even on the agenda.

Already, the bias of state and federal governments for roads over rail has been well documented. As oil is the most critical commodity in fuelling any transport option, you could be forgiven for thinking that it should be on the agenda.

Nothing in the issues papers, nothing in the draft report from the Productivity Commission. It seems to be an article of faith that people will keep finding oil somewhere, so let’s not give it a second thought.

In an interview with the US Association for the Study of Peak Oil and Gas in January, an ex-Saudi Aramco geologist, Dr Sadad Al-Husseini, predicted oil price spikes of $140 by 2016-17.

”My base oil price forecast in 2012 dollars still ranges between $US105 and $US120/barrel … with a volatility floor of $US95/barrel and more probable upward spiking to $US140/barrel within 2016-17.”

Dr Al-Husseini’s forecast in 2009 of a limited plateau of oil supplies appears to have been vindicated. He said the plateau might have been inflated thanks to high-cost unconventional oils but major forecasters see this as pretty much transitional. ”The plateau itself remains a reality and unfortunately its duration is still unlikely to extend beyond the end of this decade.”

He highlighted several factors that would inhibit the expansion of production, including decline rates (more extreme than ever with shale oil and deep offshore), limited investments (quadrupled capex/barrel in the past few years) and economic growth (still recovering). ”In the long term, reserves depletion remains very high with totally inadequate reserves replacements regularly obscured by resorting to claiming ‘resources’ as reserves.”

The industry has moved into a higher-cost paradigm with very limited growth in conventional oil and condensate supplies, accelerated ”proven” reserves depletion and high levels of violence and conflicts around the world’s major basins of low-cost oil production.

Australia is fortunate in having enormous gas resources. Still, with the world population forecast to grow to 11 billion by the end of this century and the developing economies ever-thirsty for oil, it would seem foolish to ignore the oil price in long-term infrastructure planning.

Mind you, short-termism is an affliction not merely contained to oil. In the annual Mitsubishi lecture back in 2010, Don Elder, chief executive of coal company Solid Energy, said there was enough in coal reserves for 100 years. Yet in one more generation, global demand for food and energy would double.

OPEC Update and my argument that OPEC is producing flat out » Peak Oil BarrelPeak Oil Barrel

OPEC Update and my argument that OPEC is producing flat out » Peak Oil BarrelPeak Oil Barrel.

The OPEC Monthly Oil Market Report is just out with OPEC crude only production numbers for February 2014. OPEC Crude production was up 258.6 kb/d in February on the strength of a big jump from Iraq. Iraqi crude oil production was up 400 kb/d to 3,397 kb/d. OPEC crude only production, less Iraq, was down 141.4 kb/d.

OPEC 12

Iraq was the only big gainer this month.

Iraq

 

Saudi Arabia was down 102 kb/d but that was after January production had been revised up by 99 kb/d.

Saudi Arabia

Saudi admitted, early that their old giant fields were in steep decline. Ravensworth.org published the following quote about eight years ago however their web site has since been taken down:

One challenge for the Saudis in achieving this objective is that their existing fields sustain 5 percent-12 percent annual “decline rates,” (according to Aramco Senior Vice President Abdullah Saif, as reported in Petroleum Intelligence Weekly and the International Oil Daily) meaning that the country needs around 500,000-1 million bbl/d in new capacity each year just to compensate.

That quote by Abdullah Saif was widely circulated. and in 2007 International Business Publications published this on page 144:

One challenge for Saudi in achieving their strategic vision to add production capacity is thattheir existing fields sustain, on average, 6 to 8 percent annual “decline rates”(as reported by Platts Oilgram) in their existing fields, meaning that the country needs around 700,000 bbl/d in additional capacity each year just to compensate for natural decline.

However in 2006 Saudi Arabia’s Center for Strategic and International Studies claims they have gotten this decline rate down to almost 2%.

Without “maintain potential” drilling to make up for production, Saudi oil fields would have a natural decline rate of a hypothetical 8%. As Saudi Aramco has an extensive drilling program with a budget running in the billions of dollars, this decline is mitigated to a number close to 2%.

The drilling program they are talking about is those horizontal wells placed at the very top of the reservoir.  Now imagine, that with all those brand new horizontal wells sucking the oil right off the top of the reservoir, they still had a decline rate of  over 2%! Of course that was in 2006. It is likely that the water has already hit many of those horizontal wells and their decline rate is now well over 2%. More likely it is a lot higher than that.

But they have brought on Khurais and Manifa since then with a combined production capacity of 2 mb/d. That has enabled them to keep their production levels up… for now. Saudi may, just may, be able to produce half a million barrels per day more than they are right now but I doubt it.

Okay then is OPEC producing flat out? There is absolutely no doubt that, with the possible exception of Saudi Arabia, they are. Eight OPEC nations have serious declining production since 2005. Even to suggest that these eight nations are not producing flat out is to deny reality. To believe that they would deliberately cut production while four countries, Iraq, Saudi Arabia, Kuwait and UAE, are increasing production is delusional.

Algria et al.

What about the other four? Iraq makes no bones that they are producing every barrel possible and hope to produce more. And I have discussed Saudi Arabia but what about Kuwait and UAE?

Kuwait+UAE

Kuwait and the UAE were later than Saudi Arabia in getting their infill drilling program going. They both started their infill drilling program around 2007, delayed it during the drastic OPEC cuts from late 208 until early 2011, but have since gone full steam with that program. They reached their peak about a year ago. I expect them to hold at this level for two or three years before they start a not too slow decline.

Yes, it is my sincear opinion that OPEC is now producing every barrel they possibly can. OPEC production may increase slightly as Iran dlowly increases their production as sanctions are lifted. And there is even a slight chance that peace may break out in Libya and their production increases, but not likely.

My point is there is OPEC has no spare capacity. If anyone seriously doubts my opinion on this subject then please post your reasons, and name the countries you believe are not producing flat out, in the comments section below.

Updated charts of all 12 OPEC countries can be found here: OPEC Charts

Energy & Capital is a web site that pushes energy stock. They are usually bullish, very bullish on shale oil and usually deny peak oil. That is why it was so surprising to get their latest edition in my email box. However this is just one writer for Energy & Capital. I am sure most others have a different opinion.

Peak Oil: It’s Baaaack

Over the past few months, I’ve been sharing my concerns about shale oil.

Namely, that it’s more comparable to a Ponzi scheme than any sort of boom.

I’ve articulated the reasons for my thesis, including fast decline rates, the amount of new rigs and wells needed, and a cost of production that’s been higher than the price of sale for some time now.

And further down he says:

Predictions are tough, especially with a still-struggling economy. If I had to say, prices at least need to rise to the marginal cost of production at $115ish. Trouble with that is anything over $110 for a sustained time causes recession, which of course would send prices lower making projects unviable once more.

It’s classic peak oil. It never went away, we’ve just been able to paper over it with free money for the past half decade.

Seems like the majors realize the gig is up. They’re selling unconventional assets in a big way, wanting to mitigate risk and capex by getting back to conventional. Still, conventional peaked in 2005 and that strategy seems like a last-ditch effort.

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Richard Heinberg: Why The Oil 'Revolution' Story Is Dead Wrong | Peak Prosperity

Richard Heinberg: Why The Oil ‘Revolution’ Story Is Dead Wrong | Peak Prosperity.

Bruce Rolff/Shutterstock

Richard Heinberg: The Oil ‘Revolution’ Story Is Dead Wrong

The data tell a vastly different tale than the media
by Adam Taggart
Sunday, March 9, 2014, 1:45 PM

With all the grandiosity of the media headlines touting our destiny as the new “Saudi America”, many pundits have been quick to pronounce Peak Oil dead.

Here at PeakProsperity.com, one of the most frequent questions we’ve received over the past two years is: will the increased production from new “tight” oil sources indeed solve our liquid fuels emergency?

Not at all, say Chris and this week’s podcast guest, Richard Heinberg. Both are fellows at the Post Carbon Institute, and you are about to hear one of the most important and most lucid deconstructions of the false promise of American energy independence:

I recently went back and reread the first edition of The Party’s Over because it was the tenth year anniversary. And I was actually a little surprised to see what it really says. My forecasts in The Party’s Over were really based on the work of two veteran petroleum geologists—Colin Campbell and Jean Laherrère. So they were saying back before 2003, because it published in 2003, so it was actually written in 2001 and 2002. So they were saying back in 2000 and 2001 that we would see a peak in conventional oil around 2005—check—that that would cause oil prices to bump higher—check—which would cause a slowdown in economic growth—check. But it would also incentivize production of unconventional oil in various forms—check—which would then peak around 2015, which is basically almost where we are right now and all the signs are suggesting that that is going to be a check-off, too. So amazing enough, these two guys got it perfectly correct fifteen years ago.

The big news right now is that the industry needs prices higher than the economy will allow, as you just outlined. So we are seeing the major oil companies cutting back on capital expenditure in upstream projects, which will undoubtedly have an impact a year or two down the line in terms of lower oil production. That is why I think that Campbell and Laherrère were right on in saying 2015, 2016 maybe, we will also start to see the rapid increase of production from the Bakken and the Eagle Ford here in the US start to flatten out. And probably within a year or two after that, we will see a commencement of a rapid decline.

So you know, on a net basis, taking all those things into account, I think we are probably pretty likely to see global oil production start to head south in the next year or two.

But this change in capital expenditure by the majors, that is a new story. You know, just a couple of years ago, they needed oil prices around $100 a barrel in order to justify upstream investments. That is no longer true. Now they need something like $120 a barrel but the economy cannot stand prices that high. So you know, if the price starts to go up a little bit, then demand just falls back. People start driving less. And so the economy is unable to deliver oil prices to the industry that the industry needs. I think Gail Tverberg is saying this is the beginning of the end. I think she’s right.

If we [continue along with our current policies and dependence on petroleum] then everything will eventually change — as a result of the economy coming apart, the debt bubble bursts, you know, agriculture declines because of the expense of oil and because of depletion of topsoil and because you cannot trust the weather anymore. And we have a very dystopian future if we do not do anything.

So it has never been more important for the average person to understand energy issues than it is right now. But I doubt if there has ever been a time when energy issues have been so deliberately confused by the people who should be explaining it to us.

Click the play button below to listen to Chris’ interview with Richard Heinberg (49m:43s):

TRANSCRIPT

Chris Martenson: Welcome to this Peak Prosperity podcast. I am your host, Chris Martenson, and today, I am really excited to introduce a man who needs no introduction, Richard Heinberg, author, educator, speaker, writer now of eleven books including Party’s Over, the one that got me started on the peak oil story, The End of Growth, and Snake Oil: How Fracking’s False Promise of Plenty Imperils Our Future.

Richard Heinberg: Try say that fast five times.

Chris Martenson: [Laugh] I did, and that is the best I could do [laughter]. Welcome, Richard.

Richard Heinberg: Good to be with you, … read more

SHARE

ABOUT THE GUEST

Richard Heinberg
Richard is a Senior Fellow of thePost Carbon Institute and is widely regarded as one of the world’s foremost Peak Oil educators. He has authored scores of essays and articles that have appeared in such journals as Nature, The American Prospect, Public Policy Research, Quarterly Review, The Ecologist, Resurgence, The Futurist, European Business Review, Earth Island Journal, Yes!, and The Sun; and on web sites such as Resilience.org, TheOilDrum.com, Alternet.org, ProjectCensored.com, and Counterpunch.com.
He has been quoted in Time Magazine and has spoken to hundreds of audiences in 14 countries, including members of the European Parliament. He has appeared in many film and television documentaries, including Leonardo DiCaprio’s 11th Hour, is a recipient of the M. King Hubbert Award for Excellence in Energy Education, and in 2012 was appointed to His Majesty the King of Bhutan’s International Expert Working Group for the New Development Paradigm initiative.
Richard’s animations Don’t Worry, Drive OnWho Killed Economic Growth? and 300 Years of Fossil Fuels in 300 Minutes (winner of a YouTubes’s/DoGooder Video of the Year Award) have been viewed by 1.5 million people .
Since 2002, he has delivered more than five hundred lectures to a wide variety of audiences—from insurance executives to peace activists, from local and national elected officials to Jesuit volunteers.
He lives in northern California with his wife and is an avid violin player.

Richard Heinberg: Why The Oil ‘Revolution’ Story Is Dead Wrong | Peak Prosperity

Richard Heinberg: Why The Oil ‘Revolution’ Story Is Dead Wrong | Peak Prosperity.

Bruce Rolff/Shutterstock

Richard Heinberg: The Oil ‘Revolution’ Story Is Dead Wrong

The data tell a vastly different tale than the media
by Adam Taggart
Sunday, March 9, 2014, 1:45 PM

With all the grandiosity of the media headlines touting our destiny as the new “Saudi America”, many pundits have been quick to pronounce Peak Oil dead.

Here at PeakProsperity.com, one of the most frequent questions we’ve received over the past two years is: will the increased production from new “tight” oil sources indeed solve our liquid fuels emergency?

Not at all, say Chris and this week’s podcast guest, Richard Heinberg. Both are fellows at the Post Carbon Institute, and you are about to hear one of the most important and most lucid deconstructions of the false promise of American energy independence:

I recently went back and reread the first edition of The Party’s Over because it was the tenth year anniversary. And I was actually a little surprised to see what it really says. My forecasts in The Party’s Over were really based on the work of two veteran petroleum geologists—Colin Campbell and Jean Laherrère. So they were saying back before 2003, because it published in 2003, so it was actually written in 2001 and 2002. So they were saying back in 2000 and 2001 that we would see a peak in conventional oil around 2005—check—that that would cause oil prices to bump higher—check—which would cause a slowdown in economic growth—check. But it would also incentivize production of unconventional oil in various forms—check—which would then peak around 2015, which is basically almost where we are right now and all the signs are suggesting that that is going to be a check-off, too. So amazing enough, these two guys got it perfectly correct fifteen years ago.

The big news right now is that the industry needs prices higher than the economy will allow, as you just outlined. So we are seeing the major oil companies cutting back on capital expenditure in upstream projects, which will undoubtedly have an impact a year or two down the line in terms of lower oil production. That is why I think that Campbell and Laherrère were right on in saying 2015, 2016 maybe, we will also start to see the rapid increase of production from the Bakken and the Eagle Ford here in the US start to flatten out. And probably within a year or two after that, we will see a commencement of a rapid decline.

So you know, on a net basis, taking all those things into account, I think we are probably pretty likely to see global oil production start to head south in the next year or two.

But this change in capital expenditure by the majors, that is a new story. You know, just a couple of years ago, they needed oil prices around $100 a barrel in order to justify upstream investments. That is no longer true. Now they need something like $120 a barrel but the economy cannot stand prices that high. So you know, if the price starts to go up a little bit, then demand just falls back. People start driving less. And so the economy is unable to deliver oil prices to the industry that the industry needs. I think Gail Tverberg is saying this is the beginning of the end. I think she’s right.

If we [continue along with our current policies and dependence on petroleum] then everything will eventually change — as a result of the economy coming apart, the debt bubble bursts, you know, agriculture declines because of the expense of oil and because of depletion of topsoil and because you cannot trust the weather anymore. And we have a very dystopian future if we do not do anything.

So it has never been more important for the average person to understand energy issues than it is right now. But I doubt if there has ever been a time when energy issues have been so deliberately confused by the people who should be explaining it to us.

Click the play button below to listen to Chris’ interview with Richard Heinberg (49m:43s):

TRANSCRIPT

Chris Martenson: Welcome to this Peak Prosperity podcast. I am your host, Chris Martenson, and today, I am really excited to introduce a man who needs no introduction, Richard Heinberg, author, educator, speaker, writer now of eleven books including Party’s Over, the one that got me started on the peak oil story, The End of Growth, and Snake Oil: How Fracking’s False Promise of Plenty Imperils Our Future.

Richard Heinberg: Try say that fast five times.

Chris Martenson: [Laugh] I did, and that is the best I could do [laughter]. Welcome, Richard.

Richard Heinberg: Good to be with you, … read more

SHARE

ABOUT THE GUEST

Richard Heinberg
Richard is a Senior Fellow of thePost Carbon Institute and is widely regarded as one of the world’s foremost Peak Oil educators. He has authored scores of essays and articles that have appeared in such journals as Nature, The American Prospect, Public Policy Research, Quarterly Review, The Ecologist, Resurgence, The Futurist, European Business Review, Earth Island Journal, Yes!, and The Sun; and on web sites such as Resilience.org, TheOilDrum.com, Alternet.org, ProjectCensored.com, and Counterpunch.com.
He has been quoted in Time Magazine and has spoken to hundreds of audiences in 14 countries, including members of the European Parliament. He has appeared in many film and television documentaries, including Leonardo DiCaprio’s 11th Hour, is a recipient of the M. King Hubbert Award for Excellence in Energy Education, and in 2012 was appointed to His Majesty the King of Bhutan’s International Expert Working Group for the New Development Paradigm initiative.
Richard’s animations Don’t Worry, Drive OnWho Killed Economic Growth? and 300 Years of Fossil Fuels in 300 Minutes (winner of a YouTubes’s/DoGooder Video of the Year Award) have been viewed by 1.5 million people .
Since 2002, he has delivered more than five hundred lectures to a wide variety of audiences—from insurance executives to peace activists, from local and national elected officials to Jesuit volunteers.
He lives in northern California with his wife and is an avid violin player.
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