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Say it ain't so Saudi Arabia!!!!!

General discussions of the systemic, societal and civilisational effects of depletion.
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Re: Say it ain't so Saudi Arabia!!!!!

Postby rockdoc123 » Fri 26 Dec 2014, 20:01:38

$this->bbcode_second_pass_quote('', 'S')audi claimed 12 mbpd back in 2006 hoping to depress prices and maintain demand. Previous such announcement worked. Didn't help that time. The price went up demand went down and the Saudi's lost money when prices crashed.

You guys can barely define reserves. We have known, probable, possible, improbable, who-knows. The Saudis are still report the same perpetual 260 billion barrels under the sand. Have you seen it? Where the capacity?


First off there is an accepted definition for spare capacity used by the EIA

$this->bbcode_second_pass_quote('', 'a')s the volume of production that can be brought on within 30 days and sustained for at least 90 days


Secondly there is a wealth of evidence that KSA did increase their production capacity from 2006 onwards through the execution of the mega-projects. The money to build plants, drill wells, install additional power etc was all spent, it involved foreign contractors so it's pretty hard to claim it didn't happen. There have been numerous papers published in SPE in regards to these projects and their success. Claiming it isn't there is just silly. Opec spare capacity is another thing which is why the term effective spare capacity is used given countries such as Libya and Nigeria may have spare capacity that under normal conditions would fit the EIA definition but due to strikes, military actions, rebels etc that amount of spare capacity gets reduced.

as to reserve definitions they are well-defined. Spelled out in a series of papers presented by AAPG, SPE back a decade ago now. There are huge books which discuss guidelines for reserve classifications (I had the COGEH directives sitting on my desk for years) and there are people recognized by the SEC and TSX as "qualified reserve auditors/reporters". It's all fairly well prescribed. The issue with KSA is we do not know if the reserves they are speaking to are P2 or P3.
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Re: Say it ain't so Saudi Arabia!!!!!

Postby Keith_McClary » Sat 27 Dec 2014, 01:40:07

$this->bbcode_second_pass_quote('pstarr', 'Y')ou guys can barely define reserves.
I heard some analyst on the radio saying that companies will have to reduce their reserve estimates in the new year because of lower prices.
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Re: Say it ain't so Saudi Arabia!!!!!

Postby dolanbaker » Sat 27 Dec 2014, 08:14:03

$this->bbcode_second_pass_quote('pstarr', '')$this->bbcode_second_pass_quote('Keith_McClary', '')$this->bbcode_second_pass_quote('pstarr', 'Y')ou guys can barely define reserves.
I heard some analyst on the radio saying that companies will have to reduce their reserve estimates in the new year because of lower prices.
Does anyone consider the oil? What about the oil if demand and prices go down and reserves decline? Does it suck back into its source rock? Sent to the minors? Do they make glue out of the un-reserved oil?

I recall reading the difference between resources and reserves is whether it is economically viable to extract or not. In other words, when the price of oil rises, some of the resources are reclassified as reserves and become viable for extraction. When the price drops, some of the reserves are downgraded back to resources.
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Re: Say it ain't so Saudi Arabia!!!!!

Postby Tanada » Sat 27 Dec 2014, 09:24:32

$this->bbcode_second_pass_quote('dolanbaker', '')$this->bbcode_second_pass_quote('pstarr', '')$this->bbcode_second_pass_quote('Keith_McClary', '')$this->bbcode_second_pass_quote('pstarr', 'Y')ou guys can barely define reserves.
I heard some analyst on the radio saying that companies will have to reduce their reserve estimates in the new year because of lower prices.
Does anyone consider the oil? What about the oil if demand and prices go down and reserves decline? Does it suck back into its source rock? Sent to the minors? Do they make glue out of the un-reserved oil?

I recall reading the difference between resources and reserves is whether it is economically viable to extract or not. In other words, when the price of oil rises, some of the resources are reclassified as reserves and become viable for extraction. When the price drops, some of the reserves are downgraded back to resources.


True, and in periods of low volatility this system works very well. When oil is relatively stable for a decade or so and the price slowly changes over time the investors get a feel for how much oil reserves mean, but when the price shoots up from $35 to $110 in less than 5 years, then drops to $55.00 four years after that figuring out what resources are economical reserves at the then current price can be quite a challenge.
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Re: Say it ain't so Saudi Arabia!!!!!

Postby ROCKMAN » Sat 27 Dec 2014, 13:44:15

A quick note about "reserve reductions". No, the oil doesn't disappear. But that's the inplace and technically revoverable reserves. As was pointed out ecomomicly recoverable reserve numbers change with oil prices, technology, new trend discovies, etc. But there's also a major swing in pubco reserve numbers...or at least their value. If oil stays low enough the pubcos will eventually have to cutback big time on their booked asset value of their proved producing reserves. They'll also have to remove an amount of proved undeveloped reserves on their books that are no longer economic at the new lower price. This is where decreasing credit lines start getting to be a serious problem.
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Re: Say it ain't so Saudi Arabia!!!!!

Postby rockdoc123 » Sat 27 Dec 2014, 13:55:24

$this->bbcode_second_pass_quote('', 'R')ockdoc, The gap between oil-importing expectation, Saudi Arabia promises, and actual oil-field production grew enormous during the 2005-2007 period. The country's status as the "swing state" and the associated punditry here in the US was supposed to increase production 12 mbpd, stabilize oil prices and the world economy. It didn't happen. The world economy crashed because of peaking oil and there was nothing SA or the OPEC countries could do about it. SA's ability to increase oil exports has ended. That is all that counts.


you keep returning to this claim that is patently incorrect. The KSA made efforts to increase spare capacity, not increase production immediately as back in 2006 when they started the mega-projects there was no perceived need for that much production. Why would they over produce when they had no worries about market share or price? Makes no sense. When Libya became embroiled in civil war and production was almost completely shut-in KSA stepped in and increased their super light production by 300,000 bpd. Years ago on this site I said that the proof in the pudding would be when someone made a call on Saudi oil and they were unable to deliver.....this has never happened. In fact one could argue that the US shale success has eliminated the immediate need for all of that KSA spare capacity. Of course in 2006 when KSA embarked on their mission to increase spare capacity they had no inkling of the coming success in US shale......their spare capacity (some of which would have been needed otherwise) became somewhat redundant.
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Re: Say it ain't so Saudi Arabia!!!!!

Postby rockdoc123 » Sat 27 Dec 2014, 18:18:43

$this->bbcode_second_pass_quote('', 'H')ow would we know? How are 'calls' on oil made?


a buyer, lets say Indonesia wants an additional several hundred thousand barrels of Saudi Crude.....if they can't supply it you can be damned sure you would hear about it in the press. The fact you hear about the discounted pricing related to similar sales should instruct this information is well tracked and reported.
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Re: Say it ain't so Saudi Arabia!!!!!

Postby rockdoc123 » Sat 27 Dec 2014, 21:34:47

$this->bbcode_second_pass_quote('', 'G')ot it. EIA depends on a free press in Indonesia to measure capacity. Should have known.


Exactly what part of supply and demand do you not understand? I would think one should save sarcastic comment for the time when they are sure it isn't going to make them look uninformed. :roll:
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Re: Say it ain't so Saudi Arabia!!!!!

Postby Keith_McClary » Sun 28 Dec 2014, 00:15:17

$this->bbcode_second_pass_quote('rockdoc123', 'E')xactly what part of supply and demand do you not understand?:
You say:$this->bbcode_second_pass_quote('rockdoc123', 'a') buyer, lets say Indonesia wants an additional several hundred thousand barrels of Saudi Crude.....if they can't supply it you can be damned sure you would hear about it in the press.
Wouldn't Saudi just tell Indonesia to go to the market and offer a dollar more per barrel? Supply and demand mediated by price. I can't see Saudi going to a lot of trouble just to save Indonesia a buck.
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Re: Say it ain't so Saudi Arabia!!!!!

Postby Subjectivist » Sun 28 Dec 2014, 14:21:31

Algeria is pleading with OPEC to cut production enough to raise prices.

$this->bbcode_second_pass_quote('', 'A')LGIERS, Algeria (AP) — Algeria’s oil minister on Sunday called on OPEC to cut production and raise the price of oil, which has plunged dramatically in the last six months.

The call by Youcef Yousfi to the Organization of Petroleum Exporting Countries, of which Algeria is a member, comes as the country is struggling to deal with a halving of oil prices from $120 barrel to $60 a barrel.

“For us, OPEC has to intervene to correct the imbalance and cut production to bring up prices and defend the income of its member states,” Yousfi said in remarks carried by the state news agency.
http://www.theblaze.com/stories/2014/12/28/algeria-begs-opec-to-do-something-about-oil-prices/
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Re: Say it ain't so Saudi Arabia!!!!!

Postby Tanada » Sun 28 Dec 2014, 16:30:45

Social program pressure is building in the oil exporting countries that have not diversified their income and who did not save up for a rainy day when the market might turn down for a while.
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Re: Say it ain't so Saudi Arabia!!!!!

Postby ennui2 » Sun 28 Dec 2014, 17:24:07

$this->bbcode_second_pass_quote('pstarr', 'T')he world economy crashed because of peaking oil


Here we go again. Year after year, the same narrative. No mention of the real-estate market. Your analysis remains laughably narrow-focused.
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Re: Say it ain't so Saudi Arabia!!!!!

Postby rockdoc123 » Sun 28 Dec 2014, 22:16:02

$this->bbcode_second_pass_quote('', 'W')ouldn't Saudi just tell Indonesia to go to the market and offer a dollar more per barrel? Supply and demand mediated by price. I can't see Saudi going to a lot of trouble just to save Indonesia a buck.


Good Gosh man....Indonesia was a hypothetical example (as I stated). The fact of the matter is that Saudi Arabia has specific customers who they supply to, they do not want to lose those markets as we have seen through their response to the recent decrease in market share as a consequence of increased production from the US and Non-Opec countries. If they have the oil they will sell it.
If KSA could not deliver even at the higher price then we know there is a problem.....this has not happened. They increased their production once very quickly and the fact that their monthly production numbers are very consistent tells me they have a reasonable amount of spare capacity available as they are able to turn other wells on when they have to shut down for regular maintenance elsewhere.
KSA isn't the issue with respect to spare capacity, it is elsewhere in OPEC and has to do more with effective spare capacity.
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Re: Say it ain't so Saudi Arabia!!!!!

Postby ennui2 » Tue 30 Dec 2014, 01:20:41

$this->bbcode_second_pass_quote('pstarr', '
')The economic crash in Greece, Italy, and the rest of the PIIRG's was not due to the collapse in housing prices. Not to mention the failed Arab "Spring" and the current meltdown in China.


So in the years since 2008 you've now adjusted your narrative from "Well, maybe real-estate caused the recession--but it was PEAK OIL that caused x, y, and z all over the rest of the world!!!"

You're grasping at straws and continuing to attempt to oversimplify with your Church Lady "Could it be...Satan???" attempt to prove that correlation = causation.

If the connection were so strong, the peak-oil movement would not be reduced to a tiny little clique of die-hards like you see here.

Energy prices are always a factor, high or low, but it's not peak oil. Peak oil was Toecutter and his gang of mutant zombie bikers and we didn't get it. The world has had regional economic collapses time and time again. Argentina had its famous currency collapse long ago, for instance. Iceland had its collapse, and yet people somehow GOT ON WITH IT. They did not proceed to usher in TEOTWAWKI. The same is even true of the Arab Spring. You have turmoil, and eventually things kind of settle out. I'll believe we're in peak-oil doom when it really starts to feel apocalyptic. This ain't doin' it for me yet. Sorry. Any attempt to point to some sh*thole experiencing a hard time to say "see??? See??? THERE'S YOUR PEAK OIL DOOM!" is just a pathetic attempt to pump some life back into a concern that even a lot of doomers have begrudgingly had to admit was premature.
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