[AirlinePilot]

OPEC starting to feel the pain....


http://rigzone.com/news/article.asp?a_id=72681

[AirlinePilot]

Long term production "damaged" according to Merrill Lynch.....

http://www.bi-me.com/main.php?id=31507& ... &mset=1011

[ROCKMAN]

AP,

So ML thinks non-OPEC production may have peaked? Did I miss something or hasn't that been confirmed by just about every agency out there.

And “Citing several upcoming projects in countries like Kazakhstan, Brazil and India, Mills said non-OPEC's production is likely to remain stable for the next few years but would pick up later”. We might see a little bump from Kazakhstan in a few years if they ever work out the pipeline deal without the Russians invading them. But even Petrobras says its ramp up in actual production is quit a few years off. I hate to judge Mr. Mills on so few words but I’m guessing he’s either an idiot but more likely just one more brokerage house cheerleader chumming the waters for folks anxious to get more then a CD rate return on their money.

But then I’m a little grouchy today…been watching more folks packing up their offices after being sent to the house by my client.

[AirlinePilot]

Rock,

I agree, but Im just trying to post the links to the pieces which I think have some merit.

Here is another, although I think Phil Flynn is an idiot also, he does appear to see what I am seeing. There is a huge headwind in delayed projects and spending developing right now which is going to have serious implications the minute the economy is PERCIEVED to be coming back.

Potential supply crunch.....

http://www.reuters.com/article/GCA-Oil/ ... 7L20090212

[ROCKMAN]

By all means keep the links coming. Good to see what some folks at least say they are thinking.

[AirlinePilot]

BP scaling back......

http://www.businessweek.com/ap/financia ... MMDPG0.htm


"BP PLC scaled back its short-term oil and gas production growth target on Tuesday as the economic downturn and the

falling price of crude led Europe's second-largest oil company to reconsider the pace of expenditure on proven

resources."

[TheDude]

That's odd, since BP Replaced 121% of Reserves Last Year as Oil , Gas Output Rose.

$this->bbcode_second_pass_quote('', 'B')y Eduard Gismatullin

March 3 (Bloomberg) -- BP Plc, Europe’s second-largest oil company, replaced 121 percent of reserves in 2008 after crude and natural-gas production rose for the first time in three years.

Excluding acquisitions and divestments, BP added 1.7 billion barrels of new oil and gas to reserves, the London-based company said today in a statement distributed by the Regulatory News Service. Output climbed 0.5 percent to 3.838 million barrels a day last year, BP said Feb. 3.

The gain follows three major discoveries in Egypt, Algeria and the Gulf of Mexico last year, which each boosted resources by more than 250 million barrels of oil equivalent, according to Andy Inglis, BP’s head of exploration and production. Oil companies worldwide reported about 14 major finds in 2008.

$this->bbcode_second_pass_quote('TheDude', 'Y')ou have all those "major finds" covered, OF2?

[AirlinePilot]

Definitely not what I'd call a sure thing....

Rio-based Petrobras leads the world in deep-water oil drilling; it operates dozens of fields in Brazil, Africa and the Gulf of Mexico. “At $140 a barrel, or even $70, you could make lots of money,” says John Ditierri, who manages $7 billion of developing nation stocks for Emerging Markets Management LLC in Arlington, Virginia. “At $20 or $30, it’s not worth anything.”

Ditierri won’t say whether his firm owns Petrobras shares.

Analysts say Brazilian officials shouldn’t underestimate the technical challenges of extracting oil from Tupi, no matter what happens to the price of crude. The field, in Block BM-S-9, lies 340 kilometers (210 miles) from the Brazilian coast beneath 2 kilometers of water and 5 kilometers of sand, rock and salt.

“Much of their planning is based on the assumption that they can use the same technology they are using to produce oil offshore today and that they will only need to make minor adjustments,” says Rio-based Sylvie D’Apote, a director at Cambridge Energy Research Associates Inc., or CERA, in Cambridge, Massachusetts. “If that turns out not to be true, costs are likely to rise a lot.”



http://www.bloomberg.com/apps/news?pid=20601072&sid=a9hc9w4JfXDs&refer=energy

No worries AP, deep sea technology will only improve and get more efficient: link
$this->bbcode_second_pass_quote('', '&')quot;To drill top holes in deep waters in the GoM is a great challenge. Enhancing the RMR Technology for this service seems to be the correct choice. A positive outcome of the feasibility study will be a major step forward in the context of deepwater drilling to become safer, more environmentally friendly and - not at least - drilling at a lower risk."

[copious.abundance]

The funny thing about that Bloomberg article is, it was titled, "Tupi Oil Imperiled as Price Drop Unravels Energy Plan," but if you actually read the entire article there's essentially nothing in it which suggests development of Tupi is "imperiled." In fact, the very last paragraph suggests the exact opposite!

$this->bbcode_second_pass_quote('', 'B')razil’s coast is dotted with shipyards building platforms that will pump oil from fields 300 kilometers out to sea. In mid-March, a production ship was on its way from Singapore to the Tupi well, where it was to capture the field’s first test oil. Drill ships are scattered beyond the horizon, looking for more of the black gold that Brazilians hope will finally live up to its promise.

[AirlinePilot]

The headline is appropriate for the part I quoted. If you think using some existing deep water cost structure for planning Tupi's production makes any sense than I've got some real estate for you to look at.

Honestly, this field is probably going to be one of the costlier and more challenging fields than anyone on planet earth has yet attempted. Hell even CERA thinks they are being optimistic! That should tell you something.

Listening to Petrobras, or anyone from Brazil spout how great Tupi is is probably not a prudent thing to do. Can you say Stock Pumping?? With the present environment we are in its going to be nearly impossible for them to exploit this oil in any timely fashion. Things aren't getting better with banking, lending, or credit globally just in case you didnt notice.

Where do you think all that money is going to come from If oil stays below 40-50 $/bbl??? As one person was quoted, it ain't worth anything and getting the capital and proper long term financing in order any time soon is nothing more than wishful thinking. I believe that is the reality.

I dont deny there may be a lot of oil there, but it isnt coming out of those deep layers anytime soon. There will be a lag, and there will likely have to be much higher crude prices in place before any of this really amounts to significant production.

[AirlinePilot]

This is a speculative article...... This part hits home also....

"Oil Euphoria: In the wake of the discovery, there was euphoria in Brazil. Citizens literally danced in the streets of Rio de Janeiro at 2008’s Carnival parades to celebrate the find, with one float named “The Black Gold That Comes From the Sea.” President Luiz Inacio Lula da Silva said the flood of oil money would allow the government to attack poverty among Brazil’s 191 million people, 24 percent of whom live on less than $3 a day.

Then the world economy hit a wall, and the price of oil sank to $32 on Dec. 12 from a peak of $147 on July 11. Even though prices have recovered somewhat -- they stood at $48.4 on March 30 --investors are now wondering whether Tupi will be a bonanza or a case of misguided national celebration. " That's the key. They aren't going to get all that money required from high oil prices my friend. it just doesn't work that way.

$this->bbcode_second_pass_quote('AirlinePilot', 'W')here do you think all that money is going to come from If oil stays below 40-50 $/bbl???

[Maddog78]

I was just reading that Rigzone article on brazil myself this a.m.
Looks like full speed ahead there.
Good for them, they will be well positioned when the price rebounds.

[AirlinePilot]

Oilfinder, you really need to go look up the words, If, maybe, may, possibly and estimated. You obviously do not understand their meanings.

Denial goes both ways. Lets just agree to disagree here and see who comes out more correct when it comes to extraction rates down the road. My personal estimate is that once flow rates are established they are a bit more than I believe they will be, but fall far short of what you wish them to be.

[copious.abundance]

AP, when - that's "when", not "if" - Tupi starts churning out hundreds of thousands of barrels per day, you're never going to hear the end of it from me. I'm warning you right now, you'd better brace yourself for the inevitable onslaught.

[Maddog78]

It will happen.
I've personally been involved in offshore projects nearly 5000 ft. deep.
It will just take a little fine tuning of the equipment to go even deeper.
Petrobras doesn't seem to think they'll have any major problems and I'm sure they won't.

[AirlinePilot]

Bring it on! I cant wait

Lets see how much they bring on line and what the global decline is between now and then. For the record OF I truly hope you are right.

[AirlinePilot]

I find more good news every day!

http://www.bloomberg.com/apps/news?pid=20601072&sid=a9HrPCuxe.oM&refer=energy


http://www.bloomberg.com/apps/news?pid=20601072&sid=afEyeoD811B0&refer=energy

“Both the mothballing of this site’s facilities and the possible complete removal of assets from this site are being studied,” the report said. Reserves for the site were “debooked” from the end of last year.