[seahorse3]

It's not deja vu, we have heard this all before

$this->bbcode_second_pass_quote('', '
')Saudi Arabia wants oil price below $ 30
16-08-04 OPEC kingpin Saudi Arabia has the capacity to meet all market requirements for oil and wants to see crude prices between $ 25 to $ 30 a barrel, the kingdom's crown prince said.
"I truly tell you that the kingdom does not want to harm the world economy... We believe that prices should range between $ 25 and $ 30 a barrel," Prince Abdullah bin Abdul Aziz told.

It was the second time in a week that the leading oil producer and exporter has moved to assure a nervous market where prices have soared to new highs. Oil Minister Ali al-Naimi said the kingdom was prepared to hike output by 1.3 mm bpd in a bid to cope with world demand and curb soaring prices. Prince Abdullah, the kingdom's de facto ruler, said his country has the capacity to meet increasing demand, but blamed international oil majors for hiking oil prices.
"We have the (production) capacity to meet current requirements of the market," he said. "At the same time, I want to assure you that we have no hand in the current increase in prices. Big companies dealing with the crude are responsible for the increase, through stockpiling and speculations," he said.

World crude prices spiralled to a new high of $ 46.91 a barrel in Asian trading as a nervous market ignored producers' assurances that there was enough oil to meet demand.
The International Energy Agency estimated that OPEC, straining to increase production, is set to add 400,000 bpd of capacity this year and slightly more than £ 2.0 mm from 2005 to 2007.

The increase in prices was sparked after major producer Iraq said its crude exports had halved following the closure of a southern pipeline earlier due to the threat of attack.
Analysts are not ruling out the possibility that the New York oil futures contract may hit the $ 50-a-barrel level if unrest in Iraq continues and Russian oil titan Yukos fails to resolve its financial woes.



Source: Agence France Presse

[rockdoc123]

$this->bbcode_second_pass_quote('', 'W')hatever happened to the days when SA said $30bl was a good price?

If they can bring prices down, why don't they? Because, as a layman, I believe it when I see it, meaning, gas goes back down to the good old days of 1999 when it was $1 a gallon, the world economy was growing, the dollar was strong, we ran balanced budgets, and would have paid of our national debts by last year (2010).

[americandream]

$this->bbcode_second_pass_quote('seahorse3', '')$this->bbcode_second_pass_quote('', 'J')im Sinclair’s Commentary

World changing events are taking place in the oil rich Middle East.

Peak oil has passed. The economic dominance of the West is now history.

Those that have planned and organized the Middle East events are those that benefit here and there from chaos and $500 crude.

[seahorse3]

Well Rock, if we don't want to return to the good old days of balanced budgets and everyone making money, then, what should we return to? But, bottom line, if the Saudis don't want high oil prices to crash the world economy, or choke it as they have been doing, then they better open the taps just a little further, but they haven't have they? Now, answer me this, in what year did the Saudi's produce the most oil ever? Hint, it wasn't this decade. The fact that they haven't ever exceeded their production in the 80s is strong circumstanial evidence that they have peaked, and, their continued lip service to defending low oil prices in defense of the world economy is, well, getting old.

Now, just as Carter reached his tolerance level with these buggers, I suspect the American public has a tolerance level too, and we may have to send in military forces to open the spiggots in the name of national security or whatever other reason, I'm not sure the reason will matter much to angry soccer moms.

[rockdoc123]

$this->bbcode_second_pass_quote('', 'W')ell Rock, if we don't want to return to the good old days of balanced budgets and everyone making money, then, what should we return to? But, bottom line, if the Saudis don't want high oil prices to crash the world economy, or choke it as they have been doing, then they better open the taps just a little further, but they haven't have they? Now, answer me this, in what year did the Saudi's produce the most oil ever? Hint, it wasn't this decade. The fact that they haven't ever exceeded their production in the 80s is strong circumstanial evidence that they have peaked, and, their continued lip service to defending low oil prices in defense of the world economy is, well, getting old.

[seahorse3]

Rock, if you are relying on what Goldman is saying about SA spare production capacity, the latest from them today says SA doesn't have any spare capacity.

Now, whether it is good to take over the oil fields to me isn't even relevant. I'm telling you what I think soccer moms and a fat lazy American public would go to war for. Hell, we're fighting over there right now. We invaded Iraq under the Bush Admin premis that the cost of the war would be paid for with Iraqi oil, and American supported it. I pointed out the Carter Doctrine bc it reflects American policy, that ME oil is a security interest of the US and has been, according the Michael Klare's excellent research, since WWII. So, I'm just stating a reality, that the American public would demand something to be done. Look at us now, gas is averaging $4 a gallon and Repubs and almost everyone trying to get Obama to send in US airpower, why? In the end, bc our oil prices catch the Americans attention, regardless of who may be trying to take over Libya. We quick action for short term thinking.

Unfortunately, SA peak production occured in 1980 when they produced 9.9mbpd according to the DOE. They have yet to produce that amount again. In fact, their production according to the DOE has fallen since 2005. I used to track that here on this site, but got bored with it. Now, if they truly want to defend the world economy from high oil prices, they should, bc it's in everyone's best interest. If they don't, then we all lose. Actions speak louder than words. My believe is they would if they could but they can't. I fall back to former poster Energydigger who, as you know, drilled in SA. At one time, he posted his resume for all to see, the only "expert" i've ever known to do this. Maybe he had the balls to do this because he had drilled all over the world and was kidnapped twice. But, for whatever reason, he had the credentials and drilling experience in SA and gave a pretty good summation as to why he believed SA was at peak production. His statement backed by DOE figures showing they produce less than they did in 1980 and even 2005 lead me to the conclusion they are at peak production.

[rockdoc123]

just a few points.
Energydigger was drilling wells in Saudi a number of years ago but not the MRC wells with SMART completions (as I understand it) which are the ones that have made all the changes to recovery efficiences and have also made production from fields such as Khurais and Shaybah possible. If he was employed as a reservoir engineer for Aramco and involved in the million cell simulations they are doing on the various fields then I would have taken his comments much more seriously. A driller has a very narrow access to data relating to any given field, generally just as it relates to potential drilling problems, bit selection, mud wieghts etc. This isn't sufficient information to say much about a fields produceability. This isn't meant as a insult to ED's intelligence or capabilites, it is simply what he would have had access to. There are a lot of papers published over the last few years in SPE that speak to the success of the ongoing Aramco field developments, I guess you could argue they are "biased" but it is real data which suggests solutions to problems have been successful.

As to Saudi Arabia having peaked. Well remember this refers to peak of production. If they aren't required to produce spare capacity then one would expect a fairly broad plateau, something we have been witnessing. According to Opec numbers SA was producing around 8.4 MMB/d in January. If you add to that the 700 Kbopd then you get 9.1 MMBpd. The Saudi megaprojects were executed in order to bring spare capacity to ~12.5 MMBPd as I remember (I posted on this a number of years ago). Of the planned projects all were completed successfully with the exception of Manifa which was postponed to 2013. According to the Saudis they did reach 12 MBPD through addition of production from the megaprojects. Of those projects all were sweet to lightly sour, light to super light oil with the exception of some upgrades to Safaniyah. So the remaining spare capacity from this calculation is somewhat higher than that made by Goldman Sachs (i.e. 3 MMB versus 2 MMB) assuming there is no spare capacity elsewhere in OPEC. So I am perplexed by the GS calculation. Your comments suggest that the Saudis have no spare capacity whatsoever which would in turn mean that the barrels brought on by the megaprojects simply offset some catestrophic collapse in production. My view is if such an event took place we would have heard about it, not because the Saudis would have said anything but rather because it would have been impossible for them to have kept such an event a secret from the thousands of expats that are currently employed by Aramco. It also would have almost certainly showed up in the monthly production numbers.

[seahorse3]

I understand the limitations of ED posts, and he admitted them too. And I don't rely only on his posts to conclude SA is out of spare capacity. I consider his opinion in light of the fact that Saudi Arabia has never produced more oil than it did in 1980, and even today produces less than it did in 2005 as reported by the DOE.

http://www.eia.doe.gov/aer/txt/ptb1105.html

My conclusion is based on the fact that SA continues to say it will defend the world economy against high oil prices but doesn't. In 2004 they said they would defend the world economy against $40 oil but didn't. They say that today as well. I don't believe they are lying, I just don't think they can.

ED posts also address a fundamental problem with SA production, which was graft and corruption, leading to destruction of wells and early depletion. I don't think that culture of graft and corruption would depend on type of well, technology, or field ect. That graft and corruption would be systemic to the people running SA. Further, recovery etc is all what we are told by SA, the same entity that employed ED and which he reported was infected with graft and corruption. If PO is a political problem, this is just more evidence of the PO problem facing the ME.

Where you and I differ in our opinions is on whether SA has been called upon to use their spare capacity. I believe they have. They clearly recognized a problem as early as 2004 with the article I linked saying they would defend the world economy and the $30 pb price of oil. They didn't. They didn't and oil continued to rise unchecked, unchecked by anything accept an economy which couldn't handle $147 oil and came crashing down in 2008. They say the same thing now with Libya and all this unprecedented political unrest in the ME. Despite all this, SA produces less oil now than it did in 2005. So, I disagree and say SA has been called upon to use its spare capacity. The world, and SA included, needs not only a lower price of oil for growth, but a steady price of oil for economic and political stability. Thus, I argue SA is being called upon and has been called upon since 2004 to use its spare capacity, but it hasn't, and I believe its bc they can't. Now, granted, that's just my opinion. I recognize it doesn't matter what I think, bc in the grand scheme of things, I can't do anything about it. But, GS now shares that opinion, for what it's worth. I have no love for GS and do believe they have done far more harm than good, and many of their published opinions have been wrong. I suspect they play both bets at the same time, but they will never disclose their own long and shorts to know what they really believe.

[americandream]

rockdock

The Saudis fund terrorism, are known to fund terrorism, are at the epicentre of the Caliphate project, it is common knowledge and yet they remain the reserve bank for oil. That they pull this off so adeptly says a lot about the arrangement we have with them in terms of denial and BAU. That bankers continued selling mortgages that were toxic to their business with gay abandon in the run up to the crash, says something about the arrangement we have with ourselves in terms of denial and BAU. Combine these two inflammable components and you have the perfect convergence of precisly the sort of confusion over Saudi oil reserves we have.

We simply do not know what the Saudis have out in the desert and they wont open up to an audit. They are notorious liars and we are notoriously in denial. Nobody knows who is doing what to whom. To run a growing global civilisation of high obselescence driven consumerism based around these guys as fallback is certifiable stuff.

[rangerone314]

IF the Saudi's have any spare production, they will not use it to compensate for Libya or anything else to raise their output... they will use any spare production they have gradually to try & keep their production fairly steady and BAU going as long as possible... they would want to delay the recognition of specific fields like Ghawar collapsing for as long as possible.

[rockdoc123]

$this->bbcode_second_pass_quote('', 'T')hey say that today as well. I don't believe they are lying, I just don't think they can.

[americandream]

$this->bbcode_second_pass_quote('rockdoc123', ' ')I said back in 2008 that the real test of whether the Saudis can deliver and how much is when someone can't buy oil that is needed not for storage but for immediate refining. I think it comes down to how long the Libya debacle continues and whether or not Algeria has a similar upheaval.

[seahorse3]

Well, our future is bet on these guys whether we like it or not. Reagan said trust but verify. We have the first, but not the second. As for Libya resolving itself anytime soon, I'm not sure. I agree with Jeff Rubin's article on the Egypt upheavel, which basically concludes that these are systemic problems of growing populations in the ME, growing populations of young, unemployed, impoverished, and limited resources. This is a generational problem in the ME as a whole which won't go away in a few months.

[Pops]

Looks like SA can increase production - it's just that no one wants it.

$this->bbcode_second_pass_quote('', ' ')LONDON, March 10 (Reuters) - Russian Urals crude discounts
to Brent rose to their widest in northwest Europe since the oil
price rally of summer 2008 as traders cited on Thursday poor
refining margins and a glut of sour crude.
"It looks very poor both in the north and south. Margins are
very weak, refiners cut runs and the Saudis seems to be adding
some barrels," said a trader with an independent Russian house.
"So despite all this Libyan buzz, people are only prepared
to pay for sweet grades and no one wants sour grades like
Urals," he added.

[seahorse3]

Pops, what I'm not convinced of is the Saudis haven an extra 2mbpd, meaning they have total capacity of 12mbpd. They've never produced that much ever. The article says sa seems to be adding some, but that's speculation. What stands out in the article is there is a big diff to the economy between light sweet and sour crude. We've discussed that issue before here which involves limitations of reding capacity. My level of proof for lack of production capacity in sa is less than rocks. I believe that rising oil prices, decking economy and flat prod out of sa is proof. I concede that rocks required proof is the sure test. He requires low storage and then see if sa can meet production required to keep refineries operating. As he points out, this me unrest could answer that question once and for all.

[TheDude]

Talk of lack of customers is even more suspect now. BP says world refining cap for 2009 was 90.7 mb/d.

$this->bbcode_second_pass_quote('IEA Dec 2010 OMR', 'G')lobally, sustained weak margins in 2010 have done little to stem enthusiasm for new refining capacity.
If anything, this year’s buoyant demand growth has only added to the potential new capacity juggernaut
we envisaged for the medium term back in June. Distillation capacity (CDU) additions for 2009‐2015 now
total a weighty 9.2 mb/d, around 0.2 mb/d higher than
previously projected. A further 15 mb/d combined of
upgrading and desulphurisation capacity is also planned.
Reflecting steady demand growth, and sizeable upgrading
capacity additions, 2015 refinery processing gains are now
estimated at 2.5 mb/d, around 0.2 mb/d higher than in
our previous report. These are added to oil supply in our
global market balance.

[rockdoc123]

$this->bbcode_second_pass_quote('', 'P')ops, what I'm not convinced of is the Saudis haven an extra 2mbpd, meaning they have total capacity of 12mbpd. They've never produced that much ever.

[AirlinePilot]

$this->bbcode_second_pass_quote('rangerone314', 'I')F the Saudi's have any spare production, they will not use it to compensate for Libya or anything else to raise their output... they will use any spare production they have gradually to try & keep their production fairly steady and BAU going as long as possible... they would want to delay the recognition of specific fields like Ghawar collapsing for as long as possible.

[kiwichick]

not holding my breath for an admission of decline

[rangerone314]

I predict at least 20 more Republican Congressman will be caught in cheating or homosexual scandals by the time Saudi Arabia finally admits they can't increase production.