Byron King: The Oil Glut of 2009

The current oil price contains absolutely no risk premium. $35 crude price simply does not reflect how rapidly the oil market could tighten in 2009


Western oil majors like Exxon are finding it harder than ever to identify new prospects and successfully complete new oil projects. BP’s Thunder Horse project in the Gulf of Mexico, for example, is finally coming online in 2008, with an anticipated output of nearly 250,000 barrels per day. But this one project has taken almost 20 years to complete, at a cost in excess of $6 billion.

And Chevron’s recent success with its Jack 2 project in the Gulf came at a cost of over $240 million for just one test well. And this prospect is still years away from being a successful oil-producing prospect.

These sorts of developments have implications far beyond the Peak Oil argument, as valid as that thesis may be.

HoweStreet.com