www.enreport.com

The following news item from Ukranian news website has important information:

Previous SPR's effect (During Katrina)

On the 23rd June 2011, IEA has decided to release 60million barrels from its 28 members' reserves.
IEA members have 4.1 billion barrels of stocks, some 1.4 billion barrels is for emergency.
They will release 2 million barrels/day for the initial 30 days.

The question is whether this reserves can be traded freely like a normal reserve? Buyers of SPR may not sell it to overseas (Platts)

• "The auction for 30 million barrels of light sweet crude starts at 1 p.m. CDT on Wednesday, with deliveries occurring between August 1-31."
• ""No, you cannot sell to Latin America or China," DOE said in an explainer posted to its website. "SPR petroleum may be exported only with an export license and in connection with the return of refined products to the US.""
• "The US share [30 million barrels] represents 4% of its current stockpile of 727 million barrels"
• U.S. holds (56 percent) while Japan (24 percent), Europe (14 percent) and Korea (6 percent) of the SPRs.(321 energy)
  

Ref:
http://www.iea.org/press/pressdetail.asp?PRESS_REL_ID=418
http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/6229240
http://321energy.com/editorials/holmes/holmes0062811.html

Manouchehr Takin from Center for Global Energy Studies has a brief summary of oil production capacity costs here.
Here is a summary. Remember that the units is per peak daily barrel. That is if you want to build a 100.000 barrels per day peak capacity for Haradh III, you have to invest $2,500*100.000 = 250 million dollars at least."

Saudi Arabia
- $2,500 (per peak daily barrel) for development of the Haradh III zone of the supergiant Ghawar oilfield
- $10,000 for the massive Khurais et al development a
- $17,500 for the Manifa field

-$40,000 heavy oil projects of Iran
-$85,000 supergiant Kashagan field in Kazakhstan

"

Ref:
The cost of Saudi Arabia’s oil production capacity, Manouchehr Takin, http://www.cges.co.uk/resources/articles/2011/06/21/the-cost-of-saudi-arabia%E2%80%99s-oil-production-capacity

What is interesting was the trend for oil in the computed index(there is a decrease till 1999 and a rebound in 2003.) Also keep in mind:

IEA has published its new research on Chinese oil companies. The report is full of interesting facts. Also if you follow the sources for graphs you can find valuable reports and presentations such as "Facts Global Energy". My personal feeling is, it is another politically motivated report. Since you can not decouple Chinese Government relations with African countries from Chinese oil companies investments in these countries. However report claims, Chinese oil companies are not the puppets of the government.

IEA facts on China and oil

• In the next five years, almost half of global oil demand growth will come from China.
• In 2010, China imported 4.8 million barrels per day of crude oil, up 17.5 % from 2009.
• By late 2010, Chinese NOCs operated in 31 countries and had equity oil in 20 of these countries.
• In 2010, China’s NOCs invested nearly USD 16 billion in acquiring assets, such as refineries, in Latin America.
• 77% of China’s crude oil imports pass through the Strait of Malacca. By 2015, it is estimated that crude oil passing through the Strait to China will rise to 3.5 million barrels per day. In 2009, 3.1 million barrels per day went through the Strait

Links:
http://www.fgenergy.com/?page=article_type&action=read&id=17
http://www.iea.org/papers/2011/overseas_china.pdf

A graph from the IEA's report WEO 2010 reveals that IEA believes that the world crude oil production (not including NGL or others) has peaked in 2006 or nearby:

Previously, I asked Mr. Fatih Birol, chief economist of IEA in a conference(in 2008) at METU Alumni Association, whether world will see 100 million b/d (current production of crude+ngl+other is hovering around 85-89 mb/d). He briefly described the nuances between crude oil, crude oil+NGL or other associates of crude oil. Then he stated "I don't think so"(for crude oil only). World Energy Outlook 2010 steps further and addresses a peak in crude oil only production as I marked on the graph.
Wikileaks reveal some interesting documents regarding Saudi Production. Sadad Al Husseini retired head of exploration and production for Saudi Aramco, states that Saudi Production can hardly hit 12.5 million b/d and according to documents :

" as he believes that Aramco’s reserves are overstated by as much as 300 billion bbls of “speculative resources.”
the former Aramco board member does believe that a global output plateau will be
reached in the next 5 to 10 years and will last some 15 years, until world oil
production begins to decline." (Wikileaks)

The cable is from December 10, 2007. But there is nothing to confidential about it. Sadad Al Husseini said these things before. He previously to energy bulletin he writes :

"Therefore my answer is: under the current circumstances and outlook, oil is likely to peak at a 95 mmbd plateau by 2015 and can then be sustained well beyond 2020 at increasing real oil prices."(Energy Bulletin)

So are we peaked or are we on the plateou of world oil production? We should better be careful claiming answers to such questions. But it is easier to say that, oil production will suffer from delayed investment. To get a better understanding of oil prices, we should check the storage levels and price trends during the May -driving season-. My personal belief is we are entering another high price cycle unless another economic slowdown happens. It is a risk to write those things openly on the net, since net has a memory. Prices may calm down? I am desperate to see that...

http://www.energybulletin.net/node/9498
http://www.theoildrum.com/node/7102
http://www.wikileaks.ch/cable/2007/12/07RIYADH2441.html

Matthew Simmons' article is the most visited in FP's web site for a couple of days. Before reading his article, as he suggests, check the links in this paragraph:
"The four pieces were Pulitzer Prize-winning author Daniel Yergin's seven-page article in Foreign Policy, energy analyst Michael Lynch's three column op-ed in the New York Times, analyst Edward Morse's essay in Foreign Affairs, and scholar Amy Jaffe's paper published by the Baker Institute at Rice University." http://www.foreignpolicy.com/articles/2009/09/04/oil_spin?page=0,0

• Energy demand forecasts are down from 1.3% to 1.2% in this study


• Fossil fuels will provide 80% of global energy demand by 2030


• Power generation will see the fastest growth


• Energy for transportation: Flat in developed countries, doubles in developing ones


• CO2 emissions rise 30% from 2005 to 2030

Also new section, called “The Energy Imperative,” outlines the need for an integrated set of solutions that includes improved energy efficiency, development of all economically viable energy sources, and cost-effective steps to curb emissions

A brief info about Chinese involvement as a global player in oil sector

• Russia : $10 billion loan the Chinese government extended to Russia's Rosneft in exchange for a guaranteed cut of that company's production
• Brazil: With Petrobras, arranging a similar deal with the firm that is developing a huge new offshore field - one of the biggest new discoveries in decades.
• Argentina: China National Petroleum Corporation is interested in buying all or a part of Argentina's YPF for $14.5 billion, although a deal is far from certain
• Angola: CNOOC and Sinopec are buying a $1.3 billion stake in offshore Angolan development rights from American oil firm Marathon.
• Iraq: China National Petroleum Corporation will take the majority stake in Iraq's Rumaila oilfield from BP (BP). Rumaila produces over 1 million barrels a day, and is Iraq's biggest oil field.

Also some comparisons "China National Petroleum Corporation's daily oil production is already roughly equivalent to Exxon's. And PetroChina at one point had a market capitalization twice Exxon's" but "Complex operations - like deep water drilling or liquefying natural gas, are still the domain of the Western oil firms." however : "given their need to develop those deep-water leases off Angola, the Chinese are bound to gain the technical know-how that will put them on-par with the best western firms"

Ref:
http://money.cnn.com/2009/08/17/news/international/china_oil/index.htm

Sadad Al-Husseini a veteran Saudi Aramco exexcutive has came up with a series of suggestions. These may not be new, but can be alarming bell for the next oil price rally in 2010. Some interesting notes:

The oil price surge that started in 2003 and collapsed in 2008 had its
roots in 1998. ....
What action is required?

• A regularly updated listing of all future oil and natural-gas-liquids (NGL)
  projects.
• Future capacity costs.
• Proven reserves categorization.

Creating an institution to house such a process is
the best way to begin to deal with the oil-supply challenges that must surely
lie ahead.

Ref: JPT Online, http://www.spe.org/jpt/print/2009/08/7GuestEditorial.pdf

This version of the report starts with the criticization of IEA numbers, especially China. Crude Oil production is down by nearly 3 million barrels (not world liquid production). Check the oil demand of OPEC countries! There is a big drop in their demand as well. Also, have a look to the Mexico, UK and Norway.

Report is available here (Peakoil.nl)

Baker Hughes(BH) has a very interesting interactive map, that shows you the locations of various drilling activites. It is a sample of their professional work. Their reports are a good indicator for drilling activities. For example, check the following dates and you can easily observe the effects of recession.

On 28 March 2008, there were 1808 rig counts by BH, by the same period in 2009, this number dropped to 1085. A staggering 769 drop. A 42% drop....Report for 30 March 2009.

You can also access the interactive web page from here .or here.
From the page, you can select from various parameters and see the latest data. It is limited to US however it gives a good activity about oil in the world's biggest consumer. On the date I checked it, gas activity was higher than oil activity.

Links:

Report: http://gis.bakerhughesdirect.com/Reports/StandardReport.aspx

Interactive map: http://gis.bakerhughesdirect.com/RigCounts/default2.aspx
or try this link: http://gis.bakerhughesdirect.com/RigCounts/

Nowadays when making oil price forecasts, one should also consider how the dollar's value will change. Before the G20 in London, interesting discussions are going on.
If there are concerns about dollar's long term future (we do not expect any radical changes in the short term), oil's value in terms of other commodities may stay same but in terms of dollars oil prices may rise.

WSJ : China Takes Aim at Dollar
Chinese Central Bank : Reform the International Monetary System

Then check this one:

My conclusions:
1 - Crude and square of euro/dollar parity is in harmony
2 - Recession started hitting by the end of september 2008
3 - Crude and gold relation is broken for sometime
4 - Observe the euro's appreciation against dollar and rise in crude prices

All this means is crude prices will rise, since dollar will lose some of its value. By the end of May 2009, there is a great possibility that we may see 65-70 $ if dollar continues its slow depreciation. May is the start of driving season.

Map can be reached from this website:

"The Oilwatch Monthly is a newsletter that is available free of charge with the latest data on oil supply, demand, oil stocks, spare capacity and exports." (The Oil Drum).


This report is quite useful for getting information about world's prominent oil producers and consumers. It is like an open source, illustrated version of IEA's Oil Market Report. The monthly is prepared by "Peak Oil Netherlands". In this edition, check for Russian, Egyptian, Malaysian and Mexican productions and US, OECD and EU consumptions.
You can download the report from here. Following excerpts are from the intro:

"Instead the cartel is going to focus on reaching 100% compliance with the earlier cuts totalling 4.2 million b/d, between now and its next meeting on 28 of May. So far 80% compliance has been reached, with 3.4 million b/d from 36.08 million b/d total produced last October being cut, resulting in 32.68 million b/d of liquids produced in February 2009. "

"OECD demand in December 2008 was 788,000 b/d lower than in july 2008, OPEC-11 (excluding iraq) was 650,000 b/d lower than in July, and Chinese demand was 687,000 b/d lower. A total decline of more than 2 million b/d, while OPEC in December had only cut production by 1.26 million b/d."

"More recent figures from the Energy Information Administration show that crude oil stocks in the USA increased from 334 million barrels in January to 350 million barrels in February, a level not seen since the beginning of the 1990s. On top of the commercial stocks on land the 50 to 80 million barrels of floating storage in oil tankers on the seas still remain."

Oil Watch Monthly: March 2009
http://www.peakoil.nl/wp-content/uploads/2009/03/2009_march_oilwatch_monthly.pdf