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I've posted on this subject before but it's time for an update due to what appears to be a major development.

Saudi Arabia claims a production capacity of 10.5 - 11.0 million barrels per day. As I have posted before and also provided data to major energy users, I contend that their production capacity in 2005 was 9.6 million barrels per day. Once they hit this level, rises in output stopped so until proven otherwise I think the 9.6 is a valid figure. They simply haven't reached the higher claimed capacity EVER (according to Western data sources).

But now something truly worrying has happened. Saudi production has fallen from 9.6 million barrels per day at the beginning of the year to 9.2 million in May. That is a massive fall in such a short space of time and, since it first fell to 9.5 then 9.4 before falling to 9.2 it doesn't look like it's simply a maintenance shutdown of some key facility. It looks alarmingly like the relentless fall in production which occurs in declining oil fields.

Given the high price of oil it's difficult to see why Saudi Arabia would be voluntarily cutting production at a time when every other country is running flat out or thereabouts. It just doesn't make sense.

Add to this the news last year that the Saudi's were paying THREE TIMES market rates to get drilling rigs and another piece of the puzzle falls into place. Something is wrong in the oilfields of Saudi Arabia. VERY wrong.

Many, including those using data from the oil majors (BP etc) have been concerned that a production collapse at the world's largest field, Ghawar, is imminent. Based on the first hand knowledge of the oil majors, there just isn't much oil left in that field which accounts for about half of Saudi production (over 5% of world production). Due to the water flood used to maintain high production rates right until the end, a production fall would be somewhat rapid WHEN (it will happen, question is timing) it comes.

This issue has been discussed at length on HPC and elsewhere so I'm not going to repeat all the fundamentals of how oil is extracted etc. But the bottom line is that unless someone can come up with a sound explanation for the production declines during the course of 2006 in Saudi Arabia, and more to the point show that they will be reversed, then I'm calling Peak Oil as here and now.

If I'm right then whatever happens next isn't going to be nice to say the least. My best guess is that the problem will be intentionally hidden for now by means of inducing a world recession via hikes in interest rates. Needless to say this isn't going to push house prices up.

Edit to add link for OPEC monthly production data by country. The commentary is mine based on this data. http://www.eia.doe.gov/emeu/steo/pub/3atab.html

Edited by Smurf1976

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I've posted on this subject before but it's time for an update due to what appears to be a major development.

Saudi Arabia claims a production capacity of 10.5 - 11.0 million barrels per day. As I have posted before and also provided data to major energy users, I contend that their production capacity in 2005 was 9.6 million barrels per day. Once they hit this level, rises in output stopped so until proven otherwise I think the 9.6 is a valid figure. They simply haven't reached the higher claimed capacity EVER (according to Western data sources).

But now something truly worrying has happened. Saudi production has fallen from 9.6 million barrels per day at the beginning of the year to 9.2 million in May. That is a massive fall in such a short space of time and, since it first fell to 9.5 then 9.4 before falling to 9.2 it doesn't look like it's simply a maintenance shutdown of some key facility. It looks alarmingly like the relentless fall in production which occurs in declining oil fields.

Given the high price of oil it's difficult to see why Saudi Arabia would be voluntarily cutting production at a time when every other country is running flat out or thereabouts. It just doesn't make sense.

Add to this the news last year that the Saudi's were paying THREE TIMES market rates to get drilling rigs and another piece of the puzzle falls into place. Something is wrong in the oilfields of Saudi Arabia. VERY wrong.

Many, including those using data from the oil majors (BP etc) have been concerned that a production collapse at the world's largest field, Ghawar, is imminent. Based on the first hand knowledge of the oil majors, there just isn't much oil left in that field which accounts for about half of Saudi production (over 5% of world production). Due to the water flood used to maintain high production rates right until the end, a production fall would be somewhat rapid WHEN (it will happen, question is timing) it comes.

This issue has been discussed at length on HPC and elsewhere so I'm not going to repeat all the fundamentals of how oil is extracted etc. But the bottom line is that unless someone can come up with a sound explanation for the production declines during the course of 2006 in Saudi Arabia, and more to the point show that they will be reversed, then I'm calling Peak Oil as here and now.

If I'm right then whatever happens next isn't going to be nice to say the least. My best guess is that the problem will be intentionally hidden for now by means of inducing a world recession via hikes in interest rates. Needless to say this isn't going to push house prices up.

Edit to add link for OPEC monthly production data by country. The commentary is mine based on this data. http://www.eia.doe.gov/emeu/steo/pub/3atab.html

Have you read Matthew Simmons; Twilight in the Desert?

Very good book all about the Saudi Arabian oil fields and the cover-up by Aramco to keep their reserves and productions figures all high as possible.

They are pumping in well over 12 million barrels of water per day to keep the well pressures high enough to sustain those figures, which will lead to massive structural problems in the formation.

They also haven't found another giant field in the last 30 years

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Look no further than GW-Bush for the answer I thinks.

He and his family have major connections to the Saudi Royals and using Bin-Laden to play the bad cop, pulled off the biggest lie ever on the 9-11 so they had an excuse to invade the middle east.

Just like Bp and Shell, profits for the Texas billionaire Bush family goes up with the price of oil and they are engineering the upward motion in the price and the Saudi Royals are doing the same as they are as greedy as the Bush’s and profit equally.

Russia and China are now taking steps to defend themselves against this mega terrorist and the thugs installed into the American government and the world want to dump the Petrodollar ASAP as it’s well known it’s going down the pan.

I’m not arguing that one day in the near future we will need to cut back our reliance on oil or the cost of extractin will rise, but this situation is being engineered just now for profit and power.

Edited by Justice

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This issue has been discussed at length on HPC and elsewhere so I'm not going to repeat all the fundamentals of how oil is extracted etc. But the bottom line is that unless someone can come up with a sound explanation for the production declines during the course of 2006 in Saudi Arabia, and more to the point show that they will be reversed, then I'm calling Peak Oil as here and now.

The article in the Manchester Uni magazine I mentioned yesterday say oil is running down... Mind you they're a VI as they do nuclear research :)

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I've posted on this subject before but it's time for an update due to what appears to be a major development.

Saudi Arabia claims a production capacity of 10.5 - 11.0 million barrels per day. As I have posted before and also provided data to major energy users, I contend that their production capacity in 2005 was 9.6 million barrels per day. Once they hit this level, rises in output stopped so until proven otherwise I think the 9.6 is a valid figure. They simply haven't reached the higher claimed capacity EVER (according to Western data sources).

But now something truly worrying has happened. Saudi production has fallen from 9.6 million barrels per day at the beginning of the year to 9.2 million in May. That is a massive fall in such a short space of time and, since it first fell to 9.5 then 9.4 before falling to 9.2 it doesn't look like it's simply a maintenance shutdown of some key facility. It looks alarmingly like the relentless fall in production which occurs in declining oil fields.

Given the high price of oil it's difficult to see why Saudi Arabia would be voluntarily cutting production at a time when every other country is running flat out or thereabouts. It just doesn't make sense.

Add to this the news last year that the Saudi's were paying THREE TIMES market rates to get drilling rigs and another piece of the puzzle falls into place. Something is wrong in the oilfields of Saudi Arabia. VERY wrong.

Many, including those using data from the oil majors (BP etc) have been concerned that a production collapse at the world's largest field, Ghawar, is imminent. Based on the first hand knowledge of the oil majors, there just isn't much oil left in that field which accounts for about half of Saudi production (over 5% of world production). Due to the water flood used to maintain high production rates right until the end, a production fall would be somewhat rapid WHEN (it will happen, question is timing) it comes.

This issue has been discussed at length on HPC and elsewhere so I'm not going to repeat all the fundamentals of how oil is extracted etc. But the bottom line is that unless someone can come up with a sound explanation for the production declines during the course of 2006 in Saudi Arabia, and more to the point show that they will be reversed, then I'm calling Peak Oil as here and now.

If I'm right then whatever happens next isn't going to be nice to say the least. My best guess is that the problem will be intentionally hidden for now by means of inducing a world recession via hikes in interest rates. Needless to say this isn't going to push house prices up.

Edit to add link for OPEC monthly production data by country. The commentary is mine based on this data. http://www.eia.doe.gov/emeu/steo/pub/3atab.html

All oil companies/producers benefit from rising oil prices, so I don't think it's necessarily occurring just to benefit one group. However, I do keep an open mind about that. Within the next year or two we'll know for sure.

Personally, I think peak is here and we'll be lucky to escape with a recession. Worst case is depression and/or war.

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I follow the argument that if Gwahar field, which produces a large part of the sweet crude output of Saudi, which itself is the largest exporter, has peaked then the volume of export sweet available for everyone else will be restricted.

Smurf1976 @ Jun 8 2006, 12:36 PM

"My best guess is that the problem will be intentionally hidden for now by means of inducing a world recession via hikes in interest rates. "

Sorry if I misunderstand but are you implying the rise in price of oil caused by declining output will not take place due demand destruction?

I accept that financial speculation may be taken out if interest rates go up, since it will be more expensive to finance a long position, but I understand that the mainstream opinion was that the price was due to rise due to increased demand (thought to come from India and China), partially held in check by non Opec (ex soviet, African) oil coming online through pipelines / repression of minority ethnic groups.

Apologies if this has already been answered.

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nah ********. only reason for lowered production atm is to ramp prices.

peak oil - all the core protagonists are major oil men.

only people who benefit from the fear of peak oil is the oil companies - higher prices more profit.

YoY profit increases for major oil companies for the last few years has been > 25% pa.

Peak oil and 'Peak water' are just VI ********.

Mind you, it might be worthwhile to bear in mind Bill Gates taking a major punt on Pacific Ethanol.... ;)

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nah ********. only reason for lowered production atm is to ramp prices.

peak oil - all the core protagonists are major oil men.

only people who benefit from the fear of peak oil is the oil companies - higher prices more profit.

YoY profit increases for major oil companies for the last few years has been > 25% pa.

Peak oil and 'Peak water' are just VI ********.

Mind you, it might be worthwhile to bear in mind Bill Gates taking a major punt on Pacific Ethanol.... ;)

And that Blair has said that Nuclear Power is coming back with a vengeance.

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Guest Bart of Darkness

And that Blair has said that Nuclear Power is coming back with a vengeance.

Yup, Bush has given him the definite dates for World War III!

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nah ********. only reason for lowered production atm is to ramp prices.

peak oil - all the core protagonists are major oil men.

only people who benefit from the fear of peak oil is the oil companies - higher prices more profit.

YoY profit increases for major oil companies for the last few years has been > 25% pa.

Peak oil and 'Peak water' are just VI ********.

Mind you, it might be worthwhile to bear in mind Bill Gates taking a major punt on Pacific Ethanol.... ;)

So how much research have you done on this? No didn't expect much. One of the reasons I am so bearish on property is that I expect peak oil to start biting very soon. Why do you think the oil price has gone up so recently? Well the simple rules of economics is that if supply lower and demand higher prices are rising. Get educated, get informed, get gold and believe me when I say there is no chance of anyone getting a 25 year mortgage today being able to pay it off.

http://www.theoildrum.com/

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Guest grumpy-old-man

Yup, Bush has given him the definite dates for World War III!

WW 111 has already started, we just don't know about it yet ;)

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So how much research have you done on this? No didn't expect much. One of the reasons I am so bearish on property is that I expect peak oil to start biting very soon. Why do you think the oil price has gone up so recently? Well the simple rules of economics is that if supply lower and demand higher prices are rising. Get educated, get informed, get gold and believe me when I say there is no chance of anyone getting a 25 year mortgage today being able to pay it off.

http://www.theoildrum.com/

I am with you on a lot of what you say, but can I add that the simple rules of economics does not apply to house prices

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I am with you on a lot of what you say, but can I add that the simple rules of economics does not apply to house prices

No the mechanics of an asset bubble are somewhat more complicated.

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And that Blair has said that Nuclear Power is coming back with a vengeance.

At current rates of consumption we have 32 years of uranium left globally (not including military supplies), peak uranium appears to have occurred back in 2001, along with the sweet crudes, so its not looking like a great solution, but then what is?

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Mind you, it might be worthwhile to bear in mind Bill Gates taking a major punt on Pacific Ethanol.... [RichB]

Huh? This is the man who famously failed to foresee the rise of the Internet until late 1995. Gates may be many things, but a visionary he is not.

Edited to correct attribution.

Edited by Jeff Ross

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Maybe you guys had better read this to understand what some say is going on.

http://www.nogw.com/warforisrael.html

"This War Is Also About Water - Israel needs new water sources to allow Israeli expansion plans. Iraq is the major source of water in the Middle East. Just as the war in Afghanistan was fought for the Unocal oil pipeline this war is being fought for oil and water pipelines to Israel. "

Looks like we have also hit peak water

don't do the neo-cons jobs for them, they want the price of oil to sky rocket !

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At current rates of consumption we have 32 years of uranium left globally (not including military supplies), peak uranium appears to have occurred back in 2001, along with the sweet crudes, so its not looking like a great solution, but then what is?

Conflating peak oil and peak uranium is a mistake usually made by the anti-nuke brigade. Once the black stuff is burnt, it's gone. Most of the globe has been seismically picked over for it, and it's believed that there's no other Ghawar for the simple reason that Ghawar is big. Comparatively, only the very low-hanging fruit of uranium resources have been tapped in places like Oz where you literally only need to scratch the surface to find it. The two resources are in entirely different stages of their exploration and extraction cycles. You also ignore the effect of reprocessing and fast breeders, both of which can extend current resources by a factor of up to 10. This is all known technology; it hasn't been thoroughly exploited yet because there's so much uranium out there.

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At current rates of consumption we have 32 years of uranium left globally (not including military supplies), peak uranium appears to have occurred back in 2001, along with the sweet crudes, so its not looking like a great solution, but then what is?

This is my great hope for our future. Bolox to your solar panels... bring the Sun to us!

T&T

Edited by ToilAndTrouble

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Saudi Oil Minister Ali Naimi said the reduction was in response to a drop in demand, not an attempt to limit supply and prop up prices.

I wouldn't be surprised if there was a drop in demand - or at least demand for the Saudis marginal heavier oil. Crude oil stocks are at record high in the US. There were also reports recently of Iran having to rent tankers to store oil because they could sell it.

Whilst I have no doubt we will see global peak production by the end of the decade I'm not convinced Saudi Arabia is there yet. The June 2006 ASPO (Association for the Study of Peak Oil) newsletter suggests Saudi Arabia won't see declines until 2014. There are two problems though, growing internal consumption which will reduce exports and the chance that a rapidly growing, poor population will create political instabilities.

Edited by clv101

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Mind you, it might be worthwhile to bear in mind Bill Gates taking a major punt on Pacific Ethanol.... [Minos]

Huh? This is the man who famously failed to foresee the rise of the Internet until late 1995. Gates may be many things, but a visionary he is not.

I don't recall quoting that about Bill Gates.

I agree with you. However, there is a lot of activity in ethanol now. If PO was a myth why would people waste time/money looking into better production of it ? I don't think it's because of Global Warming either.

I guess only time will tell if PO has arrived.

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Saudi Oil Minister Ali Naimi said the reduction was in response to a drop in demand, not an attempt to limit supply and prop up prices.

I wouldn't be surprised if there was a drop in demand - or at least demand for the Saudis marginal heavier oil. Crude oil stocks are at record high in the US. There were also reports recently of Iran having to rent tankers to store oil because they could sell it.

I wasn't aware of those reports. If true then that would explain the situation. As I said in my initial post, I'm only calling a peak in the absence of some other explanation which stacks up.

Regarding someone's question about recession etc, my thinking is simply that government's are in no way ready to acknowledge the problem of limited oil supplies and as such would do ANYTHING to hide it. Inducing a recession would make the problem go away for a while and it's pretty easy to achieve. Of course, if the governments / central banks don't induce a recession whenever peak oil becomes reality (I do acknowledge that it may not be now if the above explanation is correct) then surging oil prices will do the job for them. Heads you lose, tails I win.

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There is a good thread on global oil production at The Oil Drum:

http://www.peakoil.com/fortopic20921-0.html

It does seem to show that the curve is trending over a peak and we may see some decline in 2007. Saudi does not have to peak for the world to peak; if there are declines elsewhere greater than Saudi increases in production, then we are post-peak to all intents. The Saudis only plan to increase production by about 3mb/d over the next 4 years. This is not enough to counteract significant depletion.

I would say that Russia is more of a problem, since their production is as great as Saudi, but they readily admit they can't keep that up forever (and their own population is using cars more and more, of course).

All we can do is keep an eye on these data as they appear (and hope that they are right!).

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The article in the Manchester Uni magazine I mentioned yesterday say oil is running down... Mind you they're a VI as they do nuclear research :)

That's taking the concept of VI a bit far isn't it. Come on!

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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