Is There Plenty Of Oil?

Business Week ^ | July 14, 2005 | By Christopher Palmeri, with Peter Coy in New York

[Lazamataz]

First came Holstein, then Mad Dog, and soon, Thunder Horse. Atlantis will join them next year. The four giant oil fields, operated by BP PLC (BP ) and located under thousands of feet of water off the coast of Louisiana, are just beginning to pump their first barrels. At their peak rates later in the decade, they'll produce some 500,000 bbl. per day, an amount akin to floating a small Middle Eastern country such as Syria or Yemen into the Gulf of Mexico. "Add them together, and it's a massive step change," says David Eyton, BP's vice-president for deepwater in the Gulf. "The investment we're making will more than offset declines we're seeing in Alaska and the Continental Shelf."

It may seem today as if the world is running out of oil. The price of crude has hovered around $57 a barrel, in part on fears of a supply crunch in the fourth quarter. Chevron (CVX ) and China National Offshore Oil are battling for control of Unocal (UCL ). The Senate on June 28 passed the latest version of an energy bill stuffed with $18 billion in tax incentives to encourage energy production. Even legendary oilman T. Boone Pickens is predicting $3-a-gallon gasoline within a year. The national average now: a pricey $2.22.

No doubt, the energy industry is in a precarious position. Two decades of falling prices in the 1980s and '90s discouraged investment. With many of the easy-to-find fields already on the map, big oil producers have been forced to look for new sources in ever-more-hostile environments: not just under thousands of feet of water but also across frozen tundra and in countries rocked by political unrest. As a result, production has risen sluggishly in recent years, while energy demand, particularly from the booming China and

[billakay]

I'm only 19 years old and I can remember sub-$1.00 87-octane gas here in Northeast PA...

[Colorado Doug]

Two decades of falling prices in the 1980s and '90s

Falling prices? I don't think so.

[CFC__VRWC]

In an article today about Thunder Horse (where it is leaning because of Dennis), I thought they said just this one platform was already pumping a million barrels a day??

Thunder Horse is not pumping yet. As far as it's leaning goes, that was supposedly caused by an accident while the platform was being prepped for Dennis; a crane was dropped onto one of the pontoons that float and ballast the platform, screwing up the automated system that keeps it level. It should be relatively easy to fix.

[Colorado Doug]

They should NOT be allowed to get a foothold in USA and we now need to get rid of those enviro-wackos so that reasonable gas prices can come back again.

China is drilling for oil in western Colorado right now.
http://freerepublic.com/focus/f-news/1440423/posts

[taxesareforever]

Check out this article. Don't stop reading because of the first part of the article. Continue thru it. I believe that this is the case for non-fossil oil.
http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=38645

[Red Boots]

China is drilling for oil in western Colorado right now. http://freerepublic.com/focus/f-news/1440423/posts

Not exactly true....EnCanta, a Canadian company, is drilling for natural gas all over western Colorado, and they have a couple of Chinese crews.

I'll go look for a link.

[Dog Gone]

One pontoon was raised five feet yesterday. The other was raised seven. All in all, this may set back first production from Thunder Horse a couple of months while the company makes sure it can't happen again.

This would have been far more serious if this had happened while the floating platform had been connected to the wells at the sea floor.

[Bear_Slayer]

We're not all gonna die!!!!

Yeah - some of us will live.

[Travis McGee]

Lay projecte world output on a graph of predicted world demand, and you will see we are in for a major problem.

What specifically caused Japan to roll the dice and go to war? Oil.

[Our man in washington]

One issue I have with all these forecasts of trouble is the assumption that the United States will continue to use as much gas as we do now if prices stay this high.

Gasoline is an elastic good--but not in the short run. If prices went up to $4 a gallon, would people immediately trade in their SUVs or change jobs to one that allows telecommunting? Probably not on a large scale. We are creatures of habit, and can't make major changes in our lives based on the chaotic patterns of oil markets.

But if prices stay high, the laws of supply and demand will take over. People will buy smaller cars. People will seek places to live where they can take the bus to work. Companies will realize that they need to offer flexitime to get good employees. I predict that in 2-3 years, analysts will be suprised by the decline in the purchase of gasoline.

[Constitutionalist Conservative]

Falling prices? I don't think so.

Inflation-adjusted dollars. The most expensive gasoline came back during the Carter administration.

[SierraWasp]

"...and when did Karl Rove know about this?" Oh... That's right! Like that Baker man from Tennessee once said... "What did he know, and when did he know it?" Phhhhhht!!!

[PAR35]

You all probably have it pegged long term better than my comment. It will hit the mid to upper 20s before rebounding to the mid to upper 30s as you all have predicted.

[Trident/Delta]

I have lived and worked in the ME for multiple years. There have been chicken little stories for decades about the supply drying up. To a degree they are right. When the Saudi (or arab in general) governements nationalized the oil supplies, they made billions. THis was spent like a drunken sailor. Now, a level of realistic maturity seems to be setting in. Using the law of supply and demand the arabs are merely insuring a seady income at an acceptable level for their bloated lifestyle. A lot can be said about the poverty of the arabs, but, from what I have seen, it is the caste system that is at fault. It is HIGHLY unlikely to ever see a Saudi get his hands dirty. They like to sthink of themselves as above all that. Usually they get the Paks or the Filipinos to do the scut work and they sit back and sip tea and count their money. This has set the stage for a cultural lifestyle that is a bit difficlut to maintain. Compounding this, is a sense of unfullfillment on the part of the young men. (idle hands, devils workshop you know) The ONLY heros that they have are terrorists. (Know any big name arab ball players???) So with the role models being what they are, there is little recourse for the yourth to take. Islam is just and excuse. Most of the younger terrorists are merely bored young men that have fallen under the spel of ture evil in the form of the Immams (every seen a young Immam??) and psycho-sociopathic islamofacists that are bent on the establishement of a worldwide islamic caliphate. These young men and women see that they are at war with the West and the Chrisitan culture and are being brainwashed. To the Arabs, oil is just another weapon like an AK47 or a Stechkin. In the end, it is going to be Christian vs Islam with the others eithe picking sides or desparately trying to become the "peacemakers". That is except for Tom Cruise who will be trying to detonate a volcano.....

Semper Reflective

[Holicheese]

I broke a deal and I got the wheel!

[GOPJ]

IMHO China is finished filling their strategic reserves, so supply should go up.

[BlueMondaySkipper]

We're not all gonna die!!!!

Oh yes we are...

NO ONE gets outta here alive!

[Rakkasan1]

corn will save us all.

[Colorado Doug]

Not exactly true....EnCanta, a Canadian company, is drilling for natural gas all over western Colorado, and they have a couple of Chinese crews.

Yes, exactly true! One of their partners appears to be Chinese, their crews are Chinese and their drill rigs are Chinese.

One of the principals involved in the venture is Golden Bear Drilling and Services Corp., which was a subsidiary of China National, Jilin Petroleum USA of Denver. Now Golden Bear's principal registered agent is Carl Liu. A Dr. Carl Liu works for the University of Wyoming promoting trade with China in natural resources. So much for one of EnCanta's red blooded, all American partners doing the work that Americans won't do. This operation is clearly more Chinese than American.

[writer33]

That was it. Thunder Bay. Thanks, T-Bird.