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IEA to slash estimate of world's supply of crude oil.

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robertpaulsen Donating Member (1000+ posts) Send PM | Profile | Ignore Wed May-21-08 06:19 PM
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IEA to slash estimate of world's supply of crude oil.
Oil Monitor to Slash Estimate Of World's Supply of Crude
By Neil King Jr. and Peter Fritsch

The world's premier energy monitor is preparing a sharp downward revision of its oil-supply forecast, a shift that reflects deepening pessimism over whether oil companies can keep abreast of booming demand.

The Paris-based International Energy Agency is in the middle of a large study of the condition of world's top oil fields. Its findings won't be released until November, but the bottom line is already clear: Future crude-oil supplies could be far tighter than previously thought.

The IEA has predicted for several years that crude-oil supplies will arc gently upward to keep pace with rising demand, topping 116 million barrels a day by 2030, up from around 87 million barrels a day now. But the agency is now worried that aging oil fields and diminished investment mean that companies could struggle to break beyond 100 million barrels a day over the next two decades.
...
The IEA is now trying to shed light on some of the industry's best-kept secrets through a study of the world's top 400 oil fields. With behind-the-scenes assistance from major oil companies, oil-field-service companies, energy ministries and consultants, the agency hopes to assess the overall health of major fields scattered from Venezuela and Mexico to Saudi Arabia, Kuwait and Iraq. The fields supply more than two-thirds of daily world production.

The study, employing the efforts of a team of 25 analysts, marks a sea change in the IEA's efforts to peer into the future. In the past, the agency focused mainly on assessing future demand and then looked at how much non-OPEC countries were likely to produce to meet that demand. Any gap, it was assumed, would then be met by big OPEC producers such as Saudi Arabia, Iran or Kuwait.

http://online.wsj.com/article/SB121139527250011387.html...


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DJ13 Donating Member (1000+ posts) Send PM | Profile | Ignore Wed May-21-08 06:26 PM
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1. Never trust any agency that changes their methodology in the midst of a crisis
Thats usually a sign that their Independence is compromised by the very industry they are overseeing.
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robertpaulsen Donating Member (1000+ posts) Send PM | Profile | Ignore Wed May-21-08 07:10 PM
Response to Reply #1
2. Not that I think this study will reveal the whole truth.
But keep in mind the IEA was created in 1974 by the OECD in the wake of the 1973 Oil Embargo and the need to coordinate responses to future shocks and more generally create a counterweight to OPEC.

http://en.wikipedia.org/wiki/International_Energy_Agenc...

How do you think they're being compromised?
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kristopher Donating Member (1000+ posts) Send PM | Profile | Ignore Wed May-21-08 09:41 PM
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4. How are they in a position to act as counterweight to OPEC?
They have no choice but to alter their forecasts if OPEC says they aren't going to follow the old path where OPEC are the price takers. Why should OPEC pump so much oil that the price is artificially low?
Why should OPEC pump oil based on demand as measured by the people in the developed countries who benefit from overproduction - which is against the interest of OPEC members?
Why should they invest trillions of dollars investing in infrastructure to do the above, when carbon prices are supposed to be pushing production and use down?

Why shouldn't they maximize the profitability of their natural resources?
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bhikkhu Donating Member (1000+ posts) Send PM | Profile | Ignore Wed May-21-08 08:07 PM
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3. Their predictions have been increasingly ridiculous
and so to remain useful, they are reviewing their methods and the underlying data. A big problem has been reliance upon faulty USGS figures...

http://www.energybulletin.net/36518.html

If they emerge "new and improved", as expected, their numbers should be more in line with ASPO, among others.
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4dsc Donating Member (1000+ posts) Send PM | Profile | Ignore Thu May-22-08 06:31 AM
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5. The bottom paragraph is priceless
A study released earlier this year by the Cambridge Energy Research Associates, a consulting firm and unit of IHS, concluded that the depletion rate of the world's 811 biggest fields is around 4.5% a year. At that rate, oil companies have to make huge investments just to keep overall production steady. Others say the depletion rate could be higher.

"We are of the opinion that the public isn't aware of the role of the decline rate of existing fields in the energy supply balance, and that this rate will accelerate in the future," says the IEA's Mr. Birol.


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