independent consultant - glenbradford.com the arabian gulf countries are proposing 15 refinery...
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Sadad Ibrahim Al HusseiniIndependent Consultant
Long-Term Oil Supply Outlook: Constraints on Increasing Production Capacity
A Detailed Assessment of Global Oil Capacity and Prices
Through 2030
Dr. Sadad I. Al Husseini
Oil and Money Conference
London
October 30, 2007
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Brent IPE wave Bonny Dubai Oman WTI Mars
Platts Average MonthlyMarketwire October 25, 2007
$/barrel
Oil prices continue to rise in spite of OPEC capacity announcements
New projects are attempting to mitigate prices, e.g. Saudi Arabia
Oil Facilities Capacity O/S Date Value ($)
Qatif 500 k b/d 2005 3 B
Abu Safa 150 k b/d 2005 1 B
Haradh – 3 300 k b/d 2006 2 B
Hawiyah / Haradh Gas 125 k b/d NGL 2007/8 4 B
Khursaniya (AFK) 500 k b/d 2007/8 5 B
80 k b/d NGL 2007/8
Shaybah 250 k b/d 2008 2 B
Nuaim 100 k b/d 2008 1 B
Khurais 1,200 k b/d 2009/10 8 B
Manifa 900 k b/d 2011/12 9 B
Other Support Projects 19 B
Total Projects 4,105 k b/d 54 B
And the Arabian Gulf countries are proposing 15 refinery projects 6 of which are in Saudi Arabia
Location Capacity, b/d Start-up
Saudi Arabia East & West Coast topping refs. 400,000 2012
Jubail - Total 400,000 2012
Yanbu - Conoco 400,000 2013
Ras Tanura/Dow Chemicals 175,000 + 2012
Jizan 200,000 - 400,000 2012
Kuwait Al-Zawr 615,000 2012
UAE Fujairah - Conoco 400,000 2012/2013
Ruwais 300,000 ?
Oman Duqum 300,000 2012/2013
Qatar Shaheen 250,000 2011
Ras Laffan Condensate 140,000 2008
Iran Arak 100,000 2009
Qeshm 160,000 2012
Condensate Splitters 360,000 2010-2011
Total 4,400,000
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
2004 January 2005 January 2006 January 2007 January 2008 January
70,000
75,000
80,000
85,000
90,000
95,000
100,000
Brent World Production
$ / barrel
1000 b/d
Platts average monthly marketwire, EIA monthly global oil production
However actual production has not increased and even1 million bd would have a minimal impact. . .
+ 1 M b/d
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
OPEC
Non-OPEC
FSU
WORLD
Thousand b/doil, condensates
& NGLs$ 80
$ 60
$ 20
$ 40
$/b Brent
And no “idle” OPEC capacity remains to be tapped
Source: BP - 2007
$ Brent
1986 1996 2006
North America 101.6 89.3 59.9
S. & Cent. America 64.6 90.8 103.5
Europe & Eurasia 76.8 84.6 144.4
Middle East 536.7 672.2 742.7
Africa 58.0 74.9 117.2
Asia Pacific 39.7 39.2 40.5
TOTAL WORLD 877.4 1049.0 1208.2
> 400 billion barrels of reserves replacements and growth have materialized in 10 years !
BP Statistical Review, 2007
These developments raise key issues
Why are oil, condensates and NGL capacities not responding to increased oil prices?
Are there actual political, economic or physical impediments to increasing oil capacities?
Given the “abundance” of reserves, what is the long term outlook for oil supplies and prices?
Proven> 90%
Probable> 50%
Potential> 5%
Resource:Uneconomicvolume &
commerciality
Proven oil In Place – high confidenceDeveloped – clear recovery factorUndeveloped – good. recov. est.
Probable oil in place – confident Developed - prelim. recovery factorUndeveloped – est. fair recovery
Potential oil in place – low confiden.Drilled – v. low recovery factorUndrilled – recovery likely poor
Likely presence but undelineated OIP or GIP
Technically present butphysically inaccessible
hydrocarbons
Conceptually PossibleHydrocarbons, incl. EHCs
Future resolution thru exploration
& relevant technology
Oil, Gas,Shales, EHC
& to be discoveredresources
(speculativeoutlook)
Profitability orTechnology
currently inadequate
Growth thru pricing,delineation or
IOR/EOR technology
Growth thru delineation, testing& development
Available access but lacks good
reservoirand fluids data
General geological,seismic and/or
physicalindications
Statisticalreliability
ProductionOutlook
Technical basis
Growth thru actualreservoir mgmt. &
performance
Improved Oil recovery thru
existing technology
Clear opportunity with existing technology
Indicative data &potential opportunity
ActualReserves :0.9 Trillion
“Reserves” are inflated with >300 B bbls of “resources”
1.1 Trillion Depleted
ContingentResources:1.1 Trillion
Prospective&
SpeculativeResources:2.0 Trillion
Some capacity is from very mature reservoirs –
e.g. 75% of Iran’s productionDepletion
Status
2005
M b/d
2010
M b/d
2015
M b/d
00 – 29% 0.450 0.850 1.117
29 – 49% 0.470 0.818 0.838
50 – 69% 2.363 1.955 1.627
70 – 97% 0.555 0.326 0.217
Est. Capacity 3.838 3.949 3.799
EIA outlook 4.2 4.2 4.3Iran officials 4.2 4.6 - 5.4
Iraq - 6 Iran - 8 Kuwait - 5 UAE - 6 KSA - 12 Qatar - 1
8 - Kirkuk12 - Rumaila16 - Majnoon21- RumailaNorth24 - Zubair27 - West Qurna
14 - Gachsaran15 - Ahwaz17 - Marun25 - Agha Jari32 - Rag e Safid34 - Bibi Hakimeh36 - Azadegan37 - Parsi
2 - Burgan23 -Raudhatain29 - Sabriya33 - Minagish35 - Um Gudair
7 - Zakum18 - Murban – Bab20 - Murban Bu Hasa26 - Fateh30 - Asab31 - Um Shaif
1 - Ghawar3 - Safaniya4 - Zuluf5 - Manifa6 - Khurais9 - Abqaiq10 - Berri11 - Shaybah13 - Marjan19 - Qatif22 - Abu Safa28 -Khursaniya
38 - Dukhan
49.5 Billion 84.6 Billion 90.2 Billion 45.7 Billion 336 Billion 3.2 Billion
The giant fields of the Arabian Gulf average 41% depletion
Est. original reserves ~ 605 B barrelsEst. remaining reserves ~ 360 B barrels
Technology is good but does not diminish production complexities
5 kms.
Oil Field Structural extent
3-D seismic survey
0.00
2,000.00
4,000.00
6,000.00
8,000.00
10,000.00
12,000.00
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019
2022
2025
2028
Venezuela
Trinidad and Tobago
Peru
Ecuador
Cuba
Colombia
Chile
Brazil
Argentina
Offshore Brazil oil and Venezuelan EHCs are important but the offshore fields are smaller and
there are offsetting declines in S. America
1000 b/d
South America:
Oil outlook needs detailed scrutiny:
0.00
2,000.00
4,000.00
6,000.00
8,000.00
10,000.00
12,000.00
14,000.00
16,000.00
1980
198319
86
198919
9219
95
199820
01
200420
07
201020
13
201620
1920
22
202520
28
Tunisia
Sudan
South Africa
Nigeria
Mauritania
Libya
Gabon
Equatorial Guinea
Egypt
Cote d'Ivoire (IvoryCoast)
Congo (Kinshasa)
Congo (Brazzaville)
Chad
Cameroon
Angola
Algeria
Africa’s capacity increases mainly in Angola and Nigeria but declines within a decade due to the
diminishing size of discoveries
1000 b/d
Africa
0.00
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
6,000.00
7,000.00
8,000.00
9,000.00
10,000.00
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019
2022
2025
2028
United Kingdom
Turkey
Romania
Poland
Norw ay
Netherlands
Italy
Hungary
Germany
France
Denmark
Croatia
Austria
The North Sea has peaked and is in rapid decline
1000 b/d
Europe / North Sea
0.00
2,000.00
4,000.00
6,000.00
8,000.00
10,000.00
12,000.00
14,000.00
16,000.00
18,000.00
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019
2022
2025
2028
Uzbekistan
Ukraine
Turkmenistan
Russia
Kazakhstan
Former U.S.S.R.
Belarus
Azerbaijan
A revitalized industry may sustain high production assuming geopolitical cooperation
1000 b/dFSU / Caspian
0.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
30,000.00
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019
2022
2025
2028
Yemen
United Arab Emirates
Syria
Saudi Arabia
Qatar
Oman
Kuw ait
Iraq
Iran
Bahrain
The Arabian Gulf has the resources but regionalturmoil undermines growth.
1000 b/d
0.00
10,000.00
20,000.00
30,000.00
40,000.00
50,000.00
60,000.00
70,000.00
80,000.00
90,000.00
100,000.00
1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020 2024 2028
Asia & Ocn.
Africa
ME
FSU
Europe
S. & C.Am.
N. America
1000 b/d
The total outlook: a 15 year production plateau . . .
20068 M b/d NGLs
EIA 2007 hi price case
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
100.00
110.00
2004
Jan
200
5 Ja
n.
2006
Jan.
2007
Jan
2008
Jan
.20
09
Jan.
2010
Jan.
201
1 Ja
n.
80,000
82,000
84,000
86,000
88,000
90,000
92,000
94,000
96,000
98,000
100 ,000
B rent
W . Prod.
$ 12 / b increase per 1 M b / d / yrshortfall
2004 - 2006 : $ 3/ b/ yr per 1 % GDP
Supply/demand shortfall
Demand momentum~ 1.5 M b / d / year
“Virtual” 0 % excess capacity
GDP growth and supply shortfalls will raise the floor of oil prices $ 12 / year per million b/d shortfall
1000/b/d
$ / b
Conclusions
• Proven oil “reserves” are overstated by >300 billion
barrels of speculative “resources”.
• Global oil and NGL capacity is on a 15 year plateau
constrained by mature reservoirs and finite reserves.
• The momentum of growing oil demand and the gap with
limited supplies will drive up the floor of oil prices
$ 12 / yr for each million barrels of shortfall.
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