It's all about the oil II

Oil field delays mean higher 2010 crude price: EIA

«The U.S. government's top energy forecaster on Tuesday said it raised its estimate for world crude prices in 2010 by about 20 percent to near $60 a barrel due to delays bringing new oil fields on line. (...)

World crude oil prices are projected to average $57.47 a barrel in 2010 based on 2005 dollars, versus a year-ago estimate of $47.29 a barrel in 2004 dollars, the EIA said. (...) U.S. crude oil futures have hovered around $60 a barrel in recent weeks, down from the record $78.40 hit in July.

World crude prices will dip to $49.87 a barrel in 2015 and then rise steadily to average $59.12 in 2030, the EIA said. That's versus the $56.97 a barrel average for 2030 that the EIA predicted last year.»

Oil's Well

«Once again, doomsayers claiming the world's oil will soon run out have been proved wrong. There is, however, a huge threat to global fossil fuel supply: proposed taxes that would kill investment and exploration. Some environmentalists contend that the world has reached peak oil production and that we've entered a period of decline that demands we abruptly shift to more politically correct forms of power.

But before we start having the government mandate windmills on every street corner, it would be wise to listen to oil industry historian Daniel Yergin, the chairman of Cambridge Energy Research Associates. Yergin, whose 800-page best-seller, "The Prize: The Epic Quest for Oil, Money and Power," won a Pulitzer, this week published an analysis that found a remaining 3.74 trillion barrels of total global oil reserves — more than three times as much as "peak oil" theory contends. (...)

CERA's study reveals that Hubbert's approach was riddled with flaws:

• He underestimated the effectiveness of new technologies in discovering, retrieving and refining oil resources.

• His forecasts of oil production over the following decades in the lower 48 states were hugely understated — by 66% in the case of 2005.

• He failed to anticipate the huge finds in Alaska and the Gulf of Mexico.

• Even leaving new technology aside, Hubbert's prediction of a steep downward curve after a production peak is based on false assumptions regarding typical oil fields.

• He ignored the impact of price and demand in driving production.

"This is the fifth time that the world is said to be running out of oil," noted Yergin in releasing the report, titled "Why the Peak Oil Theory Falls Down: Myths, Legends and the Future of Oil Resources." (...)

CERA's Yergin points out that each time there have been fears of oil running out, "technology and the opening of new frontier areas have banished the specter of decline." He concludes that "there's no reason to think that technology is finished this time." That is unless tax-crazed politicians step in to finish it.»