NZ Oil & Gas (NZO)

[sideline]

correct: IEA, not EIA

Thanks 777,
An historic bookmark of some significance.
We know not what we do.

For reference, here is the article on page 8:

Investment key to meeting oil demand

By Carola Hoyos and Javier Blas in London

Published: October 28 2008 23:32 | Last updated: October 28 2008 23:32

As crude prices surged to an all-time high of almost $150 a barrel this summer, the warnings from those who believe the world is about to run out of oil reached fever pitch. Even members of the oil establishment began to agree with one of their main tenets: that the industry would have to invest huge amounts of money just to counter the steep production declines in existing oil fields.

In short, the industry had to run faster and faster just to stand still.

The anxiety about rapidly falling production increased as key oil regions such as the North Sea, Mexico and Alaska suffered large and unexpected production falls late last year and early this year as their old fields matured.

It was in response to these concerns – exacerbated by the fact that many Opec and non-Opec countries keep their decline rate data secret – that the International Energy Agency, the world’s oil watchdog, for the first time focused its flagship World Energy Outlook on the rate at which global oil output is declining.

The findings are critical because, as the IEA says, “future [oil] supply is far more sensitive to [production] decline rates than to the rate of growth in oil demand”.

The draft report has found that the planet is far from running out of oil, as some so-called “peak oil” theorists argued. But it also finds that output from the world’s oil fields, some of them discovered more than 30 years ago, is declining much faster than previously thought. That means the oil industry will need to invest more than expected.

“A detailed field-by-field analysis of historical trends and the prospect of a shift in the sources of oil point to a significant increase in future investments just to maintain the current level of production,” the IEA says.

The agency, using data for the 500 largest fields and extrapolating its findings to smaller fields, estimates the annual decline rate is 9.1 per cent, a figure that drops to 6.4 per cent when companies invest in more wells and techniques.

“More investment over the projection period [from 2007 to 2030] will be needed to offset the loss of capacity from existing fields as they mature,” the report says.

For example, it says the UK’s oil production from the North Sea will plunge from today’s 1.7m barrels a day to just 500,000 by 2030.

For that reason the IEA believes oil companies and oil-producing countries will need to invest a total of about $360bn a year until 2030 to replace falling oil production and increase supply by enough to satisfy the demands of emerging countries such as China.

Investment decisions by Opec will be critical, the study argues, adding that the share of world oil production from members of the cartel, particularly in the Middle East, will grow significantly, from 44 per cent in 2007 to 51 per cent in 2030.

“Saudi Arabia remains the world’s largest oil producer throughout the projection period, its production climbing from 10.2m b/d in 2007 to 15.7m b/d in 2030,” the report says. “Its willingness and ability to make timely investments in oil production capacity will be a key determinant of future oil price trends.”

This is a stark assessment given that the kingdom has just agreed to cut its current production as part of last week’s Opec agreement to shore up prices.

Worldwide, conventional crude oil production alone barely increases, from 70.4m b/d in 2007 to 75.2m b/d in 2030, as almost all the additional capacity from new oilfields is offset by declines in output at existing fields, says the report.

Non-conventional oil, such as that produced from Canada’s oil sands or Venezuela’s extra heavy oil, is expected to play “an important role in counterbalancing the decline in production from existing fields”.

The global supply of non-conventional oil is projected to increase from 1.7m b/d in 2007 to 8.8m b/d in 2030. Canadian oil sands projects make by far the largest contribution, totalling 4m b/d.

But it is unclear how much of that increase in expensive non-conventional oil, particularly in Canada, will become reality, as the draft report was written before the worst of the financial crisis.

“There is considerable uncertainty about future cost, the level of oil prices to make a new investment attractive, changes in regulatory and fiscal regimes and the depletion policies of resource-rich countries to support new investments,” it says.

[the machine]

energy review headlines


WTI slumps, Tapis takes off
Exclusively for Premium Subscribers
(Friday, 31 October 2008)

OIL prices had a turbulent time this week as a rebound in global stocks spurred by interest rate cuts in several countries warred with ongoing concerns about fuel demand in the US.
Full Story...


M

[digger]

Hi Lion,
Great news. The IEA is about to announce ( someone leaked it and they ain't happy ) that the world's oilfields are in a natural decline of 9.1% !!!! Far out. For the IEA ( who have had their head in the sand for so long ) to come out with this,, it is alarming.....Only a few years ago they were saying that Peak Oil was a myth.

This huge news for all oilers and whilst it will take a while, oil prices are going up. The world is finally waking up.

bermuda that report was apparantly from an earlier copy that has since been denied and changed.Well that is the story for now but could change once the election is out of the way.
Digger

[bermuda]

bermuda that report was apparantly from an earlier copy that has since been denied and changed.Well that is the story for now but could change once the election is out of the way.
Digger

Hi Digger,
That's the whole point I was trying to make. Things have got worse since they did the first draft. Wait till you read the final edition. And this was from an Agency that thought Peak Oil was a myth. Well,... I ask you.

[duncan macgregor]

http://hydrogendiscoveries.wordpress...l-investments/

hey sumnerned,
No its 9.1% decline per year...
catastrophic, yes....

Recession will dampen this but markets are near lows.. (perhaps a double bottom or slight over shoot from lows)... but markets wont fall past that...
its just not possible... I will explain all in the 2009 general market out look and overview thread...

We had the warning signs when oil hit 140 US...
This will come back, and it will come back stronger...

There are some too good too be true oilers floating around...
I seriously mean that... NZO is one of em...
NZO should be buying these other too good to be true oilers with Cash...
'brown paper bag' money...!...
.^sc

SHREWDY there are some good oilers under priced at the moment. NZO from a short term investment is not one of them, you gotta have the thrill of the drill. Oil will sky rocket next boom and bust phase in the market once this crash is over. I got the crash right, so lets see if i get my new investment right. I have started dribble buying CUE because of the drill factor, which should at least double my investment dollar at best, or hold its own at worst. NZO are into a consolidate what they have phase, making it a bad choice for a quick gain unlike cue who are up and at it. I have been right out the market this year, so this is my first choice in a slow return. Macdunk

[whirly]

Hi Macdunk

Interesting to see you buying in./ What indicators have gone off that have triggered this. I see oil as still in a downtrend and CUE itself still downtrending shortterm. Are the dead cat bounces over? And what sort of stop/loss have you used?

I put Cue on my watchlist end of sept. Since then its fallen about 25%.

Sure looks cheap but so do lots of stocks.

cheers
Whirly

[duncan macgregor]

Hi Macdunk

Interesting to see you buying in./ What indicators have gone off that have triggered this. I see oil as still in a downtrend and CUE itself still downtrending shortterm. Are the dead cat bounces over? And what sort of stop/loss have you used?

I put Cue on my watchlist end of sept. Since then its fallen about 25%.

Sure looks cheap but so do lots of stocks.

cheers
Whirly

Only dribble buying at the moment purely on a hunch using the over swung pendulum oil price indicator. CUE are over sold, with lots of immediate uptrend potential which places it high on my oil companies list. I lost nothing by being out the market this year, so its now time to dribble back bargain hunting. Oil will trend up nothing is more certain unless some new alternative is found, which will replace the increasing demand. I looked for an oversold oiler with immediate thrill and drill prospects.
Its a bad share to get out of in a hurry so stop losses are hard to set. I like a 5% stop loss until in profit then ease back but this one i will let run and risk egg in the face. Macdunk

[whirly]

Cheers Macdunk

Thats what i suspected. I value your posts and was surprised to see you breaking all your own rules at this point.

Oil prices could well be subdued for sometime if the US situation gets worse or is protracted as many pundits are picking.

I reckon theres another crash to come yet and all will be cheaper. I say this purely on a hunch using the over swung global index whirlycator which still looks to me as if shares, housing, commodities et al are simply returning to a more realistic trend over the long term.

w.

[Nitaa]

Only dribble buying at the moment purely on a hunch using the over swung pendulum oil price indicator. CUE are over sold, with lots of immediate uptrend potential which places it high on my oil companies list. I lost nothing by being out the market this year, so its now time to dribble back bargain hunting. Oil will trend up nothing is more certain unless some new alternative is found, which will replace the increasing demand. I looked for an oversold oiler with immediate thrill and drill prospects.
Its a bad share to get out of in a hurry so stop losses are hard to set. I like a 5% stop loss until in profit then ease back but this one i will let run and risk egg in the face. Macdunk

Macca. I am very surprised and a little dissapointed. If yo uwork on hunches you will lose. hunches are for people with a bad back or who simple want to gamble.

You are preaching, "do as i say but dont do as i do". sharemarket is still in a bear market, oil prices still trending down and now you go dabble your feet.

Just my opinion, a 5% stop losss will spit you out in no time. The volatility will most likely exit you this week sometime. I have to say i find your logic hard to fathom.

Myself i dont use anything like your system. The only stock i brought this year was nzo the other day at 1.13. However i have got pinged with my option conversions so the last 3 months has cost me somewhat. Anyway each to their own

[duncan macgregor]

NITA, This has nothing to do with logic, systems or anything else. I have been right out the market this year as you very well know. I broadcast what i do when i do it. There has been no buys for me for ten months now. I have been abused for taking that position, now getting sneered at for dipping my toes in. CUE have some drills coming up, oil is in the doldrums which must reverse, CUE is the logical choice for me to make. NZO have no exciting prospects, its all wait and see, we know best.
Markets change, the market will go no where for at least a couple of years, simply because so many people have been burned in this crash that they are to scared to come back.
The banks having the deposits gauranteed will suck the life blood out the market, we are in for a nothing happening phase.
In the short term old macdunk will buy an occasional lotto ticket, and have a small wager on an oiler as he sees fit, and give you long term investors a bit of stick to bring you back to reality. Macdunk