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ASPO is a network of scientists and others, having an interest in determining the date and impact of the peak and decline of the world's production of oil and gas, due to resource constraints. Read more.

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Peak Oil is still our future’s reality

(This is the final replay in the discussion on "The falling oil price may presage a future recession.")

In a reply to my previous contribution, “The falling oil price may presage a future recession”, Civil Economist Magnus Grill (19 October in Swedish) says that I assert, “that Peak Oil does not mean that oil will run out rather than that demand for oil will disappear. Thus it is no longer a question of Peak Oil from a production standpoint rather than now it is from a demand standpoint. This means that Aleklett has completely altered his early reasoning.” I must disappoint Magnus Grill. Peak Oil is still related to production of oil from oilfields.

When we discuss Peak Oil we do this based on the fact that oil production in an area or group of areas reaches a maximum and then declines.

The falling oil price may presage a future recession

This is the English translation of my article in the Swedish newspaper Svenska Dagbladet, Fallande oljepris ett tecken på recession)
Kjell Aleklett

brent oil 141015

Since July the price of Brent crude oil has fallen from $113 per barrel to $85.62 (on October 14). Historically we saw a similarly rapid fall in the in the oil price in late 2008 followed by the start of the global recession the year after. In 2008 the fall from July to December was from $140 down to $40 per barrel. At the moment we see no slowing of the price decline and we do not know how low the price will fall.

The fact that increased global energy consumption is a measure of economic growth means that these recent trends are pointing to an economic contraction.

Russia (Rosneft) and the USA (ExxonMobil) strike oil in Arctic well

Kara_Sea_map

News is spreading around the world that Rosneft and ExxonMobil have been successful in their joint effort to find oil in the Kara Sea up in the Arctic. Personally, I am doubtful that we should produce this oil but now that the oil appears to exist there we must place it in our global energy system. From the headlines spreading around the world one can get the impression that the discovery will change the future of oil production.

Aging oil fields can turn the Arabian Peninsula into a powder keg

300x300 Monetising Summit

If one studies the world’s oil resources and oil production then the Arabian Peninsula is of central interest. The remaining monarchies of the region have established the Gulf Cooperation Council (GCC). This was formed in 1981 as a response to the Iranian Revolution and Iraq’s attack on Iran. The GCC is comprised of Saudi Arabia, Kuwait, Bahrain, Qatar, The United Arab Emirates and Oman. Within the GCC exist enormous oil resources. According to the BP Statistical Review of World Energy 40% of the world’s remaining conventional oil reservs exists within the GCC.

The world’s largest conventional oil field is Ghawar in Saudi Arabia and there are also many other gigantic oilfields in the region. Since the 1950s it is mainly oil from the Arabian Peninsula that has been decisive for the economic growth of the global economy.

OPEC’s 165th meeting: ”Everybody is happy”

On 11 June OPEC held its 165th meeting in Vienna and the organisation’s 12 members decided to maintain its production volume of 30 millon barrels of oil per day (Mb/d). The meeting is reported in the OPEC Bulletin 6/14. They also decided to extend Abdalla Salem El-Badri’s term as general secretary of OPEC until the end of the year. After the meeting a press conference was held during which General Secretary El-Badri stated, “Right now we have a very comfortable crude oil price, the market is stable and OPEC is producing 30 Mb/d of crude, more or less. The consumers are getting their supplies and the producers a good price. Everybody is Happy.”

On the question of whether shale oil production in the USA was a threat to OPEC the answer was that it was not because the USA would not be an oil exporter. With regard to future investments El-Badri considered that OPEC had a good plan for investments and stated they would study the balance between demand and production. In conclusion he said that “OPEC will continue to play its part in supplying the world with enough crude oil”.

In the OPEC Bulletin some of the external guests to the meeting were also interviewed.

The EU’s and Russia’s mutual dependence

On 4 June I participated with Patrik Jotun, (a researcher and analyst at the Ministry for Foreign Affairs), in a symposium organised by the Green Liberals with the theme, “Environmental and Climate Policy in the Shadow of Developments in Russia – on environment, climate, security and energy supply”. The delegates were allowed into the Folk Party’s premises at Mynttorget under strict security control. My presentation was somewhat similar to that I gave at The Economist’s recent symposium in Stockholm and so I will direct you to my earlier blog on that event for details (European Energy Horizons 2014). I found Patrik Jotun’s presentation very interesting and it gave me new perspective on the tensions that we see today between the EU and Russia.

Clouds on the horizon for fracking companies?

The Oil & Gas Journal has published an article with the headline, "Chesapeake mulls spinoff, sale of oil field services division". The article is especially interesting since Chesapeake is one of the largest companies in fracking. On Chesapeake Energy Corporation’s website one can read that they are the second largest producer of natural gas and the eleventh largest company for production of oil and NGL in the USA. Further, one can read that, “The company’s operations are focused on discovering and developing its large and geographically diverse resource base of unconventional natural gas and oil assets onshore in the U.S. The company also owns substantial marketing, compression and oilfield services businesses.” On 11 February 2014 the company submitted an “Investor presentation” and they explained that they were required to make such “forward-looking statements” by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

NOG Symposium: World Energy Outlook 2013 - Energy Markets Changing

Image: Bo Diczfalusy

On February 6 the Network for Oil and Gas (NOG) in Sweden organised a symposium at which the World Energy Outlook 2013 report was discussed, primarily in terms of a changing energy market. Personally, I was interested in what Bo Diczfalusy, ‎Director at the Swedish Ministry of Enterprise and Energy, would say about WEO 2013. From December 2009 until December 2012 he was Director of the Directorate of Sustainable Energy Policy and Technology at the International Energy Agency (IEA). That means that he is well acquainted with the production of WEO reports. His presentation on WEO 2013 did not differ significantly from that given by the IEA’s Chief Economist Fatih Birol last autumn. Possibly he pointed out even more clearly that the WEO report is a scenario calculation restricted by certain assumptions.

Elin Akinci from the Energy Authority gave a more detailed description of the natural gas scenario that exists in WEO 2013.

Fracking in the Barnett Shale around Dallas-Fort Worth, a city of 1 million

By Kjell Aleklett

shale formations Texas

For the past 100 days I have visited shale formations with oil and gas from Amarillo in the north to Laredo and Eagle Ford in the south, from Odessa and the Permian Basin in the west to Nocogdoches and the Haynesville Shale in the east. The only remaining shale formation to visit on my list was the Barnett Shale around Fort Worth west of Dallas. It was here that the US adventure with fracking began and in September 2013 RRC, Railroad Commission of Texas, reported that one had drilled 18,300 wells in the Barnett Shale.

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