Skip to comments.'Sky-High' Oil Prices to Last Until 2020
Posted on 04/12/2008 7:20:50 AM PDT by kellynla
The world is now in a period of sky-high oil prices that will last a long timeprobably until 2020, according to the world's largest investment bank. Senior analyst Gioavanni Serio in Goldman Sachs, visiting Norway, told participants in an energy seminar that the oil industry moves in 20-year cycles, reports finance industry newswire E24.
The price for American raw oil rose to a record-high USD 112 per barrel this week after new figures revealed a surprising decrease in storage the week before.
Brent oil from the North Sea also rose to new highs, selling for USD 109 per barrel.
In the long-term, oil prices reflect marginal costs to the oil industry," said Serio at a yearly energy seminar held by Wilhelmsen at Lysaker outside of Oslo. "The oil price and marginal costs stayed low in the 1990s. Now that it has become far more expensive for the oil producers to retrieve oil, the price is going to rise correspondingly," he predicted.
The Goldman analyst does not think oil demand will increase significantly but he pointed to "bottlenecks everywhere". He said: "Oil companies are lacking professionals and rig rates have exploded from around USD 100,000 per day in 2002 to USD 500,000 per day this year."
Serio expects oil prices to fall in the short-term, to about USD 90 per barrel, but said it is "unrealistic" that the price would fall under USD 70 per barrel in the coming years. By the end of 2008, he expects the price to be well over USD 100 per barrel.
However, not everyone shares Goldman Sachs' bullish predictions. Italian oil giant ENI's CEO Paolo Scaroni said last week he believes oil prices will fall as a result of increased production.
"We expect the oil price to fall to USD 50-60 per barrel, a price that will provide for global growth," said Scaroni in an interview on Italian TV.
The Norwegian economy has boomed on the back of soaring prices for Norway's oil and gas amid a general world economic downturn.
Arm-Chair Engineers like yourself are a dime a dozen.
I guess my entire career wasn’t real. But thanks for telling me all about it..... I’ll take your information for what you think it is.
REFINERY CAPACITY UNIT COMPLETION
isn’t it interesting that the price of crude went from less than ten bucks a barrel in 1999 to over a hundred bucks in the time that the “oil president” has been in office...
thanks for your “leadership”, Jorge...like his father, GW has managed to squander a 90% approval rating!
Man, if my business goes bust I think I know what I will do for 3-5 years!
The biggest donors to those "Luddite" groups are the tax-exempt, "chraritable" foundations belonging to major oil company stockholders, and always have been.
I wasn’t subscribing to Goldman’s newsletters in 1996 since chasing bunkering opportunities on the Great Lakes held most of my attention. Thursday, Goldman predicted a $10/MM floor on gas this summer, which is a pretty good bet.
What? The Alberta Oils sands have been in continuous commercial production for over 40 years. They produced their billionth barrel back in 1998.
Oil Sands History
In 2006 Albertas oil sands were the source of about 62 per cent of the provinces total crude oil and equivalent production and about 47 per cent of all crude oil and equivalent produced in Canada.
Annual oil sands production is growing steadily as the industry matures. Output of marketable oil sands production increased to 1.126 million barrels per day (bbl/d) in 2006. With anticipated growth, this level of production could reach 3 million barrels per day by 2020 and possibly even 5 million barrels per day by 2030.
Alberta.ca > Energy Home > Our Business > Oil Sands
The experiment stage ended decades ago. It is not government controlled but investor owned commercial facilities.
The industry is investing over $150 billion in Alberta oilsands in new facilities and expansions.
Inventory of Major Alberta Projects
Scroll down, select Oilsands and click Submit
Joe: I thought you said you were seeing 10% recovery rates in the Bakken. Do I remember that correctly?
Another Michael Ramirez Classic! LOL
I know a guy who has www.oilrising.com for those who believe oil prices are going up, and also www.oilfalling.com for those who believe prices are going down. It is funny because he is taking advantage of both sides in this very debate.
That's an important point.
That was Great. Now on my home page.
Huh? Are you kidding? That's just the problem - there is not "plenty of oil" left at all. In fact there really isn't much more than 50 years worth by many estimates. And that includes drilling in ANWR and everywhere else. It's going to run out someday, and that day is fast approaching.
There need to be more conservatives like you posting on here. These people just don't get it.
It won't run out all that fast. It's at peak production right now so it isn't going to suddenly stop now. The cost will rise and rise until it is no longer a resource. Then it will be over even if it hasn't run out.
Welcome to FR.
If the tanking of Asian markets combined with the slow response of OPEC to scale back production that resulted in spot price for oil that low for a few months and compare that today’s price is a sign of the president’s fault, please explain it to me.
... and by just as "many", if not more than ... there is plenty of oil.
So I'm not an oil man, nor play one on TV, but I've chosen to believe the ones that say there is, rather than the ones that say there isn't.
Pretty much the same as Gorebull warming, eh?
I wonder if this 'information highway' thing is such a great idea.
I can't remember ever having so many bullets to believe/disbelieve in my life .. ever .. until I turned on my computer in 1998.
There does seem to be a trend ... That for every thesis there is an equal and opposite anti-thesis, and the theory of synthesis is yet to be proven.
The oil man retires in January of 2009, so I don’t see the climbing prices going much beyond that.
We cannot know now. We can look back at some future time and say it was but in the middle of the ongoing it is impossible to do more than pass rumor.
EASY easy easy money....BUT it involves hard and dangerous work.
Just bought a $$$boatload of stock in Transocean Inc.(RIG) and Schlumberger (SLB).
There's a lot of money to be had investing in the "Drillers" and "Oil Services" industry. IMO.
In 1980 those estimates said we had 27 years left.
In 1990 those estimates said we had 41 years left.
In 2000 those estimates said we had 36 years left.
In 2005 those estimates said we had 41 years left.
In 2007 those estimates said we had 43 years left.
On average, the petroleum industry meets the rising demand and still adds more to the proved reserves.
Proved reserves are only based upon fields that have been flow tested. Areas known to contain oil but not drilled, like ANWR and most of NPRA for example are not counted in the total.
Now add those others plus oil shale, coal-to-liquid, gas-to-liquid and methane hydrates to our supplies.
Still think we won’t use liquid petroleum in 50 years? I’m not claiming it will be cheap, but I suspect it will still be the largest source of world energy.
It's an important point, that's what I said, that's what I mean.
When in history did something like this happen before?
Your cartoon expresses the truth in a nutshell.
Here's the synthesis:
Yes we are running out of easy to recover oil but there is a whole sh*t load of difficult to recover oil still in the earth.
Difficult = $$$. So Goldman Sach's predection of 20 year high oil prices is probably true.
No need after 12/21/2012....
“No need after 12/21/2012?”
Okay, I give up...what happens then? LOL
It all depends on what area of the field you are in since the Bakken varies widely through out the region.
The New Town/Parshall area has a higher yield and recovery rate because of the nature of the porosity of the formation there. It is also one of the thickest production zones found in the entire field to date.
It is still difficult to determine however, because most wells start off with a good flow, but fall off sharply according to what the recovery rate will allow. Fracking and other metods are still being tried to see which works best, but the entire field is still too unproven to gather any solid data either way.
There is a vast discrepancy on estimates of the field’s total volume and recoverable oil because of the lack of historical data. The zone being produced currently has not had enough drilling activity yet, to give those statistical results.
There is a great potential, but there still lacks the number of rigs needed to open the leases, which will give better statistical results.
Also, your post about the Albertal Oil Sands was not the original argument. it was first discussed about “Canadian Oil Shale’s.” The Alberta Oil sands is a different subject entirely. In fact, Sand and Siltstones in the Bakken is what make it producible using horizontal drilling methods.
So, believe me, don’t take me for some idiot who does not know what he is talking about. I’ll exchange technical data with anybody in that respect. My area of expertise deals with Horizontal drilling methods as well as production methods in the region.
And Bakken pales before the potential yield from CO & UT shales. 'Course, we have to get the politicians' and environazis' thumbs out of their bum before we'll see much production from those shales.
In situ is breakeven at $38/bbl. Breakeven is uncertain so far on microwaving, because current thinking is that using a combination of frequencies may be more productive than the current single-frequency (harmonic) process.
Will they be implemented? Only if/when the political class tell the environazis to suck wind. What company is going to risk X billion on anything at all if some jackass tree-hugger might get lucky with a BS lawsuit and shut the project down, eh?
But, 35 years in the ''awl bidness'' or not, you're not paying attention. New technologies, as well as new adaptations of old technologies, are out there aplenty right this minute.
Care to add a bit of commentary, gents?
Go figure, eh?
The Mayan calendar ends on Dec. 21, 2012...there’s a joke (that some take seriously) that the world will end on that date.
The Bakken Shales have been misnamed. Production does not come from the upper or lower Bakken shales. It comes primarily from the Middle Bakken, which is mostly Sandstones and Siltstones. Most wells are currently being drilled in the lower shale portion to take advantage of the non-permeable nature of shale, then fracking, bringing the oil bearing mid-bakken to the well bore, which optimizes production.
It cost more to drill this way, because of the lower “P” rates but pays off in the long run with a higher yield. The only set back is the average recovery rates of the formation are low. But new technology and methods are continually being improved.
Don’t mind them, Psycho. They cannot help themselves.
I was born into the oil industry nearly 60 years ago and have seen lots and lots of booms and busts. I used to feel sorry for the typical American consumer when prices got out of hand. Now I don’t care, because the American people, thru elections, has had since 1973/74 in order to get control of their own energy future. Failing to do that, they must pay the price now. And they will continue to have to pay until they wise up.
Son is DD here in TX.
Prices are really arbitrary numbers. What really matters over time is how many hours you have to work to buy the oranges, radios, automobiles and houses. Of course, you have to factor in the changes in technology as you pointed out. The automobile of 2008 is vastly different from the automobile of 1968.
Good points, by the way, what part of Canada are you from?
I have dealt first hand with assembling a rig and all the crews, with just days before spudding the well and have a court order shut the whole thing down.
The latest was in Utah where a sacred Indian arrow-head hunting ground managed to put over 100 people out of work. Of course, we quickly went some where else and our paychecks didn’t see any difference, but the real losers were the indians. They stood to get huge royalties off the mineral rights.
oh...okay...I don’t keep up with the Mayan calendar...
I have enough to do just to keep up with our calendar. LOL
Don’t mind Biff, You dinosaurs think cause you knew the business 20 years ago you are still experts. The world has changed. Try to keep up instead of arrogantly demanding, like Phsyco did on this thread, that the rest of us ignore all factual reality just so you Whineocons can feverishly cling to your narrow emotion based political dogmas and fundementel doom and gloom ignorance.
Another piece of factual data that shows you and Phsyco either wholly ignorant or frauds.
Thanks good FRiend,
I am a DD consultant and like I said before, we go primarily on a day to day basis. Projections and estimates mean absolutely nothing to us. The actual facts are what we deal with.
We don’t land a drill string based on estimates, we land it by hands-on tenacity and paying strict detail to realistic conditions. And they vary greatly by the second.
It just gets more and more expensive with every new method we develop. That seems to be the only constant.
LOL! Inducing production out of older mostly depleted fields, has nothing to do with what was being discussed here today. The discussion was over the higher cost of drilling and some of the methods being used. And you clearly illustrated the additional costs to extract oil that must be added on to the initial cost to produce that oil.
As far as I’m concerned, you are simply too rude or overbearing to have a logical and intelligent discussion with. You also go out of your way to insult people who have a valid opinion, simply because you don’t agree with their outlook.
If you are looking for a technical battle, and care to discuss it in a civil and respectful manner, I’m more than available, but if you keep on throwing insults and poorly based facts on a subject you know almost nothing about, then forget about a response from me from here on out.
You are only making yourself look like a small cynical little man who uses abusive comebacks when he lacks the expertise or the dignity to carry on a logical and pragmatic conversation.
Sorry, skimming through the posts and Alberta jumped out at me. My apologies.
That’s ok MN. If you are the young expert, why don’t you come on down here and show us how it is done. You might be suprised to know that oil wells are drilled today exactly like they were 60 years ago. As a matter of fact, there are rigs running today that are at least 30 yrs old.
I suppose the biggest technological breakthru has been directional drilling, computers, 3D seismo, and fracking.
Most yankees do not know squat about how the oil industry works. How it develops fields, the drilling and production processes, gathering, refining. Oh, I forgot, the yankess do know how to make money off the backs of the American consumer by driving up the price of oil on the futures markets.
So that is ok MN, this old fart will still help drill oil wells and provide America with the lifeblood that drives our economy in everything a consumer touches. And I will be very happy when I go to the bank.
That is all.
No appology necessary Thack,
The discussion here was supposed to be reasonable, but then somehow became skewed.
I do have in depth knowledge about this field (The Williston Basin) from a technical standpoint. And I am only trying to clear up what many here are confused about. You will get it from a realistic standpoint as far as I am concerned. Nothing more, nothing less.
Like a hot knife through warm butter my FRiend!
I think maybe you're more right than all the rest here.