A quick 2006 Oil Review
- hi folks,
With latest EIA data for December 2006 now released, I thought I'd
enlighten you with my brief analysis and thoughts for this year..
Despite bringing Haradh III onstream in the second quarter at a claimed
capacity of 300kb/d, Saudi Arabia's annual production fell 400kb/d
(refer also to today's oil drum post). The Khursaniyah group of fields,
claimed to add 750kb/d of oil and natural gas liquids capacity, is not
expected on stream until the end of this year. If Saudi Aramco are in
fact pumping close to flat out and battling depletion, production will
continue to fall steadily through most of 2007. That claim may either be
refuted or supported if the world makes a call on Saudi 'spare capacity'
at any stage this year, which seems probable. I predict we will see
another large fall in 2007 but Khursaniyah will help stem further
decline in 2008.
Russia provided the largest single contribution to oil supply growth in
2006, with average production 200kb/d thousand barrels per day higher
than 2005. Production was higher in the second half of the year, with
the highest value in October. My prediction is that Russia's average
production will be about the same again in 2007 - meaning that last
year's largest production increment may not be repeated.
Other standout performers in 2006 were: Angola, Canada, Iraq, United
Arab Emirates, Brazil, China, Azerbaijan, Libya and NGL supplies. Most
need to grow the same amount again to continue offsetting declines in
other regions. Announced projects suggest they have a chance of
achieving that. Whether China can continue its expansion will be
significant, with evidence that it now needs to call on other fields to
make up for the aging Daqing giant. Other growth candidates to watch
this year include Algeria, Qatar and Venezuela (which declined in 2006).
Given the late rise in Australia's production in 2006, presumably the
arrival of Enfield NW shelf production, our average for 2007 may well be
higher than last year.
In a nutshell, for the world outside Saudi Arabia and Russia, further
new deep water, unconventional oil and natural gas liquids development
projects may just hold steady against declines in all other countries.
The fate of world oil production now rests with the two countries
together accounting for one quarter of total liquid supply. If net
production from Saudi Arabia and Russia continues to fall in the first
quarter of 2007, as I predict it will, then the case for peak oil being
within the last two years will strengthen.
Of course, all manner of possible disruptions only add to the downside!