Key oil figures were distorted by US pressure, says whistleblower

[Ford Jellymoulds]

Watchdog's estimates of oil reserves inflated says IEA top official

 

 

 

The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying

 

The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves.

 

The allegations raise serious questions about the accuracy of the organisation's latest World Energy Outlook on oil demand and supply to be published tomorrow – which is used by the British and many other governments to help guide their wider energy and climate change policies.

 

 

 

In particular they question the prediction in the last World Economic Outlook, believed to be repeated again this year, that oil production can be raised from its current level of 83m barrels a day to 105m barrels. External critics have frequently argued that this cannot be substantiated by firm evidence and say the world has already passed its peak in oil production.

 

Now the "peak oil" theory is gaining support at the heart of the global energy establishment. "The IEA in 2005 was predicting oil supplies could rise as high as 120m barrels a day by 2030 although it was forced to reduce this gradually to 116m and then 105m last year," said the IEA source, who was unwilling to be identified for fear of reprisals inside the industry. "The 120m figure always was nonsense but even today's number is much higher than can be justified and the IEA knows this.

 

"Many inside the organisation believe that maintaining oil supplies at even 90m to 95m barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further. And the Americans fear the end of oil supremacy because it would threaten their power over access to oil resources," he added.

 

A second senior IEA source, who has now left but was also unwilling to give his name, said a key rule at the organisation was that it was "imperative not to anger the Americans" but the fact was that there was not as much oil in the world as had been admitted. "We have [already] entered the 'peak oil' zone. I think that the situation is really bad," he added.

 

The IEA acknowledges the importance of its own figures, boasting on its website: "The IEA governments and industry from all across the globe have come to rely on the World Energy Outlook to provide a consistent basis on which they can formulate policies and design business plans."

 

The British government, among others, always uses the IEA statistics rather than any of its own to argue that there is little threat to long-term oil supplies.

 

The IEA said tonight that peak oil critics had often wrongly questioned the accuracy of its figures. A spokesman said it was unable to comment ahead of the 2009 report being released tomorrow.

 

John Hemming, the MP who chairs the all-party parliamentary group on peak oil and gas, said the revelations confirmed his suspicions that the IEA underplayed how quickly the world was running out and this had profound implications for British government energy policy.

 

He said he had also been contacted by some IEA officials unhappy with its lack of independent scepticism over predictions. "Reliance on IEA reports has been used to justify claims that oil and gas supplies will not peak before 2030. It is clear now that this will not be the case and the IEA figures cannot be relied on," said Hemming.

 

"This all gives an importance to the Copenhagen [climate change] talks and an urgent need for the UK to move faster towards a more sustainable [lower carbon] economy if it is to avoid severe economic dislocation," he added.

 

The IEA was established in 1974 after the oil crisis in an attempt to try to safeguard energy supplies to the west. The World Energy Outlook is produced annually under the control of the IEA's chief economist, Fatih Birol, who has defended the projections from earlier outside attack. Peak oil critics have often questioned the IEA figures.

 

But now IEA sources who have contacted the Guardian say that Birol has increasingly been facing questions about the figures inside the organisation.

 

Matt Simmons, a respected oil industry expert, has long questioned the decline rates and oil statistics provided by Saudi Arabia on its own fields. He has raised questions about whether peak oil is much closer than many have accepted.

 

A report by the UK Energy Research Centre (UKERC) last month said worldwide production of conventionally extracted oil could "peak" and go into terminal decline before 2020 – but that the government was not facing up to the risk. Steve Sorrell, chief author of the report, said forecasts suggesting oil production will not peak before 2030 were "at best optimistic and at worst implausible".

 

But as far back as 2004 there have been people making similar warnings. Colin Campbell, a former executive with Total of France told a conference: "If the real [oil reserve] figures were to come out there would be panic on the stock markets … in the end that would suit no one."

LINK

 

Just as well Ford produces some of the most fuel efficent cars Fiesta, Focus & Mondeo Econetic diesels to make oil supplies last just that little bit longer if oil supply is about to dry up.

[mettech]

:reading:

[Ford Jellymoulds]

:reading:

 

LOL

[Edstock]

Ho-hum.

 

Alberta says it has something like 50 years of reserves. Saskatchewan has an equal amount, un-developed.

 

Fuel might go to $5 a gallon, but, at $5 a gallon, we can make as much as we need.

 

It might be E-85, it might be Natural Gas, but at $5 a gallon, there will be all the fuel you need, in North America and lots of other places.

[jpd80]

As oil gets more expensive, previously non-profitable fields below the ocean floor become viable.

I think big oil will play this one all the way out......

[mettech]

A gallon of gas should be above $5.00 now.

 

Very cheap fuel right now.

[mlhm5]

OPEC claims to have 4m barrels/day of spare capacity. However, they also claim to have 250 billion barrels of proven reserves, and that number is never verified, and rarely changes in spite of pumping 30 million barrels a day, year after.

 

So does OPEC countries have as much oil as they say they have? Highly doubtful.

 

 

The supply is only one issue.

 

 

There is the question of how economic remaining oil will be to extract and how quickly it can be brought to market. If the remaining volume of reserves takes 100 years to extract then the supply rate will not match even the current demand.

 

And there is the inexorable upward pressure on demand from very large emerging economies like China and India.

 

How about price?

 

 

A few years ago OPEC made a big show of maintaining an oil price of $30/barrel, then $50/barrel, then $70/barrel. At one point they abandoned quotas and allowed unrestricted pumping. That did not stop the price reaching $147.

 

Oil has gone from $55 to $80 in the last 6 months.

 

 

OPECs response? Kuwaiti oil minister said OPEC would not increase production until oil hit $100 /barrel. At that price airlines go bankrupt.

 

So, we may not be running out of oil in the sense of having used up all of the resource, however, the point we've now reached, is that we've used up most of the economically viable recoverable oil and much of that remaining is, under the limitations of economics and the energy returned on energy invested (EROEI) is probably destined to stay in the ground.

 

If you want an example, observe the fact that private oil companies are flocking to produce oil from the Canadian tar sands. That oil is only economic at ~$70-80 per barrel prices.

 

 

Why not just go and drill where we know where the oil is? The reason is simple. The huge majority of the oil that people think is avaialbe is extractable only with negative EROEI . And nothing can change that. The laws of thermodynamics immutable.

Edited November 12, 2009 by mlhm5

[matthewq4b]

If you want an example, observe the fact that private oil companies are flocking to produce oil from the Canadian tar sands. That oil is only economic at ~$70-80 per barrel prices.

 

 

Where the hell do you guys get these bullshit figures ?

 

They have been pulling oil out of the Oil Sands on a large scale now for 40 years.

If it cost that NONE of the Oil Sand Companies would even exist.

 

Cause guess what oil HAS NEVER BEEN THAT PRICE until just recently.

 

 

The Oil Sand Companies have to see $20 crude minimum to make enough profits to see continued investment and expansion in the projects.

 

It Costs $8-$9 dollars a barrel to produce a barrel of synthetic crude with strip mining. SAGD is about $7 and THAI extracted oil is about $5 a barrel SSB (syncrude synthetic blend) has a market value about 25% higher than that of West Texas crude and requires far less refining than any conventional light crude on the planet. Refinery through put can be boosted by up to 35% using SSB as the only feed stock.

 

The 10 billion dollar CNRL project will pay for it's self in 30 months at $45 a barrel crude.

 

One reason they are flocking here is cause it is no risk investment. No searching for the oil they know it is there and exactly how much they can recover with the available technology . They have a guaranteed return on investment. No guessing games needed. Just crunch the numbers.

And the Arabs have used about 50% of their recoverable reserves that figure has remained pretty constant due to improved recovery technologies. They are now looking toward heavy oil extraction technologies to boost the recoverable figures of their light crude even further.

 

There is NO Crude shortage.

 

Easy access Light Crude is nearing or at it's peak. The Arabs just now are looking at their fields of lower quality heavier crude deposits. Until recently they have only been exploiting the highest grade crude fields that yield the highest profits but they still have massive reserves of heavier and lower quality crude oil. They will drive up the price of oil to insure they see the same percentage of margins on their lower quality heavy crude that they enjoy on their light crude.

And as heavier crude extraction technologies got better the amount recoverable has increased. That is why their reserve figures have not really moved.

 

Case in point Alberta has all but exhausted all our light crude resources we hit peak oil production for light crude 30 years ago, yet our reserves are many times higher now than when were at the start of light crude production. This has come about as heavy crude extraction technologies advanced, then the crude reserves went up as only recoverable crude oil is counted in reserves. Why do you think Alberta invested billions upon billions of tax payer dollars in to heavy crude research in cooperation with private industry?. We knew decades ago that we were running out of light crude oil and did some thing about it before we did run out. We transitioned from 90% of all oil produced here being light crude to 95% of all oil produced here being heavy crude with out a hiccup and increased over all out put.

 

Canada is the ONLY Nation on the planet who's heavy crude reserves are fully counted in the nation's crude reserves They were only added to the national crude reserves in 2000 or so and we went from 20 some place to second over night.. And even at that it is based on 35 year old extraction technologies. According to the offical reserves at the current rate of production the U.S will have exhausted all it's crude oil in less than a decade.

Now how many of you actually belive that ? If you belive that I got some ocean front property to sell you in Alberta.

 

 

Also with the rapid advancement of upgrading technologies the amount of actual Synthetic Crude able to be produced is higher than the reserves of the heavy crude in the ground. You get more synthetic crude than the volume of heavy crude you extract.

 

If you have 1 billion barrels of heavy reserves you can conservatively say you have reserves of 1.2 billion barrels, 1.3 billion is actually more realistic.

 

Shale gas has become a important part of the switch to heavy crude.

 

Why do think the BTU link that has traditionally dictated the price spread between crude oil and NG has been broken in NA ? Why do think the U.S has gone full bore forward on shale gas expansion driving the price of NG to record lows (inflation taken in to consideration) the U.S is going to need this NG for upgrading Canadian heavy crudes Utah Oil sand and eventually shale crude in to synthetic crude.

NG will play an important part in the production of synthetic crude, the NG is needed for the production of hydrogen for upgrading heavy crudes and is used for other process.

 

The industry as whole is in the infancy of setting up the infrastructure for the switch from depending on light crude to depending on heavy crude. Alberta has already made this switch and that is another reason why we are the center of attention.

 

The first step is making sure the resources are available to proses and upgrade heavy crude, the primary resource needed is NG, that is well underway in the U.S with the shale gas explosion, We went on a NG drilling spree in the 1960's and 1970's and to this day there are still NG wells here that were drilled in the 1960's that have yet to be tapped.

The next step will be construction of upgraders and that has started. Mean while extraction and upgrading technology will continue to be improved increasing published reserves even further. None of the U.S heavy crude resources are included in it's crude reserves.

 

The days of easy access punch a hole in the ground and pump the crude out are nearing an end, but we are on track to replace this with heavy crude that needs upgrading and more advanced extraction technologies.

 

Why do think every one is flocking here? Cause we are the technology leaders in the Field of Heavy crude extraction and upgrading. And we have already made the switch from an industry dependent on light crude as feed stock to one using heavy crude as the feed stock.

Heavy crude extraction has come along way in a short time, just 10 years ago it took 5 to 7 years to build an extraction plant. Now the same extraction can be done with new technologies that partially upgrade the crude before it even hits the surface that can go from ground breaking to production in 18 months. And that figure will supposedly be shortened to 14 months in the next generation of facility.

 

 

The days of dirt cheap oil are gone, and the days of light crude are nearing an end. But the infrastructure and technology is being worked on and put in place to insure that we DO NOT run out of crude oil. Light Crude is going to be replaced with heavy crude. We are NOT going to run out of crude oil. We are running out of light crude oil, that is a given and this is what all these so called annalists are panicking about. Problem is they are not telling you the whole story.

 

There is many many many times more the volume of heavy crude on the planet than there ever was of light crude.

Less than 20% of the crude on the planet is in the form of light crude. There potentially is as more recoverable (with current tech) synthetic crude on the planet now as there was crude total 100 years ago

 

There is no shortage of Crude nor is their going to be one any time soon.

At the very worst we will see a limited supply until heavy crude production is fully ramped up to meet demand.

The big question is how fast will light crude resources be exhausted. And that is a question NO ONE can answer.

 

 

 

Matthew

Edited November 12, 2009 by matthewq4b

[lfeg]

Set em straight Matthew. Reserves are a function of the technology used, and the price customers are willing to pay as well as the stuff that is actually in the deposits. And when we decide that we WANT TO develop the oil shales and go forward with coal to liquids technologies, reserves will continue to build.

 

Will petroluem last forever? No, but if we use our knowledge wisely, it will last long enough for us to develop alternate equivalent fuels. Our biggest hinderance right now are the major governments and the deciples of doom and gloom psuedoscience.

[goinbroke2]

Just because Mathew is in the middle of the industry and knows what he is talking about is no reason to not listen to Trim...

 

Let's see, when oil was going past $120 a barrel, everybody was saying $200 a barrel is coming and Matt said $150.00 Then oil peaked at $149.00...

 

Matt said oil will drop back to around $70.00 a barrel and stay that way for a few years ($70/72/74) And it dropped to $35 or so then levelled off at...wait for it....$70 a barrel + or -.

 

No I wouldn't believe Matt, how could he know...better listen to mlmh5 or Trim or one of the other "experts"

[Ford Jellymoulds]

Our biggest hinderance right now are the major governments and the deciples of doom and gloom psuedoscience.

 

UK Govenments latest anti-owning a car guilt trip CO2 TV advert pumped out every 5 minutes British TV, CO2 the latest way to milk billions in tax revenue from the huge cash cow that is the British motorist.

 

UK Government - CO2 its all the cars fault you need to drive 5 miles less every week latest TV Advert.

(Meaning we are gonna rape the motorist with huge 'Global Warming taxes', these taxes go into a general pool of tax revenue where not one dime will be spent on combating the effects of climate change, UK Government Global Warming C02 tax revenue will all get spent "ELSEWHERE" on anything OTHER than combating GLOBAL WARMING)

 

Car & Aircraft makers who will have to fix the problem will get sweet bugger all from these hypocritical governments they get to keep the Global Warming taxes, which they spend elsewhere like pumping billions propping up useless failed banks who now award themselves massive bonuses because they now look good because they are awash with taxpayers bailout money.

 

Daily Mail Reports... TIME TO SLAY THIS BANK BEHEMOTH

Billions of our money have been spent to keep Royal Bank of Scotland afloat - but they're blowing it on bonuses and high stake gambles.

LINK

Edited November 13, 2009 by Ford Jellymoulds