Briefs December 22, 2008

• Delays in energy investments could curb future global fuel supplies by the equivalent of 4 million b/d within the next five years, according to Peter Jackson, Cambridge Energy Research Associates. As scores of small wells are shut down, analysts have calculated that oil production in North America could decline by 1.3 million barrels a day through 2010, or 17 percent, to 6.14 million barrels a day. (12/16, #6)
•          Oppenheimer & Co. senior oil analyst Fadel Gheit estimates world oil supply is likely to drop by three million to five million barrels a day in 2009, due to OPEC cuts and smaller companies slashing production, compared with a decline of just one million to two million barrels a day in global oil demand. This scenario of overtightening supply relative to demand would reduce global oil inventories a record 10% to 30%, pushing crude prices significantly higher later in 2009, Mr. Gheit said.(12/15, #4)
•          Oil companies have begun cutting spending nearly across the board. A survey by Barclays Capital found 2009 capital budgets were 12% lower than 2008 spending plans, and some believe they might head lower. Budgets in the U.S. and Canada are being cut the most, as projects in the high-cost oil-sands and unconventional natural-gas fields now make less economic sense. (12/20, #7)
•          Russia would come under crippling financial pressure and may need to raise money abroad if oil stays at an average of $30 a barrel over the next two years, the World Bank predicted Friday. The bleak scenario would mark a rapid unraveling of Russia’s oil-fueled economic gains over the past eight years. (12/20, #13)
•          Because Russia’s oil output is falling due to underinvestment, Russia already is, in effect, helping OPEC without actually turning off any taps. Any reduction from Russia, depending on the size, could simply be repackaging naturally declining output as a “cut.” (12/15, #4)
•          A survey of 200 oil and gas companies shows the oil price required to allow new oil projects to break even has climbed from about $18 US per barrel in 1999 to $60 in 2007 and an estimated $62 now…In addition to jeopardizing future conventional oil projects, oil at $45/barrel makes new tar sands production uneconomic, has the same effect on biofuels, and discourages development of more fuel efficient vehicles. (12/20, #14)
•          Iran’s oil minister said he considered the “real price” for a barrel of crude should be more than $100. Saudi Arabia has said $75 a barrel was a fair price, comments echoed by an Iranian official this month.  Other OPEC officials have said OPEC states needed $70 to $80 a barrel. (12/15, #9)
•          Last week Iran’s President Ahmadinejad acknowledged for the first time that due to low oil prices the Government will have to cut spending and subsidies for food and fuel, as well as raise taxes. (12/20, #10)
•          Toyota could report its first annual operating loss in 71 years and may issue a profit warning at a scheduled year-end news conference on Monday. (12/19, #9)
•          BP today announced that it has successfully started production from the third and fourth wells at the Thunder Horse field with production now in excess of 200,000 barrels of oil equivalent per day. BP plans to start up additional production from the Thunder Horse North field in the first half of 2009. (12/19, #13)
•          John Holdren, currently a Harvard University physicist, has been selected as President-elect’s Science Advisor.  Holdren has said recently that the world is not running out of energy and that even “peak oil” is debatable. (12/19, #14)
•          A coalition of 14 companies announced the creation of a new business alliance aimed at promoting domestic production of lithium ion batteries. Automakers hope to use the batteries in next-generation hybrids as well as plug-in electric cars. (12/19, #16)
•          Recent analysis by the EIA projects virtually no growth in US petroleum use through the year 2030 because of wider use of ethanol and biodiesel and a push toward greater automobile fuel efficiency. The reversal began this year with US petroleum use declining by a million barrels a day compared with 2007. (12/18, #4)
•          Nepal’s government declared a national power emergency and said consumers will face electricity cuts of as much as 16 hours a day. (12/18, #8)
•          Facing poor returns for producing gasoline, Valero Energy Corp. reduced gasoline production at 10 U.S. refineries.  (12/18, #10)
•          Gazprom said it would cut Ukraine off from gas supplies starting in January as Kiev could only pay $800 million in gas arrears before the end of the year. (12/18, #12)
•          Speaking in 2004, incoming Energy Secretary Chu said he expected world oil supplies to plateau within ten to forty years. The International Energy Agency, the voice of the global energy establishment, announced last week that it expects peak oil to arrive by 2020, while outside analysts believe it will come much sooner, if it hasn’t already arrived. (12/18, #14)
•          The United States will not be able to meet the mandate to use 36 billion gallons of biofuels by 2022, reported the U.S. Energy Information Administration Wednesday. (12/18, #15)
•          International oil companies operating in Nigeria said that if cases of insecurity should continue in the oil and gas producing zones, they may be forced to stop the production and supply of gas. (12/17, #9)
•          Expanding its output of lower-emission fuel, Exxon Mobil Corp. said it would spend more than $1 billion to increase diesel production at two US refineries and a third in Belgium. Exxon sees a growing market for diesel, which provides better fuel economy than gasoline and therefore emits less carbon dioxide for each mile driven. (12/17, #13)
•          A national energy council should be established in the US to develop a 50-year energy strategy, with the council developing benchmarks to monitor progress and making regular public reports, said energy economist Joseph Stanislaw.  (123/17, #14)
•          Average global total liquid fuels production in 2007 was 85.41 million b/d according to the IEA. In 2008, an average of 86.73 million b/d has been produced from January to November, an increase of 1.5% over 2007. (12/17, #16)
•          Venezuela’s PdVSA, which has served as the sole engine of growth for Venezuela’s economy, now faces one of its biggest challenges since President Hugo Chavez took office: keeping up production with less money and funding the spending of a bloated government.  (12/16, #11)
•          Some Chinese economists think the November statistics show their economy may have bottomed under the influence of the global financial crisis, and that the fourth quarter of this year and first two quarters of next year may see low economic growth, with a rebound for the economy from the third quarter of 2009. (12/16, #13)
•          Proved reserve reductions:  Many companies will likely be forced to declare that big chunks of their oil and gas reserves are uneconomic at today’s low oil prices. Smaller companies that rely on their reserves as collateral on their credit lines from banks could find their available credit shrinking along with the value of their booked reserves. (12/16, #8)