Impact Of Oil Output Fall At Aging Fields Seen As Acute - Dow Jones

[hatrack]

LONDON (Dow Jones)--"Falling oil output from ageing fields, once insignificant compared with global production, has become large enough to impact world supply and may help explain the constant tightness in the oil market this year, according to analysts.

Oil production is now in decline in at least 18 major producing countries including the U.S., U.K. and OPEC members Indonesia and Venezuela, and total production from this group is falling by around 1 million barrels a day every year, according to the latest data.

The oil futures market can spike on a temporary outage of just a few hundred thousand barrels a day, so what is in effect a permanent outage of 1 million b/d may help explain some of the momentum behind the 53% rise in U.S. crude futures so far this year to near $50 a barrel, analysts who study depletion said.

"Depletion has become a serious issue for the oil market, and I believe it is contributing to market tightness," said Chris Skrebowski, editor of the London-based Energy Institute's Petroleum Review. Skrebowski has studied the issue using data from BP PLC's (BP) widely-read Statistical Review of World Energy data. "What it means is that before you meet a single barrel of demand growth you have to replace all the missing barrels," he continued. "Depletion is really an extra demand. Countries where oil production is still expanding are being put under increasing pressure to make up growing depletion rates. It's a huge drag on the system."

EDIT

http://sg.biz.yahoo.com/040827/15/3mqn7.html

[mhr]

1. Succinct Article On Peak Oil Here

http://www.dallasforkerry.com/mediascope/brainzone/

[daleo]

2. "Depletion is really an extra demand"

No, it is drop in supply. It may even mean the resource is running out.

[Kagemusha]

3. People speak like they want oil depletion.

This is the result of under-investment when oil was super super super cheap. It's normal.

[phantom power]

4. it's more about oil becoming more expensive (permanently)

The issue is, that this may not be "normal", it may be the beginning of a new phase in the relation between supply and demand. "peak oil" is the point past which it becomes increasingly expensive to extract further oil, and so oil becomes expensive, and stays that way.

Eventually, of course, we also run out. But the impact of "difficult, expensive" oil happens long before we actually run out.

[daleo]

5. What people want is irrelevant

It is a matter of what will happen. Some people believe that given a high enough price, there will be oil to be found in plentiful supply. Others think not.

It isn't just a matter of economics, thermodynamics come into play as well. At a certain point, more energy can go into the exploration, extraction, distribution, and consumption of an energy resource than comes out of it. Some people think we are approaching that point, others don't. I guess time will tell. But standard economic theories of price signals resulting in increased supply may not apply, if fossil fuels are not (for all practical purposes) inexhaustible.

[mbperrin]

6. Depletion been continuous in Texas since 1972

Official record from Texas RRC:
http://www.rrc.state.tx.us/divisions/og/information-data/stats/ogisopwc.html

Investment high or low, oil production declines since 1972, now at lower level than 1935 when records began to be kept.

1,000,000 Texans worked in the industry in 1980 - now 150,000.

[bpilgrim]

7. this explains 12/12/2000

this explains 911
this explains OUR 'new' foreign policy
this explains iraq
this explains EVERYTHING that has gone down since they SELECTED our LEADER.

Fortune even has an article on it...

AWOL is THREATENED and the neoCONs need MINI-NUKES and MOABS to protect and preserve it.

and just let ANYONE try and get in the way...



peace

[aquart]

8. Yes.

Shortsighted Republican policies cause long term damage.

[bpilgrim]

9. clinton never addressed it either

he sold out to the 'third-way' whatever that means :shrug:

:hi:

peace