Fractional flow curves and export collapse, oh my!
Asked to comment, independent Texas-based petroleum geologist Jeffrey Brown said he expects that the decline in Russian oil production “will be pretty steep,” noting, “The Russians are highly dependent on old oil fields, with rising water cuts.” (The older a well, the more likely water is being pumped in so as to force the remaining crude to the surface.)
Brown indicated that as sharply as he expects Russia’s output to fall, the amount of oil Moscow will have available for export will fall even more, reflecting rising oil consumption inside Russia. In the first half of 2008, Russian oil exports reportedly fell 5.2% compared with the prior-year period. (For more on Brown’s oil analyses, see Does Your Financial Adviser Know What Jeffrey Brown Knows About Mexico’s Oil Exports? (If Not, Listen Up) and Jeffrey Brown’s Warning On Oil Producers’ Own Rising Consumption Gains New Wall Street Backing.)
Noting that Russia accounted for two thirds of the increase in non-OPEC oil production between 2000 and 2007, the Raymond James report further concluded that “with Russian oil production now heading south, it will be extremely difficult for non-OPEC oil supply to post any meaningful growth in the future.”
http://energytechstocks.com/wp/?p=1604