The coming decline of Aviation

[CaptR]

Peaking, BP (Lord Browne) and Shale Oil

Peaking
It is important to recognize that oil production peaking is not “running out.” Peaking is the maximum oil production rate, which typically occurs after roughly half of the recoverable oil in an oil field has been produced. What is likely to happen on a world scale will be similar to what happens with individual oil fields, because world production is by definition the sum total of production from all of the world’s oil fields.

Shale Oil
A recent study performed by the US Department of Energy (DOE) Office of Naval Petroleum and Oil Shale Reserves advocates a research and development program with a production goal of two million barrels per day from shale oil by 2020. While the U.S. has a huge resource of shale oil that could be processed into substitute liquid fuels, the technology to accomplish that task is not now ready for deployment. Given we currently burn over 84 million barrels of oil a day shale oil with its lengthy processes will never come close to meeting current demand, let alone future demands.

Lord Browne - BP
Russia is the world's No. 2 crude exporter after Saudi Arabia. Its supplies, which go mainly to Europe, cover more than a quarter of the continent's oil needs. It also has 28% of the worlds available reserves of gas. Companies wishing to make an acquisition, avoid windfall taxes or deter Russian expropriations have every good reason to try to talk down the price of oil.

As mentioned earlier in another post, "Lord Browne, the chief executive of oil firm BP, has said he expects crude prices to fall from current near-record levels as more supplies are discovered. However Lord Browne, speaking in an interview with German magazine Der Spiegel, said there was not likely to be any dip in prices in the short term. He said prices will probably settle at an average of about $40 a barrel in the medium term, before falling lower.... Lord Browne said that companies were finding large oil deposits in the Caspian Sea, while there was good production potential in countries such as Russia and regions including Western Africa. He also said that improved efficiency would help boost crude extraction. 'In the past we managed to get out 20% to 30%,' Lord Browne said. 'At the moment it's maybe 40% to 45%. I can see no reason why we could not reach 50% or 60%.'

The price of oil may indeed fall as Lord Browne suggests if economic collapse from soaring prices leads to a reduction in demand. But adding sufficient new world supply is not plausible in view both of the forty-year trend of declining discovery, which is hardly likely to change direction, and the increasing desire of countries, led by Russia & Venezeula, to conserve their resources for their own needs. Apparent improved recovery is more an artefact of reporting than a technological dynamic. Field developments tend to occur in steps, with the reserves of each being properly reported as committed, giving the illusion of reserve growth. The amazing technological advanced have served mainly to hold production higher for longer, which makes more money, without adding much to the amounts recoverable, as amply demonstrated in many giants fields. Besides, sucking a few extra barrels out of a field may extend its life, but is unlikely to affect the critical peak rate of production.

Meanwhile, BP has published the 2006 Edition of its Statistic Review of World Energy which is widely, but wrongly, taken as an authoritative source of data coming from an experienced and knowledgeable oil company. It is important therefore to note the key qualification stated in the following footnote
Statistics published in this Review are taken from government sources and published data. No use is made of confidential information obtained by BP in the course of its business.

BP’s position is entirely understandable as it once had to withdraw the publication even after it had been printed under pressure from an important host government which did not wish it to reveal the truth. The most glaring distortions in the BP Reserve data are for the OPEC countries, which are reporting about double the amount likely to be extracted from known fields, but in some other cases, such as the United Kingdom, the estimates are under-reported.

Do the research, use sources like CSIRO, DOE, Geoscience Australia, US House of Reps, The current Australian Senate Inquiry, go and look at Chevron Texaco's website http://www.willyoujoinus.com/ - there are numerous, numerous sources of data to understand and be informed - research all angles for yourselves......

After 7 years of researching this issue it is to serious to ignore. People buy insurance in case their house catches fire, where is the insurance for this issue - particulary if you are in the aviation industry which is so vunerable to the price of oil.....watch this space over the coming 2 years and watch more airlines go bankrupt, merge.........as the QANTAS CFO acknowleged when it gets to expensive we will be all out of a job - unless you work for Emirates or suchlike!!