Some good news from Brazil

Brazil seems to be having some good returns in the Campos Basin, helping Petrobras to new production records of 1.82 mbd. on their way to an anticipated target of 14% increase in production over last year. Their costs, as a reference, are about $4 a barrel, according to the article in Rigzone.
Technorati Tags: ,

When will Brazil peak? And how much difference will a 14% increase in 1.82 mbd really make in a world market of over 80 mbd?

The interesting thing in the oil market now is that the good news seems to be about small items and the bad news seems to be about really big items (like Saudi Arabia).

Well, all we have left is small items. Unless they let us begin drilling off the east coast, west coast, or Florida coast. Or if we got to pipeline into Siberia....

The pickins are slim!

It would appear from ASPO's country report,, that this discovery will be used mostly by the Brazillian economy with the leftovers traded within S. America. As for its impact on global Peak, that too seems to be accounted for already by ASPO. Lastly regarding the global oil market, it will ease demand pressure ever so slightly while providing additional reserves for newly emerging PetroSur.

I figure that with Ecuador and Brazil declaring "first dibs" on their own petroresources, the "PetroWar" might move their way. If a "terrorist link" is discovered into Latin America...

No terrorist link needed in Ecuador - we already have the war on drugs, and a permanent military presence in Ecuador (to support said war).

Fascinating to see the ups and downs of oil production around the globe. Some days good news, some days bad news, some seasons good weather for oil, other seasons bad weather for oil. A new and humongous discovery in the future will be greeted with joy and relief and a sense that, hey, everything is going to be alright, forever. Hope beyond hope. Almost like when we or a loved one gets sick, and then better, the world is a happier place and will be for the foreseeable future.

I play golf at a private club in the north east, and on Thursday's we have a league for the men, and I get to play with different people each week. I make it a point to talk about peak oil and the prospects for the future of energy for transportation. Many of these guys drive big and new SUV's and, while they don't like the increase in gas prices, they treat it as a minor irritant which is likely to go away shortly. When I mention the prospect that gas is likely to go much higher in price, and that the availability of fuel may diminish significantly over the next 10-20 years, they blow me away with a few laughs and a reminder about Jimmy Carter and his nutty fears. Very, very few folks understand the issue of diminishing and finite supplies of oil and gas. We are in a tiny minority.

As they say in market trading (and life in general), timing is everything. It is quite possible that we are slightly ahead of our time (as the Panasonic ads say). Or maybe far ahead. I have a sense that most of us want to be proven right and soon - the energy world is going to hell in a handbasket, and we were right! But I would caution (myself especially) that we may be way ahead of our time. I'm not betting money that oil prices will go thru the roof soon, and never will. I want to be right, of course, but I also want to get the message out. Jimmy Carter wanted to do the same, but where is he now? He's held in contempt by many on the right side of the political spectrum. Slightly ahead of his time, but we could use him now.

A big drop in oil prices now, perhaps as a result of extremely fortuitous circumstances and a strengthening U.S. dollar, could put a wet blanket on our forecasts for the end of the energy world as we know it. I intend to continue to pound the message in any case, and study the biography of Jimmy Carter.

Which is why, when we put up numbers we should give a reference to provide a logical basis for the discussion. Unfortunately one can only deal with the numbers that one finds at different sources, and quite often numbers vary from source to source.

Your concern though, mirrors that of many in the oil industry who are loth to spend money betting on $50 oil when they remember, from the past, that it can fall back to $20.

Dilbert's duffers remind me of the Dodo birds in the movie Ice Age, or the grasshopper from the ant and grasshopper fable. There are times when it makes no sense to expend vital time and energy getting ostriches to pull their heads out of the ground. I know that's harsh, but the best lesson I can point to is the experience of the Jamestown colony--a bunch of rich yahoos landed and went out looking for gold, etc., instead of putting together the systems they'd need to survive, and Powhatten made the mistake of saving them.

We all know fossil fuels are finite and follow a boom and bust cycle; just when the mine plays out and the bust begins is hard to pinpoint, but it will happen. For me, it's much easier to point to the peak of NG because there's far more evidence for that happening now. A while ago, I mentioned that I had to remind my students that the Depression didn't just start at the drop of a hat; it took several years to develop into a full-blown crisis, and it presents lessons for those willing to study and learn.

The curse put on Cassandra was that while she would be proved correct nobody would listen to her warnings until it was too late. We can avoid being Cassandras by presenting evidence to justify our warnings; some will choose to heed, others not. The former will have a greater chance at perservering, while the latter are likely to drown in their ignorance.

Given the time lag between discovery and production and the declines taking place in existing fields, the fact is that oil production is most likely not going to be able to keep pace with the increasing demand, coming not only from China and India, but the growing demand from within the US. The straightforward implication of this is that the oil prices will remain volatile because of the inelasticity of oildemand and supply.

Also, the IEA warns of coming power failures -


The Paris-based International Energy Agency has said Europe and North America could face power blackouts this summer.

The agency said utility groups have failed to invest enough in electricity generation and transmission capacity, the Financial Times reported Saturday. Energy companies are also underinvesting in new oil and gas production capacity by up to 20 percent, the IEA said.

London, New York and several cities across southern Europe have experienced large-scale power failures during the past three summers because growing numbers of air-conditioners have driven demand to peak levels.

Fatih Birol, IEA chief economist, said electricity generation capacity in the European Union's 25 member states increased by only 1 percent last year -- less than half the 2.3 percent increase in electricity demand.

Birol said the trend in the European power sector was mirrored by trends in North America and much of the developing world.