Kenneth Heebner on Ghawar (and other topics...)

(it's under the fold)
(Thanks Leanan!)

It seems like Kenneth Heebner is reading TOD!

It seems like Kenneth Heebner is reading TOD!

. . . except not your posts on ELM, or Gail the Actuary's on the link between cheap energy and a rising standard of living. To Heebner steep declines in Ghawar and Cantarell mean only that Schlumberger will make more money. Short-term he is probably right, but I wouldn't want to be invested in his fund when ELM begins to bite.

It seems that some fund managers are tuning in to the right energy analysts. Now I know which fund I'm going to expand into...

If we had our own investment fund something like: peak oil investment fund. We could invest in that instead of CGM investment fund. This would accomplish two things.

1) We could direct investment to productive enterprises like Alan Drake's electrified rail here and here or Engineer-Poet's plan for sustainability, energy independence and agricultural policy here and here or a host of other responsible initiatives that the world is going to need from electric cars and concentrated solar to organic farming and urban planning.

2) We could make a ton of money. That is of course assuming that you believe there is actually such a thing as peak oil. I'm guessing that at least a few of you do :)

Anyone interested in this can meet the people they need to talk to set things up at the 2007 Houston world oil conference.

"Houston... we have an Opportunity!"

Wednesday Afternoon Breakout Session 1
A. Investing in Conventional Oil and Gas in a Peak Oil World
This session will be moderated by Leslie Haines, editor of Oil and Gas Investor, and will include brief presentations by panelists, with extensive audience interaction.

Wednesday Afternoon Breakout Session 2
A. Investing in Unconventional Oil and Substitute Fuels in a Peak Oil World
Brief presentations with extensive audience interaction.

All of the money and all of the talent is going to be in the same place at the same time for a couple of days. Enough said.


Kenneth Heebner:

"For the first time in modern history the American economy or the American consumer is not the driver...

Obviously if we had a complete depression in our country, it would have an impact...but a slow down... is not going to derail this global economy.

I think a lesson in history would be in place for Mr. Heebner :)

But interesting comment nevertheless, even if one ignores the redefinition of "modern history".

God this would make great material for Jon Stewart...

"ya...I like Saskatchewan Potash...companies that Putin likes to deal with...oh ya...then because all the major oilfields in the world are in decline and the world will come to an end as we know it...I would invest heavily in energy-related sectors...and perhaps the major security outfits and ammunition Blackwater who will be protecting us from the massing hordes of starving people...all and all...prospects in 2008 are there if you invest smart..."

"...who will be protecting us from the massing hordes of starving people...all and all...prospects in 2008 are there if you invest smart..."

Feb. 26 (Bloomberg) -- Wheat production in Australia, the world's third-largest exporter, may more than double this year on speculation one of the nation's worst droughts in 100 years is ending.

Output may be between 20 million metric tons and 26 million tons, the second-highest ever, according to estimates of six analysts surveyed by Bloomberg. That compares with last year's drought-ravaged crop of 9.8 million tons and a record 26.1 million tons produced from the crop sown in 2003.


Tuesday, September 18, 2007, 10:11 AM

by John Perkins

The Australian Bureau of Agricultural and Resource Economics has lowered its 2007 wheat production forecast to 15.5 million tons, down 7 million from the June estimate but up sharply from last year's harvest of 9.8 million.

Australian weather. Maps will also be watched as the country’s wheat crop needs a big drink during the key stages of forming and filling heads on the plants. This week the Australian Bureau of Agricultural and Resource Economics (ABARE) slashed its country’s wheat crop estimate by 31 percent due to 15.5 million tonnes.

CBOT trade talk at end week circulated that could shrink to 12 million if it stays dry.

Or even 5.8 tons. My est.

Arkansaw of Samuel L Clemens

Seems that Ghawar is declining and the market movers know about it. So we have the two largest oil fields in decline and this fellow Heebner telling the folks that are watching CNBC and people watching here, that the oil feilds are declining and there are not enough little ones to make up the difference. So he is talking Peak Oil Production, he couches it in the fact that he can make money at it. So as the rest of the world slides down the back slope of the peak, he and other like him will make money on the gloom and doom. I Do wonder where he will be in 10 years?

Nice to know that Bob Shaw was right in all that talk about Potash a few weeks ago.

One of the interesting comments in the interview was Heebner noting that the CEO Baker Hughes believes Ghawar is declining four to five percent annually. Have any of you out here seen the CEO make/write that statement? I'll make an effort to see if it's in the public record somewhere if indeed someone here also remembers a comment like that. There are not too many executives at top oil or oil service companies that speak in such blunt terms about Ghawar.

As a side comment about Heebner: He's been around for a long time, and has a reputation for being a deep thinking contrarian and in taking big bets, swinging from sector to sector based on his view of where fundamentals are strongest. He's generally viewed with respect, and is generally very well known.

I'm in the finance industry and I can say without a doubt that there's a growing tide of big players that are taking the concept of peak oil seriously, although most have yet to come to terms with the full scope of challenges ahead.


I was wondering the same.

A Baker Hughes link anyone?

Arkansaw of Samuel L Clemens

I would expect a CEO of Baker Hughes to not make this sort of error but now I am left wondering if he meant that Ghawar was being depleted at a rate of 4-5% per year? That is a much more reasonable interpretation, as Ace has documented elsewhere that about 5% depletion of the remaining recoverable oil appears to be exactly what KSA has been attempting to do.

"The greatest shortcoming of the human race is our inability to understand the exponential function." -- Dr. Albert Bartlett
Into the Grey Zone

Not really too many comments here on this thread. Unfortunate as Mr. Heebner is offering some good insights on how one can invest over the next several years. SLB is indeed an excellent vehicle to grow one's assets given their global footprint and what is increasingly appearing to be a continous constrained oil supply environment. Ziggy...Andrew Gould, CEO for SLB, delivered a presentation recently (on slb's website)that speaks to these issues in a candid manner. He has previously speculated that the overall decline rate is much higher (i.e. up to 8%).

Andrew Gould Speaks at Howard Weil Energy Conference
Schlumberger Chairman and CEO Andrew Gould addressed the oil and gas investment community at the 33rd Annual Howard Weil Energy Conference on April 4, 2005 in New Orleans, Louisiana, USA. Read the full text of his speech.

To download the complete presentation click here. (3.47 MB PDF)