And as we watched Louisiana and Washington . . . 3 items to note

As the short term issues as to whether we will have enough heating oil this winter begin to be a growing concern in the US, and over in Europe they are starting to fear the impact of an abnormally cold winter, the rest of the world is looking a little further into the future.

Recently the Chinese have become quite successful in buying assets in places such as Kazakhstan and Ecuador, seemingly more in competition with India rather than anyone else.  Well it seems that the Indians haven't given up.  I noted the other day that they were aggressively pursuing the Vankorskoye field in Russia, now we learn that they are also chasing possible oil production in Cuba.  

Oil & Natural Gas and its partners, Spain's Repsol YPF SA and Norsk Hydro ASA, are waiting for approval from the Cuban government to go ahead with exploring for oil in six areas on the Caribbean island, R.S. Butola, Oil & Natural Gas's managing director for overseas operations, said in an interview in Johannesburg, South Africa on Sept. 27.

 ``We will explore more extensively in the area, which may prove quite promising,'' Butola said while attending the World Petroleum Congress. Based on an initial estimate by Repsol, the six areas could hold 4 billion barrels of oil, Butola said.

 Oil & Natural Gas needs to raise output to retain its position as the largest supplier of crude oil and gas in the country. Oil imports by India, Asia's third-biggest consumer of the fuel, are set to rise as refiners expand capacity to meet fuel demand. India imports 70 percent of its crude oil.

This on the day that the Russian company Gazprom bought it's competitor Sibneft. And so
The deal has given the Russian Government direct control of almost 25 per cent of the country's 9.5 billion barrel per day (bpd) oil output - amid continuing record-high oil prices.
And that reserve is adjudged quite large
According to BP PLC's annual statistics review published in July, Russia is the world's No. 6 in terms of oil reserves with 72 billion barrels, and is No. 1 in terms of gas reserves with 1,700 trillion cubic feet. Saudi Arabia has most crude with 263 billion barrels, while Iran is the world's No. 2 in terms of gas reserves with 950 trillion cubic feet.

And speaking of Saudi Arabia, my comment yesterday about the oil rigs they were renting was a little premature.  As Business Week notes

The Saudis are already vying for a limited number of rigs. Aramco will be paying Houston-based Rowan Cos. $100,000 to $105,000 per day for each of four large offshore rigs slated to begin exploring for oil and reworking wells in the Arabian Gulf for a three-year period beginning in early 2006.

 The Saudis originally contracted for five Rowan rigs but one is missing following Hurricane Rita. Rowan hasn't found work in the kingdom since 1981. "It's a nice way to go back," says William C. Provine, an investor relations vice-president. Another participant is Bermuda's Nabors Industries Ltd., which has 10 rigs in the kingdom.

The article also recognizes a concern expressed here, in earlier posts, about the simple arithmetic of the drilling operation.
According to one industry source in the region, the Khurays field, the largest expansion planned, will need an estimated 400 wells drilled to produce the target of 1.2 million barrels. If each rig drills six to seven wells per year, that would require some 20 rigs at the site for three years. The field will also need 2 million barrels per day of water injection, facilities to process the water, and pipelines.

 Given all that, getting production up even to 12.5 million barrels per day seems a tall order, especially considering the Saudis need to add enough capacity to offset declines of 400,000 to 500,000 barrels. per year in existing fields. "Clearly Aramco has allocated the funds and set up the contracts for the expansion. The challenge will be for the contractors to mobilize the materials, drilling equipment, and human resources to meet the kingdom's very tight schedules," says Sadad Husseini, a former Aramco executive vice-president for exploration and production.

On which two comments.  First that 1.2 million divided by 400 equates to 3,000 bd/well which is a drop from the 3,500 bd/well we have previously been using as Aramco well productivity. Secondly that the Saudi's themselves have admitted to twice the depletion rate quoted here, so what will that do to the arithmetic of overall production?
Re: "By next year, Aramco aims to have 110 rigs drilling, although that may be unreachable because of fierce competition for equipment" [from the cited Business Week article] and "considering the Saudis need to add enough capacity to offset declines of 400,000 to 500,000 barrels. per year in existing fields..."

Well! Now we're getting somewhere. As always, I anticipate and look forward to the latest Saudi Oil Minister spin.... They are desperate to keep the prices at "reasonable" (???) levels and fearing that things will get out of hand if they don't -- as reported in the Maass article in the NY Times Magazine some time back. Well worth quoting at this point:
The onset of triple-digit prices might seem a blessing for the Saudis - they would receive greater amounts of money for their increasingly scarce oil. But one popular misunderstanding about the Saudis - and about OPEC in general - is that high prices, no matter how high, are to their benefit.

Although oil costing more than $60 a barrel hasn't caused a global recession, that could still happen: it can take a while for high prices to have their ruinous impact. And the higher above $60 that prices rise, the more likely a recession will become. High oil prices are inflationary; they raise the cost of virtually everything - from gasoline to jet fuel to plastics and fertilizers - and that means people buy less and travel less, which means a drop-off in economic activity. So after a brief windfall for producers, oil prices would slide as recession sets in and once-voracious economies slow down, using less oil. Prices have collapsed before, and not so long ago: in 1998, oil fell to $10 a barrel after an untimely increase in OPEC production and a reduction in demand from Asia, which was suffering through a financial crash. Saudi Arabia and the other members of OPEC entered crisis mode back then; adjusted for inflation, oil was at its lowest price since the cartel's creation, threatening to feed unrest among the ranks of jobless citizens in OPEC states.

"The Saudis are very happy with oil at $55 per barrel, but they're also nervous," a Western diplomat in Riyadh told me in May, referring to the price that prevailed then. (Like all the diplomats I spoke to, he insisted on speaking anonymously because of the sensitivities of relations with Saudi Arabia.) "They don't know where this magic line has moved to. Is it now $65? Is it $75? Is it $80? They don't want to find out, because if you did have oil move that far north . . . the chain reaction can come back to a price collapse again."
But its too late, their intervention to keep prices reasonable will be too little too late anyway. They needn't worry about the prices crashing again -- they won't.
This is an excerpt related to Rowan Co.'s "lost" GOM rigs (from a very interesting article):

Bill Provine, with Houston-based Rowan Companies, a major drilling contractor in the Gulf, said that the company lost four of eight jackup rigs that were in Rita's path, and another rig in Katrina. Provine said the company had not lost a rig in the Gulf for over 30 years, until the year before last. Since then, Rowan has lost five jackups, he said.

"One of them was found on the bank in Louisiana. The other rigs, they are gone. They are either floating around in the Gulf or sank. We probably won't know until tomorrow," Provine said Monday. "These were good big rigs, capable of drilling to 30,000 feet ... They weigh about 30 million pounds each. That's a lot of steel, some of them are as big as a football field."

So Rowan's remaining fleet that is off to Saudi waters will be greatly missed. (And does this mean even further delays in bringing GOM production back on line?)

The IHS Web site had this to say
Houston-based Rowan Companies Inc said four of its jack-ups were not at  their pre-storm locations after Hurricane Rita. The "Rowan-Odessa," which  was drilling a Remington Oil & Gas well on Ship Shoal Block 250, is still unaccounted for.

The "Rowan-Halifax" jack-up was beached in the East Cameron  area. It had been on location at a Remington project on East  Cameron Block 346. The hull of the "Rowan-Louisiana" jack-up  apparently detached from its legs and ran aground offshore Louisiana.  It had been on location at Vermilion Block 338, operated by Helis.

The company's "Rowan-Fort Worth" jack-up was found beached in  the West Cameron area. It has been drilling a Hunt Petroleum  test on South Marsh Island Block 146.

The company's other Gulf rigs have been identified, though an  assessment of their condition will depend upon closer inspection.

The "Rowan-Odessa," "Rowan-Halifax" and "Rowan-Louisiana" were  operating under contracts that provided for total revenues of  about $210,000 per day. The rigs are collectively insured for  an amount that exceeds their aggregate carrying value. The company  said it does not maintain insurance against loss of revenue.

Rowan had previously lost its "Rowan-New Orleans" jack-up during  Hurricane Katrina earlier this month. It capsized and sank in  155 ft of water on Main Pass Block 185.

Saudi the country does better with high prices for oil, but Saudi the family has most of it's assets in Treasury bills, stocks, REITs, etc. An American or European or general OECD collapse is bad for the family of about twenty thousand that runs Saudi Arabia.