Oil supply what's the real situation?

[peilthetraveler]

Forgot to mention about saudi arabia....at 8 million barrels x 50 dollars a barrel ($60-$10 for productions costs) x 365 = that 146 billion a year. (there GDP is 310 billion) So even if oil goes to 100 dollars a barrel they aint gonna get rich and we could still crush them like a bug. by the way...it would take them 79 years to pump out all their oil unless we invade them and increase there production like we increase iraqs. /evil grin

 

[dgabriel]

http://www.eia.doe.gov/oiaf/ieo/oil_tables.html

If a consumption growth rate of 2.5% per year is assumed, then, 1 trillion barrels of oil will be consumed in 30 years, which is a little less than "proven global reserves" and 2.35 trillion will be consumed in 60 years, which is a little more than proved reserves and reserve growth.

I read that some Alberta Shale oil can be extracted and processed into crude at $10 per barrel. But let's assuume the figure quoted earlier in this thread of $21 is correct. The fear which retards investment in oil shale is that if a large scale effort is undertaken to extract and utilize the shale deposits, then the Saudis will pump enough to depress prices just enough to shut down the shale effort.

Contrary to scientific conjecture in the past, recent discoveries under the antarctic ice shelf show a rich and ancient biotic history, and suggest oil deposits.

 

[PoundTheRock]

Well, if the President's popularity rating gets low enough, we'll have at least one oil shock down when he releases the Strategic Petroleum Reserve.

 

[Sparohok]

Quote from dgabriel:

I read that some Alberta Shale oil can be extracted and processed into crude at $10 per barrel. But let's assuume the figure quoted earlier in this thread of $21 is correct. The fear which retards investment in oil shale is that if a large scale effort is undertaken to extract and utilize the shale deposits, then the Saudis will pump enough to depress prices just enough to shut down the shale effort.

The unconventional oil deposits in Alberta are bitumen (tar) mixed with sand, not shale. The largest oil shale formations are in the USA.

Much of the cost of producing crude from oil sands is purchased energy, in the form of natural gas, so the cost is not fixed. In 2004 when the Syncrude joint venture was in full production their average operating cost over the year was CDN$19.40/barrel, or about US$15.

Martin

 

[kubilai]

I wish there was a "I don't know" option so I can see the consensus without lying and polluting the poll

 

[Chagi]

Quote from Sparohok:

The unconventional oil deposits in Alberta are bitumen (tar) mixed with sand, not shale. The largest oil shale formations are in the USA.

Much of the cost of producing crude from oil sands is purchased energy, in the form of natural gas, so the cost is not fixed. In 2004 when the Syncrude joint venture was in full production their average operating cost over the year was CDN$19.40/barrel, or about US$15.

Martin

Exactly, it takes a fair bit of energy to produce a barrel of oil from the oil sands.

There has actually been some talk on and off about Alberta building a nuke plant to power some of these oil sands projects (as opposed to chewing up large amounts of natural gas).

 

[petrotrader]

Quote from PoundTheRock:

Well, if the President's popularity rating gets low enough, we'll have at least one oil shock down when he releases the Strategic Petroleum Reserve.

Don't hold your breath...

 

[Samson77]

Quote from Sparohok:

The unconventional oil deposits in Alberta are bitumen (tar) mixed with sand, not shale. The largest oil shale formations are in the USA.

Much of the cost of producing crude from oil sands is purchased energy, in the form of natural gas, so the cost is not fixed. In 2004 when the Syncrude joint venture was in full production their average operating cost over the year was CDN$19.40/barrel, or about US$15.

Martin

Martin you seem to really know your stuff so please tell us where your investing for the next 3 months, 1 year and 5 years.

Thanks.

 

[Chagi]

Quote from Samson77:

Martin you seem to really know your stuff so please tell us where your investing for the next 3 months, 1 year and 5 years.

Thanks.

I'm not Martin, but I can provide you with a few Canadian companies to research in further detail if you're interested. I live in Alberta, economy is booming due to natural gas, traditional oil and oil sands activity. Fort MacMurray in particular is smoking hot, property market up there is getting is starting to get a bit insane due to lots of trades people with cash competing for far too few homes.

Encana - pure natural gas play, company is currently focused on selling off many of their assets in order to focus entirely on natural gas in North America

Suncore (SU.TO) - already mentioned, oil sands play in Alberta, Canada

Canadian Natural Resources (CNQ.TO) - another player in the Alberta oil sands industry, announced within the past 4-5 months a major expansion with the "Horizons" project (if I remember correctly).

Western Oil Sands Inc. (WTO.TO) - another oil sands player

UTS Energy Corp (UTS.TO) - i think this one is in the oil sands upgrader business, this one just crossed my radar, haven't had a chance to read into it in much detail as of yet

Canadian Oil Sands Trust (COS-UN.TO) - company name basically describes the company, income trust structure instead of common shares

 

[Sparohok]

Quote from Samson77:

Martin you seem to really know your stuff so please tell us where your investing for the next 3 months, 1 year and 5 years.

Samson, thank you, assuming you're not being sarcastic. You never can tell around here.

In terms of energy investing I am a big fan of Kurt Wulff and his web site www.mcdep.com. Another source I can highly recommend is the book "The Oil Factor" by Stephen and Donna Leeb. I read The Oil Factor recently and was shocked by the degree to which their recommended portfolio and investment stance matches my own. (Despite the title the book isn't just about oil.)

The one thing I can add to more directly answer your question is that I recently hedged much of my investment in oil producers with a short position in oil futures. At $60 I am no longer particularly bullish on oil in the short term. Any number of growth shocks to the world economy could bring oil back under $50 in the remainder of 2005. However I still believe that oil producers are significantly undervalued relative to the price of oil, hence the hedged position rather than just selling my oil stocks outright.

Martin