Monday, May 9, 2016

Oil discoveries drop to 60-year low, Financial Times:

Discoveries of new oil reserves have dropped to their lowest level for more than 60 years, pointing to potential supply shortages in the next decade. 

Oil explorers found 2.8 billion barrels of crude and related liquids last year. This is the lowest annual volume recorded since 1954, reflecting a slowdown in exploration activity as hard-pressed oil companies seek to conserve cash.

Most of the new reserves that have been found are offshore in deep water, where oilfields take an of average seven years to bring into production, so the declining rate of exploration success points to reduced supplies from the mid-2020s.

The dwindling rate of discoveries does not mean that the world is running out of oil; in recent years most of the increase in global production has come from existing fields, not new finds.

But if the rate of oil discoveries does not improve, it will create a shortfall in global supplies of about 4.5m barrels per day by 2035, Wood Mackenzie said.
That could mean higher oil prices, and make the world more reliant on onshore oilfields where the resource base is already known, such as US shale.

A lot will happen between now and 2035. Saudi Arabia has more pressing problems. For investors the bigger problem is that share value is determined to a great extent by amount of oil in reserves, not in production.

Active rigs:

	5/9/2016	05/09/2015	05/09/2014	05/09/2013	05/09/2012
Active Rigs	27	84	192	183	207

RBN Energy: continuing updates on demand factors affecting natural gas storage injection season.

Deep-sea video for the granddaughters: NOAA has three deep-sea cameras live streaming. I'm not sure long this will last, and it's possible there will be "down time." But it may be worth watching. Camera 1 is the best; it appears to be "down" right now. Camera 2 appears to be a camera "above" the explorer, and films the explorer itself. Camera 3 appears to have the technical data from inside the mother/control vessel. Just my guess. From NOAA:

From April 20 to July 10, 2016, NOAA and partners will conduct the three-cruise Deepwater Exploration of the Marianas expedition on NOAA Ship Okeanos Explorer to collect critical baseline information of unknown and poorly known areas in and around the Marianas Trench Marine National Monument and the Commonwealth of the Northern Mariana Islands.

NOAA Ship Okeanos Explorer is operating on Fiji time (GMT +12) during the 2016 Deepwater Exploration of the Marianas expedition.

Daily daytime remotely operated vehicle (ROV) dives are planned, with ROV deployment at approximately 0830 and ROV recovery at approximately 1630 Fiji time most days.

Currently Central Time is five hours ahead of GMT time. At noon today, it will be 5:00 p.m. GMT.

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For The Archives: The Canadian Fires

Estimate: Up To One Million BOPD Off Global Market

The Globe and Mail is reporting:

The Alberta wildfire that has destroyed entire neighbourhoods in Fort McMurray is taking a growing toll on the energy industry, forcing as much as a quarter of the country’s oil output off-line.

Oil sands projects, pipelines and electrical facilities around Fort McMurray have shut down and workers have been sent to safer locales.

With the inferno having expanded more than tenfold in a day, there is no estimate yet of when many of the operations can resume.

Northern Alberta’s fiery disaster, and fears of a worsening supply problem, have prompted global oil traders to bid up crude prices. U.S. benchmark West Texas intermediate rose 38 cents (U.S.) to settle at $44.70 a barrel on Friday. Prices for Canadian heavy oil also rose on tightening supplies in the affected region.

If operations can get back online relatively quickly, as was the case last year when wildfires caused outages far south of Fort McMurray – and if there is no damage to facilities – the market impact should be relatively small, said Jackie Forrest, vice-president at ARC Financial Corp.

“The thing is, we’re not certain it’s going to stay that way. It could be that this fire grows and that we actually see some damage to oil sands facilities that isn’t temporary,” Ms. Forrest said.

Estimates place the volume that companies have shut off at between 800,000 and one million barrels a day. Prices have yet to spike dramatically, largely because the outages come at a time of brimming inventories in North America. No companies are estimating when evacuated staff can return from shelters and other temporary housing around the province.

Four takeaways:

• won't have any material effect on global production (that's why price of oil is actually down today)
• puts Trudeau in a bad, bad economic position; it will help him face (energy) reality
• it gives the 30-year-old Saudi prince additional time (at least six months) of not having to cut production 
• somewhat of a lifeline, perhaps, for Venezuela; the US needs heavy oil to mix with light oil for refineries; much of that heavy oil came from Canada 

Canadian GDP, contribution by sector (per wiki):

• real estate: 12%
• manufacturing: 11%
• oil: 8%
• health care: 7%
• public administration: 7%
• finance and insurance: 7%
• agriculture, forestry, hunting, fishing: less than 2%

I think the numbers speak for themselves.

Bottom line: huge impact for Canada; almost no impact on rest of world.