Energy Links at Independent Stock Analysis

Updates

August 25, 2012: a former vice president of Saudi Aramco disputes Lenoardo Maugeri's paper (see original post):

Leonardo Maugeri’s recent paper Oil: The Next Revolution on the presumed future abundance of oil supplies rejects the pessimistic outlook of limited increases in oil capacity over the next decade. It suggests global oil capacity will exceed 110 million barrels per day by the end of the decade, putting an immediate end to concerns regarding constrained long-term oil supplies. This conclusion is based on an assessment of new projects with a reported capacity of 49 million b/d before a downward adjustment to 29 million b/d to allow for completion risks and reserves depletion. Maugeri holds two PhDs, one in Political Science and one in Economics, and has extensive executive experience with ENI in strategies and developments and in petrochemicals.

In putting forth this optimistic thesis, Maugeri apparently sets aside a variety of technical realities, including the difference between natural gas liquids (NGLs) and conventional oil, reserves depletion versus capacity declines, and proven reserves as opposed to speculative resources.

Sada al-Huseini's bottom line:

Not surprisingly, many oil executives have stated publicly that incremental oil supplies are now in a precarious balance with capacity declines and will remain so for years to come.

Much as all the stakeholders in the energy industry would like to be optimistic, it isn’t an oil glut by 2020 that is keeping oil prices as high as they are. It is the reality that the oil sector has been pushed to the limit of its capabilities and that this difficult challenge will dominate energy markets for the rest of the decade.

Original Post

Link to ISA here. Again, excellent links.

When you get there, you may want to download the first link, PDF file.

Yesterday a report by Leonardo Maugeri created big buzz in the oil and gas community.  The Oil and Gas Journal actually used the ridiculous 17 million number in a headline.  The executive summary forgets about price.  The WSJ and economist Mark Perry tease the peak oil idea in their headlines.

For me, the Bakken was important for two reasons:

a) the production
b) the lessons learned and development of horizontal fracking

The second reason was the most important. I started the blog simply to help me understand what was going on in the Bakken. I was surprised by all the naysayers out there, suggesting the Bakken was not that important. I responded by saying that perhaps for the global economy, the Bakken was not a big deal, but for a small region in North Dakota it was huge. It appears I was wrong by giving in, saying that perhaps for the global economy the Bakken was not a big a big deal. As an industrial laboratory, it has had a significant impact on how the oil and gas industry developed.