Over At The Oil Drum: China Talk and Energy -- Implications for the Bakken

A nice update on global oil production and demand. Bullish for Bakken oil.

It really is interesting how often the Bakken is mentioned in this article (or at least the comments) with regard to global supply and demand.

From the linked article:

... this has not been a particularly good month for that future. In August, the Alaskan pipeline pumped an average of 399 kbd from the North Slope. As winter approaches, that number needs to be above 350 kbd to ensure that there are no solids built-up within the pipe, and each year the numbers fall a little closer to that limit.  

Just this past week, Shell announced that they will not complete any wells in the Chuchki Sea this year, but will only partially drill a number of wells, and leave completion until next year. This despite the fact that the Arctic ice acreage fell to the lowest level in 33 years, the time over which these measurements have been made. 

Further, over in Russia, the promised development of the Shtokman field, postponed several times in the past, has again been put back on the shelf. The arrival of increasing quantities of shale gas, and the loss of the market to China have reduced the need for these supplies in the short term. At the same time, the Russian government is again seeking support from Western companies for developments in East Siberia and offshore. They are apparently still courting BP.

The oil drum notes:

• "the amount of investment being made in repairing the interstate highway system, and expanding the number of lanes bringing cars into the cities show that there is continuing commitment to automobile and truck transport in the USA"
• "there appeared to be more trucks on the road than I remember seeing in the past 3 or 4 years..."

I thought this was very interesting:

• ... the US economy will grow (albeit perhaps slowly) but it will be helped by low cost of natural gas BUT there remains a serious lack of viable alternative fuels to replace oil for transportation...
• ... and with no alternative, the demand for oil in America and Europe will be sustained ..
• BUT, the demand for oil will continue to rise in the BRIC countries where automobile use continues to rise...

That comment about "expanding the number of lanes on interstate highways" was very noticeable in the Los Angeles metropolitan area, where again, the "405" was shut down for an extensive period to widen the road; the "405" is THE corridor on LA's west side.

As usual, the comments are as good as the article.

There will be continued volatility in the price of oil, but the general trend is going to be up. The only question is how fast will the rise be?