Reality Sets In? Never Mind

I can't remember if I posted an earlier story about Iraq's ambitious goals to significantly increase oil production. I took the article at face value, didn't question it, but certainly looked askance.

Now today, there is a report that Iraq has said, "never mind."

Iraq officially stepped back on Wednesday from its ambitious plans to more than triple its oil production by 2017, but it remains more optimistic than the world's leading global energy monitor about how fast and how high it can boost output. Baghdad's latest targets show that Iraq, which is now pumping some 3.4 million barrels a day, is eager to be a major player on the world energy map despite decades of wars and sanctions. It recently nudged out Iran as OPEC's second-largest producer, and further production gains would solidify its place behind the bloc's top producer, Saudi Arabia. 

Iraq did not provide any reasons for stepping back. But others did provide some reasons:

The IEA said Iraq needed to sort out internal issues in order for its predictions to come true. Among the most troublesome is the lack of oil-related infrastructure like pipeline networks, storages and export terminals. Another is the dispute between Iraq's central government and the self-ruled northern Kurdish region over rights to develop natural resources.

The IEA report also noted that boosting Iraq's oil production is crucial for international markets, as Iraq is expected to account for nearly half of the expected growth in global oil output in the current decade. A more pessimistic IEA forecast in the same report sees Iraqi oil output rising to just 4 million barrels a day in 2020 and to 5.3 million barrels in 2035. In its high case, IEA says that oil production could reach 9.2 million barrels in 2020.

The most troublesome issue: "Among the most troublesome is the lack of oil-related infrastructure like pipeline networks, storages and export terminals." That's what the IEA said. One has to ask "why." With all that oil, all that money, why is the lack of infrastructure an issue?

This story further serves to emphasize the challenges Bakken operators have faced and met head-on. I keep thinking of the huge investment in rail / crude-by-rail in just the past eighteen months in western North Dakota, and how that has significantly altered oil shipment patterns in the US.

Never Mind, Gilda Radner