CERA sees rising oil supplies
Cambridge Energy Research Associates predicts that global oil production capacity will rise almost 20% to 101.5 MMb/d by 2010. CERA began its 25th annual meeting this week in Houston with a projection of increasing oil supplies. According to CERA, the increased production will be split between non-OPEC (+7.6 MMb/d) and OPEC (+8.9 MMb/d) producers. A large proportion of the new oil is expected to flow from deepwater projects off Brazil, Nigeria, Angola, and the Gulf of Mexico.
At the same time, there is a risk of prices softening due to the increasing supply, (as much as 16 MMb/d net over replacement, in the 2006-2007 time frame), according to Julian West, CERA senior director.
Meanwhile, the industry will need over $2 trillion worth of investment in oil infrastructure to extract new oil and move it to market, George Kirkland, executive vice president for ChevronTexaco, said in the Upstream Oil session.
In one current example, Larry McVay, COO for TNK-BP, noted that 3.6 MMb/d is kept in Russia because of limited export capacity and the need to enhance transportation systems.
The oil industry is entering a third cycle characterized by globalization and trade, coupled with declining oil production from OECD countries, David O'Reilly, chairman and CEO of ChevronTexaco, told the conference.
"The era of cheap energy is ending," he said, while demand is growing and shifting its center of gravity to India and China. "The era of easy access is also over," he said.
Oil resources are now found in remote locations and in challenging water depths with geological difficulties, O'Reilly said. The search for new oil sources occurs in an environment of geopolitical instability. He emphasized that energy must be included in any political discussion of national security and that the public must be informed of the industry's importance to the economic future.
02/16/05