Vital Trivia

The major oil companies mainly operate outside of the Organisation of Petroleum Exporting Countries (OPEC) and therefore will see their own oil extraction rates peak and decline before the global peak. Non-OPEC oil has already peaked, this is becoming clear from looking at the extraction rates from the oil majors.

Chevron, which launched the initial takeover bid for Unocal in April, reported a 6% decline in second-quarter production and an 11% drop in 2004.
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Exxon Mobil: Profits from exploration and production jumped $1 billion to $4.9 billion, a reflection of strong crude and natural gas prices offsetting a 4.3 percent reduction in output, the company said.
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Shell’s oil and gas production, including oil sands, averaged 3.53 million barrels of oil equivalent a day in the second quarter, a 1 percent decline from 3.58 million barrels a day a year earlier.
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BP buck the above trend with an increase in their extraction though.

BP Plc, said oil and gas production rose 3.5 percent in the second quarter… Second-quarter production averaged 4.11 million barrels a day, compared with the 3.97 million barrels a day reported for the year- earlier period.
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This increase at BP doesn’t necessarily represent new drilling, new projects or new discoveries though. It more likely represents the fact that BP have bought or increased their shareholding in other smaller companies allowing BP to claim existing extraction this year that they couldn’t last year. For example:

Production for the quarter at 4,112 mboe/d was over 3.5% higher than the second quarter of 2004. This reflects production growth from major projects in the new profit centres and TNK-BP, partly offset by anticipated decline in existing profit centres.
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LadyRuby, a member of the Peakoil.com forum has looked at this in more detail. By looking back through the quarterly reports from the oil majors she has produced the table below which compairs a quarters production with the previous years quarter. In the case of Chevron, Q205 was 6% down on Q204 which itself was 4% down on Q203 which was 5% down on Q202.

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The declining production at Chevron might go some way to explaning the thinking behind their recent acquision of Unocal:

Unocal shareholders approved the deal Wednesday, giving Chevron access to oil and gas fields across Asia and North America. O’Reilly needs the new supplies: Chevron’s production has fallen 14 percent since he took the reins in 2000, according to the energy research firm John S. Herold Inc.

Chevron’s decision to swallow Unocal comes amid an increasingly tense debate over whether the world’s oil supplies have hit a peak and are about to start running out. If so, that will mean sky-high oil prices and a race for control of companies such as Unocal that own proven reserves.

Its “replacement rate” was just 18 percent - one of the worst showings by a large oil company in recent years. If that continues, Chevron could eventually pump itself out of existence. That is why many in the oil patch see Chevron’s acquisition of Unocal as a sign of weakness, not strength.
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The declining of the oil majors also backs up the IEA projection of slowing non-OPEC supply growth.

Non-OPEC nations are failing to deliver as much oil as expected this year despite record high crude prices, the International Energy Agency said on Thursday.

Independent producers’ failure to live up to expectations, will increase the burden on the Organization of the Petroleum Exporting Countries — already producing almost at full tilt.

Non-OPEC countries are set to pump only 675,000 barrels per day (bpd) of fresh oil this year, sharply down on the additional 1.1 million bpd in 2004, the energy watchdog said.

The Paris-based agency cut non-OPEC supply growth this year by 205,000 bpd, with unscheduled outages in the US Gulf, Mexico, Norway and the UK accounting for 150,000 bpd of the lower estimate.

The IEA raised its requirement on OPEC crude for the fourth quarter, the seasonal peak in demand, by 300,000 bpd to 29.2 million bpd.

Downward adjustments to non-OPEC 2006 supply also push up the call for the year to 28.3 million bpd, a 200,000 bpd upward revision.
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I find it surprising that OPEC is always described as already producing almost at full tilt. It’s always assumed OPEC can produce just a little bit more. There has to be a limit somewhere, one day OPEC won’t be able to produce just a little be more.

This post was written by Chris Vernon

This entry was posted on Tuesday, August 2nd, 2005 at 7:09 pm and is filed under Hydrocarbon Depletion. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.