118 comments on Peak oil: BP, Conoco CEOs say it's here - also IEA's Fatih Birol really freaks out
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ThatsItI'mOut
Roger Conners
You've put your finger on the problem. The strategy of the powers that be has shifted to maintain the status quo as long as possible, rather than outright denial. If the gurus and talking heads get honest the handwriting is on the wall for multinational oil companies, and the multinationals don't want to go out of business or change their paradigm so that their personal power and positions change for good.
Think about this for a bit: Everything changed with the first oil crisis in 1972
Before 1972
-major oil companies produce nearly
100% of the non-communist oil
-Only Majors have technology to drill and produce
Major oil companies can drill virtually all of the non communist world
-Russians and majors boycott each other, so markets are safe
-Majors control prices through swing capability of Texas
Now
-Multi-nationals produce less than 12% of the world production
-almost all prodction and new exploration technology controlled by geophysical and engineering firms with no interest in production (Schlumerger, Baker-Hughes Haliburton ect)
-Multinationals are restricted to less than 1/8th the potentially productive areas for E&P
-National oil companies control the products markets by petrochemical and refinery building decisions being made for political as well as profit motive
-prices controlled by demand and by investment decisions made by national companies
In other words, I'm saying the whole nature of the international oil business has changed and the former major oil companies don't control the oil business anymore. Yet our national governments in the OECD are buffaloed into believing that its true. Do you really think that the Neocons would have started the attempted conquest of Iraq if they'd thought about how the real power has shifted in the international oil business.
I might add that I started reading The Oil Drum 1 year and 27 weeks ago. I've studied the situation now for about a year and a half, but I believed like most people on the planet that the Multinationals were still people controlling the oil business. But, as I've read and thought about the problem my perception and conclusions have changed.
I think the multi-nationals are quickly accelerating on a downhill slide, and the whole integrated oil business is fixing to morph out of existance. There's a place for large independents in both the production and petrochemical/refining business and in the marketing business. So I'm fixing to sell my major company stock while the gettings good, I think CNBC noticing that the liquids production is down at ExxonMobil and ChevronTexaco is the start of the crack in the dam thats going to bring it all down.
So, ladies and gentlemen, please argue with me about this, or add your own supporting observations. My conclusion is just too extreme for me to be comfortable with, yet, there it is-the multinationals will be out of business within 10 years and the oil business so changed as to be unrecognisable.
Bob Ebersole
You appear to consider all the fancy exploration and production techniques to the province of Schlumberger et al. What about Chinese companies? They seem to be pretty capable and I wouldn't be certain they aren't or won't soon be on a pretty equal footing with the traditional big players.
Any thoughts on that? It almost seems like the usual American exceptionalism to think that you need these guys to drill sideways in 2007, but maybe so. ??
These are great charts Jerome - it would be good to see them updated to 2007. These are the guys who promise us there is plenty oil and that increased recovery factors will save the day.
Its worth noting that the production boost that bp has comes from TNK - where BP's earnings are pegged to a relatively low $ / bbl - somewhere in the 20s I believe - so they don't get much benefit from high price from this part of there production. But the fact this is a very favourable deal for Russia means that BP may get to keep it. Production growth since 04 has come from improved reservoir management and de-bottlenecking. This is one reason why Exxon are still a larger company than BP by cap.
Oilmanbob,
To use your exact words, "You've put your finger on the problem."
I think your exactly right about the decline of the oil majors, and I think you are right to take the history of the changing situation back to the early 1970's, at the American peak. So whether or not we are at Peak oil production in the world, we seem to surely be at what I have called "Peak 7 sisters productions", referencing the famous old book of the title "The 7 Sisters", a reference to the old oil majors. And no, I don't now own a single share of any of them, anymore than I own shares in the old "big 3" automakers. I think the future for both industries is now one of gradual but advancing decline, and finally, diversification out of their primary industries.
Does that mean that cars will not be built? Of course not. Does that mean that oil and gas will not be drilled? Of course not. What we are seeing is a long running process of decentralization in all industry, and it looks very much like a "great collapse". Instead, it may be a "great opportunity".
RC