Daniel Yergin, CERA, and the new O-15

Ashok Dutta
CanWest News Service
Friday, March 23, 200

CALGARY -- Canada has been ranked fifth in a new global oil grouping unveiled Thursday by an independent energy analyst in testimony in Washington to the U.S. House Committee on Foreign Affairs.

Called Oil-15, or O-15, the new order put together by Daniel Yergin, chairman of Cambridge Energy Research Associates, includes all OPEC states — barring Indonesia — and includes five others that have the highest potential to increase supplies by 2015. Besides Canada, they are Azerbaijan, Kazakhstan, Brazil and Russia. The group is projected to produce 72.7 million barrels per day, or 69 per cent of total global oil output.

“It is a straight forward grouping of producers that are planning major investments and do not necessarily have a political agenda,” Guy Caruso, administrator of Washington-based watchdog Energy Information Administration, said in an interview.

Saudi Arabia was ranked No. 1. Its output was forecast by Cambridge to grow to 14.3 million barrels per day from 2005 output of 12.7 million bpd. Russia was in the No. 2 spot, and was forecasted to see production grow to 11.5 million bpd from 9.6 million. Iran was No. 3, with output forecast to grow to 4.3 million bpd from 5.7 million bpd, and Iraq No. 4, with output forecast to grow to 5.5 million from 2.6 million.

Next came Canada, with production forecast to grow to 5.3 million bpd by 2015 from 3.5 million bpd in 2005.

“We will see a concentration of growth in liquid production capacity within the O-15,” said Yergin, who was asked to make the presentation on energy security.

“After two decades of working off excess capacity, global energy supply is now dominated by the growth challenge.”

Canada, with over $125 billion investments in the Alberta’s oilsands sector, is set to play a central role in meeting U.S. energy demand. Last year, the largest share of American’s energy imports came from Canada, Yergin said.

Greg Stringham, vice-president at the Canadian Association of Petroleum Producers, said the testimony is a recognition of Canada’s importance both now and in the future for delivering energy supplies.

“Canada is the most secure source and will continue to maintain its lead position,” he said.In 2006, Canada exporting 2.29 million bpd of crude oil to the U.S., accounting for 17 per cent of total imports. This was followed closely by Mexico at 13 per cent. Until a few years ago, Saudi Arabia was the principal supplier of Arabian Light and Super Light grades of crude to the U.S. The call on Canadian crude is likely to increase, if a statement issued Wednesday by Mexico’s Pemex on a 5.8 per cent dip in its proved oil and gas reserves is any indication.

However, from an energy security perspective, a question remains to what extent.

“From an energy security perspective, there will be a limit. But, it is still too early days to talk about it,” Caruso said.

Stringham felt that if the O-15 group were drawn up on a political-stability basis, Canada would have been on the top.

“The U.S. has made it amply clear they do not want us to sell our oil in the global markets and will take as much as we can offer. At the same time there will not be any pressure on Canadian producers to increase
supplies,” he said.

http://www.canada.com/nationalpost/financialpost/story.html?id=9d39ecf7-6796-4c16-8384-142807913ab8&k=32047

Canada ranked fifth in ability to increase oil production

What will OPEC do?

From Rigzone article :

OPEC members "have already reached their goal of wiping out a large part of excess inventories and stabilizing prices," said Vera de Ladoucette, director of Middle East Research at Cambridge Energy Research Associates in Paris.

A senior OPEC official said ministers will review the latest demand, supply and inventory data -- including a monthly oil market report due to be published today by the Paris-based International Energy Agency, the industrialized world's energy watchdog. "It looks like there will be no change" in output policy at this week's meeting, this official said. The official cautioned against ruling out a surprise decision, if fresh data suggest a need to cut.

Analysts reckon OPEC's ministers are likely to wait until oil-inventory data for the first few months of this year are published in coming months to confirm what the industry suspects -- that inventories are close to becoming so lean that the market is prone to a renewed price surge. OPEC members have relished the four-year boom in crude revenue, which has put hundreds of billions of extra dollars in their coffers, but they are anxious to avoid a recession-inducing price climb

Poor Forecasting Record of CERA and IEA

Smoke and Mirrors
by Aage Figenshou

EnergyBulletin.net carries this article
http://energybulletin.net/26474.html

It is difficult to make predictions and one tends to shy away from criticizing other people’s incorrect forecasts. Next time it might be you making an error. However some people and organizations have such a high level of credibility and profile that they are trusted by politicians and captains of industry to deliver solid information. We know these institutions influence decisions that will impact global development. If these institutions year after year deliver bad data, and if they at the same time refuse to accept that something is wrong with their forecasting models, it is actually an important service to point this out. Important decision makers in politics and industry should know that what these institutions say about the future can not be relied upon as a solid basis for policymaking.

The article includes a highly detailed look at the horrible inaccuracy of recent forecasts by both the IEA and CERA. Figenshou concludes:

CERA has made it their task in life to debunk the peak oil myth. They claim that the resource base is plentiful and technology will solve all problems. Somehow many people listen. Would they listen as much if they knew the huge errors CERA has been making? How their forecasts, when analyzed and compared with other sources, look completely unrealistic? And that even based on their own forecast the spare capacity will actually only grow with 1 to 3 million b/d? If the global oil industry cannot do better than that after a decade of unprecedented oil prices, far above anybody’s marginal cost, it means something is terribly wrong with our ability to grow production. In this situation one does not need King Hubbard to understand that “Houston, we have a problem.”