Iraq Reconstruction

Great Debates
141

>> The Polish Foreign Minister, Wlodzimierz Cimoszewicz, said his country had never disguised the fact that it sought direct access to the oilfields

Spain also supported the coalition with expectations of getting a share of the spoils but a few weeks ago the USA let them bid only on a contract for oil which was of a type Spanish refineries could not process and not on other contracts for types of oil more suited to Spanish refineries. Spain gave it a pass. Suckers indeed to trust the American “friend”.

142

Well, it would seem the Turks were right to play the game on Cash & Carry terms.

143

>> Opposition to Polish intervention is growing steadily in Poland as they see how things are developing in Iraq

I have spent quite a while looking for it. I have gone into the history of my browser and revisited every page I read today in the BBC and CNN. It had to be there but I just cannot find it. Now I am coming to the conclusion that I might have heard it on the TV news as I was reading those web sites and my mind played the trick of making me think I had read it online. Now I am not sure of anything. I do remember distinctly it was today and the news was that an opinion poll showed slightly more than half of the Polish people (something like 53%) opposed sending Polish troops to Iraq. If I can find it online I will post a link.

144

Actually, new exploration continues - but discoveries peaked years ago and the world uses more oil than we find every year.

Check out these links for facts involving world oil depletion :

http://www.hubbertpeak.com/

As for Russia - they are passed their peak :

http://www.asponews.org/plots.php?plot=Russia

The peak for Russia was just before the collapse of the soviet union. Now that collapse lead to a much lower production level than they were capable of - and they have increased production levels lately - but that increase will never get above their peak (this includes all the FSU - former soviet union - states) and will soon reach the depletion curve again - and from then on will fall.
Note their discovery curve peaked years ago.

Here is a link to Matthew R Simmons page with some interesting talks/speeches/papers listed under his name (pulldown menu Simmons/Papers and Speeches) :

http://www.simmonsco-intl.com/

Simmons was part of VP Cheney’s energy team - he is an advisor to the President and gives speeches to Congress and other interational bodies.

He runs a multi-billion dollar investment consulting company.

From his latest speech given June 5th 2003 :

Non OPEC supply (excluding FSU) has flattened out.

FSU supply was a mystery suprise
Lack of quality data makes some of this surge “suspect”
Lack of exploration proves that further gains are “suspect”
Logistical bottlenecks are limit to export growth.

from another slide of that same talk :

FSU growth is too suspect
Remaining non-OPEC supply has plateaued
Supply models should assume non-OPEC supply has probably peaked

He then goes on to talk about how most of the Middle East supply comes from a small “Golden Triangle” of about the size of Arizona with Saudi Arabia by far the biggest producer with the most reserves.

From a similar presentation he made in May of this year - Simmons says :

Most serious scientists worry that the world will peak in oil supplies.
But most assume the day is still years away
Most assume nonconventional oil will carry us through several additional decades
They were right to ring the alarm bell
But they might also be too optomistic

The next slide in that presentation:

Light oil is easy to produce and convert into useable oil
Heavy oil is hard to produce, energy intensive and hard to grow supply quickly

So, from all factual sources that I can find, the percentage of useable cheap oil available for quick production that is controlled by OPEC grows every year, and soon (like in 5 years or less) that percentage will be over 50% - and soon after that over 50 % will be Saudi Arabia’s alone.

These facts are well known by our policy makers in the US, and the importance of oil supply to our economy is also known. The US will have troops in the Middle East indefinitely to secure this vital resource as a national security priority.

Facts.

Regards

Adamant

145

I’ve always preferred Operation Iraqi Liberation.

146

Here’s a cite for you re: Polish public opinion, from today’s RFE/RL Newsline at:

http://www.rferl.org/newsline/2003/07/3-CEE/cee-290703.asp

"MOST POLES OPPOSE SENDING TROOPS TO IRAQ, POLL SHOWS

Roughly 55 percent of respondents in a 4-7 July CBOS poll said they oppose Polish troop participation in Iraq, while 36 percent said they favor it, PAP reported on 28 July. Support is strongest among Civic Platform (66 percent) voters, followed by those of the governing Democratic Left Alliance (60 percent) and the right-wing Law and Justice (57 percent) party. More than two-thirds of respondents said they believe Polish participation might prompt terrorist attacks on Polish soil, up 15 percentage points from June, while 23 percent hold the opposite view."

147

Do you have a cite for this? I’d love to share it, but don’t feel comfortable doing so until I have a cite to rpovide with it.

148

It took me a while and I could only find a cite in Spanish and it turns out I was only half right. There was an auction on July 9 to which two Spanish companies were invited to bid but they declined because the oil type was “basra light” which was not suitable for their refineries. That is the news I had heard and which is supported in that page. What I did not know was that there had been an earlier auction on June 12 for a total of 9.5 million barrels of “kirkuk” type oil and the two Spanish companies were awarded a million barrels each. Whether that is a significant amount or whether that was a good deal for Spain, I haven’t the faintest idea. The news I had read did not mention this and seemed to imply Spain had been screwed by the US. This page though does not put it so badly.

149

Sailor:

Unless I have become illiterate, I do believe el Mundo is mistakenly calling BP an American firm.

In re the Kirkuk sale, as it happens there is no more northern exports at this time, so if the Spanish producers thought they had an in, I can see some disappointment.

Now, on the side issue of oil reserves:
Facts?

What I see is a series of axe grinding websites dedicated to the concept that oil production has peaked, an assertion that’s been around for a good 30 years.

Let me refer to Lynch, Mihcael. “Farce this Time: Renewed Pessimism About Oil Supply” Geopolitics of Energy Dec. 98-Jan. 99, 9-12 (Lynch is president of the US Assoc. of Energy Economics and Ex. Dir. Of Asian Energy & Security CIS, MIT) and Odell, Peter, R. “Oil & Gas Reserves: Retrospect and Prospect.” [ibid], 13-20 (Odell is at the London School of Economics, in political economy of energy).

First in regards to the assertion that oil reserve finds have peaked, let me cite to Prof. Odell’s analysis, a bit old now but to the point. Depending on Oil & Gas Journal, World Oil and the BP Statistical Review, we have the following data, global:

In order as I am not sure how to chart in this damned VB:
Decade, Proven Reserve start, production amount, gross additions to reserves, net additions. (billions of barrels)
[ul]
1970-1979 483 208 333 125
1980-1989 608 216 591 375
1990-1999 983 246 314 68
[/ul]
Net growth in reserves since 1970, 568 bb

Now should we need to check this data, I advise going to http://www.bp.com/centres/energy/chartingtool/ for their very helpful charting tool. Slightly different data sets, and ones that bring us forward to 2002, but the story is somewhat similar, we do seem to have a flattening of the reserve to production ratio in the past 15 years, which might support peaking, but on the other hand the story of Russian reserves peaking out is not matched in the data. We can also consult http://www.eia.doe.gov/emeu/ipsr/contents.html for its helpful current data, however I haven’t the patience at present to drill through their site. Not as much fun as the BP statistical tool.

Now then, the main point in this discussion, which is simply irrelevant to the main point of the thread, is a difference of opinion between geologists and economists. As Lynch indicates in his article (which was preceded by an article by our own Campbell, in fact I believe the very article you link to in a different form), Campbell has been arguing oil production has peaked for quite a while, stating in an article Campbell “Oil Price Leap in the early nineties” Noroil Dec. 1989 that oil production had peaked and prices would hit $60/bl range (in current dollars as of article). Lynch argued that prices would be in the $18/bl range by 2000 due to ex-OPEC discoveries (“Oil Prices to 2000” EIU, May 1989)…

I don’t particularly see a need for getting into this argument, insofar as it is a hijack, however I provide you with these references to suggest you shouldn’t depend on arguments with a history of being wrong.

What is probably correct is given present pricing levels, present patterns of exploration and present investment trends, Middle Eastern share will probably increase over the decade for economic reasons – cheapest to extract. Assertions regarding flat lining of new discoveries need to be taken in light of a 20 year history of such.