CERA: Global Oil Capacity Will Continue to Grow

A well known Cambridge research firm challenges the notion that the world is running out of oil:

Global oil and liquids supply capacity could increase as much as 25% by 2015, with unconventional sources, including  gas-related liquids and extra-heavy oils accounting for a major proportion of  net capacity growth, according to Cambridge Energy Research Associates’ (CERA) July, 2006 benchmark field-by-field analysis of worldwide hydrocarbon liquids production capacity.

CERA’s examination of actual activity and production data covered existing fields and 360 new projects -- 250 new non-OPEC and 110 new OPEC development projects -- expected to start production by 2010. The analysis points to global productive capacity rising from 88.7 mbd in 2006 to 110 mbd in 2015

CERA projects potential capacity growth of 13.3 mbd in the five years from 2006 through 2010, followed by 8 mbd in capacity growth from 2010 through 2015, producing a total of up to 21.3 mbd in new capacity over the next ten years.  These are projects which are either approved and under development or very likely to be approved.

They identified five primary factors affecting strong capacity growth:

• High oil prices and strong competition for access to reserves and pressures on the service sector
• The search for new sources of conventional crude and non-traditional supply
• Increasing global gas productive capacity driving up the volumes of associated liquids
• The pace and scale of deepwater discoveries and development
• E&P company diversification

“During 2000, unconventional liquids represented 16% of global capacity, and by 2006 this had grown to 24% of the total,” they write.  “We expect this strong growth to continue to over one-third of total global capacity (38%) by 2015.

“These levels of growth depend on continuing high rates of investment,” write CERA Director of Oil Industry Activity Peter M. Jackson and CERA Director of Global Oil and Gas Resources Robert W. Esser in Expansion Set to Continue, Global Liquids Capacity to 2015.   “The reference case includes assessments of the 10-year consequences of current disruptions, and assumes that disruptions over the next 10 years will average more or less the same magnitude as the current level with a similar impact.

Contrary to what seems to be a common belief, the overall proportion of lighter liquids is expanding faster than heavy and extra-heavy crudes, according to the CERA report.  Although the market seems to be very focused on heavy and extra-heavy crudes, there is a strong trend toward an expanding stream of light crude, condensates and natural gas liquids (NGLs).

World Oil & Liquids Production Capacity to Grow Significantly through At Least 2015: CERA Update, Press release, August 8, 2008

Source : The Energy Blog - thefraserdomain.typepad.com

A well known Cambridge research firm challenges the notion that the world is running out of oil:

Global oil and liquids supply capacity could increase as much as 25% by 2015, with unconventional sources, including  gas-related liquids and extra-heavy oils accounting for a major proportion of  net capacity growth, according to Cambridge Energy Research Associates’ (CERA) July, 2006 benchmark field-by-field analysis of worldwide hydrocarbon liquids production capacity.

CERA’s examination of actual activity and production data covered existing fields and 360 new projects -- 250 new non-OPEC and 110 new OPEC development projects -- expected to start production by 2010. The analysis points to global productive capacity rising from 88.7 mbd in 2006 to 110 mbd in 2015

CERA projects potential capacity growth of 13.3 mbd in the five years from 2006 through 2010, followed by 8 mbd in capacity growth from 2010 through 2015, producing a total of up to 21.3 mbd in new capacity over the next ten years.  These are projects which are either approved and under development or very likely to be approved.

They identified five primary factors affecting strong capacity growth:

• High oil prices and strong competition for access to reserves and pressures on the service sector
• The search for new sources of conventional crude and non-traditional supply
• Increasing global gas productive capacity driving up the volumes of associated liquids
• The pace and scale of deepwater discoveries and development
• E&P company diversification

“During 2000, unconventional liquids represented 16% of global capacity, and by 2006 this had grown to 24% of the total,” they write.  “We expect this strong growth to continue to over one-third of total global capacity (38%) by 2015.

“These levels of growth depend on continuing high rates of investment,” write CERA Director of Oil Industry Activity Peter M. Jackson and CERA Director of Global Oil and Gas Resources Robert W. Esser in Expansion Set to Continue, Global Liquids Capacity to 2015.   “The reference case includes assessments of the 10-year consequences of current disruptions, and assumes that disruptions over the next 10 years will average more or less the same magnitude as the current level with a similar impact.

Contrary to what seems to be a common belief, the overall proportion of lighter liquids is expanding faster than heavy and extra-heavy crudes, according to the CERA report.  Although the market seems to be very focused on heavy and extra-heavy crudes, there is a strong trend toward an expanding stream of light crude, condensates and natural gas liquids (NGLs).

World Oil & Liquids Production Capacity to Grow Significantly through At Least 2015: CERA Update, Press release, August 8, 2008

Source : The Energy Blog - thefraserdomain.typepad.com