Published Jul 20 2009 by Energy Bulletin
Archived Jul 20 2009

Peak oil, prices, and supplies - July 20

by Staff

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API: US petroleum product demand plunges in first half

Nick Snow, Oil and Gas Journal

US petroleum product demand plunged to its lowest first-half level in more than a decade as the sluggish economy continued to squeeze oil consumption, reported the American Petroleum Institute.

Total product deliveries (how API measures demand) averaged 18.75 million b/d during this year’s first 6 months, 5.8% below the comparable 2008 period’s 19.9 million b/d and nearly 10% below the peak of 20.75 million b/d in first half 2005, API said as it released its latest monthly, quarterly, and 6-month statistics.

“It clearly shows declines in demand, greater for some products than for the average. It reflects an economy that clearly is struggling right now. Demand is down, even though prices are significantly lower than they were a year ago,” API Chief Economist John C. Felmy told reporters during a teleconference.

...Gasoline demand fell at a lower rate, but was down nevertheless to its lowest first-half level since 2003, API officials said. “Consumers’ incomes have declined, but not as drastically as the general economy,” observed API Statistics Manager Ronald Planting. Gasoline deliveries in 2008’s first half averaged 8.95 million b/d, 0.9% less than 9.04 million b/d in 2009’s first 6 months, API reported.

API also showed that first-half US jet fuel demand plunged 12.8% year-to-year to 1.38 million b/d in 2009 from 1.59 million b/d in 2008, while residual fuel oil deliveries dropped 9.1% to an average 587,000 b/d from 646,000 b/d during the same period. Planting said that the lower resid demand reflected reduced industrial activity, “although one has to be careful here because of resid’s relationship to natural gas prices, which are depressed.”

US crude oil and condensate production, meanwhile, grew 3.4% to an average 5.29 million b/d in 2009’s first half from 5.12 million b/d during the comparable period a year earlier, according to API. “New fields came on line offshore in the Gulf of Mexico and onshore in the Bakken shale of North Dakota,” Felmy said. Production grew despite a more than 12% drop in Alaska during June related to maintenance of the Trans-Alaska Pipeline System, API noted.

It said domestic crude inventories as of June 30 were 348.7 million bbl, 17.9% more than the 295.8 million bbl a year earlier. “We’re definitely above the 5-year average of about 322 million bbl,” Felmy said.

Product inventories also increased year-to-year, with gasoline 0.6% higher at 212.1 million bbl, jet fuel up 8.7% to 43.3 million bbl, ULSD 27.2% higher at 94 million bbl, and low-sulfur diesel up 22% to 114.3 million bbl, the statistics showed.
(16 July 2009)

A Preliminary Investigation of Energy Return on Energy Investment for Global Oil and Gas Production

Nathan Gagnon, Charles A. Hall, and Lysle Brinker, Energies, Volume 2, Issue 3

Abstract: Economies are fueled by energy produced in excess of the amount required to drive the energy production process. Therefore any successful society’s energy resources must be both abundant and exploitable with a high ratio of energy return on energy invested (EROI). Unfortunately most of the data kept on costs of oil and gas operations are in monetary, not energy, terms. Fortunately we can convert monetary values into approximate energy values by deriving energy intensities for monetary transactions from those few nations that keep both sets of data. We provide a preliminary assessment of EROI for the world’s most important fuels, oil and gas, based on time series of global production and estimates of energy inputs derived from monetary expenditures for all publicly traded oil and gas companies and estimates of energy intensities of those expenditures. We estimate that EROI at the wellhead was roughly 26:1 in 1992, increased to 35:1 in 1999, and then decreased to 18:1 in 2006. These trends imply that global supplies of petroleum available to do economic work are considerably less than estimates of gross reserves and that EROI is declining over time and with increased annual drilling levels. Our global estimates of EROI have a pattern similar to, but somewhat higher than, the United States, which has better data on energy costs but a more depleted resource base.
(13 July 2009)

Exxon, the Chase for Reserves, and the Oil Sands

Steve LeVine, The Oil and the Glory

Talking to corporate analysts over the several years that I've been back in the U.S. and covering oil, a recurring question I hear is how Exxon manages year after year without exception -- unlike its Big Oil rivals -- to replenish its cache of proven oil and natural gas reserves. That's what the company has reported in its news releases and annual reports for the last nine years -- an unbroken trajectory of replacing more than 100% of the oil and natural gas that it pumps out of the ground.

The answer is that it hasn't done so, not at least according to the rules of the Securities and Exchange Commission, which governs such matters. When you examine Exxon's annual filings for 1999-2008, the company has had a quite-normal -- for oil companies, that is -- four years of exceeding 100% replacement, and five years not. For instance, for 2008 the company issued a statement saying that it possessed 22.8 billion barrels of proven reserves; yet its 10-K filing with the SEC reported just 21.1 billion barrels in proven reserves (to get there, see page 7 of the 10-K, and tally up the developed and undeveloped reserves in the consolidated and equity categories).

So I gave Exxon a call. How do you get from 21.1 billion barrels to 22.8 billion barrels? I asked.

Add in the oil sands, was the reply.
(18 July 2009)