Tuesday, February 8, 2011

IEA Oil Market Report 1992-2011

A trio of text files this time, 10/12/14 mb. Their archives actually start in 1990 but OCR wasn't employed, so the pages aren't readable text. These are organized by year but not by month - getting them grouped together by year with Acrobat was enough of a chore. IEA makes downloading these much easier than the EIA, however, so that balanced things out a bit. This time the compiled pdf was "only" 227 mb, available for the curious. It's 12,198 pages long...

Pt 1
Pt 2
Pt 3

Saturday, February 5, 2011

Short-Term Energy Outlook 1983-1996

Here's a download of a text file with all of the STEOs for this era; handy for researching. It's only 7 mb, contrast the 457 mb pdf I made of the originals. The text file is largely full of junk characters copied from tables etc but you can search it easy enough. I'll do the same with the IEA's OMR when the chance arises.

Monday, January 31, 2011

1995 comment on OPEC reserves from the EIA

I've been trawling through old EIA documents looking for any references to the 80s OPEC revisions; this morning I downloaded all of the archived STEOs and come up short, although there is discussion of the bickering in OPEC. Another publication of theirs was the International Energy Outlook, which you'd think would cover this issue; the STEO, after all, does have Short Term in its very title. But they only go back to 1995 in the available Past IEO Editions; but as it happens, our topic is brought up:

OPEC Reserves and Production
Capacity Expansion

The decade of the 1960s saw considerable oil explora-
tion activity, which resulted in the addition of almost
310 billion barrels of crude oil reserves worldwide. (The
reserves referred to in this section are proven reserves,
that is, crude oil that is recoverable using present
technology at current market prices.) The OPEC nations
accounted for more than 60 percent of the additions, of
which almost 82 percent were concentrated in the
Persian Gulf. During the high oil price environment of
the 1970s and early 1980s, most of the oil investment
was in the downstream sector, with negligible additions
to reserves. However, in the latter part of the 1980s,
more than 350 billion barrels of crude oil reserves, an
unprecedented amount, were added worldwide. Unlike
the 1960s, however, when substantial additions were
realized by both OPEC and non-OPEC nations, the
additions during the late 1980s were predominantly by
the OPEC nations (almost 94 percent of the total). Over
the 30-year period from 1960 through 1990, more than
78 percent of the additions to worldwide crude oil
reserves were by the member nations of OPEC, and
more than 85 percent of the OPEC additions were in
the Persian Gulf region.

Considering the substantive additions to OPEC crude
oil reserves, it might be natural to assume that there
were also dramatic increases in OPEC crude oil produc-
tion. Such has not been the case. Although OPEC crude
oil production has been increasing steadily in recent years, it still falls below its 1980 level even today. On
the other hand, crude oil production from non-OPEC
suppliers has seen a two-decade increase of more than
two-thirds. The growth of non-OPEC supply between
1973 and 1980 was largely attributable to three areas:
the Alaska North Slope, Mexico, and the North Sea.
Since 1980, the trend in non-OPEC supply has been
increasingly toward geographic dispersion, with
particular supply potential exhibited in the developing
countries. This two-decade growth in non-OPEC supply
no doubt played a significant role in the erosion of
OPEC’s market share between 1973 and the mid-1980s.
In addition to the unanticipated resilience of non-OPEC
supply, OPEC’s diminished market share during this
period was also the result of the price-induced drop in
world oil consumption, as well as the conscious deci-
sion by Persian Gulf producers to reduce output in an
effort to maintain higher prices.

That's about as far as it goes, unfortunately; the validity of the massive jump in reserves isn't questioned at all, but used as a base for production projections with further reserve growth of varying degrees. It is noteworthy to see it mentioned at all, though.

They include their usual trio of forecasts, too:

Projections

Reference/High Price/Low Price
1995 29.5 29.3 30.3
2000 34.8 33.4 38.9
2005 41.7 39.7 48.3
2010 46.2 43.5 55

July 2008 was 36.4 mb/d. Jan-Aug 2010 average C+C was 29.1 mb/d, all liquids 29.9 mb/d. Missed the boat a bit there! 15 years is an eternity in forecasting, though.

Sunday, January 30, 2011

OPEC Quotas and Reserves Revisions

OPEC production, quota, and reserves data; quite the trove. Now, the official line has always been that the 80s reserves wars were all about beefing up individual nations' quotas; is there any evidence of causality there? I'll try and pin down when the countries actually announced their reserves upgrades, and see if there was an attendant jump in quota - kinda doubt it, but it will be fun/instructive. BTW the official line isn't quite correct; apparently OPEC were ruminating over a quota system based wholly on reserves, but that was as far as it went, although that seemed more than far enough, given the results - and now we're in Quota Wars II: The Numbers are Complete Rubbish.

We start with the handy table for OPEC countries in the Wiki article on reserves, with highlighted revisions in red.

First at bat was Iraq in 1982, jumping from 32 to 59 bbo; and I can find nary a peep about this event in a Google News Archive Search. So much for that!

Next was Kuwait in 1984; they claimed to discover massive finds that would boost reserves to 90-100 bbo, as reported on September 1, 1984, in the The Calgary Herald. BTW, I notice that events aren't always published in the papers precisely when they occurred, but it's close enough for our purposes.

1985 saw Venezuela go from 28 to 54.5 bbo, where I'm not sure, the pages of the O&GJ it seems, since on Feb 1 1986 the Reading Eagle was still reporting them at 25.8 bbo - lower than what the Wiki lists. They also have Iraq at 44.5 bbo, Iran at 48.6 bbo, Abu Dhabi at 30.5 bbo, and Libya at 21.1 bbo. Only this last is anywhere close to the BP Stat Review figures used in the Wiki...hmmm.

On April 26, 1987, the Bend Oregon paper The Bulletin reported a jump to 55 bbo - not 54.5 - with ample commentary for once. They picked up and expanded on an LA Times article.

Though Venezuela has long been known to contain enormous amounts of unique, "extra-heavy" oil, the geologists say that successful experimental work and the the updated seismic information now indicate that far more of the tarlike substance can be produced and transported easily and economically than was earlier believed. The most conservative numbers advanced by the Venezuelans - the amount of oil recoverable at current oil prices, with today's technology, from wells already in drilled — show an increase to 55 billion barrels from the year-earlier estimate of 29 billion barrels.

That 26 billion-barrel increase in proven reserves is like introducing three oil fields the size of this country's largest, Prudhoe Bay in Alaska, to a place half the distance to most U.S. oil markets.

In addition to those 55 billion barrels, the Venezuelans now say that another 267 billion barrels of oil — most of it extra-heavy Orinoco oil — fall within the reach of today's technology and economic requirements.

The U.S. Geological Survey, while using slightly different numbers and categories of oil, says it has no quarrel with the Venezuelan statistics.

They also quote Charlie Masters of the USGS, who from all accounts was a sound researcher; the implication seemed to be that he considered the upgrade bona fide.

For 1986 it's Iran, 59 to 92.9 bbo, and also the UAE from 33 to 97.2 bbo. Ah, now we're cooking with condensate! As mentioned above these two countries were still being reported in Feb with the old numbers, and this was still the case on June 27th, as reported in the Leader-Post, picking up an AP story. By now Kuwait is listed at 90 bbo.

The NYT seemed quite taken by surprise to report on January 17, 1989 that Six in OPEC Have 70% of Oil.

NICOSIA, Cyprus, Jan. 16 — Six members of the Organization of Petroleum Exporting Countries now have 70.5 percent of the world's proven oil reserves, the Middle East Economic Survey reported today.

The respected oil industry newsletter said that according to revised estimates, reserves for the ''big six'' in the last five years had risen from 308 billion barrels to 699 billion.

It listed Saudi Arabia's reserves at 255 billion barrels; Iraq, 100 billion; the United Arab Emirates, 98 billion; Kuwait, 95 billion; Iran, 93 billion, and Venezuela, 58 billion.

The five Persian Gulf states alone account for nearly two-thirds of the world's proven reserves.

Saudi Arabia last week upgraded its estimate of its reserves by 85 billion barrels after a six-year study. Describing the Saudi revision as ''a staggering increase,'' the Nicosia-based survey noted, ''The reassessment of reserves in Saudi Arabia represents the latest stage of a truly massive upward revision of proven oil reserves by the major OPEC countries in recent years.''

Revised over the last five years, or just now? At least we can pin down when KSA made the leap. Even that doesn't correspond with BP data, which lists this event for 1988.

Iraq went to 100 bbo in '87, again, this didn't hit the news until later; from May 26, 1988, again in the NYT: Iraq Seeking To Expand Oil Output.

For many years the country had shunned Western contacts.

''There was a one-time premium on secrecy,'' said Dr. Laurie A. Mylroie, a Harvard professor who is an expert on Iraq. ''Now the message is to let the world know that Iraq has the second-largest reserves in the world.''

Mr. Chalabi placed Iraq's proven reserves at 100 billion barrrels, compared with an estimated 170 billion barrels for Saudi Arabia.

This is then Iraqi Oil Minister Issam Abdul-Rahim al-Chalabi. He is still active in Iraqi oil debate, even being listed as giving a presentation at ASPO 2008. In 1990 Saddam replaced him with a palace bodyguard/son-in-law, as Chalabi imposed fuel rationing after the UN imposed sanctions for the Iraqi invasion of Kuwait. The rationing lasted all of 5 days.

In June '88 we have Chalabi stating that Iraq Demands Oil Quota Rise.

''Iraq will never accept a quota below that of Iran within the framework of any new accord reached by the organization,'' Mr. Chalabi said in advance of a meeting of the Organization of Petroleum Exporting Countries in Vienna.

Going back to KSA, on Jan 10, 1989 this was reported in the Anchorage Daily News, picked up from the LA Times; this is such an extraordinary article I'm going to repeat it in full:


Saudi Arabia, already blessed with the world's largest reserves of crude oil, declared Monday that a new computer assessment shows it has about 50 percent more crude oil and 25 percent more natural gas than previously believed.

If correct, the new Saudi numbers would boost by about 10 percent the world's proven reserves of crude oil to the 900 billion barrel range. This would tend to prolong the oil era and underscore the reliance of industrialized nations on the Middle East.

Some Saudi watchers said the dramatic upward revision is legitimate and over due, while others said it was at least partly inspired by the politics of the Organization of Petroleum Exporting Countries. Both views might be correct, analysts said.

"This was a political announcement. On the other hand, they may well have the oil," said William Dietzman, a retired Energy Department geologist who has studied the Saudi oil fields for the U.S. government.

Several other OPEC nations, including Iran, Iraq. Kuwait and Venezuela, have also increased their own oil reserve estimates sharply in the past year. The higher a country's reserves, the greater its influence and production quota in OPEC. Within the oil community, Iran's claims are widely discounted while the others are accepted to varying degrees.

The Saudis, through their Arabian American Oil Co., or Aramco, said that six years of studies at their new oil exploration and engineering computer center showed that they have 252.4 billion barrels of proven crude oil under ground and 177.3 trillion cubic feet of gas.

For many years, the official Saudi government number was 110 billion barrels. But since at least 1975, the scientific community has

carried Saudi Arabia on its books as having 150 to 170 billion barrels, the estimate varying annually with oil prices, discoveries and production levels.

The U.S. Geological Survey in Reston, Va., said its estimate a year ago was 167 billion barrels, similar to the Saudis' own numbers at that time. The USGS put the natural-gas estimate at 130 trillion cubic feet, while Aramco had previously estimated 141 trillion.

Dietzman and others said the timing of the announcement dramatically boosting the Saudis' official oil reserve estimate strongly suggests that it was inspired by the need to hold their ground within OPEC for the purposes of determining quotas.

"They're saying, if Iraq says it has 100 billion barrels, then we say we have 250 billion," said Dietzman.

Even without the political element, any assessment of how much oil is underground and how much of it can be recovered with known technology and current prices is inexact. But in Saudi Arabia, the reserves are considered so large that it is hard to challenge any estimate.

Consultant Joseph Story of McLean, Va., a former Aramco executive, said there is so much oil in Saudi Arabia that until recently, not much effort has been expended at determining just how much there is.

But skryocketing oil prices in the late 1970s and early 1980s prompted Saudi Arabia to spend some of the financial windfall on establishing a state-of-the-art oil exploration and engineering center in Dhahran in 1982 that is the envy of oil geologists.

Aramco, calling the latest estimates "very conservative," said the work done at the Dhahran center is the basis for the big increase in the official reserve estimates.

"There was no need to look for oil. But now they've put a lot of money into upgrading their seismic capabilities and into exploration activity," said Story, president of Gulf Consulting Services Inc. "The point of this is, the numbers are probably true. But in announcing it, they might also be trying to alleviate any worries that there are going to be shortages any time soon."

Here in a nutshell we have the whole peakist argument about the significance of the Quota Wars, along with some of the standard rebuttals.

So can we build a timeline? Not judging from what's been dug up, as that NYT article in 1989 seems to indicate, with its Oh My God sense of reserves having just suddenly gone through the roof at some point in the last five years. These three dates might get us somewhere, though:

1982 ??? Iraq
1984 Sep Kuwait
1987 Apr Venezuela

Iraq's quota held at 1.2 mb/d all through 1982-Jan 1987, when it was bumped up to 1466 kb/d, with attendant decrease from KSA. In Nov 84 Kuwait's share actually decreased, from 1050 kb/d to 900 kb/d. Shot themselves in the foot, eh? Venezuela got a bump up in July '87 from 1495 kb/d to 1571 kb/d. Why, that's almost as much as the 1574 kb/d they were at in Nov '86!

Mostly we see chaotic wobbling about, but get these bump ups from Dec '88 to Jan '89:

Iran Iraq Kuwait Libya Nigeria Qatar KSA UAE Venezuela
2369 0 996 996 1301 299 4343 948 1571
2640 2640 1037 1037 1355 312 4524 988 1636

That must have been some Meeting. Iran had been left out of the previous quota for some reason, subtracting their 1540 kb/d from the last quota set on Jul 1987 we get an advance of 1884 kb/d for the group as a whole.

Did anyone come out ahead here? Iraq did advance 4.09% - while KSA declined -4.60%. Tit for tat. Venezuela did get bumped up 1.02% at the Jan '88 meeting, in the wake of its revision. But Kuwait declined -0.38% in Nov '84, in the wake of its announcements. Their average shift over Nov '84 to Jan '88, when I'd think their bump up in reserves would have its primary effect, is 0.09% up - fairly small potatoes in the grand scheme of things.

All in all I can't see much clear correlation between an increase in reserves and more quota.

Investigating all of this revealed the most intriguing tidbit of all, however - from Oct 2000 to July 2005 percentage of total for all member nations remained totally constant, barring a 0.1% drop in Feb 2001 for Venezuela. This, despite the total quota having shifted from 26.7 down to 21.0 up to 28.0 mb/d! It's as if OPEC has just given up on all that horse trading and jockeying for position; the general meetings, with the eyes of the world upon them, now consist of the Chairman saying "So, what do you think, increase 750 kb/d?" "Sure, sounds great!" "Right on!" "Ah, splendid. Now, who's up for some baccarac?"

I did a fair bit of digging around for impartial papers analyzing the OPEC quota system, and/or its effectiveness as a cartel, and there are a good deal of them, this being oil and they being OPEC and all; didn't find anything about the reserves revisions which wasn't a screed on one side or other of the fence, and the analytical papers treat the published reserves as a given; but none of these documents seem to notice how proportion of quota has become wholly set in stone. Perhaps this is laid out in OPEC's bylaws and I just didn't catch the fine print. It certainly must make operations run that much smoother, as my snide scenario in the previous paragraph suggests.

Link to revised worksheet: OPEC Quotas

Thursday, January 27, 2011

OPEC Quotas/Production/Price 1982-2006

Armed with our quarterly production series for OPEC 1982 through 1993, let's match that up with OPEC quotas and oil prices. For historic prices I generally use US FOB Spot, since the EIA monthly series goes all the way back to 1973. OPEC quotas are here; I've distilled what they offer into a spreadsheet, downloadable here: OPEC Quotas (revised 1/29/2011). I'd keep going past 2006 if they provided the numbers, or if it weren't a massive project in its own right to figure out what they were, as Margaret McQuaile explained in Nov '09, writing about The parallel worlds of OPEC quotas and actual production for Platts:

In the world of OPEC, the word production can mean different things. There is official production, whereby OPEC sets quotas for individual members under an overall volume, and there is actual production, which can bear little resemblance to official levels.

And there is a further complication. OPEC, although it has given out the overall target number for the current output agreement, has not published the individual quotas under that target. Which means that people like my colleagues and myself have had to work out those quotas by ourselves, sometimes with a bit of help from delegates or ministers who may confirm figures or indicate that our calculations are close to the mark.

It would, of course, be so much easier if OPEC just published the figures.

I'll investigate what recent OPEC quotas have been later on, if they don't update these numbers themselves; for now, here's my chart:

OPEC Quotas and Production 1982-2006

I'd post it full size but aren't having luck getting the resolution right at smaller sizes, and full size it covers a lot of the page, including the sidebar.

Lots of cheating in the 80s, as widely reported in the news; they showed little interest in bringing the price up for a few years there, but actively defended the $20/bbl ceiling thereafter. The spike in quota in Jan '98 is odd, I'd guess this was in response to the Asian financial crisis which kicked off in July '97, but wouldn't that crater demand? All of this with a trend towards falling prices. John Williams at WTRG explains thusly:

OPEC continued to have mixed success in controlling prices. There were mistakes in timing of quota changes as well as the usual problems in maintaining production discipline among its member countries.

The price increases came to a rapid end in 1997 and 1998 when the impact of the economic crisis in Asia was either ignored or severely underestimated by OPEC. In December, 1997 OPEC increased its quota by 2.5 million barrels per day (10 percent) to 27.5 MMBPD effective January 1, 1998. The rapid growth in Asian economies had come to a halt. In 1998 Asian Pacific oil consumption declined for the first time since 1982. The combination of lower consumption and higher OPEC production sent prices into a downward spiral. In response, OPEC cut quotas by 1.25 million b/d in April and another 1.335 million in July. Price continued down through December 1998.

Prices began to recover in early 1999 and OPEC reduced production another 1.719 million barrels in April. As usual not all of the quotas were observed but between early 1998 and the middle of 1999 OPEC production dropped by about 3 million barrels per day and was sufficient to move prices above $25 per barrel.

Then in July '98 Iraq no longer took part in OPEC quotas. This was in the era of the Oil-for-Food Programme; in the wake of Gulf War I Iraq's quota was ca. 500 kb/d from Oct '91 for exactly two years, then was bumped up to 1200 kb/d for some reason, and to 1314 kb/d for Jan '98, while production hovered around 550 kb/d until Dec '96.

Note how the dates of OPEC changes in quota (which I've marked in bold on the spreadsheet) don't match what Williams mentions in his analysis; also OPEC list a production shift of some kind for July '98 on their page, highlighting a bunch of small numbers in yellow; I've discarded these on my sheet.

The drop in OPEC production in Jan '94 is an artifact of the EIA numbers, at the transition between the quarterly data I dug up, and the monthly numbers which begin here. The quarterly numbers are definitely all liquids, but for some reason the monthly numbers are much lower; still, the shape of the curve conveys the general idea. Perhaps the monthly numbers don't include Iraq, and also Gabon left OPEC in '94 but they were only producing 340 kb/d, and as stated above Iraq wasn't cranking out much either; the drop in the data is almost 4 mb/d. Odd!

Thursday, January 20, 2011

EIA Quarterly Data 1983-1993

The EIA has an excellent site but it isn't without its quirks - for instance, many of the figures for annual data only begin in the early 80s, but sets covering much longer spans of time for the same subjects are available in the Annual Energy Review. Another oddity, which I'll remedy with this post, is how Monthly/Quarterly International data only goes back to 1994, even though these numbers are readily available in old issues of the Short Term Energy Outlook. Presumably they're waiting for a flunky to scan these and punch the numbers in; well, having waited some years for this to happen, I went ahead and did the deed myself. This was a bit time consuming, but I learned a fair deal about OCR software in the process.

As the post title states only quarterly numbers are given. I tried to stick to numbers that weren't preliminary, as is the case when the numbers are given in boldface in the original documents, but in one or two instances this wasn't possible. Note that numbers for Canada
Japan, Australia/New Zealand, and Total OECD are given starting Q1 1987. I threw out the "Statistical Discrepancies" sequence. I don't think there any serious errors in the scanning, but take all this with a grain of salt anyway.

The format changed massively in 1991, hence the extra headers beneath the main ones. I did fill in US and OPEC production to make a quick and dirty graph. OPEC really flails about in the 80s, but levels off in the 90s...hmmm...was it the markets calming down, or did they just lose the ability to swing? I have data on OPEC quotas ready to match up with this in the next post, and also the spare capacity stuff from WTRG.

Link to download of .ods file: EIA Quarterly Data 1983-1993

Monday, January 17, 2011

Historical Spare Capacity

It's simple enough to find charts of this, but the actual numbers are MIA. The EIA provides them for the previous decade or so via their Short-Term Energy Outlook, select "11. OPEC Surplus Crude Oil Production Capacity" under the "Figures" section. It's a given that only OPEC have any SC these days, natch. You have your choice of graph or .xls. But STEOs I've checked out from the 80s/90s just seem to have graphs and helpful statements like "Significant excess oil production capacity is expected to exist in the OPEC member nations throughout the forecast period." They provide a table for International Petroleum Balance, but this juxtaposes production with product supplied, noting the difference between the two, which is neglible, at < 1 mb/d generally; good for tracking how much went into stock draws, but not spare cap. Stuart Staniford tackled this approach in Refining the Plateau, a 2006 TOD post, by noting the difference between production and refining capacity in the 2005 BP Stat Review, yielding this:


Two problems present themselves here, firstly that BP's production numbers are ex biofuels, and have late become quite divorced from other All Liquids measures; also this approach yields what seem to be quite implausible figures, like 2.1 mb/d for 2006, whereas EIA gives 1.42 mb/d. Numbers for the 80s from BP are even more out there, peaking at 18.7 mb/d in 1981. There was a lot of unused supply back then, but this deviates sharply from other estimates you see in graphs from professional research firms and government agencies.

A site I've found very useful is John Williams's WTRG, and its Oil Price History and Analysis page. This graph isn't there anymore, perhaps it's still stuck away in a corner of the site somewhere:




Well, I'll put my trust in John to deliver the goods, and have reverse engineered his numbers:

1970 4.4
1971 4.8
1972 4.8
1973 3.2
1974 4.5
1975 8
1976 4.7
1977 5.2
1978 7
1979 4.2
1980 6.1
1981 7.7
1982 9.8
1983 10.3
1984 9.6
1985 10.8
1986 8.8
1987 8.7
1988 6.7
1989 5.9
1990 3.3
1991 1.2
1992 2
1993 3.1
1994 3.2
1995 3.2
1996 3.2
1997 3.5
1998 3.6
1999 5.4
2000 3.6
2001 4.9
2002 6.2
2003 1

I made a graph of these numbers and superimposed it on John's, revealing a pretty tight fit. Close enough for government work, as my Dad used to say. Here's what the EIA have in the latest STEO:

2000 3.0
2001 4.1
2002 5.5
2003 1.9
2004 1.3
2005 1.0
2006 1.4
2007 2.1
2008 1.5
2009 4.3
2010 4.7
2011 4.7
2012 4.2

I rounded down to the 10th decimal place here, FYI. They expect a 200 kb/d build for this year. Yay! Their own data shows only 1.4 mb/d shut in from the July 2008 absolute peak, so the 2.8 mb/d difference is fresh oil, 1.2 mb/d from Khurais, which we are led to believe will provide 10 times its historic output. Wonder if that's ever been pulled off before...

Spare Capacity in the papers:

"Nearly 8 mb/d, compared to about <1.5 mb/d before the Middle East war last October" - The Milwaukee Journal - Dec 9, 1974

"In less than two years, it is doubtful that OPEC will have any spare capacity" - The Montreal Gazette - Nov 3, 1979

<3.2 mb/d from OPEC, less on a sustained basis, according to State Department rep: St. Petersburg Times - Nov 16, 1979

3.5 mb/d from KSA: The Milwaukee Journal - May 24, 1982

8 mb/d total from Arabian Gulf countries, according to Exxon rep: The Leader-Post - May 17, 1984

Herald-Journal - Jun 25, 1987e 10 mb/d according to DOE rep, 1 mb/d before the 70s oil crises, warns of SC drying up by the 90s without reserves additions.

2 mb/d, down from 14 mb/d in 1986, according to employee of DC firm the Petroleum Financial Company: NYT, March 6 1990

4% of total, i.e. ca. 2.5 mb/d: The Telegraph-Herald - Apr 9, 1990

Few solid figures are available in the 90s; starting in the middle of that decade more online web based commentary is available, as opposed to the earlier format of scanned newspapers; beginning about 10 years ago papers seem to start directly quoting the IEA's OMR and the like.