Tech Talk - Predictions

From time to time I have written about the dubious assumptions that lie behind some of the predictions made by Energy Agencies and some of the larger oil producing companies as they predict the energy supplies and demands of the next few years.

It is relatively simple to make those criticisms given that one has only to compare ongoing reality with the assumptions to be able to judge that the future is unlikely to be as rosy as any of these folk imagine.

However there is this strong tradition of making the odd prediction at the start of the New Year. Yet having just spent about 2 hours digging snow out of my drive (an hour and a half for the first session which moved most of the snow and then thirty minutes to remove all the snow shifted back into the drive when the snowplow came by clearing the center of the road) my creative buds are a little slow this evening, but I would suspect that it is not hard to make one or two suggestions, and then go back and so how they panned out.

Last year I was quite pessimistic about the future, given the pull back in Arctic drilling following the grounding of the Shell drillship and had some question on the stability of the domestic production levels. Well a year later the situation in the Arctic has perhaps grown a little less encouraging for those who would anticipate early development of those resources, but on the other hand domestic production has continued to increase.

For next year I suspect that the situation with China, in terms of its attitude to acquiring sufficient energy reserves, will not improve. There are already suggestions that China will adjust its position in regard to the importation of Iranian oil and may increase purchases, despite the ongoing sanctions. Similarly it is refusing to recognize arbitration in its dispute over ownership of the China Seas (East and South). To keep the projection vague (and thus less likely to be too far off) I would expect that this will get worse over the next year, and the steps China is willing to take to ensure future energy supplies will become more obvious.

In this regard I suspect China will continue to beat out India in the pursuit of available resources around the world, though the consequences for this in India won’t likely become evident for a couple of years yet.

There will likely continue to be enough available crude to meet demand through next year (depending on how the various conflicts in the different countries of the Middle East develop) but it may be the last year in which this holds true. With the Kingdom of Saudi Arabia determined to hold production at a maximum of around 10 mbd, with Iraq increasingly troubled by growing sectarian violence and with other regional countries similarly destabilizing there are only a few places where increased production can be brought on line to meet demand – and that problem may become evident in 2015.

So having made a couple of relatively obvious suggestions let’s see how 2014 turns out for us all – though I hope it brings you Prosperity and Success!

OGPSS - An update on Russian plans and the OPEC MOMR

The Arctic is a less forgiving place than many folk care to recognize. Shell have just moved back the date on which they plan to restart drilling in the Chukchi Sea and won’t be going up there this year. At the same time, last August, Gazprom announced that the development of the Shtokman gas field off the Russian coast and also in the Arctic had been put on an indefinite delay. Yet the region still shows considerable promise. ExxonMobil and Rosneft have agreed to exploration in the Chukchi, Laptev and Kara Seas, with the latter considered as possibly having the highest potential.


Figure 1. Location of the Kara and Laptev Seas. (Google Earth)

The blocks that will be explored are South of the island of Novaya Zemlya, in relatively shallow water. They lie north of the Yamal Peninsula, and the Shtokman field is on the other side of the island.


Figure 2. The locations of the East Prinovozemelsky blocks south of the island of Navoaya Zemlya (Rosneft)

Rosneft estimates that the reserves that are recoverable are 6.2 billion tons of oil, and a total of 20.9 billion tons of oil equivalent when the natural gas content is included. The first wildcat well is scheduled to be drilled in 2015.

While Gazprom and Rosneft share access to these offshore resources, Lukoil has found a site at Khatanga Bay in the Laptev Sea where it believes that it can be successful. Despite the difficulties, the need for Russia to sustain production is forcing the companies offshore into more difficult waters, it is where the future production lies, and the Russian economy needs the income.

The February OPEC Monthly Oil Market Report notes that Chinese demand has now topped 10 mbd on a quarterly average, the highest to date and growing at 6%. The greatest increase has been in the use of gasoline. Global demand is anticipated to top 91 mbd by the end of the year. Russia is anticipated to produce some 10.42 mbd on average this year. OPEC has, however, a few caveats:

The Vankor oil field is expected to average 435 tb/d in 2013, a minor increase from the level of 410 tb/d achieved by the end of 2012. Some operators provided that new technologies will be utilized to stop natural decline. On the other hand, the supply forecast remains associated with a high level of risk, due to technical, political, geological and price factors. On a quarterly basis, Russian oil supply is expected to average 10.43 mb/d, 10.42 mb/d, 10.42 mb/d and 10.42 mb/d, respectively. Preliminary figures indicate that Russian oil production stood at 10.46 mb/d in January, steady from the previous month.

As usual it is interesting to compare the OPEC production results for the last few months, based both on the reports obtained from secondary sources, and those numbers that the individual nations provide.


Figure 3. OPEC crude production based on secondary sources (OPEC February MOMR )

It is important to note that Saudi Arabia has dropped its production by around 300 kbd or so for the last couple of months. While I suspect that this to keep markets a little tighter and thus hold prices stable, others might suggest that the may have some slight difficulty sustaining the higher numbers.


Figure 4. OPEC oil production figures as reported by the producing countries. (sources (OPEC February MOMR )

Iran continues to have a disparity of around 1 mbd between the two tables, Iraq still seems to be struggling to get over 3 mbd, and Venezuela has a discrepancy of around 400 kbd. In short, not much new.

Turning back to look for just a moment at Gazprom activities, although they have continued to keep Lukoil out of the Arctic, they have also continued to seek resources abroad. The company has acquired territory in Iraqi Kurdistan and is reported to have an 80% stake in the Halabja project with reserves of around 700 mb. The field lies on the Iranian border in the Kurdish part of the country, and Baghdad objected to the deal going forward. It might, however, help raise Iraqi overall production. Gazprom has two other projects in the region at Garmian and Shakal, and one at Badra which falls under the control of the central government.

And, still in the Middle East, Gazprom is in talks with Israel to buy LNG from the offshore Tamar field and ship it to Asia to serve markets that it cannot easily reach with its pipelines. The intent is to use a floating liquefaction plant that will take gas from both Tamar and Dalit, at the rate of around 3 million tons a year with production starting in 2017.

Gazprom recognizes that, if it is to develop Asian customers it must provide LNG and so it has begun work on an LNG plant in Vladivostock with three trains, each capable of producing 5 million tons of LNG a year, from the Sakhalin, Yakutia and Irkutsk gas fields. With production aimed to begin in 2018, the market will, again, be in the Asia-Pacific region and may be one of the reasons to accelerate production from the Kovyktinskoye field. At the present time Gazprom has brought the Zapolyarnoye up to full production, and they estimate that this will produce 20% of Russian natural gas as the field moves to be the largest producer in the country.

And, while tracking down some of the information for this post, I did find a picture of a polar bear and cub in the region that ExxonMobil is venturing into. It was taken on the island of Novaya Zemlya. Hopefully environmental concerns won't raise the same sort of difficulties in developing these sites that they have in other places further East.


Polar Bear and cub on Novaya Zemlya on the Shores of the Kara Sea (the photo is on Google Earth and was taken at the red arrow in Figure 2 by

Oh, and before I forget the Alaska pipeline continues to run below 600 kbd with an average of 577, 604 bd. for January.

Is global warming regional - as in the MWP?

I was looking over Anthony Watts’ web site, and noted a picture that he had posted that shows the large number of stations around the United States that were showing record temperatures.

Places in the United States showing record temperatures (From WUWT)

What struck me was that, just as one could argue that this showed how cold we were getting, those that argue that carbon dioxide is raising global temperatures could as easily point to the points in the Western part of the country as evidence for their argument.

The problem of trying to determine which arguments are more accurate is made more difficult where there is this isolation of data, so that those seeking information are only presented with that which supports one side – so cheers to Anthony for showing both.

But individual data points, while interesting, don’t really reflect the sort of long-term changes that are predicted (or not) by various climate models. There is a considerable question over the accuracy and methodology used to derive an average measure of the global temperature, with satellite data, which was supposed to be more accurate, having its own limitations, in measuring ocean temperatures for example.


If one looks at the average temperature for the contiguous United States, for example,

Average US temperatures since 1880 (GISS )

One can see that the average for the country has been tending downwards over the last decade, and has not differed that much from the temperatures of the 1930’s (which still has the record for the hottest year). It is hard to argue for AGW based on this graph alone.

Yet if once compares the data from the two hemispheres, it is the Northern Hemisphere that is warming much faster than the Southern.

Hemispheric temp changes (GISS)

So if the US landmass isn’t warming, and the Southern Hemisphere isn’t currently doing much either where is all the global warming coming from? A look at the current temperature anomalies shows that it is the Arctic and Europe that is warming the most:

Global temperature anomalies (GISS)

But it is interesting that the actual anomaly is only 0.54 degrees, since, as I have noted before, the predictive values that Dr Hansen gave in the paper that is the most cited as authoritative on this predicted that by now the temperature would be between 1.0 and 1.2 degrees higher than the datum, and that only if there was dramatic reduction in greenhouse gases would we get to 0.65 degrees by now.

Now that is still a it higher than the 0.42 degrees – which Anthony is reporting and which is, I presume, the daily difference, but as he notes, the carbon dioxide levels are at 388 ppm, and if the impact was a severe as has been modeled it should be much higher (though the GISS graph above does show that it is heading backup).

But the other thing to comment on is that back when those of us who bring up the Medieval Warming Period (MWP) first did so, the response of the AGW proponents was that we were discussing something that was only true of Europe and the Arctic. Now that we are seeing a pattern that shows a regionalization of the global warming pattern I wonder if that argument can’t be reversed?

It is only by openly discussing these changes and their implications that true scientific understanding can be achieved, not by hiding, or adjusting data in less than transparent ways. Unfortunately scientific debate takes time and evidence only accumulates slowly. How long, for example must the current apparent cooling persist, (or the accelerated increase in temperature not occur) before the model predictions are discredited? Yet without that debate we risk the frittering away of resources on valueless measures that will have no impact on the future.