OGPSS - At around 2 mbd - Nigeria, Angola, Libya and the UK oil production

The growing concerns about the stability of the countries of the Middle East and North Africa (MENA) because they make significant contributions to world oil supply adds additional meaning to these weekly posts on the world’s major oil producers. To briefly recap I looked at the top tier oil producers (as listed by the EIA (i.e. those who produce more than 3.1 mbd in 2008) in the first post of the series. (These were Russia, Saudi Arabia, the United States, Iran, China and Canada. ) In the second I looked at the next four countries on the list, namely Mexico, the United Arab Emirates (UAE) Kuwait and referred to Venezuela – subject of a series of posts earlier in the year. The third post covered Norway, Brazil, Iraq, and Algeria. And so now we move on to look at Nigeria (2.35 mbd), Angola (2.0 mbd) Libya (1.87 mbd) and the United Kingdom (1.58 mbd). The numbers in parentheses are the production numbers cited by the EIA for 2008. To further put these countries in context, these take us down to number 18 on the list, and with one more post I will have covered all the countries that produced more than 1 mbd on average in 2008.

I will start with Nigeria, which now is cited as producing 2.4 mbd of crude and condensate in January 2011. The country has been having considerable trouble with sabotage and internal unrest, which has had a negative impact on production. However the country signed an Amnesty Program with militants in 2009 which has reduced disruption. As a result in February Nigeria was able to raise production to 2.6 mbd. If this can be sustained it will bring production back over the peak level that was achieved back in 2005.


Note that, for crude oil production alone, Nigeria is listed as producing 2.17 mbd in January, according to the February OPEC MOMR. (Which is also a gain from the above chart). In light of some of my recent comments on who might be hurt if oil production in some of the MENA countries drops off, it is perhaps interesting to note which countries got oil from Nigeria in 2009.

Nigerian oil customers in 2009 (Source EIA )

Historically Nigeria flared much of the gas that was associated with the oil, particularly in the Niger River Delta, where much of the oil is found. That practice led to some of the more dramatic stories that came from the region, before the amnesty. There is, however, a concerted effort now to capture and market this natural gas, as well as that which comes from gas wells in the country. This has led to some optimism by the Government over future sources of revenue.

The Minister also disclosed that the establishment of two new Liquefied Natural Gas, LNG plants, in Olokola in Ogun/Ondo States and Brass LNG in Bayelsa state, will create over 7,000 jobs and inject over $1billion into the host communities.

There are a total of 6 LNG trains at Finima, on Bonny Island, first coming into production in September 1999, and supplying a variety of customers. While the capacity is at 1.1 Tcf, recent figures have been at about half that volume. (And this is about the same volume that continues to be flared in the country.)

With Nigeria having increased overall production since 2008, though potentially having limited potential for much greater increase, the next country down the list is Angola which, since 2007, is also in OPEC, and OPEC list the January Angolan production of crude at 1.62 mbd. This is significantly below the overall 3.8 mbdoe that BP has reported for total energy production in 2010. Because of some technical problems with water injection, being used to help move oil from the reservoirs, moves to address the problem might overall, reduce the average for 2011 to 3.4 mbdoe. Angola exports about 1. 7 mbd of oil, but is responsive to OPEC requests to control production in order to keep prices at the OPEC comfort level. (Which has risen from around $75 to over $100/bbl in the last few months). Thus the declines shown in the EIA plot below, which only shows through 2009, are more politically induced than due to geological conditions. The EIA, for example, lists project for this year alone that are expected to add 650 kbd to production, and likely export. Unfortunately we are now far enough down the list that while these numbers are significant in their own right, and for the country they may not give that much help to the overall shortages that may evolve over the next year.


Angola currently is building an LNG project at Soyo, expected on stream in 2012 which will handle around 1 bcf/day. Apart from the LNG, which will be exported, the plant will send some 125 mcf/day of natural gas into a distribution network for domestic consumption. Until the plant comes on line most of the almost 1 bcf of natural gas that is produced every day is either flared or reinjected to help with oil production.

Trying to project Libyan future production is rapidly becoming meaningless, I fear as the initial moves to remove the current Leader have not met with sufficient success to eliminate the possibility of civil war. It was only a few weeks ago that Libya was producing at around 1.6 mbd of oil, and Luis de Sousa has reposted an earlier review of the past history of their production. He presciently notes in that post that the rising population of the country is going to demand more of the resource be spent at home. The topic of Libyan production will likely continue to appear in other posts – as it just has – but at the moment it appears, for a variety of reasons, that the system is effectively shut down.

Little if any oil can be shipped out of Libya because most ports were closed. Meanwhile, storage tanks were filling up rapidly. Oil traders said one major oil company cargo ship was supposed to berth this week, but no one was at the port to deliver an oil shipment, and shipping companies were reluctant to send ships into the Libyan ports.

I have also discussed elsewhere the likelihood of sufficient increase in production in other countries to make up the shortfall. Gazprom has been helping Italy, for example, and Saudi Arabia increasing production, but how long this will last, and how much will ultimately be needed remains an unknown. It really depends on how many dominoes fall, and how long they remain on the table.

Which brings us to the United Kingdom. Back in the troubled days of the first oil shocks some thirty to forty years ago, it was the combination of new production from the fields in the North Sea and the North Slope that helped bring oil prices down to the low level which allowed the years of growth until now. But we have reached a point where those resources are beginning to disappear, and the UK has turned from an energy exporter to a growing importer. Euan Mearns has documented this progression in a much more detailed and better way than I illuminating, for example, back in 2008, the coming seriousness of their problem.

Euan’s plot of the UK Predicament, from 2008

If we look at the situation today, the reports for last year note

In 2010, the UK produced 850 million barrels of oil and gas equivalent (boe) or 2.3 million boe per day. Current plans now target reserves of 11.6 billion boe, 1.3 billion boe more than was anticipated a year ago, reflecting the outcome of increased exploration and appraisal activity across the UKCS and particularly West of Shetland. Oil & Gas UK believes there could be up to 24 billion barrels of oil and gas still to recover from the UKCS.

This was about 60% of the UK energy need. Production of crude for last November was 1.047 mbd from offshore, and 9,344 bbl from land wells. The natural gas numbers were 2.7 Bcf from offshore oil wells (as associated gas) and 2.8 Bcf from offshore gas wells. In addition there was some 12 kbd of condensate from the offshore gas fields.

Whether one uses Euan’s plot, or that from the Energy Export Databrowser:

UK Oil statistics (Energy Export Databrowser)

The UK is clearly entering a more expensive future as it must find more oil from overseas, just as that supply is tightening.

On the other hand, while the situation is getting somewhat worse more rapidly with natural gas, as the EIA plot below shows ( and it contributes to Euan’s total figures) there is a sufficient glut on the world market at the moment that there will not be that immediate a problem in the short-term.

United Kingdom trends in gas statistics (EIA )

UPDATE The energy situation in the UK is becoming recognizably more dire, and the Secretary of Climate and Energy, Chris Huhne has just pointed out that the price of $100 a barrel for oil justifies a greater investment in green technology

Drawing on research conducted for the previous government by Lord Stern, Huhne argued that a $100 a barrel price is the exact point at which the economics of climate change pivot so that it becomes cheaper for British consumers and businesses to invest in green technology than remain with the status quo.

He said that if oil only reaches $108 a barrel by 2020 as predicted by the US Department of Energy, which would also lead to higher gas prices, then "the UK consumer will win hands down". He said the UK consumer would be "paying less through low-carbon policies than they would pay for fossil fuel policies".

This does not recognize that most renewable energy technology currently focuses on generating electricity, while the crisis is in liquid fuels for transportation, and it also ignores the likely over supply of natural gas which is separate that price from the rising price of oil over the coming years. Tsk!

The current situation in the MENA countries is in such a state of flux, and the impacts barely recognized as yet, that it is becoming even more difficult to have any confidence that the predictions of performance that were being used only a couple of months ago will continue to have much validity in predicting what is likely to occur even in the relatively short term future.

Of hybrids and algae

As I had mentioned in an earlier post, we are thinking of getting a second hybrid in the family, with thoughts turning toward the Ford Fusion. At the time of the decision, there still seemed to be an aura around the concept of hydrids that continued to make them seem a more desirable product. With the drop in gas prices, and their higher initial price over conventional gas models, that is no longer the case.

"When gas prices came down, the priority of buying a hybrid fell off quite quickly," said Wes Brown, a partner at Los Angeles-based market research firm Iceology. "Yet even as consumer interest declined, the manufacturers have continued to pump them out."

Last month, only 15,144 hybrids sold nationwide, down almost two-thirds from April, when the segment's sales peaked and gas averaged $3.57 a gallon. That's far larger than the drop in industry sales for the period and scarcely a better showing than January, when hybrid sales were at their lowest since early 2005.

I hadn’t realized that we were planning on joining such an exclusive group. And perhaps we can see why Ford have not been more aggressive in selling (they aren’t).

executives at other automakers (than Toyota) concede they lose money on every hybrid sold. "If we were making money on the Civic hybrid, we weren't making a lot," Honda spokesman Chris Martin said.

That may help to explain why fewer than two of every 100 Chevy Malibus sold last month had the hybrid powertrain and why Ford priced its new hybrid Fusion, which dealers expect to start receiving this month, $8,000 above the gasoline-only version.

Ford expects to produce about 20,000 Fusion and Milan hybrids this year, or about 1% of its total production. . . . . . . Three weeks ago, Jerome Haig, a lawyer in Torrance, put down a $500 deposit on a Fusion hybrid, even though he hasn't even test driven one because they have yet to hit lots. "I do like the idea of getting a hybrid," Haig said.

But he admits that he may not have considered the car if not for a $3,400 tax credit on Ford hybrids and a deduction on new car sales tax. The latter was part of the $787-billion federal stimulus package. "The tax advantages are a pretty big incentive."

However sales of the Honda Insight seem to be doing better than expected, but this is because the new model is cheaper than a Prius. if the price can hold under $20,000 then that sales growth is expected to continue.

Shell appear content to continue funding of their algae program. Back in 2007 the reviews were mixed:

algae always seemed promising as a biofuel feedstock. They devour CO2, multiply like rabbits, are oily, and don’t need much land. The U.S. Department of Energy spent almost twenty years studying more than 3,000 varieties of algae to see what would work. Nothing did; Clinton pulled the plug in 1996.

That is because algae-to-oil is a balancing act: Only the hardiest strains thrive with temperature variations, and they have fewer lipids. Really greasy algae aren’t outdoors types. So a lot of small algae biofuel companies prefer “photobioreactors,” or grow closets for algae. Others go back to the farm, but keep algae under wraps.

Shell says its pilot project will determine which strains of algae are commercially viable and which will best be able to suck up CO2 emissions from power plants. In the meantime, its Hawaiian project will be using bottled CO2.

The Hawaiian pilot plant on Kona is run by a joint venture called Cellana and uses non-modified species in a surface “racetrack” set of ponds. The first step in the process was to find the right local species. This involved putting test tubes of different strains out to find which ones grow the best.

In the next step in the development last June the partners were talking of having the first commercial plant available within three years. A site has been found in Maui near a power plant, that would provide a source for the CO2, and with high interest from officials, the date for the plant to be started moved up to 2011. The technical breakthough has been to limit the amount of time that the algae spend in the open ponds, the crop is harvested, and a new stock is injected, with new nutrient, at an already high concentration, so that the residence time is short, and competition from other species is limited before the algae have consumed the nutrient, multiplied, and are ready for harvesting. By doing it this way, it is claimed that costs are reduced. To bring the feed stock up to the required volume needed for injection, the algae are first bred in plastic tubes. In regard to the volumes of carbon dioxide that are consumed

A very rough calculation would be a minimum of 250,000 tons of CO2 per year captured by 1,000 hectares (roughly 2,500 acres) of algae, for a coal-fired or diesel-fired power plant. So a very large commercial facility, say 20,000 hectares (roughly 50,000 acres), could perhaps capture 5 million tons of CO2 per year. This calculation will be further refined during the joint venture demonstration phase.

The nutrient added to the seawater will largely be nitrates and phosphates, as it depletes in the water, the concentration of oil in the algae increases.

Cellana meanwhile is moving ahead with algae selection at the the facility on Kona. They have screened some 5,000 possible candidates down to 75 who were evaluated for high throughput, cutting the number down to 12, of which 8 were considered viable for outside cultivation. These will be studied and screened down as the Kona pilot plant develops in 2010. That facility will be a 2.5 ha size, and will be used to help plan the full commercial facility that has now been targeted for 2014. They have now down-selected to 7 species and hope to have their first harvest this quarter, with the first oil produced in volume by the end of the year. One of the team partners, Bodo University in Norway, is evaluating the de-oiled biomass as an animal feed. The production plant has the following objectives

The project will use 10 percent of the Maui Electric plant’s CO2 emissions as feedstock. The CO2 will be delivered by pipe from the Maalaea pipe, and the plant will produce up to 3 Mgy of algae oil based on a projected 750-acre algae farm producing 5,000 acres per gallon.

The company said that it expected that it would take up to three years to obtain permits for the operation, which would be profitable in the first year of production according to HR Petroleum execs.

There are some doubts about the longer term and larger scale production that will be needed if algal biodiesel is to make a significant contribution to fuel supplies. But even with those doubts the potential for removing carbon dioxide remains attractive, and the Alberta Research Council has joined with Innoventures Canada to look at this .

The ARC says the preliminary target for its Carbon Algae Recycling System project is a 30 per cent reduction of the greenhouse gases produced by an average 300 megawatt coal-fired power plant. CARS proposes to feed flue gas (CO2, nitrogen oxides and other emissions) directly from industry into ponds to feed algal growth.

"We are in the early stage of looking at carbon dioxide bio-fixation to micro-algae," says Quinn Goretzky, project manager for strategic initiatives at the council. "Our vision is to transform carbon into a value-added good."

To date they have focused on green algae. Of 21 samples under examination, nine failed to thrive.

"Five were taken to characterization, and that relates to biomass and rate of growth," Goretzky says. "Algae is made up of fatty acids and lipids, which is the most important since they go to fuel. The carbohydrates go to ethanol and the proteins to animal feed and fertilizer."

He admits the process as it stands right now is energy-intensive. The ARC consortium favours a large greenhouse-covered pond system. "This maintains temperature, delays evaporation and reduces contamination."

The Canadian system has a target set of data (ppt)
•Total algae pond system area : 400 ha
•Algae yield : 30 – 120 g/m2/day
•CO2 captured : 77 500 – 310 500 tonnes/Year
•Algae oil = 3.5 barrels/tonne algae
•Carbon credit : 15 $/tonne CO2
It has an anticipated 7 year return on investment if it can sell the biodiesel for over $3.46 a gallon (which is currently isn’t).