Oil Industry Headlines: Week of January 25
In an e-letter sent to employees, Shell’s Chief Executive Jeroen van der Veer wrote, “Shell estimates that after 2015, supplies of easy-to-access oil and gas will no longer keep up with demand.” As the era of easy oil ends, the era of cheap oil goes with it. Unconventional oil, which requires significantly more investment to recover, is expected to help bridge the gap between supply and demand in coming years. The likelihood that commodity prices will increase in response to market demand (and the rising cost of producing unconventional oil and gas) is not lost on market watchers. Interest in oil investments as a hedge against economic instability is soaring.
As if to highlight the reality of van der Veer’s statement, a representative from Mexico’s state-owned oil company announced this week that production is rapidly declining in the country’s most prolific oil field. Jesus Reyes Heroles, Director General of PEMEX, said Tuesday that average daily production is expected to drop by 200,000 barrels in 2008. “The decrease would be a drop of 16 percent from Cantarell’s December 2007 output of 1.26 million barrels per day (bpd), its lowest level of the year. Yields at Cantarell declined 16 percent during 2007, slightly more than predicted,” reported Reuters. Although Mexico currently has a constitutional ban against private investment, officials are exploring the role such investments may be able to play in reinvigorating the country’s struggling oil industry.
Published Thursday, January 31st, 2008 at 8:37 pm and filed under Industry News.