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May 20, 2008

Some of T Boone Pickens oil predictions are wrong

T Boone Pickens has made various predictions about oil on MCNBC

"Eighty-five million barrels of oil a day is all the world can produce, and the demand is 87 million," he said. "It's just that simple. It doesn't have anything to do with the value of the dollar."


target=blank>Pickens founded BP Capital and has a 46% interest in the company which runs two hedge funds, Capital Commodity and Capital Equity, both of which invest primarily in oil and natural gas.

Pickens is also investing in wind energy

Pickens says that world oil production will not exceed 85 million bpd. The EIA says that Feb 2008, the world production is at 85.921 million bpd. March and April had 300,000 bpd increase from Saudi Arabia and 42,000 bpd increases in Brazil.

The IEA statistics for total world oil production rose to 87.47 million b/d in February, up from 87.29 million b/d in January, the IEA said, thanks to higher volumes from the Americas and the former Soviet Union.

It would appear by end of 2008, Thunder Horse (Gulf of Mexico deepwater oil rig) will come online in 2008 and produce 250,000 bpd sometime in 2009. More additions in Saudi Arabia in July. More increases in Brazil up to 500,000-600,000 bpd more by end of 2008.

I predict that Pickens is wrong on the production peak.
I predict that the May, 2008 EIA numbers will be 86+ million bpd. (Not April because of the UK strike and other issues in April)
I predict that the Sept, 2008 EIA numbers will be 87+ million bpd.

On the Oilsands
Pickens claimed that the oilsand development would be hindered by a shortage of welders and personnel.


When asked about Canadian Oil sands, he said he had $500 million invested in this segment. He has been there ten years. I pointed out that he has probably made five times on his investment and he agreed. He owns Canadian Oil Sands (CNQ) and Suncor (SU). I then asked him if he was worried about the fact that the Canadian government is going to raise taxes. He said that governments always tax profitable businesses. Chesapeake Energy (CHK) and SandRidge (SD) were two explorers that he mentioned.

Encana is projecting growth in their holdings in the Alberta oilsands from 35,000 barrels a day net to EnCana today to 100,000 next year (2009), to 200,000 by 2012 and to 400,000 barrels a day by 2016.

A third-quarter [2008] startup of the massive Horizon oilsands project will deliver 110,000 barrels per day (bpd) in the first phase. Construction to increase capacity to 250,000 bpd is already underway.

Pickens forecasts $150 a barrel price for oil in 2008
"The only way I see that oil doesn't continue to rise [is] if we had a global recession." he said. "That will happen at some point, but I don't see the Chinese stumbling until after the Olympics."

Pickens says natural gas is the only American resource that can reduce oil imports. He claims the effective use of natural gas could reduce oil imports by 40 percent. [Wind and solar can free up natural gas to replace 40% of oil use in the US within 10 years.] He dismissed ethanol as an alternative.


Prices could rise that high because of a weak dollar, supply/demand imbalance, and any hickup in production (like the Nigerian unrest that is blocking 500,000 to 1 million bpd).

Using nuclear power, wind and solar to free up natural gas would be part of a reasonable energy plan.

1 comments:

John said...

What's your prediction for what happens as we reach peak oil? Will we find new sources of oil & gas (e.g. new wells, oil sands, shale). Will switch grass ethanol become economically competitive? Will we all start driving hybrids? What will be the dominant theme?