History of the Oil and Gas / Petroleum Industry
Posted on October 7, 2009 – 12:10 pm | by oilandgaspress.com
In 1911, the power of Standard Oil was such that the American congress voted the famous antitrust law aimed at breaking it up into three “bits”: Standard Oil of New Jersey (the future Exxon), Standard Oil of New York (the future Mobil), and Standard Oil of California (Socal).
All three would become part of the global conglomorate group: Exxon, Socal (later to become Chevron), Mobil, Texaco, Gulf, BP (the heir of AIOC, the Anglo-Iranian Oil Company), and Shell.
Then came the French CFP (Compagnie Française des Pétroles, the future Total)
The two oldest of the major oil companies were created at the end of the 19 th century:
1/. The American, Standard Oil belonging to the Rockefeller family.
2/. The Anglo-Dutch, Royal Dutch/Shell.
The principal international oil companies, the major players are:
1/. Exxon/Mobil: American, formed by the merger of Exxon and Mobil;
2/. BP: British, the result of a merger between BP and Amoco;
3/. Shell: Anglo-Dutch;
4/. Total: French, the result of a merger between Elf, Fina and Total;
5/. Chevron/Texaco: American, resulting from the merger of Chevron and Texaco.
National agencies & government departments with responsibility for energy matters
DGEMP(Department of Energy and Raw Materials) in France
OPEC (the Organisation of Petroleum Exporting Countries),
OAPEC (the Organisation of Arab Petroleum Exporting Countries)
IEA (the International Energy Agency)
DOE, the Department of Energy ,US
Oil sector as suppliers of services
Companies are involved in specific technical areas such as geophysical surveying and analysis, drilling, depth imaging, production equipment. They supply oil companies with personnel and equipment. e.g Schlumberger, Halliburton
Research institutes - IFP (Institut Franais du Ptrole, or the French Oil Institute)
Investments in Renewable Energy for Future:
BP with solar energy, the new world leader in photovoltaic production;
Shell with the biomass, solar and wind energy, whose declared objective was to hold a 10% market share in renewable energies in 2005;
Total with the design and marketing of photovoltaic systems and investments in other renewable energies (wind, wave energy …).
OPEC countries Company State share in the company
Algeria Sonatrach 100%
Saudi Arabia Aramco 100%
United Arab Emirates ADCO/DPC 60% / 100%
Indonesia Pertamina 100%
Iran NIOC 100%
Iraq INOC 100%
Kuwait KPC 100%
Libya NOC 100%
Nigeria NNPC 100%
Qatar QGPC 100%
Venezuela PDVSA 100%
Source: the OPEC statistical bulletin, 2003
In some Poorer countries in Africa main production activities are delegated to the major foreign companies within the framework of production sharing contracts and incomes.
In the United States, oil production is entirely in the hands of the private sector.
The Middle Eastern countries, all members of OPEC, together hold 2/3 of worldwide oil reserves.
Saudi Arabia alone possesses ¼ of these world reserves.
OPEC in total holds 80% of world reserves and produces a little less than 40% of the oil consumed throughout the world.
U.S. Oil Imports
The U.S. with 4.5% of the world’s population, uses 26% of the world’s oil.
In 2001, the U.S imported 54% of the oil it needed, importing 11-12 million barrels a day and producing about 8-9 million a day to provide the 20 million barrels a day the U.S. consumes daily.
Of those imports, 48% came from the Western Hemisphere and 30% came from the Persian Gulf region, with the rest coming from Africa and Europe.
[Source: Energy Information Administration - 5/02]
Although the U.S. imports only 11.4 % of its oil from the Persian Gulf region, that area contains 590 billion barrels of known reserves. Add Iran, Libya and Algeria and you have another 130 billion barrels. The enormous pool of oil stretching form Algeria to Iran is estimated at 720 billion barrels. The reserves expected from the Caspain Sea in Central Asia will be added to this total in a few years.
[Source - American Petroleum Institute, 2003]
Short-Term Oil and Gas Outlook according to the EIA
U.S. real gross domestic product (GDP) is expected to decline by 2.7 percent in 2009, triggering decreases in domestic energy consumption for all major fuels. Economic recovery is projected to begin in 2010, with 2.2 percent year-over-year growth in GDP. Accompanying the projected economic recovery should be a mild rebound in energy consumption for all the major fuels in 2010.
Over the past 6 months, the monthly average price of West Texas Intermediate (WTI) crude oil fell from $133 per barrel in July to $41 in December and January. WTI prices are projected to average $43 per barrel in 2009 and $55 in 2010, unchanged from last month’s Outlook.
The U.S. price for regular gasoline averaged $1.69 per gallon in December 2008, the lowest monthly average since February 2004 and down nearly $2.40 per gallon from the monthly peak seen last July. Gasoline prices have been slowly increasing over the last 6 weeks as crude oil prices have stabilized and refiner margins have recovered from their recent near-historic lows. Retail gasoline prices are projected to average $1.95 per gallon in 2009 and $2.19 per gallon in 2010.
The U.S. economic downturn is also contributing to a decline in natural gas consumption, particularly in the industrial sector, which has led to lower natural gas prices. The Henry Hub natural gas spot price is projected to decline from an average of $9.13 per thousand cubic feet (Mcf) in 2008 to about $5 per Mcf in 2009, but then increase in 2010 to an average of almost $6 per Mcf.
Global Petroleum
Overview. The worsening global economy and a weak oil consumption outlook are keeping the world oil market well supplied, despite two downward revisions in production targets by the Organization of the Petroleum Exporting Countries (OPEC) within the past few months. Lower global oil demand and rising surplus production capacity through at least mid-year 2009 reduce the possibility for a strong and sustained rebound in oil prices over that period. OPEC is scheduled to meet in Vienna on March 15, which could lead to another production cut to mitigate some of the slack in the world oil market. However, near-month oil prices will likely be driven primarily by the global economy. Global real gross domestic product (GDP, weighted according to shares of world oil consumption) is assumed to decline by 0.1 percent in 2009 and rise by 3.0 percent in 2010, versus last month’s assessment of 0.6-percent growth in real GDP in 2009 and 3.0-percent growth in 2010.
Consumption. World oil consumption is projected to fall by 1.2 million barrels per day (bbl/d) in 2009, representing an additional decline of 400,000 bbl/d from last month’s Outlook. World oil consumption is expected to rebound in 2010, growing by more than 1.2 million bbl/d, due to an expected recovery in the global economy. Oil consumption growth over the next 2 years is concentrated in countries outside of the Organization for Economic Cooperation and Development (OECD), particularly China, the Middle East, and Latin America, offsetting projected declines in OECD oil consumption (World Oil Consumption). If the world economy recovers sooner than EIA now anticipates, oil consumption could be higher than expected, putting upward pressure on oil prices.
Non-OPEC Supply. Non-OPEC oil supply is expected to grow by 150,000 bbl/d in 2009 and 130,000 bbl/d in 2010. The expected growth in non-OPEC supply over the next 2 years comes in stark contrast to the 330,000-bbl/d decline seen in 2008, which was the result of longer-than-expected delays in key projects, larger-than-expected decline rates in mature basins, and supply disruptions in the Gulf of Mexico and Central Asia. The largest sources of growth over the forecast period are the United States, Brazil, and Azerbaijan, offset by large declines in production in Mexico, the North Sea, and Russia. The expected decline in Russian output in 2009 (-160,000 bbl/d) is especially noteworthy. Russian oil production grew by 3 million bbl/d from 2000 through 2007, representing 75 percent of total non-OPEC oil production growth over that period.
There are downside risks to the outlook for non-OPEC supply, as additional project delays are certainly possible given the financial crisis and the current price environment. Sustained lower oil prices bring into doubt the viability of some high-cost non-OPEC projects, especially those utilizing nonconventional technology or those seeking to exploit frontier oil basins. The credit crunch associated with the global economic crisis can also make it difficult to acquire financing for new projects or even to finance the investment required to prevent accelerated declines at producing fields. EIA’s forecast reflects an attempt to account for some of these potential delays.
OPEC Supply. OPEC producers are cutting crude production targets in response to lower prices and eroding consumption. Estimated OPEC crude oil production fell by 1 million bbl/d during the fourth quarter of 2008, reaching 30.7 million bbl/d. OPEC crude oil production is expected to fall by an additional 1.6 million bbl/d in the first quarter of 2009 to 29.1 million bbl/d, the lowest level in 5 years, largely resulting from lower production in Saudi Arabia. The decline of 2.6 million bbl/d over this period represents nearly two-thirds of the 4.2-million-bbl/d cut in OPEC’s production target announced at its December meeting. For the year, OPEC crude oil production is expected to average 29.4 million bbl/d, then rise to 30.1 million bbl/d in 2010. In addition, EIA expects that OPEC production of non-crude liquids will rise substantially next year, growing by 660,000 bbl/d in 2009 and by 870,000 bbl/d in 2010, due to increasing condensate and natural gas production.
The combination of lower demand for OPEC crude oil, increasing production of non-crude liquids, and the capacity expansions expected in several OPEC countries means that surplus production capacity could increase dramatically over the next 2 years. OPEC surplus production capacity could average 4.3 million bbl/d in 2009, eventually exceeding 5 million bbl/d by the end of 2010. By comparison, OPEC surplus production capacity ranged from 1 to 2 million bbl/d over the past 5 years (OPEC Surplus Oil Production Capacity). The lack of surplus production capacity was a crucial factor during the run-up in oil prices through the first half of 2008. If OPEC does hold 4 to 5 million bbl/d of surplus production capacity over the next 2 years, this could act to cushion the world oil market and help mitigate the price effect of perceived or actual supply disruptions.
Inventories. Preliminary data indicate that OECD commercial inventories stood at 2.58 billion barrels at the end of 2008, equivalent to 52 days of forward cover (Days of Supply of OECD Commercial Stocks), above average levels for that time of year. Measured as days of forward cover, OECD commercial inventories are projected to remain above average levels through the end of 2010. High crude inventories in some markets, along with a growing use of floating storage, are signs that the oil market is well supplied. Along with ample OPEC surplus production capacity, high commercial inventories should help mitigate any strong upward price pressures.
Natural Gas
Consumption. Total natural gas consumption is projected to decline by 1.3 percent in 2009 and then increase by 0.6 percent in 2010 (Total U.S. Natural Gas Consumption Growth). The expectation of limited weather-driven consumption growth in the residential and commercial sectors in 2009 is outweighed by the implications of continued economic weakness in the industrial and electric power sectors. Consumption in the industrial and electric power sectors is expected to decline by 5.1 and 1.0 percent, respectively, in 2009. Consumption growth in 2010 remains largely dependent upon the timing and pace of economic recovery. Based on current assumptions, 2.2-percent growth in the electric power sector combined with slight growth in the residential and industrial sectors are all expected to contribute to 2010 consumption growth.
Production and Imports. Total U.S. marketed natural gas production is expected to rise slightly in 2009 and fall by 1.1 percent in 2010. The dramatic decline in drilling activity, as total working natural gas rigs have declined by more than 31 percent since August 2008, is expected to contribute to lower production during the second half of 2009. Despite the cutback in drilling activity, the current outlook suggests that some production curtailments may be necessary during the latter part of 2009 in order to balance the market. Nevertheless, this year’s marketed production from the Lower-48 non-Gulf of Mexico (GOM) is expected to increase by 1.1 percent due to the low operating cost of wells currently in use and the lagged effect of aggressive drilling programs during the latter part of 2008. In contrast, the natural decline in production from existing fields and long-term decline in drilling activity are expected to lead to a 6.4-percent decrease in production in the Federal GOM this year. In 2010, annual production is projected to decline relative to 2009 in the Federal GOM and Lower-48 non-GOM by 6.3 and 0.6 percent, respectively.
U.S. imports of liquefied natural gas (LNG) are expected to reach about 369 billion cubic feet (Bcf) in 2009, a slight increase over the volume received in 2008. Shipments of LNG to the United States this year will be affected by the timing of supply additions in Russia, Norway, Qatar, and Yemen and the status of global natural gas inventories in LNG-consuming regions. In 2010, U.S. LNG imports are projected to be about 463 Bcf.
Inventories. On January 30, 2009, working natural gas in storage was 2,179 Bcf (U.S. Working Natural Gas in Storage). Current inventories are now 17 Bcf above the 5-year average (2004–2008) and 60 Bcf above the level during the corresponding week last year. Storage inventories are expected to finish the 2009 withdrawal season (March 31, 2009) at about 1.5 trillion cubic feet (Tcf), roughly 100 Bcf above the previous 5-year average for that time. This fall, inventories are expected to approach the previous high of 3,565 Bcf recorded at the end of October 2007.
Prices. The Henry Hub spot price averaged $5.40 per Mcf in January, $0.60 per Mcf below the average December spot price. For all of 2008, the Henry Hub spot price averaged $9.13 per Mcf. Despite colder-than-normal weather last month, prices continued downward in response to the ongoing drop in natural gas demand. Natural gas prices in 2009 are expected to be largely driven by the extent of the supply response to the persistence of sluggish consumption in light of the current economic downturn. Prices are expected to remain weak as inventories build toward capacity this fall. A warmer summer or faster economic recovery than anticipated could push consumption and prices higher than expected. Prices are projected to recover in 2010 as economic growth contributes to an increase in demand. The Henry Hub spot price is expected to average $5.01 per Mcf in 2009 and $5.93 per Mcf in 2010.
Source: EIA
Read more on: http://www.eia.doe.gov/emeu/steo/pub/contents.html
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