Quote of the week
© The Financial Times Ltd 2015 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
Neil McMahon at Bernstein Research says it’s not peak oil, but peak well flow that is the problem. He does however touch on similar themes advanced by peak oilists; namely that remaining oil reserves are becoming more difficult, and expensive, to recover. He recounts the phenomenal flow rates of some of the most famous ‘gushers’ of bygone days, notably the Lucas I well at Spindletop, Texas.
Finds such as this were ‘drilled to death’ and flow rates fell, especially as pressure subsided. High flow rates had something of a renaissance thanks to the North Sea and other offshore discoveries of the 1980s and 1990s, and McMahon writes that these flow rates were critical for the expensive and difficult engineering required to develop the fields.
Today, however, he writes that the industry is not coming to terms with the lower flow rates that newer discoveries will provide.
We have been so used to field developments that have produced 30 kbbl/d, or even 40 kbbl/d in the case of Thunder Horse, that the new phase of developments are likely to come out at half that number. So why will these flowrates drop by half, and won’t technology come along to save the day yet again?
Kosmos Energy, a privately-held oil company with a stake in Ghana’s newly-discovered oil reserves, has been the subject of interest from China and India’s ONGC. Now Shell is rumoured to be looking into Kosmos – although with Shell’s substantial operations in nearby Nigeria it would be somewhat surprising if they hadn’t considered it.
Kosmos, which is backed by private equity groups Warburg Pincus and Blackstone, is up for sale with a decision expected in July. It has just over 30 per cent stake in the Jupiter field in the Gulf of Guinea, which holds more than 1bn barrels of recoverable oil, making it one of the significant finds in recent years. However oil majors have not yet become involved in Ghana. Read more
Oil prices rose back towards the $72 a barrel mark on Friday, with bullish sentiment bolstered by yesterday’s improved US economic data and continued supply concerns in Nigeria.
Oil futures, which many investors have been purchasing to gain exposure to a recovery in global economic activity, ticked upwards yesterday after an influential business activity index from the Philadelphia Federal Reserve posted its highest reading since before the collapse of the investment bank Lehman Brothers sent shock waves through global markets last September. Read more
Google is writing software with “vehicle dispatch algorithms” to help smooth out demand for electricity that plug-in vehicles could create, CNet reports. It’s not the first time Google, or more specifically its philanthropic arm Google.org, has ventured into electric cars; two years ago it announced grants worth a total of $10m to electric car research programmes, and also said it would explore “vehicle-to-grid” technology directly with Pacific Gas & Electric.
Google.org’s on FAQ on the subject shows there was hope that electric cars could act a kind of baseload power source, allowing the grid to draw back energy from vehicles, rather than turning to fossil fuels at times when generation from solar and wind power was insufficient.
But CNet’s report suggests said Google has moved away from vehicle-too-grid in favour of a one-way charging because it can be implemented more quickly, with less need for advanced grid technology. Read more
By Neil Hume
London is mentioned in passing but we wonder if a dual listing here and in Switzerland is the most likely option. Read more
China’s oil demand in May rose for a second month in a row, year-on-year, according to Platts’ analysis of official data – the second highest level ever. It followed an increase in April that was the first in six months.
The analysis is based on Chinese official figures, which do not explicitly cover consumption, so it doesn’t preclude factors such as building reserves, or restocking, which the latest monthly IEA report pointed to. Read more
- Commodity trading powerhouse Glencore explores listing
Partnership structure seen as barrier to growth (FT)