Looking ahead

World petroleum demand to increase 2.5%. The International Energy Agency (IEA) predicts that demand for petroleum worldwide will reach 77.7 million bpd in 2001, compared to the current rate of 75.8 million bpd. Half of the increase is due to growing consumption in member states of the Organization for Economic Cooperation and Development (OECD), while the other half is due to non-OECD demand growth. This growth will be concentrated in Asia. After increasing an estimated 1.3 million bpd this year, oil supplied by non-OPEC countries is likely to add 670,000 bpd – half the 2000 growth.

Norwegian oil fields can do no more to curb high prices. As oil prices soar to 10-year highs, the oil minister of the world’s second-largest, oil-exporting country, Olav Akselsen, said that Norway has "no more capacity" and is "producing what it can." He went on to further explain that the market is based on several factors, including psychology. "We are producing more than the market calls for; thus in theory, prices should go down, but they haven’t. It is very limited how much we can affect prices," he said. Norway is not an OPEC member, but it has repeatedly supported OPEC’s efforts to oversee global oil prices. Exporters and importers will benefit from stable oil prices, the minister said. However, he does not have a preferred price range.

Gas price forecast raised. Lehman Brothers increased its Henry Hub gas price forecast for the years 2000 through 2002. In 2000, the new estimate is $3.80/MMBtu up from $3.60/MMBtu. In 2001, it is $4.20/MMBtu up from $3.50/MMBtu, and for 2002, the new prediction is $3.50/MMBtu raised from$2.85/MMBtu. Growth, this year, is due to a raise in fourth-quarter gas price forecasts, to $4.96/MMBtu from $4.25/MMBtu. It is anticipated that supply and demand will balance. However, current gas production levels in the U.S. and Canada continue to lag. Gas drilling activity has increased dramatically from a second-quarter 1999 low of 395 average rigs to an average 629 rigs in first half of 2000. The historic trends in E&P activity show that 650 rigs are needed to maintain production.

Philippines will start gas production by 2002. The Department of Energy (DOE) stated that the expected commencement of natural gas output will cut the country’s dependence on oil and enable it to attain energy self-sufficiency. According to Energy Secretary Mario Tiaoqui, the Malampaya gas field in Palawan has a sizeable reserve that can support up to 3,000 MW of power plant capacity. Initial annual field output is estimated at 145 Bcfg that will be used to fuel the 2,700 MW of baseload power plants in southern Luzon. Gas production in 2004 is projected at 146.6 Bcf, higher than the estimated demand of 105.2 Bcf. In 2009, the forecast is 255.8 Bcfg, with demand of 141.2 Bcfg. The power sector is expected to account for the majority of gas demand. The government is promoting gas-use since gas is considered the cleanest fossil fuel. Last year, oil accounted for only 23% of the power mix, and this year it is expected to slide further to 15%, said Tiaoqui.

Rig shortages, flat production predicted. Petrodata Research released a report at the Offshore Northern Seas Conference in Norway, stating that the rebound in oil prices from the 1998 – 1999 collapse may have been too late and may be unable to prevent a shortage of new drilling rigs, predicted for 2001. Petrodata’s analyst Maarten van Mourik said, "Upstream activity has been in the doldrums and is only now picking up." Oil companies have been using cash flow for in-house financial activities instead of drilling wells. Consequently, the number of new field developments has shrunk, and it is now hard to foresee any increases in non-OPEC oil supply for 2001. Only the politically burdened OPEC is left to fill rising demand, said the study.

Foreign firms to invest in Syrian oil sector. Syrian Oil Minister Mohamamd Jamal told the London-based Arabic daily, Al-Hayat, that his country will invite additional foreign oil companies to participate in its E&P oil activities. The minister explained that the decision to encourage foreign firms to participate in the country’s upstream sector is based on a financial need to have such companies share the country’s risk of exploring fresh territories. Pending final signatures, an agreement allows Canadian firm Dublin (a subsidiary of Lundin Oil) to operate in the Audeh area of north east Syria, said Jamal. The Syrian minister also disclosed plans for doubling gas production.

Technological advances allow development of smaller fields. The Brigantine field – a cluster of three gas fields – contains recoverable reserves estimated at 280 Bcf of gas. This is a small field compared to most North Sea finds. It is the second such field to be developed in UK waters this year. Shell and ExxonMobil have a £100-million ($145-million) plan for the field’s development. Energy Minister Helen Liddell said, "The technological innovation needed to develop the field demonstrates the ability of the industry to meet the challenges presented by the North Sea." Drilling is on the way, and first gas output is expected in January 2001.

PanCanadian closes border deal, expands its U.S. presence. Calgary-based PanCanadian Petroleum bought $470 million in oil and gas assets from Montana Power. According to a company statement, the purchase will stretch its facilities from the current "powerbase" in southern Alberta and Saskatchewan into northern Montana. Additional production from these assets of 94,000 Mcfgd and 3,800 bpd of liquids will increase the firm’s output by more than 10%.