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Norway Predicts Continued High Oil Prices March 31, 2005 08:13 AM ET
By DOUG MELLGREN
OSLO, Norway (AP) - Oil prices are likely to remain high, and there is nothing Norway can do to increase supplies because the nation's offshore fields are already producing at full capacity, oil minister Thorhild Widvey said Thursday.
"I think oil prices will remain high," she said at a briefing for Oslo-based foreign correspondents. "How high I don't know."
Oil prices have been above $50 a barrel, near record levels, and the International Energy Agency has said demand for energy is expected to increase by 60 percent by 2030, pushed up by increasing consumption in places like China and India.
"Energy is going to become more and more important on the international agenda," said Widvey.
Increased supplies could cool off oil prices, although Widvey said Norway's offshore fields are already at full capacity of about 3.2 million barrels of oil per day plus natural gas.
Norway, the world's third-largest oil exporter after Saudi Arabia and Russia, has remained outside the Organization of Petroleum Exporting Countries, which Widvey said would have to provide any extra oil.
"There are not many non-OPEC countries with extra capacity. The extra capacity is within OPEC," she said.
Widvey declined to say whether she thought oil prices were too high, but said "the price must be at a level that does not hurt the world economy, but covers the cost of producing oil in Norway."
Widvey said Norway is seeking to maintain current oil production levels for the next few years, but that flows will decline after that.
The Nordic country hopes to maintain supplies by searching for oil in the Barents Sea off the Norwegian and Russian Arctic, squeezing more oil out of current fields and encouraging small oil companies to develop projects deemed too small by the major players.
Currently, only about 46 percent of the oil in Norwegian offshore fields can be recovered. The government is encouraging efforts and funding research to increase that rate through enhanced recovery techniques that can include injecting water or gases into the reservoir or using special compounds to carry out more oil.
Widvey said a 1 percent increase in the rate would result in 180 billion kroner ($28.5 billion), in extra revenue for this Nordic nation of 4.6 million people.
There are also high hopes for the Barents Sea, which is shared by Norway and Russia, with a vast disputed border area between them.
Statoil ASA, Norway's state-owned oil and gas company, estimates the Norwegian side of the Barents alone holds around 8 billion barrels of oil equivalent. But only three of 62 oil exploration wells drilled in the region have struck petroleum in the form of natural gas.
Widvey said oil companies are still very interested in the Barents, especially since experts estimate that one-third of the world's undiscovered oil reserves are in the Arctic.
"There has been enormous interest in the Barents," said Widvey.
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Bend Arch Petroleum Inc. management commented, "The new well has produced over 1000 barrels of oil and approximately 2.5MCF of natural gas in the past week. The well has not yet stabilized and is very erratic while the fracture completion fluid is being recovered. The revenue from this new production is expected to significantly assist us on our ongoing drilling and exploration programs."
i don't think the math on this has sunk in yet....
this is JUST ONE WELL....
-------------------- Don't envy the happiness of those who live in a fool's paradise.
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Look at SVSE's last PR.......Exciting as well!
LOS ANGELES, CA--(MARKET WIRE)--Mar 22, 2005 -- Silver Star Energy, Inc. (OTC BB:SVSE.OB - News) is pleased to report that natural gas production has begun from the "Archer-Whitney #1" gas well. The operator of the North Franklin Project informed the Company that the well was put on production and began flowing gas into the gas buyers system. A gas sales contract is in place with a natural gas purchaser and Silver Star will begin to receive revenue as of today's date.
The operator of the project has choked down and metered the flow at an initial rate of 2.0MMcf and will be increasing the flow in small increments until the pressures from the reservoir stabilize at an acceptable rate that will not damage the casing or productive sand layer. It is critical for the field health to inhibit a simple open flow and to choke down pressures to prevent gas reservoir "coning" and drawing water into the sands by the outgoing gas.
The Company will endeavor to release further gas flow rates from the well as soon as numbers become available. The gas well will now be evaluated as to I.P.R.s (Initial Production Rates) and flow rates will be established as to the performance of the well and response of the reservoir.
The Company has always expected excellent deliverability from the well and is optimistic that ultimately, gas flow rates will be similar to area analog gas fields and that 5,000 mcf/day is a realistic flow rate target. The production rate will now be evaluated and assessed by the Company, partners and operator as to optimal numbers for the well and reservoir.
Robert McIntosh, President of Silver Star, stated, "The inaugural production at North Franklin is a tremendous accomplishment for the Company. Now that the well is finally online it comes at a time when gas prices continue to rise due to high demand and Silver Star is positioned to take advantage of these natural gas prices. The Company has plans for drilling 5 more wells on the leases and the second well is scheduled to begin drilling immediately on the lease when the conditions allow us to mobilize drilling equipment."
Monday's gas price based on PG&E-Citygate pricing is $7.19 mcf
-------------------- Greedy Because I'm Broke!!
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VIENNA, Austria - Crude futures climbed more than $1 a barrel Thursday on the heels of rising prices for gasoline and heating oil futures the previous day.
The U.S. government released data on Wednesday that showed a large increase in crude inventories, but a drop in the nation's supply of gasoline and distillate fuel, which includes heating oil.
Also swirling around the market on Thursday was a report by Goldman Sachs that raised the possibility of oil prices rising as high as $105 a barrel.
Light, sweet crude on the New York Mercantile Exchange rose $1.21 to $55.20 a barrel in morning trading. Heating oil rose nearly 3 cents to $1.636 a gallon, while unleaded gasoline also rose about 3 cents to $1.627 a gallon.
On Wednesday, heating oil futures settled more than 5 cents higher and gasoline futures closed more than 2 cents higher.
While strong builds in oil supplies normally have a bearish pull, analysts said lag times in converting crude to refined consumer products — particularly gasoline — worked against a drop in prices, along with lingering fears that OPEC would cut production if prices fell too far.
On Wednesday, the U.S. Energy Department said in its weekly petroleum supply report that the nation's inventory of crude oil grew by 5.4 million barrels last week to 314.7 million barrels, or 9 percent above year-ago levels.
Gasoline inventories fell by 2.9 million barrels last week to 214.4 million barrels, or 6 percent above year-ago levels, the agency said. The supply of distillate fuel, which includes diesel and heating oil, dropped by 1.1 million barrels to 103.4 million barrels, or 2 percent below last year's level.
"Crude oil keeps rolling into key consuming markets, but refiners have been slow to convert it into enough gasoline and heating oil to rebuild product stocks. And tight product markets are helping soften downward price reactions to the crude stock builds," Energy Intelligence, which reports on the global energy industry, said on its Web site.
It said that while U.S. supply data drove oil futures prices down on Wednesday, the reaction to the stock rise "was mostly undone by a late gasoline price rally."
Noting that gasoline supplies were down, Adam Sieminski of Deutsche Bank in London said: "There is a lot of concern about the upcoming driving season.
"Summer driving is tending to thwart things, and despite the crude build there is still a view that says OPEC is willing to cut to support prices," he added.
Ng Weng Hoong, a Singapore-based analyst with EnergyAsia Report, said the recent price pullback could extend into April, "but this could be merely setting the stage for another strong run-up."
"The $60 mark is the next barrier waiting to be crashed. With few signs of a global economic slowdown, no one is predicting an oil price crash just yet as the markets move into the traditionally weak demand second quarter," he wrote in an e-mail.
The U.S. government's latest supply snapshot showed that refineries were running at 91 percent of their output capacity and that imports of crude have averaged 10.2 million barrels a day over the past month, compared with 9.9 million barrels a year earlier.
In the latest signal that OPEC considered the market under control, Qatar's oil minister, Abdullah bin Hamad Al Attiyah, said there were no supply problems and that he did not expect the group to meet before June, as scheduled.
OPEC agreed earlier this month to raise production quotas by 500,000 barrels per day and said it would consult on whether to increase them by a further 500,000 if prices continued to rise. It recently decided against such immediate action.
Worldwide demand is forecast by the International Energy Agency to rise 2.2 percent this year to an average of 84.3 million barrels a day.
While oil prices are roughly 47 percent higher than a year ago, Nymex futures would need to surpass $90 a barrel to approach the inflation-adjusted high set in 1980.
-------------------- Greedy Because I'm Broke!!
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