Oil fundamentals today are showing very similar characteristics to natural gas a few years ago: A rapid increase in productive capacity; weak domestic consumption that can’t absorb the rising output; old takeaway infrastructure (for example, pipelines) that is not adapting quickly enough to match new sources of supply with shifting demand; and a fenced-in continental marketplace that inhibits exports to higher-value global markets.



Rapid production growth, the number one antagonist, continues to astound with every new data point received. From North Dakota to Alberta, Saskatchewan to Oklahoma, new light oil barrels from horizontally-fracked wells keep flowing in greater quantities every month. If there is one chart that turns this story into Technicolor, it’s Figure 1, the long-term production profile for Texas. _Globe&Mail

Texas is now growing its rate of oil output by 35,000 B/d, every month, for an annualized growth rate of 425,000 B/d per year! To put this in perspective, that’s the equivalent of one-third of Libya’s oil production developed and brought to market in 12 months. It’s also close to China’s incremental consumption in 2011 (505,000 B/d).



Here in Alberta, the production of light, tight oil, or LTO, is now up by 175,000 B/d relative to what would have been expected without the new technologies. Putting this in perspective, Alberta has built the equivalent capacity of a big oil sands project in less than 18 months – complete with an upgrader to light oil! _Globe&Mail

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Even More:

North American oil executives are becoming concerned that the same type of price collapse that occurred in the natural gas sector may also occur in the crude oil sector due to significant improvements in oil production technology. Canada is projecting sustained growth in oil production over at least the next 2 decades, largely due to growth of in situ oil sands production.And as you can see below, Texas has reversed its long decline in oil production, and expects production to continue to grow for the near-term and intermediate-term.To say nothing of North Dakota and the Gulf of Mexico! Carbon Sciences is showing progress in its unique "dry reforming catalytic technology" which makes economic use of otherwise useless high CO2 natural gas deposits . By using CO2 in the reforming of methane to syngas, Carbon Sciences opens up large deposits of otherwise stranded gas which would be impossible to make economic use of otherwise.Carbon Sciences' technology allows for a wide range of uses for these newly available gas deposits, including GTL (gas to liquids), high value chemicals production, etc.Widening the economic uses of natural gas -- both stranded and otherwise -- also puts downward pressure on oil prices, although few analysts or journalists up until now have taken the trouble to point out that important fact.

Labels: GTL, natural gas, oil prices, oil production