Within the last three years, several discrepancies were found in the amount of oil reported in storage. Let's take a closer look at one of those instances...
On September 16, 2009, the EIA reported a loss of four million barrels of oil from the Cushing storage hub in Oklahoma. That day, oil futures climbed 2.2%.
Now, before grabbing your torches and pitchforks, remember that this isn't some malicious cover-up. Some of the errors were reported to the EIA by the companies that made them. According to the EIA, these errors are rare and mistakes are typically adjusted later on.
The EIA isn't without excuses. For starters, their system hasn't been updated for nearly three decades. Furthermore, much of the data must be put in manually.
Is the EIA reporting debacle a cause for panic?
Absolutely not.
Does this warrant concern? I'd say so.
Then again, we should be used to shady numbers within the oil industry.
OPEC has become a master of cooking the books. Anyone else remember when OPEC members suddenly doubled their proven oil reserves? Iraq managed to do it twice within five years.
The reality is this: Even though the EIA messed up, their mistakes shouldn't change your outlook on the oil industry in the slightest — especially when it comes to your oil investments.
The Death of Conventional Oil
There's a very specific reason why our outlook hasn't changed.
If one thing has become apparent by now, it's that conventional oil is on its deathbed. To a certain degree, you're seeing the last drops of that easy-to-get oil right now, and what is now considered "conventional" is continually changing.
The Cantarell oil field should ring a bell. The once-mighty Cantarell field was the third-largest oil field in the world. Today, it's one of the chief reasons why Mexico's oil exports are shriveling.
Who knows, perhaps production from Alberta's oil sands will one day be considered conventional. I know some of you would argue that the cheap stuff is already gone, and to a certain point, I would agree with you.
When was the last time you read about a massive oil discovery?
Was it when the Tupi field found off the coast of Brazil, considered the largest oil discovery in the Western Hemisphere within the last 30 years, made headlines?
Petrobras, Brazil's state-run oil company, recently boosted its spending by approximately 26% to tap into this offshore oil. They're spending up to $220 billion over the next five years.
(So much for cheap oil... )
It's not too easy for the world's top producers, either. This week, Iran announced it is looking for $200 billion in oil, gas, and refining investments to 2015. Then again, that's needed just to avoid a production decline.
Re-Vitalizing the North American Oil Industry
Interestingly, the U.S. is getting better at avoiding oil from the Middle East. For the first time in twenty years, oil imports from Saudi Arabia are below one million barrels per day.
That's not an error in the EIA numbers. The fact is that we've been slowly shying away from Saudi oil.
It couldn't have come at a better time... And to think, all it took was a massive collapse in oil prices.
That and the fact that for the first time since in decades, we have a reason to feel good about U.S. oil production.
You see, the North American oil industry is finally getting a well-deserved boost. Advancements made in drilling and fracturing techniques have investors rushing into the area.
And while not all companies are going to come out on top, several small oil companies — highlighted in this special report — are pulling out all the stops. The best part is that the latest market sell-off makes right now the perfect time for you get your fair share of the profits. Simply click here to learn about these opportunities.
We can only hope the U.S. government takes this mess as a lesson and gives the EIA additional resources to help them manage the numbers. Let's face it, your make-or-break decisions aren't solely based on their inventory reports.
Over the next few weeks, I'll be taking a deeper look at some of these North American oil plays. If there are any areas in particular that you want to know about, please feel free to leave a comment below — even if you just want to offer your own two cents on a specific play.
Until next time,
Keith Kohl
Energy and Capital
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First hand knowledge from an independent producer friend of mine. Denbury Resources is taking old, depleted fields turning them into productive producing fields. One giant story is Tinsley Field at 5000 ft level in Yazoo, Ms. It's what's under that depth that is interesting and will be in play after the CO2 flood at the 5000 ft mark is done. 40,000,000 Bbls will come from the shallow play, then at the 12,500 foot depth it is said there may be one trillion cubic feet of gas and more oil in the deeper sand formations like Cotton Valley, or Rodessa formations. Tinsley is Mississippi's largest oil field. Keep you eye on Citronelle Alabama, Alabama's largest field and the DOE CO2 test that began in March, 2010. It's a five month test flood in a specific area. Citronelle has 325 oil reserviors and has been estimated to have 65,000,000 Bbls of oil in place for recovery. Google it.
Also the cost to bring up a Bbl to Denbury is very reasonable. Look at what they are doing in La. and Tx. as well. Just a heads up. Enjoy reading your articles.
Regards,
Robert Rusling
How about talking about the huge undiscovered bitumen reserves uncovered by Oilsands Quest in Saskatchewan, and the unconventional methods for insitu extraction? They plan on using SAGD which is only one method out of many unconventional recovery methods for extracting this virtually unknown resource.
WASP