"Iraq Oil Revolution Over-Hyped No Way Can Expand As Fastas hope"

[wings13]

From The San Francisco Chronicle

Original Link: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/04/01/businessinsider-cambridge-energy-resarch-on-iraq-oil-2010-4.DTL

CERA: Iraq's Oil Revolution Is Massively Over-Hyped, There's No Way They Can Expand As Fast As They Hope (XOM)

Vincent Fernando, CFA,

Thursday, April 1, 2010

Cambridge Energy Research Associates (IHS CERA) is questioning the feasibility of Iraq's extremely ambitious oil production capacity expansion plans in a latest report.

Iraq is currently gunning to expand its oil production capacity to 12 million barrels per day from just 2.5 million now, in as little as seven years.

CERA believes that Iraq has massive production potential, but believes Iraq will be challenged to just increase oil production half as much as it intends.

The reason is that we've never seen such a rapid expansion successfully completed:

Rig Zone:

"But Iraq's new expansion timetable would dwarf the most rapid buildups that we have recently seen in places such as Russia and Saudi Arabia," said IHS CERA Senior Middle East Director, Bhushan Bahree. "The political, security, operational and infrastructure challenges in the country, along with a likely shortage of skilled personnel, are likely to hamper progress towards such an unprecedented achievement."

...

"Iraq's expansion timetable appears extraordinarily ambitious in comparison to the recently completed capacity increase in Saudi Arabia," said Bahree. "Saudi Arabia has significant security and infrastructure advantages yet it took Saudi Arabia between four and five years to expand its net output capacity by some 2 million barrels per day. Iraq will certainly be challenged to match this pace, much less exceed it."

IHS CERA thinks Iraq will only be able to expand oil production to 4.3 million barrels per day by 2015 and 6.5 million by 2020. They nevertheless stress that even this will be a significant change for the oil market, and OPEC in general (Iraq is currently not restricted by OPEC quotas). Just don't think Iraq will hit 12 million barrels per day production any time soon. Thus Saudi Arabia will remain the undisputed oil production king for at least another decade.

[mrparrot]

You never know what you can do until ya' try...

[jackdavis1364]

Never say never. Think about what happened in the US during world war II. Virtually overnight we went on a war footing that started cranking out planes by the thousands, tanks, trucks, ships, ammo and on and on. I have oft times wondered how we ever kept up with the demands. Yes, Iraq can do what they say but it would take a mighty effort on their part but it can be done. Do I think the US could duplicate what we did in WW II ? No, unfortunately not. We have become weak. China has all of our manufacturing. We have no plants to convert as we did when J. C. Higgins quit manufacturing bicycles and started manufacturing landing craft. And the automobile manufacturers started manufacturing tanks. The unions would demand higher wages and strike. Washington would want to have hearings that would last a year. Well, as you can see, my clock is wound tighter than a girdle. But going back, Iraq is still young. They don't have all of the encumberances. They can do it...with the proper leadership.

[allIneedisonemillionusd]

I guess this fella doesn't know his history. Take a look at the Permian Basin during the 70's. A well a week per rig and the holes were much deeper and rockier. With proper motivation ($) the oil companies will make it happen. The fact that they agreed to a per barrel profit instead of market, means they will be punching holes in Iraq as fast as they can and sucking the oil out even faster. Hence, the non-cooperation with OPEC. OPEC knows this and is trying to get Iraq involved with their quota system. Iraq is saying no! JMHO