OPEC Energy Minister: 'Crude Should be $100'

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OPEC Energy Minister: 'Crude Should be $100'2007-10-10 - Luke Burgess

BALTIMORE, MD--Even though it is the smallest of the OPEC producers, Qatar remains a vital cog in the global crude oil supply/demand balance. In return, the tiny peninsula country stakes up trillions of hydrocarbon dollars every year.  But many of Qatar's oil fields are old and largely depleted. Some estimate that the country's entire oil reserves will be almost completely depleted in 15 years. Fortunately, Qatar has a back up plan. But the means are going cost them . . . big time.

With a population of roughly 900,000, Qatar currently produces over 800,000 barrels of crude per day. Interestingly, this means that there are .889 barrels of oil produced every day per citizen. In comparison, the United States produces .017 barrels per day (bbls/d) per citizen, Canada pumps out .098 bbls/d per citizen, and Saudi Arabia, the king of all world oil production, produces .269 bbls/d per citizen.

Qatar's crude production has risen steadily since the 1980s. And even though the country produces out less than a million barrels of crude per day, Qatar has managed to more than double production of its black gold in the past twenty years. This is a feat few other oil producing nations can tout and makes the country a strategic member of OPEC.

But many of Qatar's oil fields are old. And most are largely depleted. The country largest liquid hydrocarbon deposit is the Dukhan oil field. The Dukhan complex has production facilities that can handle up to 335,000 barrels per day, over 40% of the country total output. But this field starting producing crude back in 1947. And at over 60 years old, Dukhan is an aging grandfather in oil field years and will not be able to sustain current production levels much longer.

Other than the Dukan field, Qatar has only two other offshore oil fields, Al-Shaheen and Idd Ed Shardi, that have the capacity to produce over 100,000 barrels per day. Al-Shaheen is the most prospective of the two with crude oil reserves of about 780 million barrels.

Production began at Al-Shaheen in 1994 with an average daily capacity of 30,000 bbls/d. The field's production in the first quarter of 2006 mounted to 240,000 bbls/d and has been estimated to increase to 525,000 bbls/d by the end of 2009.

But Al-Shaheen may be Qatar's last oil revenue hurray.

By 2023, all of Qatar's oil fields are projected to be mostly depleted.

Fortunately for the country, Qatar controls the North natural gas field, which is currently assumed to contain an eye-popping 900 trillion cubic feet of recoverable natural gas reserves. That's about 14% of the total worldwide reserves.

Matthew Simmons called this monstrous natural gas field the "Single, most important natural gas field in the world."

Much of this natural gas will likely be converted into liquid fuels by employing a process known as gas-to-liquids. Using this technology, refineries can convert gaseous products into valuable fuel oils, which can be sold as or blended with diesel fuel. Liquid fuels are cheaper to transport, market, and distribute to large markets making them ideal products.

Moreover, gas-to-liquids technology is becoming increasingly significant as crude oil resources are depleted, while natural gas supplies are projected to last into the 22nd century.

At this point in time, however, it's still cheaper and easier for most countries to create refined petroleum products using traditional crude oil. Gas-to-liquid technology requires significant capital expenditure . . . in the tens of billions . . . much of which is needed for engineering and technical resources. Fact is, there are only a few guys in the world today that can be considered gas-to-liquid "experts" and securing one of these guys to work on your project right now is extremely difficult. Because of this lack of wide knowledge base, gas-to-liquid technology, while very promising, is still a few years away.

In the meantime, the world needs crude oil . . . and lots of it. And the depletion of Qatar's oil fields in the next 15 years will further add to the supply/demand imbalance and ultimately push oil prices ever higher.  

It's difficult to say exactly how high oil prices will go. Some think the black goopy stuff should already be over $100 per barrel . . . like Qatar's energy minister.

Earlier this week Abdullah bin Hamad Al-Attiyah, the Deputy Prime Minister and Minister of Energy for Qatar, said in remarks aired by Al-Jazeera television, "If we take into account inflation from 1972 to the present day, the real and fair price for oil should be more than 100 dollars."

The current price of crude oil still does not reflect all the fundamentals. And even while currently trading at record highs, oil prices still have plenty of room to run. And as crude prices knife higher, oil and gas stocks will inevitably continue to bloom.

With this in mind, we've carefully handpicked a select group of oil and gas stocks for the Secret Stock Files portfolio, including one that I think is right now worth 45.7% more than current share prices. And I urge you to start taking positions in oil and gas firms now if you haven't already.

WaferGen Bio-Systems Update

I just got off the phone with Alnoor Shivji, President and CEO of WaferGen Bio-Systems. And let me tell you . . . this guy is fired up with excitement.

As you might remember, Alnoor has already turned lead into gold, selling his last three companies for +$1 billion. So there's little doubt that he has the know-how to turn turn his new project, WaferGen, into another slam-dunk winner.

Alnoor told me some very interesting things that I didn't know about the company before talking with him . . . like they've already secured the best patent guy in the entire industry to work for WaferGen.

And here's the truth: I was excited about WaferGen before I got on the phone with Alnoor. Now I'm really hopped up.

I'm going to publish a section in tomorrow's Secret Stock Files about my conversation with Alnoor. If you'd like to begin subscription to Secret Stock Files, which has returned profits of 16.6% . . . 40.6% . . . and even 64.3% in the past three weeks alone, simply sign up here: http://networkcrafter.com/cgr/cntdir.asp?num=3

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Until next time,

Luke Burgess
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