The World’s Energy Future
Saudi Aramco President and CEO Abdullah S. Jum’ah keynoted at the 20th World Energy Congress in Rome.
World-Generation was credentialed.
By Dick Flanagan, publisher
Saudi Aramco President and CEO Abdullah S. Jum’ah addressed the 20th World Energy Congress and asserted that there are enough conventional and non-conventional liquid energy resources available for petroleum to be a significant part of global energy for decades. He offered a statistical basis for his argument that forecasts the ultimate recovery of conventional oil resources have actually increased over time.
“In general, we have grossly underestimated mankind’s ability to find new reserves of petroleum,” Jum’ah asserts, “as well as our capacity to raise recovery rates and tap fields once thought inaccessible or impossible to produce. On balance, I am confident that this growth trend can continue. But confidence is no excuse for complacency, and I also believe we must take a hard look at the Earth’s total endowment of liquid fuels, and realistically assess our ability to meet future demand for energy.”
In addition to conventional oil, Jum’ah believes that non-conventional resources of liquid energy such as condensates, natural gas liquids, tar sands, bitumen, extra heavy oil, oil shales, gas-to-liquids, coal-to-liquids, and biofuels will ultimately contribute to the global supplies of petroleum that are currently meeting consumers’ needs. “The amount of conventional oil in place is somewhere between six and eight trillion barrels, depending on whether you go with the conservative or target scenario,” he said. “The volume of non-conventional oil in place is rather murkier, with a conservative figure of seven trillion barrels and a target scenario number of roughly eight trillion barrels or higher.”
Derivatives For All Seasons
By Ronn Mullins, Insurance editor
Ronn Mullins is the Insurance Editor for World-Generation and a Member of the Class of 2008.
Everybody talks about the weather, Mark Twain observed, but nobody does anything about it. True, nothing can alter the path or culmination of weather, but now with weather derivatives, the sharp sting can be lessened from the random effects of weather. These weather derivatives are especially applicable for companies supplying energy and those using it.
Simply, a derivative contract identifies a peculiar financial instrument that has no value in and of itself, but derives its value from assets or data that support it such as stocks, bonds, currencies, commodities, real estate, even weather.
Weather derivatives first appeared more than a decade ago when before the warm winter brought on by El Nino in 1997-1998, Aquila Energy executed a weather option for Consolidated Edison in New York that was embedded in a power contract.
Today, demand for weather derivatives continues to be strong worldwide, according to a survey published by the Weather Risk Management Association which was conducted by Price Waterhouse. The 2007 industry survey shows that the total number of contracts traded worldwide – both over-the-counter (OTC) and on the Chicago Mercantile Exchange (CME) -- was 730,087 for the period April 2006 through March 2007. Reflecting a shift from seasonal to monthly contracts on the CME, the notional value of contracts traded during 2007 dropped to $19.2 billion from 2006’s record of $45.2 billion. Still growth has been substantial. In 2005 the total value of contracts was $8.4 billion; in 2004, a mere $4.6 billion.
Dick
Flanagan
