IEA sees boost in peak OPEC flow from '08 projects

Feb. 18, 2008
Production projects due on stream this year in members of OPEC represent peak gross capacity additions of 3.1 million b/d of oil and other liquids, says IEA.

By OGJ editors
HOUSTON, Feb. 18 -- Production projects due on stream this year in members of the Organization of Petroleum Exporting Countries represent peak gross capacity additions of 3.1 million b/d of crude oil and other liquids, says the International Energy Agency.

Last year, OPEC members started up projects with peak total-liquids capacities of 1.25 million b/d.

In its February Oil Market Report, IEA says OPEC members' ability to produce crude oil alone, net of declines in existing fields, could increase by 840,000 b/d during 2008.

NGLs and condensate represent 42% of the peak-capacity estimates for 2008 projects, compared with 20% last year, IEA says.

The agency points out that the time between start-up to plateau output varies from 1-2 months for some projects to 24 months or more for others.

"The net change in OPEC capacity in 2008 is of course markedly less than implied by gross additions starting up in 2008 because of the lag before plateau output is attained and also the offsetting impact of mature field decline," it says.

"Moreover, stretched drilling capacity and installation and service crew availability will likely continue to strain project deadlines again this year."

OPEC members also might defer project starts if they believe global oil demand is declining.

"The proliferation of potential additional liquids volumes in 2008 holds forth the prospect that tight OPEC spare capacity could temporarily ease, even if not everything comes to fruition on schedule," IEA says.

Low spare production capacity and low global inventories are signs of the market tightness that has kept crude oil prices high.

IEA estimates sustainable OPEC capacity to produce crude oil—the output level that members can reach with 30 days and maintain for at least 90 days—at 35.04 million b/d. It estimates January OPEC production of crude oil at 32.02 million b/d.

Although IEA has lowered its forecast for 2008, OPEC output of NGLs remains on a strong climb. The agency predicts OPEC NGL production this year will average 5.18 million b/d, up 365,000 b/d. It earlier expected the increase to be 620,000 b/d.

The scale-back reflects a delay in the start-up of the gas phase of Saudi Arabia's Khursaniyah oil and gas field, which is partly offset by expectations for faster build-up in gas from Qatar's Dolphin project.