Forecasters Converging On 100 Million B/D :
While predictions by Total Chief Executive Christophe de Margerie and others that world oil production is facing a limit of 100 million barrels per day or less have received a lot of attention lately, new long-term energy forecasts from major oil companies and government organizations seem to be quietly converging with that stark assessment. While the latest mainstream energy forecasts don’t predict a peak or plateau, they do see little more than 100 million b/d of conventional oil output by 2030 — the end of the forecast period (PIW Nov.5,p1). Both Exxon Mobil’s new long-term outlook and the latest World Energy Outlook from the International Energy Agency (IEA) project conventional oil production of 105 million-106 million b/d against total liquids supply of 116 million b/d. According to the recent US National Petroleum Council (NPC) study, Facing the Hard Truths about Energy, the average of all the forecasts gathered from international oil companies pointed to an even lower global liquids supply of 107 million b/d by 2030, implying conventional oil of less than 100 million b/d (PIW Dec.10,p1). The pattern in these annual projections has been for gradual reductions in total supply figures in recent years, even at much higher prices, despite signs of unexpectedly durable oil demand from emerging markets.
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Even with the convergence toward 100 million b/d, the mainstream forecasts still involve some admittedly ambitious supply assumptions to get up even to that level. Both Exxon and the IEA see Opec production having to increase by more than 50% from current levels by 2030. The IEA pegs Saudi output at a hefty 17.5 million b/d by then, with big increases from other Mideast producers, too. Exxon projects Opec crude oil production at 47 million b/d, but both stress the obstacles ahead in achieving these kinds of supply increases. While the NPC study highlights the big differences that emerge among supply projections after 2015, the IEA warns that even in the period from now until 2015 balances will be tight, and that even a slight excess of demand or shortfall in supply risks significant upward price pressure.
This, my dear, dear friends, is what happens when large institutions that value saving face or avoiding a panic more than getting the numbers right can no longer avoid the nasty realities of the oil situation.
They can’t suddenly leap to their feet and proclaim, in stentorian tones, “What ho! We’ve been lying (or wrong or simply indulging in recreational chemistry) all this time! Peak oil is real! And it’s about to bite us on the ass! Sorry about not getting the word out sooner and all that.” No, instead they will keep splitting the difference, as my mother used to say, between their current predictions and where they know, in the very deepest recesses of their hearts, we’re headed. So we know have this miraculous consensus that we’ll have a ceiling around 100 million barrels/day, with a secondary view also gaining official support for continued tightness and a “supply crunch” around 2012.
I find this fascinating, as the analysis I trust the most is Chris Skrebowski’s Megafields Project, which predicts a peak of around 92 million barrels/day in roughly the middle of 2011. When I mention his conclusions here, I routinely get e-mail from people saying, “But we’re only producing 86 million barrels/day now–how can we find another 6 million barrels/day beyond that needed to offset the declines from older wells, all in 3 or 4 years?” That’s precisely why I think a bottom-up analysis, such as the Megafields Project, is so valuable: It looks at the fields and wells in production or development, the infrastructure (all those tankers and things), and adds up the additions and the declines. If the new projects coming online now (and there are some big ones) don’t slip too much, then we should expect to see a jump off the current plateau that we’ve been on since early 2005. But it would likely be a leap to the ultimate peak (perhaps in the form of the ultimate production plateau), meaning we would stay there just long enough for all the cornucopians to get chesty and tell the world how this proves that peak oil is a lot of hooie, etc.
Honestly, if peak oil weren’t such a serious and unpleasant situation, I would actually enjoy watching these fools have to eat their words once we’re on the downslope.
The real concern, as always, is not just the supply of oil, taken in isolation, but the interaction of supply and demand, which determines the price and the economic impact of approaching the peak. With oil demand skipping right along in China and many of the (currently) exporting countries, there’s a very strong chance that we could see significantly higher prices in 2011, even if Skrebowski’s magic 6 million barrels/day arrives on time. So far, the impact of near-$100 oil on the US economy has been a fraction of what most people predicted; one can only wonder how much higher it will have to go before things get ugly, to use a technical economics terms.
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December 22nd, 2007 at 11:11 am
While we all have to respect the great, tedious, etc work of Chris Skrebowski, it remains to be seen what impact the demand part of the equation of the exporting countries will look like. While some of their production will offset our demand, or maybe that of China, it is becoming more apparent that the demand there will greatly impact our supplies. I do not care where my plastic ______ (fill in anything, I don’t use much anyway) comes from, as long as it is there when I need (should be spelled “want”) it. Likewise, anything in the form of refined products. I can see us bemoaning the days when we had cheap asphalt back when we refined all that &%$#*@ heavy sour crude that will be refined in distant realms in the future. Cheap roofing, road materials, etc. will go by the way. And, what about the high quality parafins used in cosmetics?
The size of the spigot, and where the nasty stuff is used will both be a part of our overall economic equation in the future, no matter who is right.
I also expect to see the market demand far better than 35 MPG in the future, but well before 2020.
December 22nd, 2007 at 11:44 am
I think we have to look at this situation in layers, as you suggest. There’s the baseline of raw production capacity at the well, which is limited by the level desired by the producing countries and the infrastructure available to transport and process the oil. Then there’s the import/export layer you mentioned (a further narrowing of the pipeline, in effect), and finally the demand from the importing nations. I often use the imagery in talking about all this of a problem in orbital mechanics, with about a dozen bodies of various sizes all orbiting each other and interacting in real time. I’m beginning to think that underestimates the situation.
I forget who first observed on this site that car companies won’t be able to sell anything in 2020 that gets anywhere near 35 MPG, thanks to the price of oil. I’ve started using it in my conversations, and it resonates perfectly with people, especially the non-energy-geek crowd. I wish I’d come up with it first.
December 22nd, 2007 at 1:35 pm
When I brought up the PO issue with a representative of the Sierra Club he argued that the official projections include liquid fuels from all sources including tar sands, CTL, shale, and biofuels. I argued that Coal ain’t oil, pavement (bitumen) ain’t oil, kerogen ain’t oil, and corn squeezins ain’t oil. I suppose the PO denialsts will eventually count the “juice” which charges EV batteries is also a liquid fuel. The electrolytes in batteries are liquids they might argue.
December 22nd, 2007 at 3:13 pm
Bottom line: while every effort in energy efficiency and conservation is welcome, very large scale clean renewable energy solutions have to be designed and build NOW:
This is where the M.A.R.E. Initiative comes in.
M.A.R.E. is put together by people who care about the future of this planet and want to act now, before it’s way too late. People who do realize we need to think BIG.
M.A.R.E. is about putting our priorities right as a globally responsible civilization and it is about decisive leadership and bold visions.
MARE’s goal is to become the largest independent clean energy provider in the world and has the potential to make the Difference, the next big step in our progress as a civilization.
The project is based on proven technologies, qualified as “suitable for funding” by the World Bank.
December 24th, 2007 at 11:48 am
Sorry for the late addition to the discussion, but the disadvantage with the “renewable” fuels is the drastic increase in CO2 emissions which will be generated by their production. The advantage of true crude oil is that it is a combination of many components which have only to be separated, generally throught fractionation, which generates some CO2, but the manufacturing processes like CTL, most biofuels, and certainly ethanol from even corn generates more pollution than using crude oil. Thus, if we are to be responsible in our choices, “renewable” may well mean dirtier, even with the reputation which the oil and gas industries, where I earn my living, most certainly deserve. If we are going to go to the extremes of manufacturing our fuels, we have to come up with the technologies to make them truly clean.
As such I will say two things: First, I do not care what the source of my fuel is, as long as it works and the production or manufacture of it is not killing me or anyone else. Second, even the cleanest of fuel alternatives, and I do not consider hydrogen to be among those alternatives, are going to be dirty unless we can find a way to power those alternatives with electricity and then produce clean electricity, like solar or wind generation, and accept the limitations, as a species which those sources impose. Not some of us, not most of us, but ALL of us.