Carl Mortished, World Business Editor
Posted on 01/18/2008 12:33:51 AM PST by Stoat
Doom-laden forecasts that world oil supplies are poised to fall off the edge of a cliff are wide of the mark, according to leading oil industry experts who gave warning that human factors, not geology, will drive the oil market.
A landmark study of more than 800 oilfields by Cambridge Energy Research Associates (Cera) has concluded that rates of decline are only 4.5 per cent a year, almost half the rate previously believed, leading the consultancy to conclude that oil output will continue to rise over the next decade.
Peter Jackson, the report's author, said: We will be able to grow supply to well over 100million barrels per day by 2017. Current world oil output is in the region of 85million barrels a day.
The optimistic view of the world's oil resource was also given support by BP's chief economist, Peter Davies, who dismissed theories of Peak Oil as fallacious. Instead, he gave warning that world oil production would peak as demand weakened, because of political constraints, including taxation and government efforts to reduce greenhouse gas emissions.
Speaking to the All Party Parliamentary Group on Peak Oil, Mr Davies said that peaks in world production had been wrongly predicted throughout history but he agreed that oil might peak within a generation as a result of a peaking of demand rather than supply.
He said it was inconceivable that oil consumption would be unaffected by government policies to reduce carbon emissions. There is a distinct possibilty that global oil consumption could peak as a result of such climate policies, Mr Davies said.
The BP economist's remarks were echoed yesterday by Mr Jackson. It is the above-ground risks that will influence the rate [of oil output], he said.
Cera analysed the output of 811 oilfields, which produce 19 billion barrels a year, out of total world output of 32 billion. These included many of the giants, including Saudi Arabia's Ghawar, the largest known oilfield, which has been at the centre of the debate between peak oil analysts and their detractors.
In his book Twilight in the Desert, Matthew Simmons of Simmons & Co, the consultancy, said the big Saudi fields reached their peak output in 1981 but Cera yesterday said that Ghawar was not failing. There is no technical evidence that Ghawar is about to decline, said Mr Jackson.
Cera reckons that oil output, including unconventional oil, such as tar sands, could allow oil to peak at much higher levels of as much as 112 million barrels per day, with average rates of more than 100million bpd.
The Cera analysis targeted oilfields producing more than 10,000 barrels a day of conventional oil and concluded that overall output was declining at a rate of 4.5 per cent a year and that field decline rates were not increasing.
This is much lower than the 7 to 8percent average rate that is generally assumed in the industry. Typically, Peak Oil theorists believe that the output of oil reserves can be plotted on a graph as a bell curve, rising to a peak and then falling rapidly.
It was proposed in 1950 by M King Hubbert, a US geologist, who successfully predicted the peak of onshore oil production in the United States.
His analysis is disputed by many geologists today, who argue that technology has changed the equation, allowing oil companies to produce more oil from reservoirs than was previously possible.
Meanwhile, increases in the price of oil has made the extraction of difficult reserves economically viable.
Yeah, perhaps a State thing.
Article says production can be 100 million barrels a day by 2017. What is it now? 100 million?
Today I sent in the final payment on my SUV. It wasn’t stylish when it was new, but at least it isn’t going out of style and as much as I drive it will last 600 years.
I have no idea why.... we should use that to build more refineries, and drill for more oil on our own soil.
And by that measure it could be said that "Liberals" driving tiny, lawnmower-motor-powered cars are not using gasoline "liberally" either.
I would imagine that most Conservatives don't consider their SUV's to be a 'waste' of gas either, but an entirely valid use for it, in that it provides a means of 'conserving' their families by providing a safer environment for them than the tiny cars do.
Doesn’t matter. We have to stop sending $278 bill a year to Saudi Arabia.
Agreed.
We might be out in those fields, but check your math. 4.5% decline the first year, 96.5%. 4.5% the second year (of the 96.5%) is less, so the depletion curve has a tendency to flatten out.
Of course, this assumes no new discoveries will occur, and we are finding new reserves (maybe not as spectacular, but new reserves) all the time. As those come on line, their production replaces the production 'lost' to depletion in reservoirs which were developed earlier.
New technology, especially horizontal drilling, has opened up entire fields which were previously not considered possible to produce.
Carter. President Jimmy Carter - please pick up the courtesy phone.
LMAO
I'm guessing that Jimmuh is on another line...perhaps a conference call with Fidel, Hugo and Mahmoud.
FYI
World not running out of oil, say experts
The sooner the better.
imagine a world in which we don’t need muslim energy any longer.
btt
I live in a part of the US where oil wells are very common. I have never been able to understand why most oil wells will be pumping merrily away until there is talk of an energy shortage. For some reason, the pumps seem to quit running. When the price of gas increases the pumps start again.
You should look at the predicted trend lines from 10, 20, 30 and 40 years ago.
Imminent Peak oil claims are not new, but they are based upon existing technology and expected pricing. Nobody 10 years ago was predicting $100 dollar oil nor the associated investment in exploration and R&D that $100 oil brings.
Failure to adjust the cycle can result in 'coning in' a well, to the point where it will only produce salt water, leaving a great deal of oil unproduced and unavailable to the wellbore (it ruins the well), or less than optimal production.
Your moments of observation may have coincided with the recovery part of the cycle, the differences may be attributable to the pumper changing the duration of the cycle in order to optimize production from an older well.
The only instance I know when price caused a slowdown in the rate of production was in 98/99. Lift costs exceeded the price of oil ($4.50/bbl for sour, $6.50/bbl for sweet crude in this area), and the Canadians were slowing their pump jacks down so they did not lose money faster.
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A spectacular, essential, and supremely worthwhile article; thank you so very much for posting the link to it and I hope that everyone will read it :-)
Sounds like a much better world to me!
I was working for a company that built gas stations in the early 1970’s. We had to change the pumps over because they wouldn’t register gas prices that were over $1.00. There were long lines at gas stations all over the country. The stations were running out of gas. We finished a station, called the distributer, and 24,000 gallons of gas was delivered in about 30 min.
I flew a little bit back then and noticed the floats were at the top of the crude oil storage tanks. They couldn’t be full of oil since there was an oil shortage. I guess they must have been full of air.
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