The Declining Oil Supply

A fair bit of the projection of the coming of Hubbert's Peak for world oil production is aimed at predicting when the oilfields in the OPEC countries reach maximum production. And this can be soon as ProfG's last post shows. But there is another way of reaching the peak, and sadly that is also happening.

Because global production has to look at what is being produced outside of OPEC, and that news is not good. The Institute of Science in Society in the UK has a story on Oil Running Out. The article accumulates some of the declines that are already occuring in some countries:
According to data from the latest BP Statistical Review of World Energy, 18 major oil-producing countries are now past their peak production, and their combined annual output dropped by over a million barrels a day in 2003. This group of countries now accounts for almost 29 percent of total world production

The ODAC study did not attempt to forecast when other countries would peak and tip into decline, but experts agree that several more are likely to do so within the next few years. Mexico and China (see above), the world's fifth- and sixth-largest producers respectively, appear to be among the likely candidates.

Mexico's national oil company, Pemex, has already announced that production from Cantarell, the world's largest offshore oil field, is expected to peak in 2006 and then decline by 14 percent a year. China, too, has confirmed that its two largest producing regions are now in decline. It achieved only modest overall production growth last year of 1.5 percent.
What the article does not mention is that when declines start, they do not stabilize. So that a loss in production of 1 mbd in one year (2003) will be likely 2 mbd the next year (2004), and so on.

If the production outside of OPEC is declining and that in OPEC is reaching a maximum, then we are flipping over the top of the hill, and Hubbert's Peak is about to arrive.

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Great blog! Here's a question though, how do price increases affect your predictions of peak oil? Running through the consumption of China, for example, or even India, as oil approaches $100/barrel their production necessarily slows (for two reasons, cost as well as slack demand in the US)... is this looked at in the calculations or do we only have estimates based on current economic climates?

This is already a puzzle. There are greater brains than mine trying to guess at what price demand will slow. There is some thought that it will be at around $80 a barrel. In regard to Chinese and Indian comsumption, this is State controlled, and the Chinese are already on record (see an earlier post) as wanting to build a strategic reserve that will increase their demand this summer by 650,000 bd.
The American (and ergo World) economy is still growing. The projected growth this year is about 500,000 bd. in the US. Add that to the Chinese and you are already above the levels OPEC can supply.

Great post. And in a weird coincidence, I blogged about this on Monday.

I'm sort of terrified about how to get through this. Is it even possible to hope we can get through and not come out on the other side resembling medieval Europe?

Sorry, I meant great blog. The post is good too.

Thanks for the comment, I tried to post on your site, but for some reason could not get past the spam filter.

I would that this were just two crazy prof's having fun over a beer, it isn't. This info is not always that easy to find, and we're probably missing the worst half. and it is not a bad dream that will be over by next Christmas.

Sorry to tell you that, and that most folk we talk to would rather pretend that we are not quite working with a full bag of French Fries.

I have assumed we are past peak at that the peak will be known as occurring in mid 2004. To confirm my idea we need more information and research regarding energy use and sustainable development.

Without checking the latest statistics and current trends I have guessed that any rise in productions from now on is just the final jitters in the pipeline. Think of it as a production plateau bubbling up in a last ditch effort to find and extract more oil as prices are high and increasing. Look for more volatility, delivery shortfalls and hyper-inflation and that's just the beginning. There are all sorts of bottlenecks and vulnerabilities appearing now. Scientifically speaking these are just guesses, we have to look for the direct evidence from which to take measurements.

I think we have to move on from the question of has Ghawar or the world peaked, to what are the most accurate indicators of decline? To answer this question we start by looking for sustainability indicators in the motor vehicle industry. Measures of agricultural activity could also be useful. These would help answer both questions. I think an excellent topic of discussion would be be how and where to find this data.

I heard a recording of Greenspan today where he said that the market would adjust... ...something like:

1) higher prices will decrease de demand for oil
2) the high demand for energy will drive business to create new alternative energy.

It sounded so much like nothing would happen...

Man, is that guy a cheerleader or a Chairman? Maybe his comment was taken out of context, I did hear it via the propaganda aparatus (TV).

This is my first visit to your blog and it "peaked" my interest because I have been posting on the same topics in my own blog.

Keep up the good work!

Is it even possible to hope we can get through and not come out on the other side resembling medieval Europe?

You say "medieval Europe" as if that were a bad thing. As someone who teaches medieval history, I resent that. :)

Actually, a breakup of large-scale territorial states--while painful in the short run--might not be a bad thing. The most likely succesors to our current Westphalian setup would be federations or alliances of city-states. City-states have a good record: democracy, drama, philosophy, codified law, banking, insurance, corporate enterprise, economic cooperation, Gothic cathedrals, Renaissance art and religious toleration among other things. By comparison, empires and territorial states have contributed...what? Mainly large military forces and oppressive state religions and/or ideologies.
The coming breakup of large states--presaged in part by the disintegration of the Soviet Union--may be the proverbial blessing in disguise. That would even apply to the USA. The metropolitan blue regions would prosper as independent entities, leaving the red zones sunk in deepening superstition and barbarism