A Simple Oil Production Estimate for 2007

The following is a guest post by Phil Hart, a petroleum facilities engineer and member of ASPO-Australia. Phil worked for Shell in the UK for five years, before returning home to Melbourne in late 2006. Phil's blog can be found here.

Following a summary of EIA data for 2006, I thought I would make a more detailed country-by-country estimate of the potential for 2007.

Starting with the headline EIA figures for last year:

Crude Oil and Condensate: 73.5 Mb/d (down 0.2)
Natural Gas Liquids (NGLs): 7.9 Mb/d (up 0.14)
Other Liquids: 3.3 Mb/d (up 0.08)

Total Liquids: 84.6 Mb/d (up an insignificant 0.02)
Mb/d = million barrels per day
kb/d = thousand barrels per day

Numbers for November and December suggest real OPEC production cuts in Algeria, Libya, Qatar and UAE. The total cut could be 230kb/d which knocks around 50kb/d off annual average production. I did not expect to find evidence for cuts, but that's how the data looks to me - four small cuts made at the same time by countries that otherwise increased their production last year through announced projects. Thus, I believe those four OPEC members, but only those four, have the ability to restore that production. Without those cuts, crude and condensate production would still be clearly down, but total liquids would have shown a somewhat more significant increase.

To establish the potential for 2007, for each country identified by the EIA, I have estimated the balance between depletion of fields in production and new project capacity expected this year. Not yet having mastered Hubbert Linearization, I have used simpler mathematical techniques: addition and subtraction.

To estimate underlying decline, I have considered the net change between 2005 and 2006, and also the production trend in 2006. Countries on a rising trend in the last twelve months start the year above their average last year. They stand a better chance of achieving the same average even without new projects this year (the rising trend is often due to fields developed recently that may still be expanding production). Conversely, countries on a declining trend start the year handicapped below their average for 2006. New projects would need to come on stream early for them to achieve or improve on their 2006 average.

Expected project capacity is based on Chris Skrebowski's Megaprojects report "New capacity fails to boost 2006 production - delays or depletion?", Petroleum Review, February 2007 (should be available at ODAC soon).


  • 15 countries contribute to a gross decline of 1.1 Mb/d.
  • 15 identified countries plus 'Others' and 'NGLs' contribute to a gross increase of 1.7 Mb/d.
  • The net result is a possible increase in capacity of nearly 600 kb/d.
  • Don't get excited about the final figure suggesting an increase this year. This represents what we might call 'increased capacity', but that level of production could only be achieved in an almost ideal world. There is very little upside here, but many risks.

    If peace breaks out in Nigeria or Iraq, production could improve significantly. Neither appears very likely. Brazil, Angola and Canada have the potential to exceed the estimates listed here. But potential downsides are everywhere.

    Disruption in Iran or perhaps just the impact of sanctions, hurricanes in the Gulf of Mexico or other producing regions, accelerating declines in Saudi Arabia and Mexico - any one of these could wipe out most of this net production gain. Production could easily fall short of the significant gains estimated for the aforementioned Brazil, Angola and Canada.

    New capacity, while substantial, may not be enough to offset increasing declines and real world performance.

    Estimating New Capacity in 2007 (thousand barrels per day)
    from 2005
    Trend in
    Capacity 2007
    Forecast for
    Algeria1,81417Increase. Max in Q46550
    Iran4,028-110Decline. Offset by new projects150-50
    Iraq1,995117Increase. Max in Q3na50
    Kuwait2,5356Decline. Max in Q1110-25
    Libya1,68148Increase. Max in Q34025
    Nigeria2,440-187Decline through disruption.na-25
    Qatar85015Increase. Max in Q36550
    Saudi Arabia9,154-396Decline500-400
    UAE2,635100Increase. Max in Q3na50
    Norway 2,491-208Decline. Offset by new projects85-100
    UK1,490-159Decline. Offset by new projects180-50
    Angola1,419163Increase. Max in Q4490250
    Australia433-12Increase. Max in Q4na50
    Brazil1,72289Increase. Max in Q4610300
    Canada2,525156Variable increase. Max in Q4270150
    China3,68677Variable. Max in Q219050
    Colombia5315Decline. Max in Q2na-10
    Ecuador5365Decline. Max in Q1na-10
    Egypt639-19Variable decline. Max in Q1na-25
    Gabon237-29Decline. Max in Q1na-10
    India68924Increase. Max in Q4na25
    Malaysia684-65Decline. Max in Q112025
    Mexico3,256-78Decline. Max in Q1na-300
    Oman738-36Decline. Max in Q1na-25
    Russia9,244202Increase. Max in Q4na100
    Syria406-26Decline. Max in Q1na-25
    States5,143-36Variable increase. Max in Q4180100
    Other6,231254Increase. Max in Q4120200
    NGLSs7,938139Increase. Max in Q4480200

    Some comments on key countries:


    Russia provided the largest single production increment in 2006 of 200 kb/d. Production in December was close to the maximum for the year so they begin 2007 in a strong position to maintain their average, but posting another similar gain seems less likely. Clearly one to watch.


    With 610 kb/d of new projects on the books, Brazil looks set to post by far the most significant gain for the year. Many of the projects are expected in the first half and at least one has already started. 300 kb/d as estimated here would be a huge annual increase but they could even exceed that. They also start the year above their average for last year. Without Brazil, peak oil would already be moving clearly into sight in the rear view mirror.


    With another two megaprojects expected, one in each half of the year, Angola looks set to repeat last year's strong performance and should post the second largest gain in 2007. Again, we will need it.

    Natural Gas Liquids

    Strong growth looks set to continue in this category as well.

    Saudi Arabia

    The decline of 400 kb/d compared to 2005 had nothing to do with quota cuts and was not anticipated by any energy agency. Stuart's post shows that the massive Haradh III project presented itself as a little bump on the ski slope. The Khursaniyah/Abu Hadriya/Fadhili developnent is larger again but not expected until the end of the year and will therefore not impact the figures much. Until then, we should get a long clear look at decline. Surely, sometime this year, the world will make a strong call on Saudi 'spare capacity', which could finally put that notion to bed. Or perhaps we will be proven wrong?

    In their defense, Saudi Aramco have delivered and continue to work on the world's largest oil and gas projects. They have an enviable project delivery reputation within the industry. The economists, however, will show little gratitude. Expect to hear the phrase 'lack of investment' soon.


    Decline here is estimated at 300 kb/d. It could be worse.

    Project Notes:

    Figures in brackets are maximum capacity and not necessarily what could be achieved this year.
    Saudi Arabia Khursaniyah: Not expected until end of 2007. Reading between the lines suggests even that may be a challenge. (500kb/d plus 250kb/d NGLs).
    Venezuela Corocoro: Expected mid-2007.
    Angola Greater Plutonio: Expected first half of 2007 (240kb/d) Rosa: Expected second half of 2007 (250kb/d)
    Brazil Espadarte: Started production in January (100kb/d). Golfinho: Production to expand 100kb/d in June with arrival of additional FPSO. Polvo: FPSO expected to arrive in February.
    China Bohai Bay: Production expected at low levels in 2007.
    Malaysia Kikeh: Production started in January.
    United States Atlantis: Expected end of 2007 (150kb/d).
    NGL Projects Are counted under corresponding EIA column and not allocated explicitly to country columns, which are crude and condensate projections only. Two main projects in 2007 are Saudi Aramco and QatarGas.
    Updates on particular projects or the potential in specific countries are of course welcome.

    The net positive result achieved in this analysis is not all that surprising. The Megaprojects report identifies 3.2 Mb/d of capacity arriving in 2006, while EIA data show the net result was a slight loss (for crude and condensate and NGLs). After allowing for project delays and production below capacity, an approximate guess would suggest that net new production for the year was around two million barrels per day. Production declines absorbed all of that.

    For 2007, new project capacity rises to a massive 4.6 Mb/d, more than 40% higher again than last year (some of that is from last year's projects that are still expanding). Even allowing that several of the largest projects only arrive late in the year, it is possible that net new production will increase, even above last year's historically high levels.

    For 2007 production to fall relative to 2006, depletion must also increase substantially. Plenty of evidence supporting that notion has been presented on TOD. This analysis is somewhat conservative in that regard. If Saudi Arabia continues declining at 8% as in Stuart's analysis, then they will lose 700 kb/d. The extra 300 kb/d compared to my estimate would wipe out half of my net 'possible' gain. A similar case for Mexico could wipe out the rest, and that's before allowing for major disruptions anywhere else.

    Khebab's analysis of countries already suffering Type III depletion is another, more refined way of illustrating the challenge outlined above. It will be interesting to see an update of that with 2006 data. But I also know Khebab has lots of other requests and no doubt ideas of his own to work on :-).

    Let me finish with a chart of EIA Total Liquids for the last three years. The obvious feature is the 1.5 Mb/d jump from June to July last year. This set some alarm bells ringing but reviewing the data, it is hard to fault. The month-to-month increase was provided by UK and Norway (270), Angola (180), Australia (120), Brazil (100), Canada (170), NGLs (300), OPEC (200) and 'Other Liquids' (190). It seems remarkable that all these increases should arrive at once, although it did occur as prices were approaching their record highs. The jump in production helps to explain why prices steadily retreated afterwards - a world that had learned to live with 84 million barrels per day suddenly had another 1.5 to play with. So, despite the large jump, average changes for the year for all these countries look reasonable in the context of delivered projects, so I don't believe it is an attempt to delay peak oil by massaging the figures.

    We started 2007 with production just slightly higher than the average for 2006. A few steps upwards early this year would put us within striking distance of matching the average again. But, will those steps materialize or will the line continue the downward trend?


    Phil Hart
    Petroleum Facilities Engineer, Melbourne
    Phil worked for Shell in the UK for five years, before returning home to Melbourne in late 2006. He is a member of the Australia Association for the Study of Peak Oil.

    Hit reddit (EVEN IF IT STILL SAYS SUBMIT), hit digg, hit your favorite link farm! (de.icio.us, metafilter, stumbleupon, slashdot, etc.)

    Phil asked me to post this:

    The Khursaniyah link above does not work because the Saudi Aramco website uses Session IDs. For details on Khursaniyah and other projects, choose 'Media Center' then 'News' and then 'Megaprojects':


    In the last few days, there has been good discussion about Saudi's performance in 2006. If I hadn't already written my article, I might have toned down the language I used. Robert is of course correct that Haradh III started-up early in the year - it was officially opened on the 22nd March. They acknowledge a ramp-up period but I would still have expected to see impact on total production earlier than July. However, it would only have taken one or two significant process or equipment faults to push significant production back a few months. Without quality information we just don't know what actually happened.

    I'm a big fan of Robert's posts here, his reliance on solid data and that he forces us to consider alternative explanations for what we observe. Without such critical analysis, the strength of the discussion would be much lower. I also agree that organisations making official submissions about peak oil need to present the risk of an early peak but also the uncertainty that peak 'might' be several years away.

    However, I don't think TOD falls in that category. We do not control the official position of the public peak oil figures and the well funded anti-peak oil folks will always be able to use media to support their view, regardless of what we say. The Oil Drum doesn't need to convince everybody to adopt exactly the same position. Instead, TOD does a great job of informing people with quality articles and through discussion amongst people with diverse points of view.

    I come here to read the best technical, quantitative and qualitative analysis available anywhere. I come here to keep up-to-date on how Westexas, Khebab, Robert, Stuart and everybody else are reading the latest numbers. Having absorbed all the information and different points of view, I'm then in the best possible position to prepare what I present to audiences at home. So far that has included investment fund managers, the local branch of the Society of Petroleum Engineers, principal research officers for the Senate Inquiry into Australia's future oil supply and several community events. I couldn't do it without The Oil Drum!

    I'll join the discussion when I wake up in Melbourne, which will be about 4pm EST...

    "The Oil Drum doesn't need to convince everybody to adopt exactly the same position."

    100 per cent agreement with that! That's what I come here for: to hear those in the know debate.

    I just wanted to say, given the response to my query in yesterdays Drumbeat... *this* post is all I was really looking for.

    It's balance. It's a contrarian view. It's proof that The Oil Drum is *not* just a bunch of crackpots predicting the end of civilization, but rather a bunch of crackpots predicting the end of civilization... based on a real debate, sound science, rigorous analysis, and paranoid pragmatism. ;=)

    It's balance. It's a contrarian view. It's proof that The Oil Drum is *not* just a bunch of crackpots predicting the end of civilization, but rather a bunch of crackpots predicting the end of civilization... based on a real debate, sound science, rigorous analysis, and paranoid pragmatism. ;=)

    We're not crackpots. They just say we are, and spend lots of money to hire lots of people to publish articles and come to this website and attempt to debunk what is said here. I believe the article about the forming uranium cartel is a clue as to why they are buying time. They need time to consolidate their control of the next major source of energy. I'm sure they are similarly working to control coal if they don't already. Even though the world may be going to hell in a handbasket, this is still about power not energy.

    Robert is of course correct that Haradh III started-up early in the year - it was officially opened on the 22nd March. They acknowledge a ramp-up period but I would still have expected to see impact on total production earlier than July. However, it would only have taken one or two significant process or equipment faults to push significant production back a few months. Without quality information we just don't know what actually happened.

    I've been thinking about this a lot, and I agree with Prof. G's take on it here. We should keep in mind that the production data is hardly precise. From what I read, it is based, possibly in large part on the reports from PetroLogistics with it's tanker spotters and other strategically placed watchers. Given the uncertainty of the data, it makes no sense to keep one's nose too close to the numbers reported by official agencies, or, for that matter, the precise timelines of official announcements from the PR agencies of various oil-producing governments (such as the Haradh III announcement). Stuart's approach (and WT's as well) of assembling the various sources of data, plotting general trends, and drawing extrapolations seems the best we can do and in my opinion, is likely to yield a more accurate forecast than trying to pin down precise data points when the data is simply not very precise.

    We should keep in mind that the production data is hardly precise. From what I read, it is based, possibly in large part on the reports from PetroLogistics with it's tanker spotters and other strategically placed watchers.

    That argument cuts both ways, though. Then we might say that the production bump actually happened in August. Stuart tried to take some of that uncertainty out by averaging several data sets. Given that the Saudis completed the plant in January, and commissioned the plant in March, we should have seen a production bump in April and May.

    Commissioning means that they have tested all the units, everything is working, they have already had flow running through the plant, and now they are starting it up for good. Those production issues that people are suggesting would have been mostly worked out following completion and prior to commmissioning.

    So, here is what we know:

    1. Plant started up in March.
    2. Production bump in June or July.

    Without doing a lot of speculating about things we have no way of proving, we can't say that 2 was caused by 1.

    I come here to read the best technical, quantitative and qualitative analysis available anywhere. I come here to keep up-to-date on how Westexas, Khebab, Robert, Stuart and everybody else are reading the latest numbers.

    Thanks for the comments. I would add that this is also the same reason I come here, and the reason I started coming here in the first place. I like to see a diversity of opinions, because it helps me work through the issues in my own mind.

    hey robert

    sorry i left aberdeen before you arrived. could have been interesting to discuss all this over a (half) pint at The Globe or The Prince of Wales. say hello to Forbesfield Rd (just off great western road next to Forest Avenue) next time you're passing. hope you enjoy Scotland as much as I did. i was very sad to leave but with peak oil and climate change I decided it was time for me to stop flying back to Oz every year.



    Good work.

    Given how old Ghawar is, I assume that you agree that the field is almost certainly in decline. Assuming that this is the case, every field that is or was producing one mbpd or more is now in decline.

    As you know, one can define Peak Oil as the point at which smaller fields coming on line can't offset the declines from the older, larger fields. I think that we hit that point in 2005.

    I expect to see continued production declines in Saudi Arabia, perhaps with some temporary bumps upward in production as some new production comes on line.

    I think that David Shields is right that Cantarell will probably decline at about 500,000 bpd per year, which will have a catastrophic effect on Mexico's production.

    I think that the other big risk for declining production is Russia.

    And of course, IMO, oil exports will fall much faster than overall production declines.


    yes, despite the poor quality of data, i am personally convinced that production from Ghawar and Saudi production as a whole is in decline and that last year's slope was not by choice.

    when i present to 'professional' audiences though, i am less bold since the evidence is not robust enough for sceptical audiences. i cannot believe we will get through another twelve months without a strong need for more Saudi oil and therefore expose far more clearly whether they have it or not.

    i agree that Mexico could easily be worse than my estimate (but then i also saw a report saying their production was up in January, which will presumably be short lived?).

    Russia really is the big one - it seems everything hinges on them now. They have continued expanding production longer than I expected - right up to the end of last year. Even if they decline from their December production, their average will probably match last year. But there is not yet any evidence that they are declining.. how much longer can they last?


    Khebab did a predicted production curve for Russia, based on the HL plot, using only the data through the 50% of Qt mark (1984) to generate the curve.

    The post-1984 cumulative production, through 2004, was 95% of what the HL model predicted--still below the predicted cumulative production.

    They are basically right around 100% now, so I expect to see a decline this year, or next year at the latest. The kicker is that, based on the HL plot, Russia is around 90% depleted (at least in mature basins), just like the Lower 48.

    BTW, the Saudi decline rate, on an annual basis (not month to month), is so far quite close to the annual decline rate for Texas (around 4%).

    imo, total liquids should be corrected down to account for ethanol's reduced btu's... the slight upward tilt would become a slight downward one, with last year's total reduced around 300k/d.

    That would make sense, if the data was being presented as BTU's. One would also have to adjust NGPL's, as they contain less BTU's per unit of volume (depending upon their makeup).

    if we lived in a perfect world, we might also adjust ethanol volumes for poor EROEI. all useful factors to bear in mind.

    although i certainly don't think ethanol will save us, it will probably provide a positive increment in total liquids this year (+ ~200 kb/d?). along with NGLs which are also growing rapidly, that will help to offset declining crude oil and condensate production and may prevent total liquids from declining for another year or two.

    This subject gets into EROEI territory and we have been here before. I personally look at IEA total liquids, less biofuels and syncrude from tar sands, which I estimate at 1.6 mbpd. The historical production data is poor on the last item, if anybody has it, it may add a little to the discussion.

    Total production without biofuels and syncrude from tar included has been flat for 2005 and 2006, any differences recorded falling well within margins of error. Given the change in import/export mix (US, China, Europe etc up, many others must be down) for millions of people in the world peak oil is already a daily reality.

    There is so much to this story that is unreported and to which the rich world is deaf.

    Looking at the jul/aug surge, and as noted, everybody and their dog in and out of opec was producing every barrel possible as prices surged ever higher. Well, some would except SA, thinking/hoping they were holding back in the face of record prices...

    SA needs new projects to hold the decline to 8%, otherwise would be 12%. (SA is not completely opaque, having put out the 12% figure as the top of a range themselves, and further acknowledging production is already down to 8.5Mb/d.) So, with no new projects until end 07 earliest, hard to see sa not declining 1Mb/d this year, and mexico looks to go down another 500k/d, together soaking up every barrel of the hoped for 600k/d net new capacity. imo there just might be enough new projects in 07 to maintain the 05/6/7 plateau, but 2008 is another story...

    yep, that's the bleak picture in a nutshell.

    khursaniyah could significantly reduce the effect of Saudi declines in 2008 compared to what i expect this year. whether that will be enough to hold us close to the plateau is another question.

    A few comments:

    1) Norway's Petroleum Directorate is forecasting 8% decline year over year (-200 kbbl/d), yet you only assume 4% (100 kbbl/d). Any particular reason why?

    2) I question the assumption of Brazil as the "shining knight" in this analysis. If we look at Brazil's history, here is what we see over the past 2 years:

    Production Jan. 1, 2005: 1498 kbbl/d
    Additions (volumes per Skrebowsi; confirmed via press release):
    2005 Barracuda: +150 kbbl/d
    2005 Caratinga: +150 kbbl/d
    2006 Alabacora Leste +180 kbbl/d
    2006 Golfinho I +100 kbbl/d
    2006 Jubarte +60 kbbl/d

    Forecast production 12/06: 2138 kbbl/d
    Actual production 12/06: 1787 kbbl/d

    Implied decline: -351 kbbl/d (12% per year)

    History tells us two things with Brazil: (1) Projects will always be delayed, and (2) Declines are enormous. If the 12% decline rate holds, and Brazil's +610 kbbl/d comes in on average at mid-year (yearly gain +300 kbbl/d), the net gain would be around 100 kbbl/d, or about 1880 kbbl/d exit 2007 production.

    3) Similar criticism for Angola:
    Production Jan. 1, 2005: 1100 kbbl/d
    Additions (volumes per Skrebowsi; confirmed via press release):
    2005 Kizomba B: +250 kbbl/d
    2005 Bambacoo: +100 kbbl/d
    2006 Dalia +240 kbbl/d

    Forecast production 12/06: 1690 kbbl/d
    Actual production 12/06: 1477 kbbl/d

    Implied decline: -222 kbbl/d (10% per year)

    Again, assuming 10% decline holds I would expect Angola to exit 2007 at about 1580 kbbl/d for the year, again assuming projects come online in the middle of the year.

    The history of these deepwater countries suggests they must be treated very differently from onshore countries - the implied levels of decline in the 10-12% range simply will chew up the bulk of new projects....

    Very nice review - much appreciated (as is the original article).

    hmm.. good questions kyle.

    1) Norway has Alvheim project which I think came onstream in February at 85 kb/d. Possibly a smaller project or two below the radar. Like Buzzard in the UK, this will temporarily compensate for some of the decline this year. Norway could easily decline more than 100 kb/d though - I have been fairly conservative in my estimates.

    2) Fair points about Brazil. One 2007 project has already started (Espadarte). FPSOs expected for the other two projects in February (Polvo) and June (Golfinho) so much of that production could be onstream for more than half the year. As I understand it, the fields that the FPSOs are tying into are already developed - the extra production is ready to flow and they just need the extra capacity of these FPSOs. That means that delays may be less likely than on other megaprojects.

    .. have been doing some more digging: There is a little more uncertainty about timing of the two Roncador projects for this year. Semi-submersibles P-52 (first quarter) and P-54 (third quarter) are on their way but more potential for delays in getting them producing.

    There is a sixth project called Piranema producing another 30 kb/d in the second quarter.

    An increase of 300 kb/d in one year would be a huge achievement. For the moment i'm giving them the benefit of the doubt but your numbers show they could easily fall short.

    Roncador info here, Page 4:

    and here (P-52):

    3) Am inclined to agree that 250 may be an over-estimate, although they did manage an an annual average increase of 160kb/d with a similar suite of projects last year. Perhaps 150 kb/d is a more realistic estimate.

    Thanks for the questions. I have been conservative (optimistic) in general and you have shown there is plenty of downside potential.


    Got a question about those numbers.
    It looks like you are using production capacity rather than actual production. Since we don't have actual production broken down by fields, your implied decline rate will be greatly exagerated and no way to narrow it without field by field numbers.

    So another words, you are painting an aggressive decline scenario.

    Interesting NEWS from PEMEX. Source is from my news feed (no url available):

    DJ Mexico Pemex Plans 2 New Deep-Water Exploratory Wells In 2006
    MEXICO CITY (Dow Jones)--Mexican state oil monopoly Petroleos Mexicanos, or Pemex, plans to drill two new exploratory wells in deep water this year, a company official said. Carlos Morales, head of Pemex's exploration and production division, said in a conference call with analysts that the wells will be drilled in the deep-water area called Coatzacoalcos Profundo. Based on seismic studies, Pemex says there could be 10 billion barrels of crude equivalent in Coatzacoalcos Profundo, out of a potential 29.5 billion barrels of crude equivalent in
    all of Mexico's deep-water territories.
    Pemex began exploring the Coatzacoalcos Profundo area in 2004, although Morales said Tuesday that the company doesn't expect to be producing oil from deep water before 2014.
    Deep water is seen as one of the long-term solutions to replace dwindling output from the giant offshore Cantarell oilfield. Pemex recently expanded a colaboration agreement with Brazilian state oil company Petroleo Brasileiro, or Petrobras (PBR), which has a lot of experience and know-how in deep-water drilling. Mexico's energy laws don't allow Pemex to form joint-ventures to exploit oil and gas reserves with private or foreign companies, however.
    Among current projects to substitute Cantarell production is Ku-Maloob-Zaap, where Morales said crude output this month has reached 500,000 barrels a day.
    Output at Cantarell fell to 1.79 million barrels a day in 2006 from more than 2 million barrels a day in 2005, and is expected to average 1.53 million barrels a day this year.
    Pemex's overall crude production last year was 3.26 million barrels a day, compared with 3.33 million barrels a day in 2005. Output so far this year is 3.18 million barrels a day,
    Morales said.
    Of Pemex's $14 billion investment budget for this year, $12.3 billion is for exploration and production, including about $1.5 billion for exploration.
    -By Anthony Harrup, Dow Jones Newswires; (5255) 5080 3450; anthony.harrup@dowjones.com
    (END) Dow Jones Newswires
    March 06, 2007 12:52 ET (17:52 GMT)
    Copyright (c) 2007 Dow Jones & Company, Inc.

    And what about demand?

    I have seen reports that world auto production capacity may reach 110 million vehicles per day soon, of which some number like half covers US, EU, Japan replacements. (Note that I am deliberately shading all numbers downward in oil effect). 50 million extra vehicles per year, each driven 6000 miles per year at 30 miles per gallon, is 10 billion gallons a year of extra gasoline needed. That's a half million barrels per day of extra demand on top of what is already there, and observant readers can likely redo my calculation and get the numbers larger.

    Is this plausible as something that can be supported?

    110 million vehicles per day would be 40.15 billion per year. Surely you jest. :-)

    Even 110 million vehicles per year is a truly astounding number. Even more astounding, in my mind, is the continued production of incredibly expensive aircraft. Aircraft have to be used almost all the time to be able to be economic, so every brand new, say, Airbus 380, adds a vast ongoing fuel demand. Ditto for military aircraft.

    Not true for Military aircraft. Front line fighters have a an airframe life of around 15,000 hours compared to airliners over 80,000. Military transport aircraft have higher frame expectations but utilisation is only a fraction of civilian counterparts.

    There's that weasel word 'equivalents'. That could mean these deposits are 100% natural gas or propane or heavy tar.

    Good alternative number crunching Phil, I too feel there is another way of looking and judging peak oil other than "oil production" numbers. I look at the PW volumes being dealt with. And another article from Aramco's site got most of my attention.

    With the project's completion, the plant will have a treatment capacity of 14 million bpd, making QSWP the world's largest seawater treatment plant intended for oil

    Under megaprojects click on seawater.


    Regarding China, it seems like we have been seeing a number of comments recently to the effect that Chinese oil production likely peaked in 2006, and is expected to decline in 2007. One of these is from Spraxsis on February 19.


    There is also one from Ace in the same thread.

    More downside potential!

    There's better info in those links about Peng Lai/Bohai Bay than I had found. Shows increment in 2007 will be very small. Therefore, my growth estimate of 50kb/d could be revised down to a loss of 100kb/d as forecast by CNPC which wipes 150kb/d off my net total for the year.

    Anybody got any good news?

    Well, I just tested a couple of zones at a combined rate of 350 bpd, at 2,000' and 3,800' (one with an indicated permeability of 850 md), but I don't think that I can offset the Ghawar decline.

    BTW, I just got an e-mail from one of the ASPO guys who pointed out that CERA, in their 2005 report, was predicting a gradual decline in Ghawar's production, after 2005. Translated from "CERA Speak," I suppose in the real world that this means a 10% plus decline rate.

    So, I guess that we can say that even CERA concedes that all of the fields that are, or were, producing one mbpd or more are now in decline.

    What you need are a few more rigs... remember, always make up for low flow with more holes...
    Actually, 350bpd not bad at all. I'm sure ARD would like to avg that.

    Our max production rate will probably be about 50 bpd per well, but our costs are pretty low.

    Congrats Jeffery,

    Well deserved, if you are right about PO doubly well-deserved. 350*$60, that's one heck of a PO localization plan! We'll need all we can get, let's just hope that 0.0001% CO2 increase isn't the "butterfly" that causes this year's hurricanes ;) Pardon my envy, but still what confusing times.


    I think everything will be great for energy producers--until angry soccer moms start rioting at the gates of the mansions of the energy producers. . .

    My continuing advice to Oil Patch types is to ditch the Hummer, in favor of a used lime green Volvo with a big Greenpeace sticker on back.

    By good news you perhaps mean other things that will increase the price of oil, thereby bringing forward the day when we all cut back a bit?

    In this case, it was recently reported that US 4-wk avg consumption is up an incredible 7% yoy... can't believe this will last, some of this may be higher heating oil on account of a cool jan/feb, but no doubt some is because we now think that 60 oil and <3 gasoline is cheap. Meanwhile, afaik, china is continuing to rapidly increase consumption... imo, the recent stock market correction was, at least for china, just a correction as their economy slightly slows to 8-9% gdp growth.

    Hope to see WT export model curves soon... most exporting countries are booming, their consumption up sharply, exports declining, not least the one you want to watch, russia.