It's impressive that so many projects are coming on line in the next two years. But at even a conservative 4.5% decline rate ala Yergin, we need to add approx 8 million bbl/day of liquids through 2009. The above megaprojects list only accounts for about 4 million bbl/day in two years time.

One has to wonder if the Saudis have hit serious decline in Ghawar and are scrambling to add capacity to make up for shortfalls. Of course it's all speculation since their oil data is mostly secret. But if Ghawar were humming and they were adding all this capacity, then would they really keep flat in the face of $112 oil and risk of high prices destroying demand? History says no.

Perhaps a validation of Simmons.

You are looking at Jan 2008. I indicated that the 300,000 bpd is adding in April so the increase will show when May, 2008 figures are reported in 4 months.

We need time to build vehicles that can run on compressed air, or batteries. We need time to build more electrified rail systems. We need time.

We need more time that is well-spent. IF we end up at the current status quo for another decade, and nothing or little is done, then it will have made no difference. There are efforts afoot, but they are quite small and disorganized. For example, the new Nanosolar (Google) solar panel plant is expected to produce 400MW of panels per year. Assuming it does that, and we had 100 of those plants fully producing today, in ten years we would only produce 40% of our needed electric capacity by then. I've since lost my calculations on that, but I don't even think I calculated that the US averages less than 180 sunny days per year. But if only a few plants are built in the next decade, it will make no difference at all.

But effectively curtailing it requires one essential resource, among many others... time. We need time to build wind turbines and solar panels and even geothermal plants.

Don't forget CSP!

Damn, I hadn't thought about the pets.

I'm not sure I want to learn much more about what our brave new world is going look like. There is a subtle transition from being prepared to just being depressed.

Hello TODers,

If I may add a bit more to the accuracy debate: How many more wells providing C+C have been added from 2005 to now? I have no idea--100,000? 200,000? 300,000 if we count all the old horsehead pumpjacks restarted to extract oil-stained brine? The larger the database, the harder it is to get the truly accurate and time-dependent numbers for summation; this new C+C high is mathematically-bound to be less accurate than the 2005 data. Thus, IMO, this recent single measurement basically means the 2005 record still stands if one mentally adds error bars to this latest number.

I think it would be interesting for the reporting orgs to detail how much the reporting accuracy has gone down, or else what expensive data-collection steps they have taken to keep the accuracy level the same. My feeble two cents.

Of course, if C+C goes higher in each report for the next year or two, and net exports goes higher too, then I would agree that the 2005 number was premature. But TODer Ace's report [bottom of yesterday's DB] seems to indicate otherwise, plus the excellent statistical work done by Khebab, then detailed by WT.

EDIT: plus a big kudo to Darwinian and any other hard-working, much-admired data-freaks I overlooked at all the other TOD regional chapters.

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

Thank you for the correction.

I practice close math. ;}

And i humbly think I understand Pakistan better now.

They did question it in May 2005. That's what happens when figures are new and recent.

But almost three years later, they're more sure the figures are right.

So in March 2011 you can come back and see if they're still questioning the figures of April 2008 :)

Well, the question looms: Are we smarter than yeast? Before I read Diamond's Guns, Germs and Steel I had already theorized humanity must logically be getting more stupid. We are interrupting natural selection, right? Everyone survives, so there is no winnowing of those with low intelligence, poor insight, lacking common sense, etc. We may "know" more, that is, have more data to hand, overall we must be getting dumber.

Perhaps we are dumbing ourselves into extinction.

Unintended consequences.

Cheers

As I recall, Angola recently joined OPEC and this is partly why the comparison between OPEC/non-OPEC has changed, with non-OPEC declining-Angola changed teams!

This decline in exports (due to domestic consumption) was given some attention at the EIA Conference as well as a note that this sort of taking oil of the world market for internal consumption is a driver that is being missed in some quarters (not here, of course, because we are pretty much able to think at multiple levels simultaneously. We can even walk and chew gum at the same time).

So, really folks, this shouldn't be cause for peeps to go out and buy that new Suburban.

Total US monthly data is available at
the EIA.

Further, you could derive lower 48 production from this EIA web page by taking total production and subtracting out the part of PADD 5 that is Alaska as well as US offshore. The data is all there if you wish to make the adjustments just for lower 48. Note that the data for any of those series is available as a monthly spreadsheet from 1920 to 2007 (and in a few cases to 2008).

Well there ya go. As I wrote about 2 years ago, the changing definition of 'what is oil' will confuse people and lull public into complacency at the same time the internals deteriorate. So for CRUDE OIL, May 2005 still is the peak. Ceteris paribus, I am sure more energy and other resources went into Jan 08 world oil production than went into May 2005 world oil production. In addition to higher dollar costs 4 years later, we have higher costs in terms of natural gas, iron ore, water, oil, and environmental inputs.

So this means that May 2005 was the all time Peak for world wide Conventional Oil Production ?

Alan

What Canadian tar sands numbers are you using? Someone in a Drumbeat mentioned that tar sands production was down in 2008 relative to 2007. Do you have any numbers on this? Do you have any hard data showing tar sands production is up in 2008?

Thanks!

To an outsider, when they hear statements about "oil production" and so forth there is much confusion, and many people do not realize that "all liquids" includes even water (if counting Orimulsion and not adjusting for water mixture.)

To me, when I hear "oil" I interpret that to mean the liquid that comes out of oil wells, not some other hydrocarbon produced through the acrobatics of chemical engineering.

Well, you didn't read my post.

Your link (Dateline Beijing?) has the same story reported yesterday. Your 3X Mideast assumption includes what, per chance?

False - Bakken is not an oil shale, it is an oil deposit in ordinary shale rocks (that have very low porosity). Since the oil is still a liquid, it is possible (using a lot of money and energy) to get at it through drilling.

The Colorado 'oil shale's are solid form of hydrocarbons, which require an order of magnitude more energy and money to mine and convert into liquid fuels. There is no liquid fuel in those deposits.

Think of the Colorado deposits like the Canadian tar sands; Bakken is a really crappy (and possibly fairly large) oil field.

False. It's all about flow rates.

As I have previously noted, in 1956 Hubbert found that a one third increase in estimated Lower 48 URR from 150 Gb to 200 Gb delayed the projected peak by all of five years.

If we round off the upper end Bakken estimate to 5 Gb, and assume that it was pretty much fully developed in 1970, it would have therefore delayed the Lower 48 peak by about six months.

And you need to consider that these are very expensive wells, relative to fairly modest production rates, after the initial peak production period, and we will need a lot of them at the same time that we are facing personnel and equipment bottlenecks.

Also, we need to keep in the mind the difference between Kerogen deposits, e.g., the Green River Formation, and thermally mature oil reservoirs, e.g., the Bakken Formation.

Any way you slice it, maintaining an infinite rate of increase in our consumption of a finite resource base tends to be difficult to achieve--at least outside the special world that people like Peter Huber live in.

FALSE.

Bakken Not Giving It Up

It appears there's a lot of oil down there. It also appears not much is ever going to come out. They're looking at getting out about 1% of OIP.

Cheers

You are using all of the most optimistic numbers possible and still all you get is 2 mbpd MAX from Bakken for a few years. Whoop-dee-doo. On the global scale that doesn't amount to squat, given BRIC increasing consumption.

However, I don't see that 2mbpd happening because drilling costs rise as rapidly as price, as the rest of the industry is discovering. You can't assume a $150 per barrel price gives sufficient incentive if the costs rise proportionately, can you?

And there is still a problem in proving those flow rates will scale. That's one reason the majors have been very leery of Bakken.

In short, at the best of all possible reasonable estimates, the Bakken is peanuts overall. And at more reasonable estimates (which you don't even give), the Bakken is inconsequential.

It is my understanding the 3.65 figure representsrecoverable for the entir Bakken formation, not the US portion alone.

Cheers

Hello Dave Cohen and Consumer,

I tell Yerginites, that if they absolutely must buy a big, new ICE-vehicle: then they are much better off getting a four-door crewcab pickup instead of an SUV. The resale value of the pickup will be much higher when the time comes to mount the .50 cal heavy-machine gun/RPG launcher to the pickup bed & frame. The extensive bodywork required to mount the same equipment to a luxury SUV will be cost-prohibitive.

Also, until that lock 'n load time arrives: hauling fresh manure is much less aromatic with a separate cab/cargo bed pickup versus being loaded into the enclosed plush leather and carpet space of an SUV.

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

I didn't bother reading the link-I remember when CTL was going to be huge by the time oil hit $100. That and all that gigantic Orinco sludge that just needed slightly higher prices to turbocharge. It doesn't matter, because solar will take over once oil prices get just a little bit higher, then we move to hydrogen flying Jetson cars.

The problem is that no one ever identifies who "THEY" are. Sure people have been predicting everything from the end of the world to an invasion of space aliens. And I am sure there are a lot of "THEYs" out there who have predicted the end of oil many times in the past. But who were they and what were their qualifications?

Many geologists, since the late 1950s have been estimating the world's endowment of recoverable oil to be approximately 2 trillion barrels. So if we identify "THEY" to be oil field geologists, then THEY have hit the nail pretty well on the head, and they did so way back in the late 50s.

So I ask you to compare the "THEY" that have predicted the end of oil in the past with "THEY" who are predicting the impending "PEAK" of world oil production. I think you will find a difference in the quantity and quality of the latter verses the former.

Ron Patterson

I called up UCSB's Geology dept today and a woman there told me the talk will be at 7 PM in the University Center's Corwin room (Corbin? close to that).

How anyone can actually conclude this indicates that the "peak oil clock has been reset" is baffling.

A suggested exercise.

Take the May, 2005 number for C+C, 74.3 mbpd. and then take the rest of 2005 monthly data, and the 2006 and 2007 annual data, and then calculate the cumulative shortfall between what we would have produced at the 5/05 rate, and what we actually produced. My estimate is about 760 mb.

The preliminary January, 2008 number is about 74.5 mbpd (I'm rounding off to 0.1 mbpd), which as noted above, is subject to revision, generally downward.

In any case, for the first time in 32 months since May, 2005, the EIA shows that the cumulative shortfall has gone down, from about 760 mb to about 754 mb. Clearly, the crisis has passed, and gasoline will soon be too cheap to meter. We will just pay a flat rate and drive to our heart's content.

A minor note. Deffeyes was modeling conventional production. What would the C+C data look like without the production from bitumen deposits?

Granted, a barrel of upgraded oil from bitumen can be refined just like a barrel of conventional light/sweet oil, but the question is, can nonconventional production offset the decline from conventional production? I think not. Also, the two largest sources of nonconventional oil in Western Hemisphere are Canada and Venezuela. Canada isn't exactly flooding the market right now, and I estimate that the combined net oil exports from Canada and Venezuela are going to show an annual decline in 2007.

IMO, this is all predictable (and petty). The date of Peak Oil, and its ostensible repercussions or lack thereof, ofttimes become a contest in who was right and who was wrong. When we are right, in a competition/debate vs another, we get a surge of dopamine - it feels really good. In animal competetion, the winners 'surge in dopamine' ends up typically in a mating opportunity, while the loser has a drop in the same neurotransmitters (picture dog with tail between legs and head down). So of course we all like to be right, and don't like to be wrong. This is natural.

Fossil fuel depletion is happening. Natural resource depletion is happening. Population and demand is increasing. All these statistics that look important up close are irrelevant from a birds-eye view. Arguments intra-tribe in the end are not helpful other than they make the people feel good who made correct predictions in the past. My own opinion, and one I've voiced since writing here is we are going to peak sooner (as opposed to later) and the longer we remain on a plateau a)the more opportunity we have to make important infrastructure changes and b)the steeper the ultimate decline rate will be. Of course todays announcement is newsworthy to this community. Lets discuss it, get over its novelty, and quickly move forward towards discussing solutions, if any. I think the peak oil community is a good canary for peak oil itself - the smart, strongly confident in their own beliefs, cooperative/competitive nature of the people and discussions here, and how they play out over time (some people leave, some new ones show up) are a good precursor for what human interaction might look like when statistics become more than academic. (this is my prediction....;-)

I think that with world crude production at 73,807 m/b/d in 2005, and 07 coming in at 73,275 m/b/d, we have moved the peak oil bar to a yearly basis of comparison. We have three straight years of data to make conclusions on. When the US peaked, it took five years of data to win a solid majority of analysts to the peak side. We now have 36 years of data. We don't know if some production numbers came out of inventory in OPEC's January numbers. After all, OPEC doesn't want people freezing in the winter. What OPEC does want is for the Iraq war to end, higher interest rates in the US, and a higher dollar to lower the galloping inflation in their countries caused by the US Fed's reckless reduction in rates.
The January data shows Mexico, Norway and the North Sea as real decliners. It also shows Angola and Azerbaizhan as big performers. Future gains in these stallworths are forecasted to be at much slower rates. Russia and China numbers also raise questions. And lest we forget, exports of crude in the world have likely fallen over 1.5 m/b/d over the last two years. Given the above scenario, hoarding or cartel high pricing is in vogue because demand exceeds supply at present and in the near foreseeable future.

Khebab posted a study of EIA data that showed the general downward trend of revisions, with time.

I've looked at it a while back on a limited dataset (~3 years):

http://www.theoildrum.com/story/2006/10/1/233347/717

It seems that in average the monthly estimate for C+C becomes stationary after two years and is around 300 kbpd lower than the initial estimate (month 0):

Yup!
But it also means we have 65% of the responsibility and opportunity to navigate a way forward.

Seriously? What are the models based on?

Statistics based on models built on historical behavior are what helped create the current situation in the US mortgage backed security market.

Good point. They are also what built the underlying tenets of our economic system.

Have you seen any data showing what percentage of production is produced with tertiary versus conventional production methods?

I seem to recall a post a while back arguing that while one would expect this to eventually occur, production data isn't broken out by type of well so pinning this down is harder than it seems.

And here in lies the real answer to whether it would be better to stay on the plateau or come off of it. If, by staying on the plateau, we are producing tomorrows oil today and this will increase the decline rate then we are better off declining now. On the other hand, if we are staying on the plateau because there is more oil in the ground and the increased production is not changing future decline rate, then we are better off prolonging it.

I'd not say irrelevant more a best case scenario. We will be lucky to follow a US production profile.

I guess the best way to say this is that the US hit maximum depletion rate post production peak. In fact the US data is now probably significantly above HL's. In general the technical innovations the allowed us to increase depletion rates where made over time with a lot of them developed in the US in response to the production peak.

To use and example you could look at Moore's law for transistor density it works until it doesn't. As long as your well below the physical limits then technology can be used to enhance extraction rates and so of course can simply drilling a ton of wells.

Where world peak differs from the US peak is that we have had fairly advanced technology for decades now starting in the early 1990's so the world has been blessed if you will with the ability to extract oil at high depletion rates for some time. This is a very different situation then in the US which had to develop the technology as it fought production declines.

Now after 1980 the technically advanced world developed a spare capacity level of around 10mpd or so.
But understand that when oil was extracted it generally was extracted at a depletion rate that approaches twice the depletion rate of the 1950-1990 time period. So a good bit of this cushion could be considered as a artifact of technical advances.

A easy way to view this is to take 1980 as being close to the worlds probable symmetric peak production. Then strike a line across the graph. I do it at 65 mbpd. You can see that you can fairly easily fill in the low spots in production in the 1980-2000 time frame of cheap oil with current production. This is spare capacity that came from oil that went unproduced because of price.

The thesis is that any year since 1980 if needed the world could have produced at 1980 levels. As you can see we where not at maximum production. Most people agree that the jump in production since 2002 has a lot to do with bringing online spare capacity and of course expansion of production.

So my thesis is we have been close to maximum depletion rates since the 1990's but we had spare capacity. So if oil was produced we produced it as fast as possible.

We have our could have been on a virtual plateau for many decades. We just recently in a sense uncovered the existence of the plateau as spare capacity went to zero. Given that a symmetric peak means that 50% of the oil is left to produce to get a asymmetric peak takes decades of production at increasing depletion rates. It does not happen overnight. In fact its taken decades of technical progress to extract past 50% URR.

The proof if you will is simple if we where early in the game and could increase depletion rates to maintain and even increase production rates then we will. Thus if we are at 50% URR and not at maximum depletion rates we could double the depletion rate and basically double production rates from todays levels and the asymmetric peak would still happen but it would be out around 240 at about 160mbpd. I think cornucopian analysis is getting caught by this and its because our reserve estimates are way off and they are assuming we can continue to progress as we did for the past decades.

So my approach is actually in agreement with the more optimistic projections I'm simply saying they are wrong and we are close to max depletion and in fact have been close for decades. The mistake I think they are making has to do with the effects of spare capacity and low prices on yearly production and mixing that in with expectations of increasing depletion rates.

So in closing for me to be right real URR is probably 50-75% of the 2trillion barrels estimates it has to be in the 1250-1500 range which matches well with the 1980 papers done well after peak discovery. If its 2000 GB's then my asymmetric production curve is still valid but peak production is much higher and its much later in time. So understand that to really distort production profiles from a symmetric one we have to have had to get to close to 75% depletion of real URR.

My flat capacity argument since 1980 is a simple way to show that we probably have done this.
We have had innumerable posts on the oil drum that cast doubt on the reserve estimates because depletion rates don't match well with reserves. Maybe a way to see is to assume a 10% depletion rate coupled with unproduced spare capacity. This gives a effective depletion rate of around 5% or about 20 years of flat production around a symmetric peak that would have been about 1995 from Hubberts analysis. We where much lower than this for above ground reasons after 1980 so this 20 years of flat production got pushed almost a decade into the future primarily because of OPEC cutbacks in the 1980-1990 time frame. So 1995+20 = 2015 but this is overestimating the 1980-1990 contribution since production was about half what it should have been not zero so the push is not ten years but five.

So its better to shift the plateau by less than 20 years more like 15. which gives 2005 as the point we would have come off and began a sharp decline. So you get a range of 2005-2015 as a rough estimate for the end of the plateau and beginning of sharp declines because of lost Iraq production and lack of investment in Mexico, Venezuela and Iran I've picked 2009. Russia once corrected for the fall of the Soviet Union should follow the US production profile because it has a similar technical effect.

In any case the projection seems to be well bounded within the 2005-2015 time frame. Many symmetric approaches put us in decline by 2015 the difference is I'm saying we decline world wide at closer to 75% URR than 50%. And whats even more fascinating is that the dismissed lower 48 peak in the US was actually the driving force for causing a asymmetric world peak since as this large producing region went into decline early it produced technology that allowed the rest of the world to increase its depletion rates in effect smearing world peak out into a decades long capacity plateau with cheap oil prices. So although the production profile of the lower 48 may not be correct for the world the technical achievements made trying to combat it are of key historical interest.

I think future historians will correctly explain how the decline of the US spurred technical innovation and eventually resulted in the world oil production collapse in 2009.

In any case since my theory requires current reserve estimates to be way off it should be easy to disprove.

Albert should be warm and toasty, but if I was on the East Coast I would be really worried.

What part of the industry do you work in? I am always looking for more data to turn into EROI calculations like this post Canadian NatGas EROI.

Any opinions on why NatGas drilling in Canada is falling off while still growing in the US? Canada is generally believed to be a less mature province.

I only see three possible scenarios with that, either: 1) The tar will have to stay in the ground until the nuke plants come up in 10 or so years or 2) it is going to get pretty cold and dark here, or 3) both.

4.Canada stops exporting so much??

Or is that out of the question

Current Alberta gas production is 12 BCFD and 1 BCFD is in use for the tar sands, by 2012 Alberta gas production is forecast to be 9 BCFD with 6 BCFD in use for the tar sands.

The actual oil production increase by 2012 resulting from this increased gas use is far lower than 6x I assume. So why will gas use increase so much for tar sands by 2012? Is it replacing another energy source, or is the whole process simply becoming much more energy intensive?

"Russia will clearly be down about 1.5% to 2% this year because all reports out of Russia report this trend will continue."

All reports out of Russia do not report that this trend will continue. And even if they did it wouldn't mean that production would be "down 1.5% to 2%." If it is so clear, than which is it? 1.5% or 2%.

"China has been on a plateau for two years and shows no signs of increasing her production."

This is not the same as decreasing.

I couldn't help but notice that you cherry-picked Russian data from a source other than the EIA and also failed to mention that Chinese production has increased in 2005, 2006, and 2007, and that January 2008 production is higher than the average for 2007.

This is exactly the type of thinking that would have lead one to believe 2 years ago that May and December of 2005 were the peak months. Don't buy into all the negative reports and discard the positive ones and use the same data sets and methodology.

JC,our last patriot President. Oh, how different things would have been if we had followed through. Imagine that. Restricting imports.

The problem is that most people are in a catch 22 situation. For those that current oil prices are causing a strain you generally have a situation that they have maxed out credit often one or more fuel inefficent cars with loans etc. Technically the vast majority of these people are bankrupt. In many cases they are now negative on the monthly bills and will eventually file bankruptcy.

Once they lose everything they probably will make a lifestyle change at least to a fuel efficient car.

Above this you still have a large majority that has borrowed itself into a corner its not on the edge but its caught in the same box. They have house/car/boat loans etc and are underwater on depreciating assets. They can't afford to change and gasoline/food prices have not yet sent them negative every month. In general this group cannot pay of its credit card debt for example.

I don't think Australians are in terribly better shape so the issue is increasing energy conservation this means in general downsizing the house and the car. The point is Australians probably have about the same ability to contract as Americans. Sure we are at a higher usage rate and your lower but because of the financial condition of many of both countries inhabitants the ability to invest in conservation is limited.

Now I'm not saying people can't take simple measures to cut out extra driving and other waste but this will at best probably give you a 2-3% efficiency increase. I suspect closer to 1%.

To go from 25bbl -> 15 bbl is a big step generally means changing cars houses etc etc.

And worse it means fiscal responsibility. And thats the real problem before you can get serious about conservation you have to get your financial house in order. This first step will be a big one for your average American and not small for your average Australian.

I'm betting most Americans are going to simply take the path of driving their lives into a wall.
They will makes some small sacrifices but never get the big picture and just go till they have to file bankruptcy. The business cycle is just passing the biggest debt bubble in history it will be years before a prudent financial life and conservation are back in force.

Look at it this way although purchases of fuel efficient cars has risen in the US overall care sales are way down this means that most people have chosen or been forced to hold onto the SUV. The net effect is that although we are now replacing our fleet with more fuel efficient cars the fleet replacement rate has dropped dramatically. Same with housing the McMansion trend has reversed but the number of homes sold is sliding into oblivion. And of course for many if they do sale now and are not underwater the have little equity and little savings so if they buy a new home they can afford a lot of energy conservation measures. And it will be a while before the McMansions are broken up into apts. So we are stuck with then for years.

So we are in a real spot as far as conservation goes.

It will take a long time to change this behavior.

During the early 80's when that 20% drop occurred, there were 2 recessions and unemployment hit 11%. There was a housing bust (prices fell 16% in real terms). That really helps to curb runaway consumption!!

Give us similar conditions now and the result will be similar.

Do you really think debt prevents people's consumption from falling? Especially in the middle of a credit crunch??

Overall, I doubt it. Foreclosed houses, repossessed vehicles, lost jobs are all highly efficient ways of curbing consumption.

Technologically speaking, we are substantially more advanced than we were in 1980. Consumers have more choices on the efficiency front in many areas. Could soften the blow.

Here is a couple of the macros from the period in question.

In general, I have trouble understanding the idea -- often expressed here -- that because Joe SixPack is 'trapped' in his consumption pattern, consumption will remain high.

Firstly, I doubt he is as trapped as people think.

Secondly, even if he is trapped, he's welcome to remain in his trapped condition while others reduce his consumption for him.

It's not politically correct to speak that way. But if you don't, you obscure how the system works. In a substantial recession, it will carve away inefficiencies without remorse. We have downsize specialists and bailiffs. We have bankruptcy courts and repo men and collection agencies. We have the apparatus needed to enforce economic constraints. And we've had for a long time.

People associate capitalism with runaway growth. But historically, it's also associated with liquidation and relentless trimming away of waste, incompetence, bad judgment and ill-luck. I guess most of us are just too young to have seen it in action.

Stand by and watch it perform nicely according to specifications.

They will of course one day fairly soon discover that new fields are no longer able to compensate for decline and ME OPEC will at that point be passed peak.

That of course is the definition of Peak Oil. As you know, we don't stop finding new fields post-peak; we can't offset the declines from the old, large fields. And Texas and the North Sea are Exhibit "A" in rebuttal to ExxonMobil's, et al, claims that better technology can do wonderful things for conventional production. While the Texas pre-peak HL plot is noisy, the total HL plot shows the expected linear trend, and based on the C+C HL plot, the North Sea peaked when it was about 50% depleted.

I first tackled the major exporters story in January, 2006, when I noted that Saudi Arabia, in 2005, was at about the same stage of depletion at which the prior swing producer, Texas, peaked. As we all know, Saudi Arabia has shown two straight years of declining annual production, with a recent rebound to a level below their 2005 peak:

http://www.energybulletin.net/image/uploads/38948/image010.jpg

As I stated several times, IMO East Texas is to Texas as the Ghawar complex is to Saudi Arabia. The key difference of course is that Ghawar, in 2005, made up a much larger percentage of total production than did the East Texas Field in 1972. I think that the decline in production from North Ghawar caught the Saudis by surprise, wiping out most of their excess capacity, certainly their light/sweet excess capacity, and it took some time for them to regroup. And, as I noted in Stuart's articles on Saudi Arabia last year, I expected to see a rebound in Saudi production, to a level below their 2005 peak. In any case, the key question for Saudi Arabia is whether they will ever again show an annual production rate of 9.6 mbpd or more (C+C). On the net export side, I estimate that if they wanted, and were able, to match their 2005 net export level, they would have to boost their 2008 total liquids production to about 11.7 mbpd (versus 11.1 mbpd in 2005).

In the comment section of the January, 2006 article, after numerous discussions with Khebab, I concluded that Russia could show show a year or two of rising production, before starting to decline again, probably in 2007. Numerous reports show three straight months of declining production in 2008.

My position is that the HL models should be assumed to be more or less accurate, until proven otherwise, and some people, e.g., Memmel, believe that the HL models are too optimistic.

Copy of my Drumbeat post:

http://www.gulf-daily-news.com/Story.asp?Article=214240&Sn=BUSI&IssueID=...
Saudi cuts output
12 April 2008

LONDON: Saudi Arabia, the world's top oil exporter, has trimmed its output to about nine million barrels per day (bpd), a Saudi oil source said yesterday. The level is slightly lower than the 9.2m bpd that Saudi Arabia had been producing until now and reflects lower customer demand, the source said.

"Saudi oil production currently is around nine million barrels per day, which reflects the demand from our customers," the Saudi oil source said. He reiterated the kingdom's production capacity stands at 11.3m bpd and will rise to 12.5m bpd by next year. At its meeting last month, Opec agreed to leave output unchanged.

I too have voluntarily elected to keep the production from my oil fields at a reduced rate--somewhere below one mbpd--because of a recurring problem finding buyers for all of our oil, even our light/sweet oil.

"How will a Chevy Volt power ships, trains and planes?"

Electric trains have been around for years Cslater. Electric ships wouldn't be very difficult. Planes are another matter. Luckily,they use a small fraction of the oil produced today.

I answered his question exactly as it was asked. Your two cents worth was unnecessary. Crawl back under your bridge troll.

Deffeyes prediction was based on annual production (between 2004 and 2008, most likely in 2005), and based on annual data, his 2005 pick has so far been correct, even without considering the fact that he was only modeling conventional production. And given the Russian and (very recent) Saudi data, I expect 2008 to also come in below the 2005 C+C rate.

Regarding 2011, I expect it also to be below the 2005 rate, but that is not the real story. The real story is the accelerating decline in net oil exports.

Let's freeze a moment in time: May, 2005. Based on EIA data, the world produced 74.3 mbpd (C+C), at a WTI price of about $50.

Subsequent months would be below 74.3, at 74.3, or above 74.3.

So, what happened?

If we take the difference between 74.3 mbpd and the subsequent data for each month, and then multiply that times 30 days, and then add it together, we get a cumulative shortfall of about 754 mb, through January, 2008, with a current oil price of about $110, an annual rate of increase of about 30%/year since May, 2005, which in the past year has been about 50%/year.

We have seen a vast increase in the money spent on oil, from about $3.7 billion per day in May, 2005 to about $7.0 billion in January, 2008, up to about $8.2 billion per day now. (For the sake of argument, I am just using WTI; I realize that different grades of crude sell for different prices in different locations.)

An interesting thought, note that an extra $3.3 billion per day in January, 2008, produced an increase of about 200,000 bpd, relative to May, 2005, or we were spending about $16,500 per barrel of incremental oil, over the the 5/05 rate in January--$392 per gallon per day ($535 per gallon per day in April).

In any case my point is that even though the market is offering more and more money for oil, the cumulative shortfall between what we would have produced at the 5/05 rate and what we actually produced has stayed the same or increased for 31 of the 32 months after May, 2005.

But of course, IMO, what is really driving the price is a result of importers bidding against each other for declining oil exports.

The tar sands thingy doesn't get Deffeyes off the hook. He has reiterated his predictions several times and never made that clarification even though he has had ample opportunity via frequent updates and is very aware of the tar sands situation being an oil expert.

So find me quote in Deffeyes corpus where he takes that 'out', and I'll concede you have a point!!