Oilwatch Monthly April 2009

The April 2009 edition of Oilwatch Monthly can be downloaded at this weblink (PDF, 1.9 MB, 28 pp).

Figure 1 - OPEC liquids production from January 2004 to March 2009.

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A summary and latest graphics below the fold.

Latest Developments:

1) Conventional crude production - Latest available figures from the Energy Information Administration (EIA) show that crude oil production including lease condensates decreased by 1.02 million b/d from December 2008 to January 2009, resulting in a total production of crude oil including lease condensates of 71.69 million barrels per day. The all time high production record of crude oil stands at 74.83 million b/d reached in July 2008.

2) Total liquids production - In March 2009 world production of total liquids decreased by 400,000 barrels per day from February according to the latest figures of the International Energy Agency (IEA). resulting in total world liquids production of 83.35 million b/d.

Average global production in 2009 for the first three months of 2009 was 83.9 million b/d. In 2008 and 2007, the averages were 86.59 and 85.41 million b/d respectively. The US Energy Information Administration (EIA) in their International Petroleum Monthly puts average global 2008 production at 85.46 million b/d and average 2007 production at 84.43 million b/d.

3) OPEC Production - Total crude oil production excluding lease condensates of the OPEC cartel decreased by 230,000 b/d to a level of 27.84 million b/d, from February to March 2009, according to the latest available estimate of the IEA. OPEC natural gas liquids production remained stable from February to March at a level at 4.68 million b/d. Average total liquids production in OPEC countries for the three months ended March 2009 was 33.01 million b/d, versus 36.09 million b/d in 2008, and 35.02 million b/d in 2007.

4) Non-OPEC Production - Total crude oil production including lease condensates of non-OPEC increased by 61,000 b/d from December 2008 to January 2009 to a level of 41.66 million b/d, according to the latest available estimate of the EIA. Average crude oil production of non-OPEC in 2008 was 41.31 million b/d, versus 41.80 million b/d in 2007 and 41.87 million b/d in 2006. Total non-OPEC liquids production decreased by 170,000 b/d to a level of 50.83 million b/d from February to March 2009, according to the latest figures of the IEA. Average total liquids production of non-OPEC for the three months ended March 2009 was 50.89 million b/d.

5) OECD liquids demand - In January 2009 OECD, oil consumption declined by 866,000 b/d from December 2008 according to the latest estimate from JODI, resulting in a total consumption level of 45.84 million b/d, representing a year on year decline of 1.87 million b/d. Average consumption in 2008 was 46.16 million b/d, which is 1.52 million b/d lower than consumption in the same period in 2007.

6) Chinese & Indian liquids demand - Chinese liquids consumption remained stable at 6.93 million b/d from December 2008 to January 2009 according to the latest estimate from the JODI database. Average consumption in 2008 was 6.92 million b/d. In 2005 China consumed on average 6.27 million b/d, growing to 6.78 million b/d in 2006 and 7.29 million b/d in 2007. But growth was impacted since July 2008.

Consumption in India in January 2009 increased slightly by 23,000 b/d from 2.60 million b/d in December 2008 to 2.62 million b/d in January 2009. Indian oil consumption was 2.6 million b/d in 2008, versus an average of 2.43 million b/d in 2007 and 2.29 million b/d in 2006.

7) World Liquids exports - The most recent estimate suggests average world exports in January 2009 amounted to 47.52 million b/d.

8) OPEC spare capacity - Total OPEC spare production capacity increased to 4.63 million b/d in March 2009 from a level of 4.27 million b/d in February according to the Energy Information Administration. Of total spare capacity, 2.55 million b/d is estimated to come from Saudi Arabia, 0.21 million b/d from Qatar, 0.35 million b/d from Angola, 0.40 million b/d from Kuwait, 0.40 million b/d from the United Arabic Emirates, 0.25 million b/d from Iran, and 0.52 million b/d from other countries. According to the International Energy Agency, total effective spare capacity (excluding Iraq, Venezuela and Nigeria) increased to 5.39 million b/d in March 2009 from a level of 5.08 million b/d in February. The IEA estimates Saudi Arabia to be capable of producing an additional 3.05 million b/d within 90 days, the United Arab Emirates 0.61 million b/d, Angola 0.44 million b/d, Iran 0.35 million b/d, Libya 0.25 million b/d, Qatar 0.16 million b/d, and the other remaining countries 0.53 million b/d.

9) OECD oil stocks - Industrial inventories of crude oil in the OECD in February 2009 increased to a level of 1030 million barrels from 1015 million barrels in January 2009 according to IEA statistics.Total industrial product stocks in the OECD were 1421 million barrels in February 2009, a decrease of 6 million barrels from a stock level of 1427 million barrels in January. Total product stocks stand slightly higher than the five year average of 1385 million barrels.

Figure 2 - Non-OPEC crude oil production from January 2004 to January 2009

Figure 3 - World liqudis production excluding biofuels from January 2004 to March 2009.

Figure 4 - OECD crude oil stocks January 2002 to February 2009.

Figure 5 - OECD oil product stocks January 2002 to February 2009.

Figure 6 - Russia crude oil & liquids fuel production January 2005 to March 2009.

Figure 3: Demand Destruction according to the textbook

Yes, but it could soon reflect supply decline too.
4 million barrels per day lower each 6 months.
In 5 years we could be at half of current production levels.

Hmm ...

I think I've heard of someone mentioning this possibility :)

Note it probably was not really 4mbd drop in six months. Higher chance is the 2008 production numbers are bogus and its been a fairly smooth decline to this point since 2005. We are I believe dropping fast now but closer to 4mbd every 12 months. So the drop itself was not real. The real decline rate is steep but I think half of what the current numbers are showing. However the drop is accelerating how much is effectively unknown.

I've guessed anywhere from 4-8mbd in 2009. 2.5-3 is probably not a bad guess. But given our current situation with probably ample storage. I don't believe its anywhere near as high as claimed but this does not mean that OECD countries are not currently well supplied at least in the middle of the five year range if not higher.
My best guess is overall we are really between the middle of the 5 year range for storage and the top. I don't believe we are actually over the top any more than we where in 2007.

However for a lot of reason I actually believe that the current production numbers being reported are real since they are used to support the lie of OPEC cutting back.

I give the chance of OPEC announcing another 2mbd cut after having "achieved" its goals at on of the next meetings a very high probability.

So the bad news scenario is not actually as bad as whats being presented its just at the moment for political reasons we happen to be getting good numbers out of OPEC. non-OPEC however is now questionable.
The rapid build given what we know about underlying decline in non-OPEC fields is questionable.

One of my predictions was that if my theory is right that GOM production would collapse in 2008 so far reported production is showing that the new fields that came online completely covered collapse. In addition given the timing we somehow managed to make a perfect production recovery from the Hurricanes despite the financial turmoil. And the fact that after all other hurricanes some production was not brought back online.

So we now seem to have OPEC telling the truth and US production looking questionable. GOM numbers seem to high even with the new fields coming online. Here I think the new projects are close to peak production so even if the absolute value is wrong one can watch with interest how US production changes over the next several months. If there is a real underlying decline then one would expect that once the new fields are fully operational we would again see a steady decline set in. Probably from the wrong absolute value and maybe even with the wrong rate but if we are entering fast collapse and its real the GOM production overall should be crashing and the rapid ramp up of the deepwater fields will quickly be swamped by overall decline.

So you still have a mini regional collapse model that can be proven or disproven without looking at the whole model. If collapse is happening then GOM must be one of the first regions that collapse.

Of course the model could be totally wrong but given the current numbers we are rapidly reaching the point that we can start discarding lots of models about future production. The idea of fast collapse could well hit the dustbin in the near future. If we don't see continued collapse in production and high oil prices by the second half of 2009 at the latest I'd suggest its highly doubtful that this concept is correct. Given that it sets the real peak back in 2005 we just can't go much longer without fast collapse becoming obvious if its real. You can get a bump in production in the fast collapse model but the production from 2000-present is treated as the bump at the end. The bump in 2008 is not real you don't get that sort of brief increase with any stable production model you have to see a multi-year bump if you will from real production. Thats not to say that you might not get one from some seriously unsustainable production modes but that makes it even less relevant to a larger model and even more likely to have caused additional damage canceling out the brief rise.

So for now watching US production closely over the coming months will be interesting. How the GOM production changes once the large new fields have hit maximum production is of EXTREME interest.

Outside of my prediction of and announcement of a additional 2mbd cut from OPEC I expect after this if prices do rise that OPEC production numbers will again become unreliable but with US GOM production becoming a bit more reliable in its direction of change and even its rate with the absolute value off a bit.
With luck we get good reporting and can get a reliable slope. Given the way things are going I'd not be surprised in the least to see US production go up 500-800kbd and hit a flat line regardless of the price changes in oil. Same for US storage levels for that matter :(

We just have to hope that at various points in time the need to tell lies results in people publishing the real data as the easiest way to support the current lie. I think that periodically as you look at the political situation that different areas do report real numbers. Russia and Norway are two that generally are very consistent having basically no ulterior political driving force to slant the numbers.

The nice thing is these two act as proxies for a lot of the worlds production so you can believe that whatever is happening in Norway and Russia is probably the truth and that the rest of the world is not all that different. This suggest that most of the worlds fields have now entered decline at the minimum.

One of the interesting things coming out of the forthcoming update to the our (Khebab/Brown) top five net oil exporter paper is that there is not much difference between the middle and high cases regarding the post-2005 50% depleted mark (when about half of post-2005 top five cumulative net oil exports have been shipped). It's between the end of 2012 (middle case) and the end of 2014 (high case), or seven to nine years after hitting the apparent top five net export peak.

Indonesia hit the post-1996 50% depleted cumulative net oil exports point in only a little over two years after their final net export peak, and they were 100% depleted in 8 years (assuming that they don't get back into the net exporter category).

It would be nice to have some accurate net export data for the US in the 1930 to 1948 time frame (from discovery of the East Texas Field to zero net oil exports), but assuming that the Second World War was the peak for US net oil exports, the US became a net oil importer only three years later, in 1948.


Thanks for the update. Your Oilwatch Monthly continues to set a very high standard with its high quality graphics and round up of data from different sources.

I am familiar with most of the data sources mentioned but have never seen the "ASPO Ireland" database. Is this publicly available? If so, I would love to know how I might get a copy.

And it was my understanding that all of the EIA data is behind a paywall. Is this universally true? Or is there some EIA data that is publicly avaiable?


-- Jon


The ASPO Ireland database is the database managed by Colin Campbell which is not publicly available. Data from the Energy Information Administration is freely available through their website http://www.eia.doe.gov/. For oil data go to international --> international petroleum monthly.

Best Regards,


Wonder if Jonathan meant IEA instead of EIA as the IEA data is (initially) behind a paywall. However most of the data is released to the public 10 days after the subscription release at http://omrpublic.iea.org/ with archived tables at http://omrpublic.iea.org/tablessearch.asp

Unfortunately only the current "Table 1" of the IEA's OMR is available in spreadsheet form. Everything else is PDFs. Would be really nice if someone knows of somewhere all the historical OMRs are archived in one big spreadsheet.

Rembrandt, do you know if there's access to more usable data downloads with the subscription version?


>Rembrandt, do you know if there's access to more usable data downloads with the subscription version?<

no this is not the case. One needs to extract the data from all the historic PDF's as I have done.

Many thanks for all your work on this! This is a major reason I only use EIA data.

Yes, I had transposed the letters and was asking about the IEA data.

Most IEA data is freely available two weeks after publication and can be found in their oil market report here:


I also compile some data from the IEAs quaterly on oil, gas, coal, electricity OECD statistics which is a paid publication. In the case of the Oilwatch Monthly this is a part of the all liquids data.

LOL all I is I approve of the comment you included at the start of your pdf version.

Given that now real demand is and unknown quantity have changed rapidly downwards its hard to determine if the supply cuts by OPEC are real or simply in response to demand.

It seems like at least one of my "laws" if you will that complex systems when stressed tend to hide their true state and measurable value become unreliable is being played out in spades. Although its difficult to quantify better one gets the distinct impression that the values for the worlds oil supply where more reliable or at least consistent back in 2003-2005. At the moment depending on the assumptions you make about the errors you can predict anything from a massive oil glut to a collapse in production. All outcomes are possible with a fairly reasonable set of assumptions.

If you take KSA's claims of 12mbd of capacity at face value and the fact that major megaprojects probably won't halt because of the current price of oil. Remember the larger projects were planned for a much lower price point. Thunderhores reached full production just months after the lowest oil price in many years.

Then given reasonable expectations of a slow recovery we face a huge glut of oil with capacity several mbd above the 2008 peak and a fairly significant amount not under OPEC control.

The only troubling fact for this scenario is the price of oil hovering around 50 dollars a barrel which is difficult to resolve with the demand level, claimed storage levels and production that should be coming online this year.

http://en.wikipedia.org/wiki/Oil_megaprojects has for 2008 and 2009 4532 kbd coming online including OPEC for the two years its almost 10mbd !

Anyone predicting a glut would have a hard time explaining 50 a barrel oil the combination on non-opec supply additions and demand declines swamp the cutbacks from OPEC oil should be hovering around 20 if not 10 dollars a barrel forcing cutbacks by non-opec producers as some fields simply needed to be shut in.

The glut theory would have to claim that the OPEC cutbacks came fast enough that new production simply has not had time to ramp up to swamp the effect. Its credible and common for these projects to be delayed.

However the glut theory cannot assume all information is perfect and believable it has to make some assumptions.

Between glut and my believe of a crash in production exist any number of theories that make certain assumptions and assign a certain amount of truth or credibility to all the information we have about the oil markets and economy.

Whats important is however with the theory of complexity I'm working on all of them can be reasonably fitted right now ! This has not been the case even as late as mid 2008. The global economy and oil markets have reached maximum opaqueness where the real state of the system is completely unknown.

Now the second part of my toy theory of complexity is when complext systems maximize uncertainty they are going to take one of their extreme values.

So my toy theory predicts that we will either see a massive glut in oil vs demand and the price of oil will crash or we will see a massive spike. The neat thing is when the complex system hits maximum uncertainty it eliminates all the middle cases are paths as viable routes.

In population dynamics you either have a population crash or a population boom. I'd assert that in population dynamics that its a combination of events several critical ones that are unpredictable which determine the outcome. Even something simpler like a rabbit population explosion in Australia is not perfectly predictable based on a rainy season.



A question remains as to why there was no outbreak before the start of the current infestation. The localised Tasmanian rabbit plague was noted, but it would be surprising if there were no escapes from the many warrens and cages that would have been present throughout the area of European settlement in southeastern Australia. It is possible that native predators, particularly carnivorous dasyurids, were much more effective as natural controllers of the population than the later foxes and feral cats. When their populations collapsed as a result of habitat destruction and sometimes deliberate hunting rabbit populations could rise with far less restraint.

Turns out the predictable population explosions are not as predictable as people assume. As we see with the glut theory its not perfect any more than my crash theory. So even a simple complex system such as species invasion do not allow the perfect prediction of growth.

In the case of rabbits in Australia I think that reasonable and more complex theories are closer to the truth i.e it took several factors before the population exploded. If we had had good measurements of the process then I'd suspect we would find that they did what my theory states and become unpredictable right before the explosion. The habitat loss for predators has a bit of a hole since if they where losing habitat would the not simply change behavior slightly to eat the more abundant rabbits ? The coyote or raccoon hypothesis or even Bear in the garbage dump. Most predators are very adaptable.

The more you did into complex system the more the role of uncertainty become clear.

So now we get to test the second half and see which route the system now takes is it feast or famine ?
Or is my theory complete and utter hogwash and the concept of collapse of the middle is a fevered dream :)


You should not for a minute doubt that a huge amount of additional production capacity will come on-line in 2009 and 2010. These projects were started during the high prices of 2007/2008 and are far to well advanced to be stopped now. Without any doubt there will be a huge glut in production over the next couple of years. And yes. Prices will therefore stay low. Why won't they totally collapse? Well, if they don't it's probably because the cost of production of the last barrel of oil (from these projects) is probably about 50 USD/BBL.

"...if they don't [crash] it's probably because the cost of production of the last barrel of oil (from these projects) is probably about 50 USD/BBL..."

I don't agree that the sunk cost of getting some oil into production keeps the price up. It may well be that the high costs incurred cause a company to become bankrupt as they can't fund these liabilities with lower income. These risks are the same for any long term capital intensive project, in fact there are lots of mining companies in trouble and the assets will just be taken over when they go bust.

Talking of long term, China seems to be stocking up on copper.

tony. Agreed. But there are a lot of small fields close to production which will not be brought online at lower oil prices. Lots of small companies are going banktrupt all the time. But the sunk cost has still been put into exploration wells etc. and the fields then can be picked up and developed by somebody else.

Your Oil and Gas News - Global oil, gas projects delayed in 2009. Plenty of near term projects are in there, such as Perdido in the GOM, or Suncor's oil sands project Firebag Ph 3.

Actually looking at your link only two of the delayed projects where production based.
And delays in projects that where 2+ years out is not relevant to short term production i.e this year.
They will become a issue farther out but not at this moment i.e production of oil over the next couple of months. Now unannounced in field drilling and maintenance projects have probably been scaled back a lot
but we have little info outside of rig counts to guess how much.

One was tar sands which are a joke anyway so they don't coun't the oil equivalent of corn ethanol.

Ecuador well we know that their are financial games that include the US being played out to prevent a second Venezuela. Politics and oil are very much at play there.

This the Perdido platform looks like one of extreme interest in that its a project that was supposed to come online any day and was delayed.

Lets take a look at that one.


Perdido is scheduled to begin production towards the end of 2010. Shell, the 35% shareholder of the Perdido Regional Development Spar, is the operator on behalf of partners BP with 27.5% and Chevron with 37.5%.

Well what do you know.

Your link says ..

* March 17 - Royal Dutch Shell Plc (RDSa.L: Quote, Profile, Research) said start-up of the Perdido platform in the Gulf of Mexico had been pushed back to the beginning of next year from this November.

The chances this field would have come online even in 2010 is very very slim.

So we have the tar boondogle and a ton of consumption projects shut down. Lets guess what the oil industry thinks about future oil production.

You may want to consider in addition to looking at the oil mega projects for increases in production thinking about the rate of decline. From 2005-2008 global crude production has been relatively flat with 2008 somewhat higher. Crudely looking at the mega project data for those years, to remain flat we may need about 3.5 mbpd of new projects just to stay level. I don't see total available production increasing significantly and non OPEC production will probably continue its slow decline. One thing you may want to think about is if we are entering into a positive feedback cycle. High oil prices --> lower world economic activity (demand destruction) --> lower oil prices --> higher world economic activity --> high oil prices. This is also seen in normal predator/prey populations. For instance wolves and deer. More wolves --> fewer deer --> fewer wolves --> more deer --> more wolves.

Thats assuming a constant capacity or constant energy manifold. If the energy level is decreasing rapidly and say EROEI is also declining rapidly then the predator prey model is running on top of a fast decline base energy level.

The system would then rapidly dampen to head strait up or down depending on how you look at it.

Given the magnitude of the recent price flux and economic change and if a fast collapse in oil production is true on this sloping playground if you will you would I think see.

1.) Energy prices up && production down && economy down.
2.) Economy down && energy prices down && production down.
3.) Economy down && energy pries up && production down.

Some small swings in prices because of three but in general the system dampens rapidly and collapses.

More of a Easter Island than a predator prey. I'm not saying you don't get one and two but they dampen rapidly and the system spends most of its time in state three with minor excursions.

Now if the real peak for oil was actually say 2010-2015 then yes we could get several more waves like what your saying but implicitly this means we at least retain capacity very close to peak production to provide the level playing field if you will for classic predator prey model.

I prefer to see it as the predator prey model being played at through a massive meteor strike :)

You have a numerically higher number of predator and prey species then wham and the natural model is played with a lot fewer players taking part in the relationship and headed toward extinction. The natural system is so disrupted and broken that its natural oscillations rapidly cause system break down and extinction as the feed back into effects of the strike. I.e at first there are number of dead animals to eat and the top predators appear to be fat living as scavengers ( Goldman Sachs ). But then they rapidly have to eat all remaining animals and even their own young ( The American consumer parasite ) to survive.

Another problem with modeling oil as a predator-prey system is that, assuming you don't reach an extinction event, the carrying capacity reaches a limit and may go through limit cycles -- yet this means that the effective URR is INFINITY () !!!

This of course is basically absurd because oil does not have an infinite URR (and oil molecules don't give birth, etc). These kinds of logical gaps make you think that there has got to be a better way to model this stuff.

As a matter of fact I can hear carnivorous dasyurids screeching late at night or maybe it's just the neighbours. One iconic species became extinct in the 20th century and another cute species appears doomed. They eat carrion rather than chase fast prey and don't adapt well. For example they end up as road kill themselves looking for other road kill.

I take your point that predator and prey systems have independent actors with lagged and nonproportional responses. Prediction is very difficult.

You have fancy theories, memmel.
I can sort of understand given the opacity (at least for the unprivileged observer) that you're right to harp on. But opacity is not a license to assume the facts fit one's fancy.

A simpler explanation is that you pricing model is wrong and that the price is not just a function of the "demand level" (how do you observe that?) and storage.
Supply and demand should set the price and, though I can't observe them either, I don't see anything about the price that contradicts this basic (and fairly useless) assumption.

In particular, I urge you again to reconsider the relationship between storage and price.
If you think beyond short-term trading, it makes more sense for speculative storage to be driven by the futures market than the other way around. Think about the implications!

Goldman Sachs and Morgan Stanley peak oil aware.

Think about the implications.

But, at the same time... being "Peak Oil Aware" is also self serving to their stock price. So, that's not a good comparison.

Actually thats my point.

All that matters in our current economic environment is Goldman Sachs stock price.
Everything else is irrelevant well except for the bonus's they plan to give to themselves.

Given they effectively control the US Government the world is now ruled by your typical third world dictator who's first priority is to enrich himself no matter how stupid this goal is.

This dictator is peak oil aware and thus not worried about the "democratic" middle class since they know we won't be around much longer anyway. And worse they have no problem using our vices to help us along our path to extinction.

I know this sounds trivial but really thats all the hardship we are facing now is about. Certainly there are underlying real physical issues such as peak oil but our society has been reduced to this stupid and common form of corruption. For me at least its amazing how banal in a lot of ways things become in the end.

Now Manhattan project to build electric transport now collective efforts what so ever just a few greedy bastard trying to make a quick buck that I guess believe they control the military to support them when things get to bad.

This is the result that comes out of the long post here.


We have been at it for a long time and now the only place left to loot and enslave is their own countries and citizens.


Thanks for the interesting comment. I especially found this bit interesting as it makes some intuitive sense to me:

>So my toy theory predicts that we will either see a massive glut in oil vs demand and the price of oil will crash or we will see a massive spike. The neat thing is when the complex system hits maximum uncertainty it eliminates all the middle cases are paths as viable routes.<

Do you have any literature suggestions in which this hypothesis is worked out for different complex systems? Preferably mathematically.

Well the math is which ever chaotic model fits the system.

The closest is probably the logistic map.


But the math or at least chaotic math is not predictive because its extremely sensitive on the value of the initial conditions. A small change in initial conditions can lead to exponential divergence in the values
the system takes over time.


However my toy theory differs from traditional choas in the sense I'm also asserting that the initial conditions are ill defined they themselves have noise !

So its a noisy chaotic system.
I actually did a lot of work on something similar called stochastic resonance.


Generally studied with bistable systems but not restricted to those.

Next of course the systems are complex by definition this means they are capable of computation which at its most basic level means the system itself is capable of changing depending on the value of its input and some of the outputs are also inputs. At the minimum they are finite automata.

Now we start hitting recent research but you can see some disagreement in the literature here.


Observations About Finite Automata and Chaos

A few features of finite automata are worth keeping in mind when it comes to claims sometimes made about chaos:

* The state space of a finite automaton consists wholly of fixed points and orbits.
* Strange attractors do not exist in the state space of finite automata.
* Finite automata cannot display sensitive dependence.
* Finite automata cannot display chaotic behaviour, as formally defined.

Some stuffy professor wants to sweep this concept under the rug by moving the goal posts.

And in response :)


And even better here.


Now understand after all that math the truth is that all this cool math has zero predictive capability.
Especially if you include my conjecture that the system itself is also changing its governing equations
over time as the inputs change. Its reprogramming itself.

This is actually the key feature because its how the system reaches a new stability regime.
Its complex exists in some state has noise and is itself changing. The net result is to actually capture the state i.e think about a system thats moving chaotically it can change its governing equations to capture this orbit is a new stable region the best way is to see that the new equations are completely regular.

As a simply example consider the traditional 3 body problem but driven i.e energy is being added to the system it can be distributed randomly to the three bodies and all kinds of cool stocastic resonance sets up.

However in this case we can bet that at some point one of the bodies will be ejected from the system as the sum total amount of energy climbs past that needed for one of the bodies to take on a escape orbit.
I've actually done this simulation its easier to treat it as a scattering problem and have one body come in from infinity and interact with a two body system and vary the velocity of the incoming body to get different total energy values. Its a subset of the random distribution of energy case but probably does not lose any real information.

The ejection of the third body transforms the remaining two bodies to a simple two body stable problem.

But now you must understand all of this is utter and complete bullshit in the sense that the mathematics are of now value to actually predict complex system behavior for real systems. Can I chase gobs of mathematics and right tons of papers and go to conferences yes. Does it really have any meaning or utility ?
No. Its pure mental masturbation. It just gives you more detail with zero understanding. There is no comprehension here no new laws no real understanding. At best if you have a good model you have a manifold of possible outcomes. Given the nature of the system several are extremes so BFD.

Now of course we have other types of math relevant to oil is of course invoking the central limit therom and at best expanding it via perturbation theory. I.e the shock model.


This what WHT does however the problem with this approach is its mathematically fragile. This type of mathematics averages out the higher order factors and intrinsicly is incapable of detecting its own failure.

It works till it does not. My own work was effectively the same trick.

The problem of course is its a trick not one with a strong fundamental basis and thus as I stated subject to failure if your underlying assumptions turn out to be false. And of course you have to actually resort to experiment to see if you got the right answer :) You can never know if a dropped higher order term actually blows up. And of course if the governing equations themselves are changing the perturbation approach itself quickly collapses into a mathematical mess of epic proportions. Don't even go there I have its beyond ugly.

A simply example is to take the three body equation and apply a drumroll... shock to the system by having the mass of one or more of the bodies in the system vary via a independent equation.

Or you can consider a 2D equation thats really 3D and vary the strength of a constant governing the third dimension but restrict yourself to only measuring the 2D variables. The chances of you being able to deduce the real system given the measurements in X,Y are slim. Throw in a chaotic equation and good luck.

However noise in the system and hidden variables are closely related and I'm aware that hidden variable theories are routinely bashed and dismissed but I think we are discarding them to early.


Bohm's (nonlocal) hidden variable is called the quantum potential.

Obviously I'm of the Bohmist persuasion thus unsurprisingly most people who think they understand mathematics think I'm a complete fool.

I of course think that many mainstream approaches are just producing drivel counting the distribution of trees in a number of hypothetical forests tells you absolutely nothing about the forest.

Somebody is really wrong and someone is right. My new approach is to obviously try and see if I can come up with a set of valid observations of complex systems without doing the "math" because the math is bullshit.

This toy theory is completely based on the injection of a non local quantum potential into a quantum computer or computational engine.


Now yes I've not written the great treatise that provides a Bohm variation of the Qubit.
Give me some cash and some time and I'm capable of it :)

Regardless thats where I think the real math that needs to be pursued lies. For now until I get some
free time I'm happy enough to make guess based on simple or toy Bohm qubits and see if I'm right.

I'm not the only one going off in this direction and it looks like you tend to sound like a kook.

I believe that somewhere and somehow when you really deal with complex systems that the predictions of the various views of quantum mechanics and classical correspondence and this classical physics diverge.
And Bohm wins :)


No, you're not a kook...

Thanks just to add a bit you end up having to evoke a sort of bose-einstein condensation that persists regardles of temperature or size of the field. This condensate can well be virtual particles ala Quantum Wave theory creation and annilation operators. But its the carrier of this quantum probability field.

So you get the virtual particle field in the ground state that permeates everything and is everywhere.

If it sounds suspiciously like dark matter and dark energy then you hit the same conclusion I did.

So on the Universe scale if this really is the way things work and Bohm is right eventually you end up with the need for something not all that different from dark matter and dark energy that acts as the information carrier for the quantum probability field.

A patterned information field that has structure no matter how tenuous eventually has physical effects at a large enough scale.

Of course the other place to look is black holes and here we see hints of information leaks.

Like photons quantum probability fields seem to require at least a very small a fleeting real mass and charge and other physical properties that are barely detectable because the field itself is condensed and patterned.

The ether returns :)
Another kook and I think he is in left field to some extent but the problem is you have this danged problem even in respected physics that this quantum probability field seems to keep popping up as a real entity.
To be clear I want to stress the link above is complete junk physics but the concept he is trying to make has some value. Most people make it too real its not really real its a information web that just happens to have structure that might have side effects of having some barely detectable physical effects.

However it does provide the coupling required for any complex system to become a powerful quantum computer calculating some useless equation until periodically it tips the complex system to calculate something else which can have a physical effect. Theoretically if we understood complex systems this should be readily observable and if we understood this then complex systems should be trivial to understand.

Wait a second dang :)

The problem is that most of the chaotic formulations are deterministic. Everything I have tried to do is to place the problem into the stochastic domain.

One of the biggest evolutionary dead-ends that I have seen is the endless pursuit of placing the Logistic curve (i.e. Hubbert curve) into a deterministic context. The solution of the Verhulst equations at the root of the Logistic sigmoid is actually a chaotic system that has a solution in a relatively stable part of the solution space.

But I claim that this is totally wrong-headed, as I can generate a Logistic from a model of dispersive search. This has one element of accelerating growth but the rest is probability distribution effects. In general, I don't think the framework is fragile at all; it's about as fragile as statistical mechanics, which seems to explain large ensembles of particles, and which will respond rather predictably to stimuli. The Shock Model essentially codifies this stimulus/response effect.

Sorry to be clear I meant fragile in the mathematical sense not in the sense that its not a good model given the underlying assumptions. For this type of model I'd argue its probably the best model possible.

The problem with complex systems is we have no way regardless of the type of model to prove its correctly modeling the complex system. How do you know for sure your model made the correct underlying assumption ?

We do know that complex systems in general are capable of rapid change. Statistical mechanics in its simple form can't for example correctly predict phase transitions. I'd argue the theory was extended to include them because we know they exist and the model can readily account for them but the math of stat thermo does not in my opinion actually contain the concept. For that matter liquids are not obvious either although its not a huge leap to go from a gas to a condensed liquid so that transition could in a sense be discovered.
I'd argue that solids would take a stroke of genius and its not "obvious".

What I'm trying to say is this sort of modeling has very little leading hints in the math itself just to complete the model and in general despite the power its a relatively simple problem. I agree 100% that chaotic math itself is intrinsically useless as a model. No problem throwing it out but then what ?

We can of course get into a heated argument on phase transitions and statistical mechanics and if they are what I would call a natural result of the theory. I'd be forced to define what I mean by natural result at that point. The best approach would be to take some smart high school student tech him the stat thermo of gases and see if he discovered water and solids of course it would be nice if this student had never heard of water and solids or mabye the math was cleansed of its physical interpretation :)

When you get into true complex systems that are not homogeneous then its difficult to prove that you have created the correct ensemble.

It the case of the shock model I question one of the inputs which is reserve growth. Is the shock model itself capable of solving for the correct reserve growth given the other input parameters ?
Can it prove or disprove the validity of reserve growth ?

I honestly don't know I've not played with it enough to see if it can be modified to solve for some of its questionable inputs.

This is what I mean by unstable without the perfect model its difficult to know if you left something out or if you can detect questionable input condition or questionable dynamics.

Now with that said I think that the shock model can be extended to only need as inputs the size of the earth and some reasonable constraints on the number of basins. Given its basic premise one would think it could be started with inputs that could theoretically be refined to the point that the input data itself was considered trustworthy.

But even with that you still can't prove you did not miss a shock.

Maybe I can explain it this way if you know quantum mechanics its actually fairly natural to derive classical mechanics most students well versed in quantum mechanics can after a bit hit on the correspondence principle and invent classical mechanics. Of course they would naturally know where the assumptions failed.
The reverse problem was beyond hard and required brilliant insight. Classical mechanics by its nature was really incapable of telling you it was and approximation the true nature of the approximation simply was not intrinsic in the math.

This is what I mean when I say in my opinion the sock model is a good model however its not clear yet whether its classical mechanics or quantum mechanics. I argue we lack a understanding of whatever the real higher level model is and I agree chaos is the wrong route. But then what ?
Under the covers of course we know we are dealing with a complex system dispersive model or not :)

From the dispersive discovery point of view I'd argue a natural extension that not really included is that a single discovery encourages more intensive localized searches. The gold rush effect this does as you correctly point out not ensure that we find the big field first but I'd argue that any find tends to propagate further search from the point of discovery. Some of the first oil fields turned out over time to not be all that important as far as oil bearing basis go. Pennsylvania for example. And of course Hitler was desperate for oil but never even bothered to search the north sea for oil. Why because they did not have the technology so obviously to some extent the search was technically constrained.

Agree or disagree the point is I think these are valid points you could raise vs a pure dispersive search however I'd also argue that the only reason I could raise them was because I happened to know the "right" answer just like the additions of phase transitions to what is really a pure gas model of statistical mechanics I'd argue that these additions would be difficult to add naturally. Its actually a fact that discovery and lack of discovery i.e dry holes influence the search pattern. However how do you model it and even if you came up with the concept on your own since its fairly basic how would you add it ?

Hopefully you agree that there probably is a self propagation term in dispersive search such that success and failure influence the further probability of more searching in the region. Please tell me you at least buy into the concept :)

Assuming you did how could you determine the strength if you will of the variable ?

For gold for example given that the nature of the deposits where well known the search pattern around a gold strike was very intensive same for silver. Finding coal is considered trivial because of the nature of the deposits. Locating good coal seems did not require intensive skill. This is yet another "natural" intrinsice that makes sense but again I'd argue difficult to add. And certainly difficult to consider from scratch.

A simple case lets say that oil deposits hand a big red X on top of them marking their location. I know this sounds funny but rives lakes and streams effectively have this. Most rivers lakes and streams where discovered by simply walking around the area ! A dispersive search for water seems trivial.
However finding the lakes in the Antarctic and Greenland is far from trivial. And of course underground aquifers can be missed for a surprisingly long time.


You tell me you created the model how well does it extend if you agree with my concept of what I call stability then how do you feel the model works. I tend to think its a simplification of a higher order but unknown model if you agree what form with the higher one take ? Quantum and Classical mechanics shows that the "higher" model can be radically different yet naturally produce the approximation.

Obviously I think complex systems are computational engines and I think its a natural result of one formulation of quantum mechanics. One of the corrections i.e assuming more or less discovery near a strike or dryhole. Is actually driven by the belief that the underlying system is naturally a computation engine.
This does not require intelligence. Dispersion of seed via wind which one would argue is a perfect dispersive search picks up the selectivity simply because seeds that land in fertile ground disperse more seeds to continue the search while obviously the once that land on rock or water don't propagate so the search is not continued in that direction. Underlying is a rudimentary ability to communicate in the case of seeds it very primitive and the I survived signal is sufficient to alter the search pattern.

You see that communication has this tendency to enter into complex systems even something as simple as crack propagation has the "I survived" signal and cracks can rapidly propagate to the weakest point. You need not even assert biological control.

I'd argue that this feedback is so common and so basic in complex systems that dispersive search without feedback is simply not correct and that because feedback comes from a higher order model that there exists a bigger better model that the shock model is a simplification of a poorly defined meta model.

My own attempts at trying to deduce this has right now resulted in me becoming very concerned about the assumptions we make at least with what I think I know I'd suggest people become very concerned about our situation. This could of course be from lack of understanding or even worse understanding but also overreacting to some of the features that seem to be present.

All I can say right now is I think I know enough to argue that for the case of oil and our economy we are at a crossroads possible in the sense that I really think I've gleaned enough to say that we will know the true nature of our complex system. Either I'm right and we will soon know if we have a oil glut or a fast collapse or I'm really really wrong and the central limit theorem takes the day and we follow a fairly smooth curve.

Whats worse is I might be theoretically right and you can determine if a complex system is following central limit behavior or not but simply messed up the solution with oil. That for me would be the worse outcome :)
But no problem I'll go watch the ice melt at the poles since this is the other complex system that I've decided is going to follow the fast collapse route in fact its what actually lead me to think oil would also follow the same route. It has a similar feedback in that a loose iceberg physically grinds away and shatters the nearby ice. The sandpaper and hammer effect. Same for glaciers once they start cracking they have self propagation built in and of course water moving to the base. I argue that these effects soon overwhelm simple melting.

I've got to be right once or even worse I've got two chances to be wrong. Well three if you count collapse of our civilization which is independent of the rate of decline of oil simply needs it to decline.

Only because complex systems are self similar regardless of the underlying forces do you have to evoke quantum mechanics as providing the most basic feed back channel through extended qubits. A communication theory of complex systems must have a reasonable and basic route for feedback if feedback or computation is indeed the key to complex system behaviors.

At least so far it seems that complex systems in decline rarely follow the central limit theorem once fully constrained. My hearsay is that the central limit theorem only works for complex systems that are still open and have other inputs. Once the system is closed it eventually rapidly moves to and extreme condition.
One would argue that the polar caps are not closed but in my opinion they have transformed to a new system with enough open water to to create a new "closed" water ice sun dynamic. They need no further inputs then what exist now to go to extreme. Closed for complex system just means the feedback loops are no longer varying and thus the system will move to one of its extreme values.

And like I said nothing prevents this from being totally wrong thats one of the problems in my opinion with trying to formulate a higher order theory esp one that based on hidden variables and erroneous measurements :) I can't think of another approach that obviously has the proverbial feet of clay or house built on sand :) It very basis is a collapsing sandpile :)

Given the poor quality of my model that suggest this I'd be excommunicated for suggesting this if I still did science.

I'm keeping my eye on your sand pile computer :)
Dynamic reality made up of communicating units?
I am reminded a bit of the work that was done on biological 'invasive species'.
(Very important in both global agriculture and natural systems.)
Could they be predicted from fundamental characteristics?
The answer seemed to be, no.
Very few of introduced species become truly invasive, but predictably a few of most categories will become invasive, and some of these will become serious pest species. But which? An additional pattern typical of biological invasions also made for difficulty when trying to do a predictive risk assessment (for example RA for genetically engineered versions of known species), and that was the typical very long lag time between the dispersal and establishment of a few feral individuals or small populations and the take-off of explosive invasion. Lag times for real examples were typically several decades and did not necessarily involve genetic adaptation to novel environments that might have explained the length of the lags.

I believe that the processes of discovery and production are distinct from the first-order modeling point of view. All the biological analogies break down for any unified model because this lag does not exist. In predator-prey relationships, the prey gets eaten (produced) as soon as it is captured (discovered).

But the predator/prey population dynamics doesshow a time lag between the two profiles -- one peak (predator) lags the following (prey). Is the prey discoveries then? And is the predator production? Or is it vice-versa? In any case, the cumulatives in either case points to an infinite URR, which doesn't make much sense either. It's all a matter of fitting round pegs in square holes. The analogy does not quite fit, and people hang on to it because it is too tantalizing to let go.

Web I think your to hung up on predator prey relationships yourself. I'd suggest people use them because they are known complex systems that happen to be well modeled. Behind the shock model and biological models exist some basic truths about complex systems. You have hit one which is dispersion.

However :)

In real complex system dispersion creates self assembly its not a pure random walk. We actually know this from current research. As the system disperses on a random walk it finds conditions that are suitable for growth these generally act as seed crystals for further growth. In fact you probably can model complex systems via the dynamics of a system with changes in the number of seed crystals for crystalline growth. I'd argue that using this analogy the current dispersion model is effectively assuming a single seed crystal and thus is not capturing the important phenomena of self assembly. YES it need not be predator prey ! Thats fine but its why others keep coming back to it time and time again.

Now why is this important ?

Well if I'm right and that discoveries and dryholes cause the dispersive search to pattern then the search itself is capable of discovering most of the oil in a region very rapidly. This means that the reserves in a region are well known early in the search phase i.e you have a very good estimate of the total amount of oil fairly early once search has reached the point that wells are being drilled and put into production.

Thus reserve growth can only happen at the start of production later additions are simply unphysical and probably represent increased ability to deplete not any real growth.

So if I'm right and search actually becomes patterned in real complex systems this implies that most of the reserve growth people keep adding into models is fiction not fact.

Realistically we probably only have 1.5 trillion barrels of oil that will be extracted at any reasonable rate and we have burned about 1.2 trillion. Our depletion rate of our remaining oil is then probably somewhere between 5-10% giving us a realistic oil supply that I'd cut off at 25% lower than our current rate of 5-10 years. We would have 10-20 years left before rates drop to at least 50% of the current rate.

Although large changes in URR tend to not move the peak date that much what they do do esp if the real URR is lower and extraction rates have increased dramatically over time is result in a relentless increase in the depletion rate as you maintain high extraction rates. Thus starting with patterned discovery one can fairly easily conclude that most reserve additions actually are simply increases in the depletion rate of the reservoirs given the size of the claimed reserve additions depletion rates have at least doubled are quadrupled over the last 20-30 years. Given that the production decline rates have been kept low and in fact production rates have steadily increases our average depletion rate of remaining URR is sky high right now.

And of course new discoveries are well in the past thus the logical conclusion is that production rates will fall fast or have fallen rapidly as a large number of fields pass 60% depletion. Basically about 90% of the remaining URR is in fields that are 50% or greater depleted. To some extent it does not really matter if they are 50% 60% or 70% whats important is that production profiles drop dramatically when a field itself hits its end production level.

So assuming you go with patterned search and move most reserve growth to be increasing depletion rates you should be able to reproduce my worst case model.

Your correct that Predator Prey is one pattern but Oil has its own pattern and if I'm right the net result is the same sort of crash as found in predator prey relationships even though thats the wrong model the underlying intrinsic self assembly of complex systems as the disperse is universal therefore complex systems that are based on depletion faster than a resource can be renewed probably all have dynamics similar to predator/prey despite being based on quite different processes. Thus patterned search overwhelms the domain specific behavior.

From a stat thermo point of view long range order sets in well before any phase changes actually take place.

For crystallization for example proto crystalline structures form well out into the liquid phase.
We understand skin effects very very well since they are critical to any catalytic process. And we know liquids can take on ordered structure. This is not new.

Many types of crystal growth exist. I can name crystal growth near equilibrium as having completely different dynamics than crystal growth under more kinetic conditions. I did a lot of work on the latter and the old hands who thought crystal growth could only take place near equilibrium were always freaked out by how much control you could impart by working in a kinetic regime far from equilibrium. It got to to the point where you could actually "see" the atoms moving into place. Dispersion in the growth measurements was so real that you could actually pick out beat frequencies due to finite volume effects.

I only mention this because people that deal with crystal growth research have so long dealt with the problem of not being able to measure the results until after the experiment, that they can get really good at imagining what is going on in the mysterious nano-world. Working out the details of oil exploration has a similar relationship; you just have to make assumptions on the variability of the conditions and you can use the same kind of mathematical models (up to a point of course, because nothing ever perfectly analogizes).

"I'd argue that using this analogy the current dispersion model is effectively assuming a single seed crystal and thus is not capturing the important phenomena of self assembly."

This exactly reverses my premise. Dispersion acts on rates of growth. Having a variety of growth rates effectively gives a Pareto-like distribution of crystals sizes in a suspension. If you had a single seed crystal, in a very homogeneous environment then you would have a uniformly advancing collection of crystal sizes.

Dispersive discovery works the same way as fractal crystal growth, in that we have many different exploration rates from around the world acting on varying chunks of volume. The reserve growth occurs as localized dispersion (and diffusion) act on individual areas. About the only thing difficult about this analysis is understanding the length of time it takes to calibrate a discovery curve. If you backdate the discoveries to the original date in a region, then you use the reserve growth kernel function in the Shock Model convolution. That is what Khebab and I both do, as most of the published data gets backdated.

It would turn out different if the data wasn't backdated. In that case the original discovery curve would likely be much broader and the reserve growth kernel would be an integral part of the dispersion model. A tricky duality occurs in this case. One can make these areas very large so that it looks like new areas are not just extensions of previously discovered areas, but who makes the decision between whether a new area is actually a new discovery rather than a reserve growth extension of a previously discovered one?

Exactly :)

I used to do x-ray diffraction so you can image I REALLY got into crystals :)
I used to do space groups in my sleep :)

Now what I'm saying is you need a consistent model for the expansion of original discoveries this must be ab-inito you cannot depend on backdated discoveries since these are corrupted with extraction efficiency.

What I would like to see on the discovery side is the obvious creation of new centers. Your claiming that you do what I'm suggesting but I simply don't see it it your model. For example the discoveries in the ME should obviously in the discovery graphic initiate a new center for seed formation. This is simply a showme request.

Next we have the real boundaries of most basis this is the data that should be feed into the ab-inito calculation the true extent of a sedimentry basin with source rock is well known.

It would turn out different if the data wasn't backdated. In that case the original discovery curve would likely be much broader and the reserve growth kernel would be an integral part of the dispersion model. A tricky duality occurs in this case. One can make these areas very large so that it looks like new areas are not just extensions of previously discovered areas, but who makes the decision between whether a new area is actually a new discovery rather than a reserve growth extension of a previously discovered one?

This is the absolute heart of the problem today reserve growth accounts for to much of the remaining OIP and expectations of the URR its 25-50% of the input data into calculations of peak. The symmetric solutions blow up if this data is incorrect since they all use it as input. If its a pure fractal that does not have obvious new centers bounded by the topology of the basin then your model is wrong you have the seed crystal density to high. I almost wrote about that in my last post but chose not to It looks like to my chagrin. A individual crystal and a rich set of seed are both wrong. You have to seed it with the correct number and size.


This means of course that the shock model is not basic it depends on the topography of the earth but it should. A correct model of the planet earths oil endowment should depend on the real topography and geology of the planet.
A model that does not depend on our unique planet is simply wrong. I argue that the shock model has the right ideas but is not seeded correctly to determine our real oil endowment. Reserve growth data is both corrupt and should not be and input.

Look at it this way worrying about peak production is only and issue once the discoveries are well in the past. If they are well in the past the basins are well defined and can serve as input into the model. Modeling peak before discovery is obviously done is a inexact science at best. The details matter.

From your sig your obviously into astrophysics. The shock model should work for Titan and Mars. We may not have the data in some cases I'd argue that Mars could well have a surprisingly rich hydrocarbon endowment. You need to think about the requirements to turn the shock model into a generic planetary model. If you do then you will find that reserve growth is a complete sham.

Notice I left off maybe or might be or any other escapes. Its a sham its not real it never happened it can't be real. A very small precentage of reserve growth is allocated to expansion of your understanding of a basin at best its less than 10%.

X-ray diffraction is only a bulk diagnostic tool. The scattering cross-section is too small and you don't pick out what is going on at the surface. You need to do surface electron scattering to detect the dynamics at the growing surface.

The solution to Pareto is trivial. Assume a damped exponential range in migration speeds (lots of slow, very few fast). Integrate this distribution over a time which basically accumulates a volume a priori. Then average this over a range of times spanning geological ages, and you get a "Pareto-like" equation. If you put in finite time durations, you get bending in the rank histogram at the largest sizes. Very trivial to show (I won't here because I am sick of trying to do math markup on a blog) and you wonder why no one has ever figured this out before. I get tremendous insight from thinking in this way.

Now, this reservoir size distribution has at most a 2nd order effect with respect to dispersive discovery. Exactly when a big vs small reservoir is found has a weak effect both empirically and statistically (also similar to scattering cross-sections) on the discovery cumulative.

I would argue with the fact that you need to know much geology at all. Every oil reservoir is a statistical anomaly or defect governed by rules similar to Poisson statistics. And that is the way I do my analysis. But then, it is your right to assume that the specific geology rules the eventual dynamics of oil depletion.

Large scale dispersive discovery is to macroeconomics as reserve growth on a basin is to microeconomics. You can use some of the same analysis for both, but trying to determine when micro turns into macro is arbitrary. Reserve growth is simply a matter of discovery at a very localized level. You see the tip of the iceberg and it takes a while to figure out how big the volume is underneath. If you knew the iceberg's size right away then there would be know need to think about reserve growth at all. However, globally, not knowing the size of one iceberg doesn't effect other icebergs that are discovered.

BTW, My sig has no deep meaning, it is a mutated name, kind of like Olivia Neutron Bomb. I like political intrigue and I like science, therefore the sig. Actually I don't care much about astrophysics.

Again to repeat myself a bit.

Reserve growth is simply to large of a contributor to include in a basic equation if it exists at all it needs to arise from the basic calculations.

I'd suggest the biggest argument is when a field is actually well characterized. This certainly depends on technical changes over time.

But the fact that offshore fields are often pre-drilled brought online pumped and abandoned should suggest that we know our fields very well today.

Looking back into the past we find that Ghawar and indeed any field that uses peripheral water injection must by definition be well defined.

Here is a nice simple article on the issue.


Now I'm of course asserting that OIP is actually fairly well known and further more generally over estimated as most factors that effect OIP estimates are ones that tend to lower the total.

What changes over time is your estimate of your recovery precentage not really the total amount of oil present. Given that recovery rates are in general low < 50% of OIP your reserve growth can vary a lot depending on how you change your recovery rates. And of course reserve estimates are tied to financial considerations. Inside the oil industry literature I've read reserve growth is repeatedly mixed in with methods that maintain production rates.

Many of the issues are brought up here for NG.

Westexas has mentioned a few time that NG/NGL production increases from oil fields as they go into decline. My opinion is the strong increase in NGL production is a warning that all is not well in the oilpatch.

And one last thing. Despite the flaws of HL its the only method that does not include dubious reserve growth. However its a symmetric and empirical approach. HL itself because of the way it works will lead to inflated estimates of URR if technical progress has significantly increased our ability to maintain production rates as fields become depleted.

Reserve growth I argue probably has even more inflation and suffers from a variety of problems one of which is the same mistake of inflating reserves based on better extraction technology.

So it is a safe bet in my opinion to assume that any methods based on HL like heuristics or that include reserve growth are inflated.

Every attempt I've made to correct results in the world being at least 70% depleted of what I call fast oil with a large tail of oil that could be extracted at low production rates from depleted fields. I'd argue that expectations of the final URR with the low total production rates probable once most of the worlds oil fields are past 70% depleted is questionable because of above ground factors.

You have of course posted models that show extraction rate shocks. If you simply combine these with a pessimistic assessment of reserve growth or take a HL URR and assume 10% 20% or 30% inflation and fit the extraction rate shock i.e go with a URR estimate and vary the extraction rate shock you can then estimate "real" reserve growth if you have the non-backdated data.

Regardless given the current production rates if HL is indeed inflated by anything more than say 10% you have to have a asymmetric production profile. Personally in reading about extraction technology I'm convinced that over time we have doubled if not quadrupled the rate at which we can extract oil and these technical advances are retroactively applied to older fields. Ghawar is the showcase. Certainly in some cases it allows commercial production from tight or otherwise complex reserves that would not be commercially produced. However this begs the question of why these reserves that where left behind are now of interest. Where have all the easy to produce fields gone ?

Bottom line is I cannot escape the conclusion that if I'm right and technology has played a role in maintaining production rates while increasing depletion rates even a simple review indicates its a large correction or it has no impact and recovery factors have also increased dramatically even though I can't find any proof of significant increases in recovery factors in general. A few showcase fields but overall increased recovery is small and generally in the final stages of production at very low production rates.

So bottom line is if the depletion rate is increasing over time and the production rate is increasing and the discovery rate is decreasing eventually you hit the wall no matter what model you use. Only real increases in recovery rates at high production rates would result in the projected production profile using either HL or the shock model.

The lack of compelling evidence of dramatic increases in recovery rates is troublesome.

To your first point in the comment. The simplest model IMO for reserve growth uses dispersive aggregation. This leads to the hyperbolic model that Laherrere has referred to. In the most dispersed form this leads to a cumulative that goes like t/(k+t) if the aggregation speed is relatively constant over the lifetime.

At one time I asked Laherrere why he used a hyperbolic kind of curve to fit the data. He said he couldn't explain why, except to say "that everything on earth is curved". Then he said that "hyperbola is the simplest curve with an asymptote".

So we have real issues on how we talk about this stuff. I can only reason in the context of some mathematical model because pure rhetoric fails us at some point. Everyone else seems to talk about this via some heuristic (as Laherrere does, which never attempts to explain anything) or a sophisticated expository narrative that in the end is impossible to disambiguate (due to the failure of natural languages to precisely define and describe most laws). I am not immune to criticism in this regard as all my math is spread out over blog posts and it uses this great math markup language that all blogging software comes with (NOT).

So it is indeed frustrating to always talk past each other. It is almost like the two of us were in the early 19th century talking about a mysterious ether flowing through the wire and we didn't know about Ohm's law and how to apply our arguments in terms of a schematic and applying Kirchoff's circuit laws. We are essentially talking well past the fundamentals (which know one has adequately expressed yet) and assuming that further blustering rhetoric will obviate the need for a basic statistical understanding.

That is all I am working to change.

I don't disagree however I think I'm saying something much simpler. At some point you have to validate your data sources. If you data is corrupt then you have a problem.
I simply see the potential for some serious data corruption and I feel a couple of reasonable assumptions to correct for the corrupted data leaves you with some uncomfortable results.

One last thing any survey of the worlds oil endowment shows that Iraq, Iran and Russia have a significant precentage of the worlds reserves regardless of what the level is. Despite repeated above ground problems leading to poor production rates from these areas we have successfully managed to have cheap oil most of the time. Thus the depletion rate of the rest of the world excluding these areas and their reserves is open to question. Next you see late developed areas such as the North Sea and Alaska go into decline in a few decades.

There exists plenty of room for questioning here and if reserve growth and infield drilling where not so critical to expectations of future production given that new discovery is well in the past I'd drop it.

And last but not least complex systems of all types tend to show rapid growth and collapse or at least are capable of rapid collapse. The spans all complex systems from simple sand piles to markets and computer networks. Understood or not its a intrinsic feature of complex systems. Chaos although its not predictive shows at least how model systems can change rapidly. Its a useful toy for understanding the general dynamics of a system but because of its definition it simply cannot be used to predict.

And back to the top your a scientist if you trust the data fine I don't. It looks like we will find out from experiment. I'm confident that a fast collapse of oil production can be ruled out withing say the next 18 months at most. It either becomes blatantly obvious soon or I'm wrong.

However I believe now that any reasonable model of complex systems needs sufficient logic to prove its inputs. I must work more like a mathematics proof or a computer program. Your model is literally a simplified program that represent the system and runs faster. However how can you know for sure that you don't diverge ala like chaos from the real one ?

And last but not least Peak oil and resource depletion is actually a product of the Petroleum Industry and one of its main predictions has proven valid i.e the peak date for the US.
Its also a sort of duh type argument. You extract a resource thats effectively non-renewable and eventually production will decline. Why is that data needed to reasonably understand the global peak so obfuscated and hidden ? Any understanding of people show that they hide something when they have something to hide. The whole subprime housing game was at its core a simple fraud executed with layers of obfuscation. Practically every single time that humans obfuscate something that should be obvious its not a good thing.

This simple understanding of people is in my mind the strongest argument to question strongly everything that has to do with oil. Obviously I've come to the conclusion that we have lived a big lie over the last 70 years and obviously not just with our oil supply. As near as I can tell it was a whopper with lies about oil at its heart.

If we have corrupt data sources there is nothing more than I can do.
You being a physicist will appreciate the fact that there are theorists and there are experimentalists. Usually in physics academia, the two are kept segregated; the theorist postulates something and the experimentalist tries to demonstrate it. Usually the segregation occurs because of the different skillsets the scientists bring to the table. On occasion you will find the scientist who is great at both. (scratching my head trying to come up with one)

With the bad data sources, I have now officially become a theorist and I will sit back and let someone else demonstrate the results.

If people are purposely trying to hide the data, we have a double whammy on our hands.

Yep thats really my concern. And not only are their more theorist than experimentalist but more theories that theorist :) And old theories seem to hang around for ever long after they should be tossed into the rubbish bin.

However you can use various games of logic and variants of your theory to test the plausibility of the data. We don't care about simple issues just huge blunders.

Moral Hazards are hard to explain but if we have created a moral hazard in the oil industry and I think we have the true cannot be hidden forever. One thing I am confident of is that the Oil industry has certainly obfuscated thing enough that they have plenty of room to execute a moral hazard that makes the current financial crisis a walk in the park. The latitude exists.

Thanks Memmel for the lengthy post. I appreciate it and have saved it for reading when I have some time to go into these matters in detail.

How have you handled the switch of Indonesia back to non-OPEC, starting with January 2009 data? Starting in January, Indonesia's nearly 1 Mb/day goes to non-OPEC. Did you add back Indonesia retrospectively? My quick take suggests that maybe you have.
Data Indonesia: A Return to non-OPEC for 2009
See also announcements from EIA Washington and IEA Paris, linked in above post.


Yes Indonesia was added back retrospectively for all months to Non-OPEC. This was announced in clear detail two newsletters back.

why does this report not reconcile with the IEA global major field analysis and forcast from last fall??

Khebab did a reconstruction of the IEA data which show jan jan 2010 global production approx 69 MBD. that is a decline from 74MBD. that is 8 months from now
an irreversible decline, according to the chart

who is wrong?
the IEA then or Rembrandt now?

There's no way we're at 74. The data in the report is not current.
69 in 8 months is reasonable. It would probably be less of a drop than happened during the last 4 months. But it won't happen because of anything going on in major fields. It's international relations that are driving the production numbers now.
Maybe you're thinking about the major fields decline rate. This isn't the same thing as gross production because there are always new fields coming on line.

In the PDF, Rembrandt mentions that most recent month's production is probably biased high.

I believe there is a significant upward bias in the latest month for world production in every Oil Market Report of the International Energy Agency. Because in the consecutive publication by the IEA production estimates for several countries are nearly constantly revised downwards.

I am obviously in debt to Rembrandt for his invaluable work but this is something everyone that has looked at the data has noticed for some time. That said, Rembrandt's analysis is of course more detailed and better grounded than most.

Your point?

The report also clearly shows that production is manifestly closer to 69 than 74 now that I've looked at it.


Firstly, I don't provide any numbers that are published in the Oilwatch Monhtly, only refurbish and combine them from other sources so there is no possibility that I can be wrong with anything related to the Oilwatch Monthly (besides the editorial).

Secondly, I presume you refer to http://www.theoildrum.com/node/4820, wherein an average 2009 production for crude oil of 71.61 million b/d is tabulated and an average of 68.62 million b/d for 2010. I don't know where you pull the 74 MBD from as current production is 71.69 million b/d (March 2009). Furthermore, we are not even halfway 2009 so there is no way yet to say anything meaningful about the historic accuracy of this prediction.

Matt Mushalik has an update of his incremental crude oil production graph, based on EIA C+C data:

This graph shows that Saudi crude has dropped off substantially, but that there have been other reductions as well.

I'm doing some research for a school paper and I'm wondering if someone could help me by explaining the discrepancy by several million barrels of oil a day between various statistics on world oil production.

The BP statistical review of 2008 gives total production figures for crude oil at just around 82 million barrels per day which "includes crude oil, shale oil, oil sands and NGLs (the liquid content of natural gas where this is recovered separately)." They note that they exclude liquid fuels from other sources such as biomass and coal derivatives, and a good graph of this appears at http://www.theoildrum.com/files/PeakOil1.png showing that actual crude oil production is just under 73 million barrels a day.

At the same time, the IEA reports that global supply (which includes biofuels, non-crude sources of petroleum, and use of strategic oil reserves, in addition to crude production) averaged 85.24 million barrels per day.

My question is if folks can break down the actual proportions of this discrepancy. Is it only biomass and coal derivatives that are really responsible for this differential, and if so by what amount? Are there other fuels that are not being taken into account here, or am I just missing something? Any links to good websites or graphs which break this down and which explain this would be greatly appreciated. Thank you!


Crude oil and NGLs:


IEA data including bio fuels:


Further to my question, does anyone know off hand where I could find some good graphs that strictly show global crude production (and not "all liquids") based on EIA data?


I know you asked specifically about EIA data but you might also consider perusing the charts at the Energy Export Databrowser which uses data from the 2008 BP Statistical Review.

-- Jon

Rembrandt - where do you get your figures for spare capacity? I've hunted all over the EIA site and can't find anything. Are you simply subtracting exports from production?

It's really interetsting the way the IEA puts it. This from the latest public IEA report (this month's update available to mortals next week)

The  latest  decline  in  production  has  predictably  translated  into  an  increase  in  OPEC’s  effective  spare  production  capacity  to  5.2  mb/d.  While  the  de  facto  rise  in  spare  capacity  may  be  causing  concerns  in  the  near  term  given  the  backdrop  of  weaker  demand,  even  more  worrisome  is  the  prospect  of  financial  constraints  leading  to  delays  or  cancellations  of  new  projects  or  expansion  plans  of  existing  fields  is  setting  the  stage  for  an  equally  sharp  future  contraction  in  surplus  capacity. 

It's almost like there's a hint there...

Wow serious doublespeak sure you did not snag that out of 1984 ?

The steep drop in excessive profits from the credit bubble may lead to future steep drops in excessive profits making it difficult to determine when we will see and expansion of excessive profits greater than the current increase in the reduction of the excessive profit level.

Or the equity levels in a lot of houses is less that the current abnormally low sales prices well below market rate. This is caused by the abnormally large number of houses which the owners chose to return to the banks before their equity could be captured at real market rates. But its never a better time to buy since these below market sales are not expected to last long as more homeowners choose to hang onto their large equity gains.

Maybe the sharp drop in surplus capacity could actually gasp lead to lower real production which gasp might cause you to question the actual existence of this phantom capacity and for that matter profits and equity.

Maybe its not real.


EIA Spare capacity can be found here:

http://www.eia.doe.gov/ --> International --> Short Term Energy Outlook --> Don't open the report but look at the table list on the right of the page (scroll down a bit), you want to click on the table called 3c. OPEC Crude Oil and Liquid Fuels Supply. Click on the html link --> Select monthly and the years you want, spare capacity figures are now in the third table in the list. --> click the excel button to get a spreadsheet.

Good luck!

Is there any know limit on crude stock capacity? From the graph it looks like it is at all time high?

My opinion is at least half the value on the graph :)


Oil storage companies are seeing record demand for their storage facility services. Yet, they don't seem to be making the cut as far as profits from their services are concerned. The record demand seems to be a case of oil companies simply storing their output in anticipation of suitable, upward revisions in the prices of crude oil and petroleum products.

Goldman Sachs does not pay oil storage companies anything to store paper barrels.

The following seem clear:
Storage is usually at low level at or near year end. However, at end 08 storage was at 5-year high and rising.
Unofficial storage, i.e. in ships not needed to transport oil, is probably both significant and not counted in Fig. 4.
US storage, as reported weekly by USG, is continuing to rise. OECD total storage is therefore likely rising as well.
Iran, per TOD, has just stopped importing 0.5Mb/d diesel on account of higher south Pars NG production displacing diesel formerly used for electrical generation. Very good for Iran's BOP, but adds to world product supplies. (If OPEC quotas were measured by net exports, Iran would be busting their quota as they slash imports.)
Mega projects indicate that non-OPEC will probably not decline much this year or next.
We are now in Q2, a period of low demand. There is no reason to think we will not add substantially to storage throughout this Q.

OPEC cuts are real and rising, possibly approaching their 4.2Mb/d target. Suprisingly good cohesion. In the absence of OPEC cuts we would now be drowning in oil whether peak is past, here, or will never come.

Considering the above, oil price will fall in the near term because we are running out of storage. Simply no place to put the stuff. Not clear that product price will climb no matter that refineries are cutting back production on account of low crack spread... there are far more refineries around the world than needed, just as predicted by PO... although PO did not expect a refinery glut to be accompanied by a crude glut.

PO may or may not be just beginning, but the GR (greater recession) is right here right now.

And another think... there is pretty good evidence that the first world will cut back a lot when prices rise at too high a rate, which probably means above 60-80 in these times with the dollar worth what it is now. SImmons might be right that oil has an intrinsic value of 500/b, but there are not enough buyers to pay more than 80/b when the world is producing, say, 80Mb/d liquids.

Considering the above, oil price will fall in the near term because we are running out of storage. Simply no place to put the stuff. Not clear that product price will climb no matter that refineries are cutting back production on account of low crack spread... there are far more refineries around the world than needed, just as predicted by PO... although PO did not expect a refinery glut to be accompanied by a crude glut.

Taking your post as fact:

Yep exactly oil prices should start dropping in fact one would think that they would have already started dropping as we have to be close to peak physical storage. Now of course there are numerous claim of signifcant amounts of oil still at sea in floating storage some as high as 100 million barrels. It not clear if this had been offloaded. But assuming that the contango remains one would think that we would see more move to floating storage and also imports rise significantly as this is moved to cheaper on land storage. And of course somehwere we should find evidence that oil storage costs are rising as we reach our maximum.
Maybe the SPR starts making larger purchases.

The front month should be falling and one would think the contango in the market would finally collapse and given the current situation go into backwardation with the back months falling vs a falling front month.

I'm certainly willing to give it a few more months of ever increasing storage but one would imagine that the US should at some point be backing down on purchases so anyone else with storage thats not filled would get a chance esp as the price starts falling.

And what if this does not happen ?
What if the price of oil just keeps rising despite the US brimming with oil ?

We shall see. As I've said in my other posts either the world has plenty of oil with our without the OPEC cuts and the price will crash forcing OPEC to eventually give up and sell at market price or some of our data is seriously corrupt in particular US storage levels.

Something has to change soon. I've tried to find overall storage for oil in the US without success.

This is Cushing.

Despite the claims of high storage levels it looks like refinery storage capacity has fallen.


I have a hard time believing refineries where trimming storage and that third parties where furiously building tanks elsewhere. Given this is a documented decline and that storage levels have reached values
not seen since 1990 we would have to deduce that outside of refineries the empty storage tanks remained operable and waiting for almost twenty years.

Anyway time will tell but its certainly reached the point that even the hard core glut believer should be questioning the "facts".

There is oil stored at ships at sea maybe they buy some oil a little bit earlier and count it as storage at sea before it arrives?

I asked about this over at peakoil.com
Pup55 is the expert on all things that have to do with the US.


If they are its another source of double counting since this is also counted as imports.

I actually no longer believe that this is the case directly. Its a bit more complex.

It looks like the land storage has a lot of paper barrels and when they make physical delivery via
offshore storage its counted as and import and then as storage at a real customer site so the physical
oil coming in off tankers is correctly accounted for in this sense. Some was correctly counted when
speculators imported and stored physical either directly or via buying local production forcing others
to import.

But its still double counting because they are filling the contracts from oil they claimed to have in physical storage on land with oil that was really stored at see and are not reducing the claimed amount
of physical oil.

This means of course once the oil stored at sea is drained down that you will probably see prices start increasing relentlessly. From this point on out they are still double counting but will I assume start booking lower reserves on land as they buy crude on the spot market to cover their paper barrels.

So at some point in the near future the game changes and the big speculators begin to lower the amount of paper barrels claimed to be in storage and cover with purchases on the spot market.

Certainly the have significant real barrels so in general they can cover but the price of oil starts rising strongly as they are buying barrels on the spot market.

Of course they know exactly when they are going to do this so they hedge bigtime in the futures market to cover for the known fact that oil will increase strongly in price.

This is what causes the persistant contango in the futures market since the big physical speculators are covering for when they are finally forced to start covering physical deliveries of previous paper barrels with purchases on the spot market.

Thats why I really think a massive failure of inability to deliver physical oil was responsible for the price runnup in 2008 and eventually the financial crises. The oil simply was not available on the spot market
to cover the number of outstanding physical barrels that were really simply paper barrels.

Obviously a lot of the storage claims since 2005 are simply bogus most of these barrels never existed and are effectively double counting of later imported barrels bought on the spot market to cover the paper barrel fraud.

I assure you that the Saudi's know whats going on. Eventually it looks like Bushie had to go groveling to the King and beg them to release physical oil to cover a implosion of the oil markets. And of course Lehman and others where taken out and shot in the head. These shenanigans of course snowballed and the accidentally collapsed the economy while saving Goldman's ass in the commodities market.

And whats amazing is the suckers are playing the same game again hopefully they do a better job this time.

Underlying this of course is I really think production did effectively crash in 2008 and it caught everyone off with their pants down. GS did not expect that they would not be able to cover with physical at effectively any price. I assume that they will do a better job this time around and at least not crash whats left of the world economy or at least not right away.

Expect GS to turn in record profits as a hedge fund for the next several quarters as they execute another play in the oil markets and can play the churn in other financial markets as the price of oil increases.

These guys are going to make some serious money.

And of course we probably will take out and shoot another insolvent bank once GM is done. If I had to guess
AIG is now nolonger of interest to GS nor is Citi so these are the next two to be dismantled.
Of course taking out AIG will be seen as a good thing and it should actually bolster the stock market same for Citi for that matter.

The rising oil prices and "draining" reserves in the US will be played off as a strong demand increase or at least good demand. In the real world VMT should actually bottom as it hits structural limits. So as this goes on the decline in VMT would naturally slow or stop.

In reality nothing is really happening just we are hitting the bottom of and L shaped recession. Massive layoffs will begin to show up in balance sheets. The rate of layoffs will start declining. Nothing unexpected as we enter a period where efforts to increase efficiency and defaults and bankruptcy of competitors begins to help remaining business report lower losses or even small profits.

Foreclosures will continue to rise and housing prices will continue to fall, Autos will be tanking and CRE and Credit cards will continue to get hammered. All of this I suspect will be ignored by the markets.

In time unemployment rates will level as disgruntled workers start giving up and or working for cash.

However by late 2009-2010 high oil prices will start the next and effectively final stage of contraction.
The fact the economy is intrinsically and fatally wounded because of lack of oil will become increasingly obvious. Producers squeezed by rising oil prices and production costs and falling product prices because of
extreme overcapacity will begin to go bankrupt and unemployment rates which had topped at say 10-12% and maybe declined to 8-9% will start increasing again.

I've tried to find overall storage for oil in the US without success.

What's wrong with the EIA data? It's broken down by type of stock and with/without SPR.

Despite the claims of high storage levels it looks like refinery storage capacity has fallen.

The additional US storage is largely in tank farms (up 50k bbl - nearly 30% - from Sept-Jan).

I have a hard time believing refineries where trimming storage and that third parties where furiously building tanks elsewhere.


Refineries have no need to increase storage, as they're producing a lot less (net inputs were down over 10% YOY in Jan), meaning their stored days of supply has increased substantially even without adding more physical oil. Why would they want to compound this increase further? What economic benefit would it have for them?

If somebody's going to be stuck storing oil, it's more likely to be the importers or producers than the consumers, which is why the increase in storage mostly being in tank farms make perfect sense.

storage levels have reached values
not seen since 1990 we would have to deduce that outside of refineries the empty storage tanks remained operable and waiting for almost twenty years.

Tank farm storage in Jan 2009 was only about 2% above May/Jun 2007 (EIA), so it's utterly misleading to suggest that these tanks haven't been used in decades.

There does not appear to be anything particularly surprising or unusual about the US storage/consumption data.

Apropos to this discussion, check out the Apr 16 paper from Frank Veneroso, Will OPEC Production Cuts Create a Market Deficit?, contrasting Henry Groppe's view of 2009 demand vs the ISI Group's.

Veneroso is a bit too conspiratorial for my taste with respect to oil market manipulation, and after reading several of his papers I am still unconvinced that his evidence proves his point; it's just too circumstantial. To his credit, he acknowledges that the causality of speculation cannot be proved.

Still, he presents some interesting perspective on un/misreported oil demand and supply data, and raises good questions about IEA's data.

The big question remains whether we'll see another price spike this year as spare capacity once again drops. My money says yes; if not this year then early 2010.