Response to Leonardo Maugeri's Decline Rate Assumptions in "Oil: The Next Revolution"

This is a guest post by Stephen Sorrell, senior lecturer Science and Technology Policy Research, Sussex Energy Group, and lead author of the UKERC Global Oil Depletion report, and Christophe McGlade, doctoral researcher at the UCL Energy Institute. This post was slightly revised by the authors and updated here on 25/07/2012. Please see paragrapghs 8 and 9 below the fold for the updated text.

The 76 page Belfer Centre pdf can be downloaded here. This critique by Sorrell and McGlade first appeared in the ODAC newsletter here.

Commentary on: Oil: 'The Next Revolution: The Unprecedented Upsurge of Oil Production Capacity and What it Means for the World' - Leonardo Maugeri, Belfer Center for Science and International Affairs, Harvard University

Summary Maugeri's analysis and conclusions are critically dependent upon the decline rates applied to existing and future fields, and yet he does not explicitly say what these decline rates will be. However, Maugeri’s assumptions can be derived from his Table 2, which projects gross and net capacity additions over the period to 2020. Doing so suggests he uses an average annual decline rate for all fields of 1.6% over this period, which is less than half of the IEA and CERA estimates for 2008 (4.1%/year and 4.5%/year respectively). The discrepancy is even greater since the IEA and other analysts project an increase in average decline rates over the 2011-20 period. If we replace Maugeri’s 1.6% decline rate assumption with the IEA estimate of 4.1%, the projected loss of production capacity over the period to 2020 increases from 11 mb/d to 26.5 mb/d. In turn, the projected global production capacity in 2020 reduces from 110.6 mb/d to 95.1mb/d (a reduction of 14%). Since average decline rates would be expected to increase over this period, this projection must be considered optimistic.

Maugeri’s projections are very sensitive to the assumed rate of decline of production from currently producing fields - and his assumptions appear inconsistent with the available evidence.

A decline rate is a measure of how rapidly the rate of production from a field or group of fields is declining, while a depletion rate is a measure of how rapidly the remaining recoverable resources in a field or region are being produced (see box below). To avoid confusion, these concepts need to carefully defined and measured. But instead, Maugeri uses the term depletion rate when he means decline rate and fails to provide adequate definitions.

Both the IEA (2008) and CERA (2008) have estimated decline rates from a globally representative sample of post-peak fields, including the majority of the world’s giant fields. These studies allow ‘global average’ decline rates to be estimated. Maugeri claims that the IEA’s results conflict with CERA’s results, but this is incorrect. As shown in Sorrell et al (2011), the IEA and CERA studies use the same data source (the IHS field by field database) and reach broadly the same conclusions. The IEA estimate the production-weighted decline rate of their sample of post-peak fields to be 5.1%/year, while CERA estimate 5.8% a year. A third and comparable study by Hook et al. finds 5.5%/year. Allowing for minor differences in samples and definitions, these three estimates may be considered consistent.

The above numbers underestimate the global average decline rate for all post-peak fields since the mean size of the sample of fields is greater than that of the global population of fields, and small fields decline faster than large fields. Under the (probably optimistic) assumption that that decline rate for smaller fields is the same as that for the ‘large’ fields in their sample (10.4%/year), the IEA estimate a production-weighted global average decline rate of 6.7%/year for all post-peak fields.

To estimate the global production capacity that is lost each year, it necessary to estimate the production-weighted aggregate decline rate of all fields, including those in build-up and plateau. Using the IEA data, we estimate this figure of ~4.1%/year which is comparable to CERA’s estimate of 4.5%/year. This implies that around 3 mb/d of capacity must be added by new investment each year, simply to maintain global production at current levels.

A critical question for supply forecasting is how global average decline rates may be expected to develop in the period to 2030. Most existing fields will enter decline over this period, with a growing proportion of production from younger, smaller, and offshore fields that tend to have higher rates of post-peak decline. The IEA (2008) anticipates the production-weighted global average decline rate of post-peak fields increasing to 8.5%/year by 2030, leading to an estimated loss of 61% of current capacity by that date.

On page 19, Maugeri states that: “….The IEA projected the world oil average decline rate up to 2030 would increase to over 10% by 2010, while IHS-CERA predicted a 4.5% depletion rate”. But this sentence is ambiguous, two different terms are being used to mean the same thing and it is not clear how decline rates are being defined. The 10% figure appears to refer to the IEA projection for natural decline rates (see box below) for post-peak fields in 2030, while the 4.5% figure refers to a CERA estimate of overall decline rate for all fields in 2008. In other words, Maugeri is comparing apples and oranges.

Maugeri does not explicitly state what decline rate assumptions he is using for his study, although he claims (contrary to the above) that there is no evidence for an average decline rate greater than 2-3%. However, Maugeri’s assumptions can be derived from his Table 2, which projects gross and net capacity additions over the period to 2020. Subtracting, column 5 from column 4 in this table suggests a projected loss of 11 mb/d of production capacity between 2011 and 2020, owing to the decline of production from post-peak fields. This translates to an average annual decline rate for all fields of 1.4% over this period, which is less than half of the IEA and CERA estimates for 2008 (4.1%/year and 4.5%/year respectively). The discrepancy is even greater since the IEA and other analysts project an increase in average decline rates over the 2011-20 period.

If we replace Maugeri’s 1.4% decline rate assumption with the IEA estimate of 4.1%, the projected loss of production capacity over the period to 2020 increases from 11 mb/d to 29.2 mb/d. In turn, the projected global production capacity in 2020 reduces from 110.6 mb/d to 92.4mb/d (a reduction of 16%). Hence, a more realistic decline rate completely eliminates his projected increase. Since average decline rates would be expected to increase over this period, this projection must also be considered optimistic.

The bottom line is that Maugeri has made some very optimistic assumptions about global average decline rates, failed to provide adequate justification for them and misrepresented the estimates made by others. Adopting more realistic estimates would significantly change his results.

Decline rates and depletion rates

The rate of oil production from an oilfield normally rises to a peak or plateau and then declines. The term decline rate refers to the percentage annual reduction in the rate of production (in barrels/day) from an individual field or a group of fields. When measuring the average decline rate for a group of fields, it is important to distinguish between the overall decline rate which refers to all currently producing fields, including those that have yet to pass their peak, and the post-peak decline rate which refers to the subset of fields that are in decline. Some analysts also estimate the natural decline rate, which indicates the rate at which production would decline in the absence of any additional capital investment. When estimating the average decline rate for a group of fields, it is common to weight the decline rate of each field by its contribution to the total production from that group, thereby giving a ‘production weighted decline rate’. The amount of new capacity that needs to be replaced every year to maintain current levels of production is given by the product of the production-weighted overall decline rate for a region and the initial level of production.

The term depletion rate refers to the percentage of recoverable resources (in barrels) in a field or region that are being produced each year. For an individual field, this is defined as the ratio of annual production to some estimate of recoverable resources, where the latter could be proved reserves, proved and probable reserves, the remaining recoverable resources (i.e. allowing for future reserve growth) or the estimated ultimately recoverable resources. Depletion rates can also be estimated at the regional level, although the uncertainty on recoverable resource estimates will necessarily be greater since they must also include undiscovered resources. In all cases, higher estimates of recoverable resources will lead to lower estimates of depletion rates.


Sorrell, S., J. Speirs, R. Bentley, R. Miller and E. Thompson (2012), ‘Shaping the global oil peak: A review of the evidence on field sizes, reserve growth, decline rates and depletion rates’, Energy, 37 (1), 709-724

IEA World Energy Outlook 2008; International Energy Agency, OECD: Paris, 2008

CERA Finding the Critical Numbers; Cambridge Energy Research Associates: London, 2008

Höök, M.; Hirsch, R. L.; Aleklett, K., Giant oil field decline rates and the influence on world oil production. Energy Policy 2009, 37, 2262-2272

Steve Sorrell's research is always meticulous, well thought out and carefully sourced.

His "review of the evidence" on four critical aspects (2012) is back behind a paywall but it was briefly available for free.
In any event, this 16 pg study provides a concise update of the best evidence re. decline rates, etc. Unfortunately, the study was also overlooked: I don't recall seeing anything about it at TOD or Energy Bulletin.

Sorrell was also the lead author on UKERC's very thorough "assessment of the evidence for a near-term peak" (Aug. 09, 228 pgs).

Monbiot would have done well to pick up the phone to first solicit Steve's observations on Maugeri's report before jumping to conclusions. Instead, George quickly accepted and publicly endorsed Maugeri's "compelling evidence that a new oil boom has begun."

Steve & Christophe's info re. decline rates is fundamental to this discussion.

What is most important is what is says about the current state of journalism.

I mean, I think we can all agree that it isn't reasonable for a journalist, even one specialized in climate and energy as Monbiot, to do double-checking calculations for all the reports that passes his eyes.

However, I do think it is entirely reasonable for us to expect him to use basic skepticism in his work. First and foremost, who funded this study? BP. Who funds the Harvard Belfer Center on Energy? Dubai Energy Iniative.

Do these organizations have any agenda on Peak Oil? Well, BP's chief economist called Peak Oil a 'myth'. I don't think Dubai has an interest to think the world is not going to see them produce tons of oil in the next few decades.
This is old-school journalism: follow the money.

But even this test, Mr. Monbiot failed. And then the decline rates. 1.6% per year.
Really? When even the uber-cornucopian CERA estimates 4.5 %?
Or the estimates for future US shale oil(and oil shale) production, or future Canadian oil production?

EIA for example is a known peak oil denialist organization. Yet even they estimate much lower production in the future. So does IEA. So does the Canadian equivalent of the Big Oil lobby.

So Magueri is using decline rates which are not 20 % below, but 60 to 70 % below the estimates.
The study is also way, way off target on future oil production predictions, not by the skeptics, but by the estimates of the cornucopians, the oil companies and their allies!
This makes it much more embarrasing for Monbiot's enthusiastic embrace of the study as a basis to declare that the earth is flat.
It's not a close failure. It's a terrible study and he went all in for it.
And the mistakes he made are on the level of a child.

Because this is basic factfinding. Monbiot wouldn't need to do his own calculations.
He just needs to use some critical thinking. Is that too much to ask?

The report is an extreme outlier with no grounding in any of the analysis done by both government agencies, oil companies and cornucopian orgs like CERA.

And Mr. Monbiot apparently fell hook line and sinker for this report and declared Peak Oil dead. And this guy is supposed to be a journalist specializing in energy and climate issues? Dear God(not that God exists but you know what I mean).
Help us all if this is the state of modern journalism.

"In other words, Maugeri is comparing apples and oranges"

I think we should all take a lesson from Maugeri here. He is playing cloak and dagger here by mixing a number of terms and avoiding the real world. If we lived in an ideal world, we could talk about his ideal numbers that he presents. The bells went off when I was reading it the fist time when the number 93mbd was quoted.

Do you know a world nowadays which is producing 93mbd of anything!?
CRUDE production is about 20mbd less than that.

No, because he is talking about "capacity". All liquids capacity. Just like Yergins and other denialists love to do.
Just like they all love to talk about "reserves". These are things that exist only in an ideal world..

In an ideal world with Maugeri's ideal numbers, we have the ideal CAPACITY to raise ideal capacity to 110.6mbd. With, of course, ideal depletion decline rates.

Sounds to me like he's trying to write a business plan for a venture capital firm..

Now to the journalists. Do you think they would generally be able to notice the difference between production and capacity?!?

Poor George.


I have to agree that the 93 mbpd starting point looked as unreal as the ultimate prediction.

And the analysis above makes some fantastic points. But I think we need to be critical of the ENI/BP/Dubai paper for all its various weaknesses:

1. It assumes the world is currently politically, economically, and geologically capable of producing 93 million barrels per day. At the very least, this is an unproven assumption.
2. It assumes that the world economy can bear prices fluctuating in a range of 70-110 dollars per barrel. After one year of prices in this range, we are currently seeing weakened economies and demand destruction in some areas. So the question is, how much can the world economy grow with oil prices in this range and still remain dependent on oil?
3. It assumes, as so well noted in the paper above, that the decline rate will be very, very low. Far lower than even CERA estimates. With more realistic decline rates, much more oil needs to come on line to make the 110 mbpd mark (about 15 mbpd).
4. As you noted, the paper comes from a special interest group that tends to play down the risks for peak oil and to generally deny that peak oil is a threat.
5. The paper attempted to mask its origin in industry by using the Harvard moniker.
6. The paper was heralded by Monbiot who made the rather ridiculous claim that peak oil was dead.
7. Completely ignored the growing net export problem.

I think that many people on this site are well aware of the fact that peak oil doesn't mean there isn't any oil left in the ground. It means that the oil there becomes uneconomical to extract in large quantities. But there are nuances to this fact. And one nuance involves an industry increasingly dependent on speculative interest.

Given the size and influence of the oil industry, I think it is reasonable to assume that such an industry will do everything it can to manipulate prices, markets, and investors to make it possible to extract the oil, even if it wrecks entire economies to do it. So the risk the oil industry is asking us all to take is enormously huge. It asks us to make a bet on the notion that it can continue to tease out the oil even as it assumes that the lower energy, higher cost oil will be capable of growing the economy. It also asks that we take the enormously risky bet that climate change won't be so bad and that carbon capture technologies and mitigations can keep the world livable for ourselves, our children, and our grandchildren.

These combined risks are simply too much to bear. They are speculative in the extreme. And, IMHO, it is reasonable to assume the oil and gas industry is involved in manufacturing its own bubble. A bubble that will burst under the strain of increasingly uneconomic fuels and a growing climate crisis. And the economic crisis following such a bubble would be a bad thing to live through. For my part, I'd rather avoid it altogether. There have far too many damaging speculative bubbles over the past two decades. When will we stop going down these false paths and start pursuing a valid future?

Going back to the paper, it looks like little more than a pitch to investors and probably should be viewed as such. It's a paper trying to convince the investing world that oil still has a future as the king of energy.

If I have it right here's a simple numerical example in barrels
year 1 starting reserves 1000 production 100
year 2 starting reserves 900 production 150
year 3 starting reserves 750 production ...

The depletion rate is 10% then 17%. The 'decline' rate between the first and second years is growth of 50%. The point of the example being to show the two rates are not necessarily comparable and can seem contradictory.

I think the most revelatory graphs would be net thermal energy of expected future production.

Boof, it is not really that hard. The decline rate is the average year over year decline in flow rate. The depletion rate is the percentage of the oil left in the ground that is being pumped out each year. For instance Saudi Arabia said in 2006:

Without “maintain potential” drilling to make up for production, Saudi oil fields would have a natural decline rate of a hypothetical 8%. As Saudi Aramco has an extensive drilling program with a budget running in the billions of dollars, this decline is mitigated to a number close to 2%.

Their flow rate had a natural decline rate of 8 percent. But with massive infield drilling they got that decline rate down to almost 2 percent. But by doing this they were simply sucking the oil out faster. While they slowed their decline rate they increased their depletion rate. And that is why the difference in the two must be understood by all who are making predictions of future production rates.

The world uses barrels per day for daily production and reserves are measured in millions or billions of barrels also. Using thermal energy would only confuse things because it would mix oil and natural gas.

Ron P.

Of course the published Saudi depletion rate is ~ 0 so it's a difficult example.

Despite 'barrels' being the current unit of measure the European use of tonnes simplifies things like 'refinery gain': net energy content would correct for (say) the difference between a deep helicopter supported offshore well and a shallow nodding donkey in downtown LA. Or light crude oil vs NGL or ethanol.

All these are usually stirred into the '85 mbod production' pot but seem to me to have quite different societal usefulness eg EROEI.

Well no, they don't claim that. What they do claim is that for every barrel of oil they produce they replace it with "additions to their reserves". That is for every barrel of oil they produce they find, somewhere else, a barrel of oil to replace it with.

I failed to add to my above post, right after Saudi talks about getting their decline rate down to almost 2 percent they then, just like Maugeri, they confuse decline rate with depletion rate. Picking it up from the last sentence I quote above:

... As Saudi Aramco has an extensive drilling program with a budget running in the billions of dollars, this decline is mitigated to a number close to 2%.

• These depletion rates are well below industry averages, due primarily to enhanced recovery technologies and successful “maintain potential” drilling operations.

When even Nawaf Obaid, the Managing Director of the Saudi National Security Assessment Project, confuses decline rate with depletion rate, there seems to be no hope in getting anything substantial out of Saudi Arabia.

Ron P.

Maugeri must have meant something else by 1.6%; after all, the volunteers here documented something like 5 mb/d of megaprojects coming online in 2008. If a decline rate that low was in effect the world would have lost ca. 1.1 mb/d C+C, thus yielding up almost 4 mb/d in fresh spare capacity the next year - which didn't happen, albeit we gained a lot of SC via demand contraction, and the government agencies threw in a bit extra from all those megaprojects, especially the IEA.

Perhaps Maugeri thinks decline will be mediated down to 1.6% somehow. I've better things to do then parse his paper again. All of the numbers above are quick approximations from memory, too.

What they do claim is that for every barrel of oil they produce they replace it with "additions to their reserves" ... there seems to be no hope in getting anything substantial out of Saudi Arabia.

Correct, I failed to make that distinction. However the man on the street would, indeed, have a hard time telling the difference. (Assuming the man on the street knew or cared about this issue!)

Forgive my conspiratorial bent but this universal level of obfuscation doesn't seem to be from ignorance.


And as Ron has pointed out, an increase in the flow rate means an increase in the depletion rate, and the emerging consensus is that we can--and we will be indefinitely able to--increase our rate of consumption of our fossil fuel resource base.

In any case, as I have frequently pointed out, if there is anything that is more overlooked than the tendency for net export decline rates to exceed production decline rates (and to accelerate with time) in oil exporting countries, it is that initial depletion rates tend to be sky high.

IMO, we are only maintaining something like BAU because of a sky high depletion rate in post-2005 Global CNE (Cumulative Net Exports) and in Available CNE (Global Net Exports, or GNE, less Chindia's net imports).

For example, I have summed the production, consumption and net export numbers for the IUKE + VAM countries (Indonesia, UK, Egypt, Vietnam, Argentina and Malaysia), all members of AFPEC (Association of Former Petroleum Exporting Countries). They showed a combined production plateau at between 6.9 and 7.0 mbpd (BP, total petroleum liquids), from 1995 to 1999 inclusive. Here are the 1995 to 2001 numbers for production and net exports:



Production: 6.9 mbpd
Consumption: 4.0
Net Exports: 2.9


Production: 6.5 (-1.0%/year)
Consumption: 4.5 (+1.9%/year)
Net Exports: 2.0 (-6.2%/year)

But here's the kicker. Post-1995 CNE (Cumulative Net Exports) were 7.3 Gb (billion barrels). Through 2001, they had shipped 5.5 Gb, so their post-1995 CNE were 75% depleted in only six years.

So for 1995 to 2001:

Production Decline Rate: 1.0%/year
Net Export Decline Rate: 6.2%/year
Post-1995 CNE Depletion Rate: 23%/year

If we extrapolate the 1995 to 2001 rate of decline in the IUKE + VAM ECI ratio (ratio of total petroleum liquids production to liquids consumption), it suggests that they would hit a 1.0 ratio, and thus zero net oil exports, in 2015, which suggests post-1995 CNE of about 9.2 Gb. They actually hit zero in 2008, with post-1995 CNE of 7.3 Gb.


Based on the six year (2005 to 2011) rate of decline in the (2005) Top 33 Exporters' ECI ratio, estimated post-2005 CNE for the (2005) Top 33 net oil exporters are about 445 Gb. Cumulative top 33 net exports from 2006 to 2011 inclusive were about 96 Gb, putting estimated post-2005 Top 33 CNE about 22% depleted, implying a six year post-1995 Global CNE depletion rate of about 4%/year.

ANE are defined as GNE less Chindia’s combined net oil imports. The following graph shows the ratio of GNE to Chindia’s Net Imports (CNI):

The 2008 to 2011 decline in the GNE/CNI ratio was faster than what the 2005 to 2008 rate of decline (7.7%/year) predicted we would see.

Based on the six year (2005 to 2011) rate of decline in the GNE/CNI ratio, estimated post-2005 Available CNE are about 168 Gb. Cumulative ANE for 2006 to 2011 inclusive were about 81 Gb, putting estimated post-2005 Available CNE about 48% depleted, implying a six year post-1995 Available CNE depletion rate of about 11%/year.

The 2005 to 2011 rate of decline in the GNE/CNI ratio, if extrapolated, suggests that China and India would be consuming 100% of Global Net Exports of oil in the year 2030, which is 18 years from now. I don’t think that will actually happen, but that is the trend line, and the rate of decline in the GNE/CNI ratio accelerated from 2008 to 2011, versus 2005 to 2008.

Jeff, check this one out. This was published in November 2010 and I saved the URL. Just checking it again today, it startled me because it was published by The Saudi Gazete:

Saudi oil consumption seen to double by 2023

Saudi Arabia may double domestic oil use by 2023 as energy demand increases, cutting the amount of crude for export to less than half pumped volumes in two decades, the head of generator ACWA Power International said.
Saudi Aramco estimates domestic energy demand will rise to 8.3 million barrels a day of oil equivalent in 2028 from 3.4 million barrels in 2009 unless the Kingdom becomes more efficient, according to comments by Chief Executive Officer Khalid Al-Falih posted on the company website in April. The increase in demand may be cut by 50 percent through improved energy efficiency, he said.
The Kingdom consumes about 1.2 million barrels a day of oil and refined products for power generation and about the same amount of crude for processing,...

Ron P.

One year ago Jadwa Investment warned,
"Domestic consumption of oil, now sold locally for an average of around $10 per barrel, will reach 6.5 million barrels per day in
2030, exceeding oil export volumes."

Ah, now it clicks in to me why net exports are so important, because the producer countries subsidize their domestic oil consumption so much (direct government subsidies for this add up to 0.5% of global GDP, according to EIA). The consumption inside those countries doesn't work according to the supply / demand dynamics of the rest of the world that imports the oil because the price is so skewed.

Given an ongoing production decline in an oil exporting country, subsidies certainly cause the net export decline rate to accelerate; however, given an ongoing production decline in an oil exporting country, unless they cut their consumption at the same rate as the rate of decline in production, or at a faster rate, the resulting net export decline rate will exceed the production decline rate, and the net export decline rate will accelerate with time.

For example, compare the rates of change in consumption for the UK (which heavily taxes energy consumption), versus the rates of change in consumption in Indonesia and Egypt (which subsidize energy consumption), over their respective net export decline periods:

Denmark, with very high fuel taxes, is a case history of an oil exporting country that successfully cut their oil consumption, as their production declined.

Here are the 2004 to 2011 rates of change in Denmark's oil production, consumption and net exports (BP):

Total Petroleum Liquids Production: -7.9%/year
Liquids Consumption: -1.3%/year
Net Exports: -20.0%/year

So, while BP shows a small increase in global total petroleum liquids production from 2004 to 2011, BP also shows that Denmark's net exports of total petroleum liquids fell at 20%/year over the same time frame, even as Denmark reduced its internal oil consumption.

I'm estimating that Saudi post-2005 CNE depletion rate was about 8%/year from 2005 to 2011:

The following graph shows the ECI ratio for Saudi Arabia, from 2002 to 2011:

The extrapolation on the preceding Saudi graph is based on extrapolating the 2005 to 2011 decline in the Saudi ECI ratio. The extrapolation predicts that they will approach a 1.0 ECI ratio (and thus zero net oil exports) in 2034, which is slightly more optimistic than what prior ECI decline extrapolations showed. An extrapolation of the 2005 to 2008 rate of decline in the Saudi ECI ratio suggested that they would approach zero net oil exports in 2032.

Based on the initial six year extrapolation, estimated post-2005 Saudi CNE are about 45 Gb. Saudi Arabia shipped about 17 Gb of cumulative net exports from 2006 to 2011 inclusive, putting estimated remaining post-2005 Saudi CNE at about 28 Gb, or about 38% depleted (in six years).

This issue was also covered in detail in a TOD post from April, 2011:

What is “our” oil doing in their economy? — Saudi oil consumption trends

I'dd add that decline rates in shale oil fields (for example, the much vaunted Bakken shale) are significantly higher than those in normal fields, which only serves to worsen the picture in terms of replacement capacity required, if shale oil is set to fill the oil supply gap, as its proponents claim.

The Maugeri report says on page 27 on Canada:

These factors suggest reducing “unrestricted” potential future new production of Canada by 50 percent, which puts its reasonable growth at 3.4 mbd, before considering depletion of its conventional production

How come that this is much more than the Canadian Association of Petroleum Producers estimated in their June 2011 report, namely a total of around 4 mb/d in 2020?

The CAPP graphs are here:

The Maugeri report says:

I reviewed a list of more than 140 projects underway (the largest among the countries considered), some of them quite small, mostly representing possible phases of development of the same field. Considering them all, the additional unrestricted oil production of Canada might reach 6.8 mbd through 2020.

However, the CAPP 2012 Crude Oil Forecast projects that Canadian crude oil production will be 4.7 mbd in 2020. Why the difference?

Well, for one thing Maugeri doesn't know some details that CAPP knows, like:

Following a 3 per cent decline in 2011 due to maintenance work and well shut-in at Terra Nova, Newfoundland offshore production is forecast to decline by 21 per cent in 2012 due to the natural decline in production from Hibernia and Terra Nova, and scheduled maintenance at both Terra Nova and White Rose.

However, the main thing he is missing is the fact that not all (or even most) of the 140 proposed projects are going to start producing oil by 2020. These oil sands projects take a long, long time to be approved, financed, and constructed. CAPP forecasts that Canadian oil production will reach 6.2 million bpd by 2030, not 2020. Manpower is the main constraint.

I suspect that most of the other oil he expects to come on line is of the same nature - just financially and politically unfeasible to do as fast as he thinks in the real world.

Thanks for the 2012 version of the CAPP report
I have updated my menu and added

(1) the CO2 calculations from James Hansen on unconventional fuels incl. tar sands
(2) a PNAS report on peat loss by D. Schindler from the University of Alberta
(3) images from an Al Jazeera report on the tar sand pits

To the last drop

When you're quoting Al Jazeera, you have to understand that they have a dog in this fight.

The Arab nations are in direct competition with Canada oil sands producers for the title to "World's largest oil reserves". Canada is already driving down oil prices quite a lot in the mid-continent US, and will be exporting oil to Asia in future as its production slowly rises.

The owner is actually Qatar, which produces more natural gas than oil, but there is another dogfight brewing when Canada starts exporting large amounts of LNG to Asia. Look for a very negative article on the hazards of Canadian shale gas.

On most topics they're pretty neutral, but not so much on Canadian oil and anything involving Israel.

Since Leonardo Maugeri was trolling with that article, someone should have trolled him by writing an article with a headline saying "Oil Industry Executives Admits Oil Industry Intentionally Withholds Millions of Barrels of Oil From Market!". That would be true since he said the US had a capacity of 8 mbpd but was only producing like 5mbpd.

Excellent work, Stephen. I noticed some quirky syntax in Maugeri's paper, and wonder if something was possibly lost in translation, assuming that was necessary in the first place, to give him a bit of benefit of the doubt.

We have definitely arrived on the slippery slope of optimism feeding numbers of articles in business journals and popular press looking for good news. And of course industry marketing execs anxious to maintain stock value would be the last to dampen enthusiasm regardless how phony reports of "Peak Oil debunked" may be.

Most regrettable thing in our present world dilemma is the fact military planners lean to the pessimistic side, and prompt acts of brinksmanship beyond what is rational or desirable to maintain oil supply share. The system is still flexible enough to ensure a soft landing as the conventional oil flows tighten and price trends upward.

But what we see is false sense of security for domestic planners resulting in absolute nil efforts to re-orient transport to more efficient modes, along with strategic planners agitating the military side based on feelings shortage (due largely to transport call on motor fuels) is unavoidable. Honest call of the state of affairs would be helpful, and this should come from the US.

The USA as the largest per capita consumer of conventional oil has the burden of being transparent, and working hard to remake domestic transport mode mix to enable distribution and mobility on fewer barrels of oil. To compare: USA uses 25% of oil for 6% of the population. For an interesting numerical comparison using transport in the one liner: China moves 25% of railway tonnage with 6% of the world's rail mileage. Yes, apples vs. artichokes, but the comparison still is understandable when we note 2/3 US rail mileage succumbed to pavement since 1950. And, import oil volume -as a percentage- grew commensurate with percentage of rail mileage dismantled.

TOD is not a transport topic page, but seriously, when do we move from analysis to action? Certainly there are credentialed individuals seeing these articles in position to foster action to rebuild dormant rail lines? Have we military analysts in position to obtain US Rail Map Atlas Volumes and circulate with mobility command officers responsible for mode readiness? Observers of this page; "doomers" preparing for the worst with guns and junk silver in a financial position to adopt a nearby dormant rail line?

We edge toward a Mormon presidency, a man steeped with planning for hard times with a corporate ethos best described in Senator Frank J. Cannon's "Under The Prophet In Utah". Will patriotism trump habits of Darwinian economics so Mr. Romney becomes the first "Railway President" since Abraham Lincoln?

As a Canadian, I'm looking at this from the outside, but my impression is that where peak oil is concerned, the US government is paralyzed by the oil and automobile lobbies, and (in the case of the Democrats) by their associated unions.

These lobby groups definitely don't want to see cars and trucks replaced by electric rail. There would be no profits for the companies, and no jobs for their unions.

The railroads aren't that interested in lobbying for electric rail because 1) they don't want to spend their money on electrification, and 2) they will make money regardless of diesel fuel prices because of their much better fuel economy compared to the competition (trucks).

Logically, if oil is becoming increasingly rare, the US should put as much of its transportation onto the railroads as possible, and electrify as much of the rail system as possible. Look for this not to happen because of the huge lobbying opposing it, and lack of lobbying in favor.

And then there's the new but growing Peak Oil Denialist movement in the US, which I think of as the ostrich approach to dealing with threatening situations. Or the peril-sensitive sunglasses from the Hitchhiker's Guide to the Galaxy.

The Joo Janta 200 Super-Chromatic Peril Sensitive Sunglasses have been especially designed to help people develop a relaxed attitude to danger. They work, by turning completely dark at the first sign of danger, thus preventing you from seeing anything that might alarm you.

China, of course, is electrifying as many of its rail lines as possible and putting in high-speed rail between all of its major cities. It doesn't have the same politics at all.

I've heard that most of China's upper level planners and leaders are engineers, which may explain why they aren't wearing those sunglasses. I wonder if that's true.

Yes, that's true - the upper echelons of the Chinese government are heavily loaded with engineers, unlike the US where they are mostly lawyers.

Actually, our government is heavily loaded with lobbyists and corporate PR hacks, but point taken.

Of the nine members of the Chinese Politburo Standing Committee all have engineering, geology, or economics degrees. One has a law minor. In the U.S. we have Lawyers, and Bureaucrats, and it shows it.

Yes it is. It is also why they realize global climate change is a serious threat. I used to travel to China regularly for work in high tech for several years. Every time I came home from there I would shake my head and say "They are leaving us in the dust."

China is facing very significant problems. Having many engineers in a government is one thing...but what is their focus and what are their guiding principles? 'Growth' at all costs? I would not change places with them...I wish them the best.

I would not change places with them...I wish them the best.

Yeah, but I wonder if they wish us the same?!

We're all in the same boat together but everyone thinks they are in different boats and theirs will get washed up on the island of cornucopia.


If we are to remain a key customer (I wrote 'costumer' originally, but maybe that fits somehow, too.. see "Olympic Outfits", and maybe the shoe is on the other foot..), they probably won't be praying too hard for our collapse..

Joo Janta 200 Super-Chromatic Peril Sensitive Sunglasses

Where's Zaphod42? This is right up his alley.

As a Canadian, I'm looking at this from the outside, but my impression is that where peak oil is concerned, the US government is paralyzed by the oil and automobile lobbies, and (in the case of the Democrats) by their associated unions.

It is not just that . . . it is also history.

Jimmy Carter sounded the energy crisis warning. He gave a speech widely derided at the 'malaise speech'. And a few years later, cheap Alaskan, North Sea, and Saudi oil flooded the market thus making his energy crisis warnings look to be all wrong. A lot of politicians & prognosticators lost jobs & lost face over that. So people don't want to repeat that.

And now I suspect many are going to make the same case with Obama since he gave lots of money to green energy companies, battery companies, and electric vehicle companies. And many of those companies have gone bankrupt or are close to it. The shale gas glut, North Dakotan tight oil, and oil demand destruction from economic weakness have stopped runaway energy prices dead in their tracks. So PO is dead as an issue right now. Of course, this is just a temporary reprieve and we should be doing things to get off oil. But that is just not politically palatable here right now.

BTW, I wouldn't blame the unions so much . . . they'll be happy building anything as long as they have jobs and are paid decently. They are happily building GM Volts. But I guess the need to get paid a decent wage tilts things toward the more profitable beast-mobiles.

Reaction to that "malaise speech" was generally positive at the time as society was still in the grip of economic recession and memories of oil shocks were still vivid. But Jimmy Carter made some missteps and within a couple of years people just wanted to get back to normal growth and prosperity. Then Ronnie Reagan shows up promising "there are no limits to growth". I'm sure he deliberately chose that phrase in reference to the Limits to Growth study from a decade earlier. Reagan was a true cornucopian, a sincere believer in infinite resources. Whatever his successors privately believe, they've absorbed the lesson that Americans really don't want to hear about any limits to growth.

Well, the Democrat/union issue is going to get solved in the next few years by Google's self driving car... self-driving robots are nearly solved (we did one as my undergrad engineering senior design project using open source software), and the easiest part to solve is long haul intercity driving - a relatively controlled environment. There won't be any union truck drivers in 10 years... this has already begun:

(I should say, to the extent that any driving is being done at all.)

tahoe - "...when do we move from analysis to action?" I assume the simple answer is when "we" see such actions benefiting "our" position. The obvious questions are who are the "we" that are in a position to be effective and what would be their motivation. We may have some of the smartest folks on the planet here at TOD but how many are in a position to take meaningful action? And if the folks who are in a position to do so, say political and corporate leaders, what would be their prime motivation for change? That also seems to be a simple answer. For the politicians it's to be reelected. For the suits it would be profit. So far their motivations don't seem to be sending us in the right direction IMHO.

Gail, thanks for this insightful article. Your observation, that
"a growth (or drop) in energy use seems to proceed a growth (or drop) in GDP"
goes well in line with what I expected concerning the effect of an oil shortage for the economical system:
According to several studies rising oil prices will have their strongest effects on the poor people - be it in poor countries or the poor population of rich countries like the US. Since about 2000 this has probably aggravated in many countries, where the poor have become poorer in real terms (like in the US or in several European countries). Thus, a price rise has a quite quick and direct effect on the purchase power of the poor, which reduce their consumption of oil (including all goods that depend directly or indirectly on oil). However the effects on the overall economy may be dampened, as in many countries (e. g. the US, Britain, Ireland, Spain) investments as well as consumption were supported by credits - until it finally turned out that these credits were funamentally unsustainable, which lead to the "finance" crisis, thich popped up much later.
So you may be right that oil consumption might be a good early indicator of the overall economy.

Just noticed, and I think this is very important: Maugeri is predicting almost a 19 percent increase in total liquids from the end of 2011 to 2020. However he is predicting Crude Oil to grow only by 8 mb/d or 10.26 percent. However he has NGLs growing by 9.6 mb/d or 64%.

Leonardo Maugeri's prediction for "Oil:The Nest Revolution"

	       Total Crude Oil	NGLs
End 2011	93	78	15
    2020	110.6	86	24.6
Change	        17.6	8	9.6
Percent Chg. 	18.92%	10.26%	64.00%

Ron P.

Good debunking, I think the report has some good information nuggets regarding potential sources of new supply but they completely underestimated the analysis of decline rates in the resource base. A long term decline rate for the resource base at 1.6% is not serious even including NGL and a massive push in reserve growth. According to my calculation, it is even lower than 1.6% at exp(log((110.6-28.6)/93)/(2020-2011))-1= 1.39%.

It seems that they simply tried to match a demand growth target (like the IEA is doing) at around 2% per year until 2020 and then infer how the resource base should behave in order to match that.

Maugeri is just one of a number of folks paid to produce articles on a schedule designed to create brand awareness for the "Peak oil is not a problem" meme. A little fact checking usually finds the dubious assumption (e.g. unusually optimistic decline and depletion rates), assuming there are any facts to check. Most of articles, published in small local newspapers, are innumerate, fact-free and asking the wrong questions to begin with.

It really concerns me that a horses' ass of the magnitude of Maugeri could be on staff at Harvard. The decline in intellect and the quality of people in important positions in American and western society in general is as much of problem as peak oil itself.

What I wonder is to what degree oil grant money or other related funds influenced his attaining this position, the development of his fellowship, and the research center that put out this paper.

"It is difficult to get a man to understand something when his salary depends upon his not understanding it." - Upton Sinclair

We don't have a decline in intellectual capacity. We have a decline in integrity. A lot of folks selling us on cornucopian visions as well as denial of AGW have done so in full knowledge that they are lying. As Harvard is tied in with Wall St and everything else that stands to lose big if the economy goes through a dramatic reorganization, it's not that surprising that they'd support this line.

As Harvard is tied in with Wall St and everything else that stands to lose big if the economy goes through a dramatic reorganization, it's not that surprising that they'd support this line.

What is surprising, is that they don't seem to even want to try to be ahead of the curve on that coming dramatic economic reorganization. Because whether they want to see it or not it's coming and sticking their heads in the oil sands isn't going to help much to keep BAU and their positions of privilege going forever.

I think it's like the NPR schism, where they do tend to cover a range of liberal issues in ways that make it clear enough why the right sees them as Lefties.. but they are comprised of people from a class and academic and institutional environment that make it extremely unlikely that they will start intentionally 'farting at the cocktail party'. In fact, I think this often does a good bit of collateral damage to liberal causes, and shows why the idea of 'The Elites' is so pronounced in the right's view of most causes from the left that they might otherwise be willing to be onboard with.

The cultural imperative really keeps all their lips sealed, not unlike for the POTUS and ruling class.

Heard this improvised line by Guthrie, when he and Pete Seeger were trying to get a gig at the Rainbow Room, when everything all went south..

(Nora Guthrie) "Anyway, they did this audition at the Rainbow Room, and they were very popular. And the people said, "Oh, you guys are great." And they wanted to dress them up as hillbillies, with little bonnets, and "You, wear a thing and sit on a pile of hay, and we’ll do hillbilly music, and New York City elite will just love it." And Woody kind of freaked out and said, "I’m not going to do this." And the rest of the Almanacs were going, "Why not? This is a great-paying gig." And Woody says, "I’m not going to make fun of my people." And they said, "But they’re going to pay a lot of money. We’re going to be a star in New York." He said, "I’m not going to make fun of my people. And that’s what they want us to do. They want us to be up here so that they can laugh at us, instead of listen to us."

"And he started writing songs on the spot. He was a very good improviser. And he says, "At the Rainbow Room, the soup’s on the boil. They stir their salad with Standard Oil, in New York City." And he totally blew the situation. And they escaped down the elevator 60-something floors.

Thanks for the Woody anecdote.

Here's a brief outdoor clip of Woody, who was tenaciously true to the interests of 'his people' (1:28):

"Fight for your land..."

NPR vs. Conservative Talk Radio

John Stewart compares NPR to conservative talk radio.

I don't know anything specific about this person or his position, but don't forget that wealthy people are funding faculty positions at universities all over the US. IMO they are corrupting our educational institutions.

In the Florida case cited here, the university agreeed to hire two faculty with representatives of the funders on the search committees and with guarantees that the people hired could not be terminated.