An update by Chris Skrebowski
Posted by Heading Out on October 20, 2005 - 11:46am
Courtesy of Powerswitch I note that Chris Skrebowski has updated his Megaprojects projections. Unfortunately I have to give my third lecture on Peak Oil in the last few weeks, tonight, and so won't be able to immediately digest it. But it is certainly worth a look. I wonder if he has included the new Kuwaiti plans to add 500,000 bd by the end of the decade?
He notes that his numbers and CERA's (or Yergin's for those not sure what I am talking about) roughly match, but he criticises them for not considering slippage or depletion fully. He has lowered the limit for inclusion, and seems to have got the ones that I had noted were missing in the earlier list. And yes Kuwait is included as possible, but with the recognition of the difficulties that will have to be negotiated - actually that potential project list seems to have grown a bit. Yes this is definitely a resource worth some considerable time for analysis - enjoy.
“This order [i.e. capitalism] is now bound to the technical and economic conditions of machine production which today determine the lives of all the individuals who are born into this mechanism, not only those directly concerned with the economic acquisition, with irresistible force. Perhaps it will so determine them until the last ton of fossilized coal is burnt.”
—Max Weber, 1905
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I'm having trouble adding up the different numbers in his table especially on the "Extra-volume required" entries.
"Quite remarkably, in the first half of 2005 the top five, the top ten and the top 22 publicly quoted oil companies all produced less crude and NGLs [Natural Gas Liquids] than they did in 2004. Compared with 2003, ten companies produced less in the first half of this year. Nine companies produced less than in 2002. Clearly, it is no exaggeration to say that the world's largest oil companies are now really struggling to hold production levels."
When new production more than offsets decline, we can't see the decline clearly. Now, with total output figures declining, we may begin to see people taking notice. Unfortunately, like the tobacco industry, increased prices are very effectively masking a decline in volume.
You said that right! Those who are not fearful of the ceiling of fossil fuel production are either unaware of the issue , dumb as a box of rocks , incredibly courageous , psychopaths or so far into denial that a psychiatric text could be written on the topic .
I tried to summarise his numbers and came up with the table below (hope it becomes readable as it is posted)
It appeares as the decline rates in the presented table in said article has been derived from the IEA demand figures.
SUMMARY FOR THE PERIOD 2005 - 2010 Based on the article "Prices set firm, despite massive new capacity "Petroleum Review, October 2005
Cumulative demand increase 10,2 Mb/d
Cumulative depletion, 5 % 26,4 Mb/d
TOTAL NEW SUPPLIES REQUIRED 36,6 Mb/d
Cumulative supplies increases from non-OPEC 9,5 Mb/d
Cumulative supplies increases from OPEC 6,0 Mb/d
Cumulative additional supplies required 20,9 Mb/d
By using the numbers to generate a diagram it came out with a peak in 2004. I could of course have missed something, but it did not look right to me.
Rune in Norway
A better method would be to add up type II and III depletion which i figure at 2.5% to 3.5% per year.
Then you would get this:
Cumulative demand increase 10,2 Mb/d
Cumulative depletion, 2.5 % 11,8 Mb/d
Total new supplies required 22 Mb/d
Cumulative additional supplies 20.9 Mb/d
It is quite unlikely that we will peak before 2010. Possible yes but unlikely. We also have to count additional projects coming on-stream around 2009 and 2010.
A different depletion rate will obviously change the outcome.
Rune in Norway
A question I have, particularly for the insiders, is do we really know we've got at most of the deep water? Eg consider the US offshore which hasn't been surveyed for decades. I'm guessing seismic surveys in the sixties or seventies would not have looked for/found deep water oil. So how do we know there isn't a bunch of deep water oil, for example, off the continental slope by the big west coast rivers (Columbia, Sacramento, Colorado, etc). Or off the Atlantic edge of Europe?
The answer to your question is yes - we really have explored the most prospective deepwater areas, we have found most of what is expected to be found, and what is left is of substantially different quality than what has already been discovered. That does not mean that all the deepwater discoveries have been put on production yet. Many of these discoveries will be brought on stream in the next 5 years. However, despite record high oil prices, new deepwater discoveries are few and far between, and the ones you may have read about, you will find as time goes by, are not up to their initial billings.
For more info I have written about this stuff here:
http://beastsbelly.blogspot.com/2005/08/deep-water-basins-will-save-us.html
http://www.theoildrum.com/story/2005/10/7/4122/71046#50
http://www.theoildrum.com/story/2005/10/7/4122/71046#51
http://www.theoildrum.com/story/2005/10/7/4122/71046#64
However, the question is not whether there are potentially accumulations in these off limits areas that are attractive as investment opportunities for individual companies and investors. The answer to that is yes. But a more important question is whether there are areas of the planet that are 1) unexplored or underexplored; 2) currently off limits for exploration and development; and 3)considered to have enough prospectivity to add several million barrels per day to the global production mix. My personal answer to that is unequivocally no (ANWR not withstanding).
All of the areas outboard of the world's major river deltas have been explored. (The Mississippi, the Nile, the Congo, The Niger, the Amazon, the MacKenzie etc.). The biggest deepwater fields found to date are not much more than a billion barrels recoverable each. Some of these are forecasted to produce at 250,000 BOPD when they are fully up and running. So it will take 4 of the biggest ever found to fill a production hole of 1 MMBOPD. If demand is increasing by 2 million barrels per day, we have to be finding about 8 of these every year to fill this hole ( I know, I am preaching to the choir) even without regard to depletion. Have we as a global deepwater explorers missed this much? I doubt it.
Separately, Simmons says we will get to $100/b this year. Doesn't seem likely.
This is still an open subject. Our best source of information on this was cited on this thread posted by PG and gives a link to this multimedia presentation by CERA to a group of their customers. If you go through some screens from this link, you will be able to play the CERA presentation. According to my notes (and comments on that thread), CERA calculated depletion on a field by field basis without supplying an overall percentage as Skrebowski does. They were rather vague.
For people who are new to TOD since September 4th of this year, it is probably worth your while to look at the original CERA presentation (slides & audio). This is the basis upon which you have based your yearly (out to 2010) updates, right HO? Or do you now have access to the report?
My major worry with Chris and everyone else, is the assumption on depletion rates, and I suspect I may revisit that topic in a post again soon.
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Notice the FUA (Fields under Assessment) curve. The capacity is non-zero in 2005! And it's the thing that's starting to make production rise again from 06-07 on. How can fields that are only under assessment now contribute capacity this year? They'd have to be under development already. The only new UK oil fields I'm aware of are Clair which got first oil in February of this year, and Buzzard which is due to come on late next year (there's also Rhum, a big gas field). Clair has been under development since 2001, and Buzzard since 2003. So presumably they should be FUD. Buzzard is due to reach plateau in 2007 with 190pbd, and Clair's first phase is estimated to plateau at 60bpd (there's a lot of oil in Clair but it's very technically challenging)
Rembrandt - do you have any other fields relevant to this picture?
as best I can judge the graph. They seem to be using very optimistic figures put out by the UK government some time ago.
Are they doing the same for other fields?
July 05 1620
June 05 1635
7 months average production for '05 1747
7 months average production for '04 1967
Units are kbopd
This is crude and I presume does not include NGL's.
One is Enoch and i forgot the name of the other..
It is about the middle of this article and has link titled Spreadsheet
http://www.financialsense.com/Market/wrapup.htm
It will be accessible only until about 5p.m. oct 21st on this link
http://www.financialsense.com/Market/puplava/2005/1020.html
The author frequently writes about oil discusses peak oil. Last week he had a great piece - No Plan B
http://www.financialsense.com/stormwatch/2005/1014.html
Great analysis & charts. Defcon 1 or 2.
The base case assumptions shows demand exceeds supply this year, which makes sense because price rose, but it also shows that supply is 1mb/d less than in 2004, and that we peaked in that year at 83mb/d. Changing the base case to the (smaller) increased supply from Petroleum Review's mega projects data naturally shows even less 2005 production, 81mb/d. So, something seems amiss. Incidentally, both assume about the same depletion, 5% of total for PR vs. 6.9% x .8 = 5.5% for spreadsheet.