An update by Chris Skrebowski

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.

The conclusions are scary!
In 2004, effectively all the world's spare capacity was used up in meeting unexpectedly rapid demand growth. It is not at all clear if the world's oil companies
can provide an incremental 3mnplus b/d from all the small, untabulated projects and infill drilling going forward year after year. The world has now reached the point where the volumes lost to depletion are much larger than the levels of likely new demand. This means total increments requred (new demand plus depletion) are running at around 7%/y, while the largest supply increments in 2006 and 2007 are contributing 3.6% and 3.5%. It would seem most unlikely that small projects and infill drilling could account for the remaining required 3.5%. The inescapable conclusion is that oil prices will have to remain high enough to destroy demand, bringing supply and demand back into balance.

I'm having trouble adding up the different numbers in his table especially on the "Extra-volume required" entries.
Add this to a great find by Shez from the October 2005 Petrolem Review, posted on a previous thread:

"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.

I went through all of Shell's E&P PR releases for the past five years recently.  There are two things of interest to this thread.  One is this fascinating report on the investigation into their reserves write down.  It makes it really clear that they have faced tremendous stock market pressure to replace their reserves and they've been struggling to do it for quite some time.  This led them to cross the line into booking things they shouldn't have booked as reserves.  So it's very much a peak-oil story (though they never use that terminology) and a fascinating look at the inside workings of a global oil company struggling to face it.  The other thing of interest is their 2005 news releases which contain very little indeed about oil, and far more about NG and GTL.  I got the distinct feeling that they were on the way to being an NG company rather than an oil company.
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 was wondering how long it would take for skrebowski to drop another "shoe". his depletion numbers are more precise than i've seen before, if they are accurate . this i have no idea, but if he is basically correct in relative amount, it would predict a plateau kind of top....starting now?..... hmmmmm
His depletion numbers are a little bit more reliable then last forecast but still way off. He is only good at Project additions, not at depletion (no country analysis done! only a very rough BP world calculation!)
I agree he's doing a so-so job on that front and it's not clear we can rely on his conclusions.
Hello, my first posting in this great group.

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

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

The table is quite confusing because of the 5% depletion. This depletion is Type I, II and III depletion. While in his Extra volume required Skrebowski adds up only Type III Depletion (approximately 1.1 mb/d according to him).

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.

Well I found it a little hard to decipher subject table, but the table specifies 5 % depletion, and looking at the numbers they seems to be 5 % of IEA demand figures.

A different depletion rate will obviously change the outcome.

Rune in Norway

these figures are much more reasonable than skrebowski's numbers.  if his numbers on depletion are to be believed , we have already peaked by the start of his chart, since no new production figure is greater than the depletion numbers for that year. if you believe that we are pumping flat out , as the saudis and chavez are saying, it would imply a peak had already occured. that conclusion seems premature.
Is it possible that we have peaked on conventional oil only, as the ASPO is suggesting, and we are filling the gap with NGL, deepwater, heavy, etc.
It's definitely the case that the great bulk of non-opec supply coming on stream in the next few years is deep water.  After we're through with that, it's going to be Arctic and whatever OPEC turns out to really have (and be willing to sell).

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 offshore sediments aren't thick enough and they don't have a possible anoxic basin history. No hope.

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:

Thanks Bubba - I've seen your very helpful writings on the subject.  I guess my question is: have the oil companies been allowed to explore in this way, for example, off the west coat.  Ah, never mind, I see it's starting to be done.  Looks like only recently however.
The answer to that is no, or at least not entirely.

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.


I don't understand why he's making an extensive and detailled analysis of the new supply to afterward picking up a global depletion rate value that seems somewhat arbitrary.
It is clear the critical issues are the depletion rate and/or new small fields. The article says surplus capacity was used up in 2004, which may be right, and Table 2 says the 2005 deficit will be 3.2m/d, with changes in demand accounted for. THis does not seem possible since yoy storage has been above 2004 throughout the year. Either a) 5% depletion is ok for older fields, the US, north sea, etc, but not appropriate for fairly new fields, b) increased production from fields too small to be included in the study amount to a couple million/d, or c) we peaked this year. The latter agrees with Deffeyes, but I would have thought yoy storage would be falling and prices rising as we hit the peak, not the reverse...

Separately, Simmons says we will get to $100/b this year. Doesn't seem likely.

Re: CERA and Depletion

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?
Grin; that rich I am not, Dave. I used the presentation, as you gathered, and I did not critique their assumptions, since it was better, at this stage just to know what was where.  I suspect we will revisit some of the sites for re-appraisal over the next couple of years.

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.

There's something fishy going on with the CERA report and depletion.  I think the 16mb number in new capacity is not too far off, which kind of suggests they are ignoring depletion.  But then in individual graphs, they seem to be very fully taking account of it.  But then I'm looking at things like this:


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?

Sorry, those units are supposed to be kbpd for the two fields.
UK oil production has averaged 1819 thousand barrels per day for the first 6 months of this year and 1619 for June, the last month for which I have figures. CERA are showing 2200
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?
The Oil and Gas Journal shows the following figures for the UK.

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.

There were 2 more small fields like claire (although claire is quite "big" i believe but also very difficult to get a lot of production out of (15.000 b/d was planned at the moment?)

One is Enoch and i forgot the name of the other..

Guys, on this website is a link to to a spreadsheet which allows one to test various decline assumptions, various new discovery and demand scenarios and it automatically calculates the total and shortfall (if any).I know this is not rocket science but I thought i would post it here if anyone was interested.

It is about the middle of this article and has link titled Spreadsheet

It will be accessible only until about 5p.m. oct 21st on this link

The permalink for the financial sense item would be

The author frequently writes about oil discusses peak oil. Last week he had a great piece - No Plan B

Great analysis & charts. Defcon 1 or 2.

Playing with the spreadsheet is kind of like being in a dark funhouse - fun but just a little scary.

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.

  one thing that this discussion and recent events has clarified in my mind.....simmons didn't have it quite his presentations he says "demand is a runaway freight train" was until katrina..but since then the elasticity of demand has become relevant to the overall discussion...i think there's a lot of slop in this country's demand picture....the more important issue now is depletion rate...that will define the peak oil discussion.