You mean we don't have to pay CERA/Yergin $2500 for 33 pages?

(found at  CERA has decided to give some more detail on its supply forecast, the one that predicts 16mb/d of new capacity by 2010 and no peak before 2020.  Links and information below the fold.
They have a replay of a conference call presentation on the report, showing what they expect to come from where by 2010, some forecasts for specific regions, and a Q and A session. Some interesting points that can be checked against reality over the next few years: UK is expected to see a slight rise in 2007 before declining again based on fields under development and appraisal, North American production will rise slightly with deepwater Gulf of Mexico and oil sands offsetting declining conventional oil from US and Canada (this is probably right unless hurricanes keep sinking rigs), Ghawar in Saudi will decline to about 4mb/d, with total capacity rising slightly to about 11.5mb/d from 10.5 today (this doesn't appear to include the possible Khurais project).

You can access it from

It asks for name, company and email but you can skip the BS and access the video stream directly here (the video is 36Mb, for those on slower conections a slide and audio layout can be accessed from the first link may have to cut and paste the link into your browser too.):


Debunk away!

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above link in clickable form - its a Windows Media Player object.
Can't get this play on my old Windows 2000 machine. Damn!
That's odd - it runs on my old Windows 2000 machine. If you haven't tried this, update Windows Media Player.

I'm running (help about) - while its not the latest it does work.

If yours is much much older, you might find a handy "Check for Player Upgrades" under the help menu of Windows Media Player to update it; otherwise, I'm sure you can get it from Windows Update or directly off the Microsoft website.

In general I don't update such stuff on my sole-remaining Windows box but since there have been a number of exploits of Windows and Windows media player, I am resigned to accepting any new updates coming from Microsoft themselves...

Got the slideshow with audio for each slide. My recommendation is skip it all and go right to the Q&A slide 20. In the Q&A, all the questions I would have asked were asked. Honestly, I can't believe people pay money for this!

For some country-by-country production numbers see Some comments on the Cambridge Energy analysis of future oil supplies from Econbrowser and HO's More thoughts on the CERA report from the old website.

  • On demand growth -- looks like they project 1.4/mbd/year up to and including 2010. When asked, they said that Chinese growth will moderate and last year's large surge was an anomaly. Look at the demand curve in slide 17 -- looks like total demand is about 92 mbd in 2010.

    Note that demand growth is currently not moderating much under higher prices this year. Yet CERA also projects prices to be in the upper $30s 2007 and 2008, upward after 2008 (over $40). These prices will result in greater demand growth, not less.
  • On depletion -- they do not use an average global depletion percentage but calculate on a field by field basis. But how that is done was not specified. Something about a fractal curve? HO?

    However, an Encana guy asked them why their 2000 report indicated that there would be more supply (~ 2/mbd) than there currently is, so why should we believe this new study? Fumble, cough, cough, hedge....
  • They have a Delay and Disruption scenario (above ground "disturbances") -- see slide 17 for the supply curve.

    This was recorded in July with no Katrina is sight. Note that they are very optimistic toward deep water drilling -- GOMEX, Brazil, Angola and Mauritania!!! By the way there was a coup in Mauritania in July.
More later.
There is a big field development off the coast of Angola; one of the majors, can't remember at present. Believe it ultimately is supposed to reach 500 kb/d. That's probably what they are banking on there.

Re the Encana guy... yay! I like those folks, good for them for speaking up.

One quick comment re: demand response.  Dave phrased it precisely right when he said there was no moderating effect "currently".  We all know how price inelastic oil demand is (de-jargonized: demand doesn't change much in response to a change in price), but that's true only over the short run.  If prices stay high we'll see consumption patterns change and overall demand drop.

I know, I keep harping here about timing, but it's critical to understand how it relates to price elasticity.  It took decades of living with absurdly cheap oil fo rthe US to work its way into our horribly inefficient oil consumption patterns.  Under pressure from high prices we can adjust much quicker, but it will take a year or two for real change to show up.

By the way, someone else here commented the other day that people were driving slower than normal.  My wife and I noticed that over the last few days, too, in upstate NY.  We had to run a quick errand today, and I also noticed a much higher percentage of smaller cars on the road than normal.  I wonder if it's simply that multiple-car households are using the most efficient vehicle available--the Civic runs to the grocery store and the pickup truck or SUV sits in the garage.

I just finished listening to the CERA presentation and the Q & A section afterwards.

I enjoyed the entire presentation.  It's great to have this kind of detailed analysis from experts in the field.  I think this raises the debate to a higher level, with informed experts on both sides, debating the complicated issues involved.

However, now it is time for us to poke holes in CERA's analysis if we can find any.  They were very detailed in their research and I liked the Q & A section, because the listeners asked about "Peak Oil".  Also note the fact that CERA did not discount, "Peak Oil" as a possibility, just that they didn't see it before 2020.  This tells me the experts are no longer, "uncomfortable" talking about the subject.  That is, at least a first step toward open debate.

The main potential pit falls to their analysis are:

#1.  Over estimation of Supply from OPEC
#2.  Underestimation of Demand from China

First Supply from OPEC;  The OPEC nations are, as we all know, the hardest to predict.  With our very limited knowledge of their total reserves and their refusal to allow any third party oil field analysis, we know, only as much as they tell us.  From CERA's presentation it seems they just gloss over this fact and assume OPEC is as good as their word.  I will not go any further on this subject because with out the raw field numbers, that only OPEC members have access to, it is just my guess vs. CERA's guess.  

Second Demand from China;  In the CERA Q & A, the experts down play 2004 demand of an additional 2 MBD, as a fluke.  I think this is a major flaw in their analysis.  China has for the last twenty years grown at an annual rate of 9 to 10%.  China's 2004 economy has grown to a size of, 7.2 trillion dollars a year.  To give that number some context, both the US and EU economies are each 11 trillion dollar economies.  With China's continued growth over the next 6 years, their economy will require ever increasing amounts of petroleum.  While China continues to grow at a 9-10 % rate, by 2010 their economy will be valued at 13.8 trillion dollars, larger than the current US economy.  China currently consumes, 1 MBD per trillion dollars of economic activity.  So, as China's economy grows 6.6 trillion dollars from 2004 to 2010, it is safe to calculate that China's petroleum consumption will also grow 6.6 MBD from 2004 to 2010.  
    CERA's statement that "reduced gasoline firing electrical generation", as China switches to coal fired electrical generation, will slow China's petroleum demand growth, is completely unfounded.  Even though, the U.S. is very heavily dependent on coal for our own electrical generation, we still use 21 MBD of petroleum mostly for our transportation infrastructure.  So even as China switches to coal for electricity generation, their 19 % annual growth in car sales, will more than over whelm this effect.  All in all, 2004's 2 MBD demand growth was not a fluke, but instead the new reality of China becoming one of the world's three largest economies, US, EU, China.  

So why is the "world demand" so important when we are talking about a peak in, "world supply"?

Just this; if demand remains high, supply will remain tight for years to come.  If supply remains tight for years to come, crude oil prices will remain in the $50 to $60 range.  If crude oil remains in the $50 to $60 range, big oil companies will continue to; push mature fields harder, rush new fields into production, begin coal liquidation, ramp up tar sand processing, and increase NGL imports.  All of which, leads to steeper decline rates in mature fields, and reduced return activities such as tar sand processing, which in turn, hasten the day of "peak oil" dramatically.

In the end, CERA is right, production will rise for a couple years.  But at what price?

Reduced returns, steep field declines, and depletion of coal and natural gas.

CIA World Fact Book:  China 2004, 7.2 trillion dollar Purchasing Power Parity

China's stated goal is doubling of economic size by either 2020 or 2025 - restated in the past year by its president. At the of the statement I calculated the avg annual growth needed and it was indeed right on the 9% line which its been following.

Higher oil prices no doubt will cause some slowing but how much remains to be seen.

Years to double and percent growth are related by the "rule of 70". Divide one into 70 and get the other. To double in 20 years is about 70/20 or 3.5% growth per year. To double in 15 years is 70/15 or about 4.7% growth per year.

9% growth per year would double in 70/9 or 7.8 years! That would be quite a feat.

Can't remember where my brain was at when I did that calculation but likely did not factor in compounding.

So many details, so little time.

Econbrowser has had several articles on China's growth rate and petroleum demand, .

This one, , reports on a surprising recent drop-off in Chinese demand:

The New York Times reported that after growing 11% in 2003 and 15.4% in 2004, Chinese petroleum use fell 1% in 2005:II compared to 2004:II. Andy Xie, the chief Asian economist for Morgan Stanley, reported that for the first half of 2005, China's crude oil imports rose by 3.9 percent compared to a 34.8 percent increase in 2004, and refined product imports dropped by 21.1 percent compared to a 34.1 percent increase in 2004.

These figures are really astonishing. A 34.8% increase in crude imports in 2004 decreasing to only a 3.9% increase in 1H 2005? Gasoline dropping to a 21.1% decrease compared to a 34.8% increase the year before? Clearly Chinese oil demand is slowing. We all saw the pictures over the summer of gas lines. Their state controlled economy does not seem to be doing a good job of allocating this scarce resource or handling the high international prices. Without a market to adapt in a flexible and dynamic fashion, centralized control systems tend to be brittle in their responses to challenges like this. That will probably further hurt Chinese growth as long as oil prices stay high.

I'd say Yergin has an excellent case for Chinese growth slowing from its hyper-rapid pace.

I agree with your CERA weaknesses #1 and (the well argued) #2. I would only add this, which you discuss briefly

#3 Uncertainty about depletion rates

CERA on decline rates:
We don't actually look at depletion in terms of an average number across different countries and basins.... we look at it in enough detail that we're trying build up our analysis on a bottom up basis and we're trying, when we can, to get information about specific fields, or, in other cases, where we know about particular reservoirs and different types of reservoirs and particular basins, we make assumptions about decline rates. And so, there's a whole range that we use, from certain Middle Eastern fields where we see depletion rates of lets say 3 or 5%... which can range up to 20% or so for some of the heavy oil fields in Venezuela, where we see depletion rates that, without intervention, are actually pretty high...
Cera on "peak oil":
[what will drive the peak?] ... in the medium term, we don't think these will be subsurface issues. It's mostly going to be subsurface factors that will control the timing and nature of the peak.... [UK past its peak and on an undulating plateau, gradually declining]... [ultimately oil production will peak but we see an undulating plateau out to 2020]... if we consider the behaviour of oil fields and basins and countries and regions to be fractal, we can look at what's happening in particular countries and extrapolate that on a world-wide basis, so we see the undulating plateau existing for a number of decades. And if you look at historical US production, you can see some elements of this shining through.
One final comment. You can not have your cake and eat it too. They seem to make the following 3 incompatible assumptions:
  1. Yearly demand will decline from recent years until 2010
  2. Supply will increase until 2010
  3. Prices will be lower (2007 to 2010) than current levels
Sorry, you can not increase supply, decrease prices and also decrease demand in a world built around economic growth. I'm not an economist but I know an impossibility when I see it.
The "undulating plateau out to 2020" is effectively the same as a peak, and what Colin Campbell was saying a few years ago: The peak has been flattened out by technological/economic factors (lack of drilling rigs on the upslope, "unconventional" oil on the downslope), and we're bumping along the top now. So we won't see a significant decline in supply until 2020.

The main disagreement seems to be that Campbell thinks we're already at the plateaua, whereas Yergin thinks supply can increase for another five years. That's not really much difference, especially considering that Campbell was until recently considered very pessimistic.

Of course, Campbell assumed that Saudi Arabia would peak much later than the rest of the world. If Simmons is right, the decline is already starting.

I saw on a short piece on some blasts at Iranian oil wells on Thursday.  I haven't seen anything in the MSM about this.  Has anyone
More fundamentally, I do not believe the following country by country CERA numbers (by 2010)
  • Nigeria +1.27/mbd
  • Russia +1.15/mbd
  • Iraq +1.00/mbd
  • Iran +1.00 mbd
On Russia, they said "there had been growth of +600/kbd/year in the last 4 years which will slow to +200/kbd/year this year and next. Presumably, we can expect this over the period 2005 to 2010. Sorry, feeling skeptical on this one. Why, exactly, is production declining there? Nigeria is a mess. Iraq is a mess. Iran is in a showdown to the death with the West over nuclear issues.

I'm less certain about
  • Angola +1.35 mbd
  • Caspian Sea +2.5/mbd
For both my concern is geopolitical instability, not the reserves or capacity.

Finally, I'm just skipping Saudi Arabia for the moment but I don't trust Aramco's (Ali bin Ibrahim Al-Naimi's) estimates. Don't get me wrong:

I love the Saudi Arabian Minister of Petroleum and Mineral Resources
Minor correction to my post:

Why, exactly, is [percent increase] production declining there?

Also, looking around, I'm finding it hard to get production numbers from Russia and projections which are not from the Russian news services. Which I don't exactly trust, know what I mean?
I think CERA is
1)underestimating depletion rates
2)Overestimating the time accuracy of projects coming online.
3)Overestimating that RIGS are gonna be available at will, we really have a tight rig market and losing 20 to katrina is not gonna help.

Also, since canadian oil sands are extremely expensive we can expect big challenges for them if prices fall dramatically. Also remember natural gas supply by their own admission will extremely tight in north america and natural gas is a cost in oilsands production so some projects will become unprofitable below even $40.

Ahh... What's the old sayng, "Garbage in and garbage out..."  No one, and I mean NO ONE has reliable numbers for every field in every country.  The same goes for economic growth.  We are flying blind to be sure.  Basing your decisions on this estimate or that estimate is a fools game.  We cannot know what the global situation will be in 2010 because there are NO reliable numbers about the current situation and how it is trending.  Believe what you want, most of what we are seeing is rhetoric under the cover of numbers.

To be sure, oil will peak, as will coal and gas.  Economic growth on the level we have enjoyed these past 200 years will stop and, perhaps, decline significantly.  As for the time and place, be an optimist if you like and tell your kids that they might have to deal with these issues.  Be a pessimist and buy some arable land somewhere...or some oil futures as Halfin impores us to do.  

Just remember, no one has a crystal ball.  Don't be a rube.  Prepare for the worst.  Hope for the best.

Have you read about CERA's track record on natural gas? They have been HORRIBLE. Their analysis is not to be trusted.
I have been researching Peak Oil for over 2 years and this site is a great source of info and commentary. posted an article by Ronald R. Cooke (Oil, Jihad and Destiny) on August 1, 2005.  This article examined 18 of the assumptions made by Yergin in his analysis.  It makes a very interesting read.
Econbrowser has some commentary on this new report:
The Oil Drum notes that these details are now available from CERA. My impression from examining these is that CERA has good reasons for expecting significant oil production increases over the near term.

JDH also puts to rest the claim which has been widely bandied about here that the reason why CERA showed more production than other analyses is because CERA forgot to consider depletion(!):
The Oil Drum suggested that the discrepancy might be due to the fact that CERA had completely neglected the decline in production rates from existing fields. This conjecture by the Oil Drum turns out to be incorrect. For example, the graph at the right displays CERA's projections for Brazil, which show falling production rates from the Marlim oil field. Eyeballing this, CERA appears to have assumed something like an 8% annual depletion rate. This is projected to be more than offset from new fields under development...

As far as why CERA had higher numbers than the earlier report by Skrebowski of ODAC:
It may be that these field-by-field depletion assumptions work out to a different total than the overall rate assumed by Skrebowski. However, it is clear that another explanation for the differences in the conclusions is that CERA was including many projects that Skrebowski did not count. For example, I was unable to locate on Skrebowski's list the 200,000 barrels per day from Sudan's Adar Yale field, the 170,000 barrels per day expected from Sakhalin II, or a half dozen other big projects that are included in CERA's total.

There may be room for disagreement about the details of CERA's specific analyses, but at least let's put to bed the claim that CERA didn't consider depletion.
I agree about your remarks vis-a-vis CERA and depletion.

Now, if only it was realistic that we will get a reliable 200/kbd from the Sudan and Russian production won't stagnate, we'd all be on the same page... :)

By the way,
Our project [Sakhalin II] comprises the development of two fields: Piltun-Astokhskoye, primarily an oil field with associated gas, and Lunskoye, predominantly a gas field with associated condensate and an oil rim. Both fields were discovered in the 1980's. Together the fields contain recoverable hydrocarbon volumes of over 1 billion barrels (150 million tonnes) of crude oil and more than 500 billion cubic meters (18 trillion cubic feet) of natural gas. The oil reserves equate to more than one year of crude oil exports from Russia at the current level of around 2.5 million barrels per day while the gas reserves represent nearly five years of Russian gas exports to Europe, or enough to supply current global LNG demand
Over a billion barrels. I am very impressed with the immensity of this new field.
Sorry, here's the source of the data.
Not trying to be dense here, but if oil reserve numbers become an "undulating plateau", and remain steady, the economy adapts to the new higher prices, will demand not simply increase as economies grow into the "breathing space" this plateau provides? I mean, we are talking about 4 years until 2010! The US auto/truck fleet will not turn over in that time period. NOLA/MissCoast will not be finished being rebuilt in that time frame. Won't the rebuilding of the Gulf Coast drive our demand much higher? When we are howling after steel, pots, pans, etc. to rebuild our lost coast, will that not boost China's economy and push their growth numbers upwards??

If oil prices retreat and move downward, the drive to "change horses" will cease, and the economies will default to cheap easy energy once again.

I am having a lot of difficulty seeing where there is any "bright side" to the way things are playing out right now...