What would we have predicted for Kuwait?

For me, the reports that Kuwaiti reserves are much less than claimed are not news because they allege the Kuwaitis have been lying about their reserves. What is news is the new reported numbers for reserves. So would Hubbert linearization have given us the right answer?

Linearization of Kuwaiti oil production. Data source: American Petroleum Institute (via Jean Laherrere) and BP Statistical Review of World Energy. Click to enlarge.

Update [2006-1-21 2:25:16 by Stuart Staniford]: More graphs and a stability analysis added to the story below the fold.

According to Reuters, the Petroleum Intelligence Weekly story (itself behind a paywall) has these facts.

"PIW learns from sources that Kuwait's actual oil reserves, which are officially stated at around 99 billion barrels, or close to 10 percent of the global total, are a good deal lower, according to internal Kuwaiti records," the weekly PIW reported on Friday.

It said that according to data circulated in Kuwait Oil Co (KOC), the upstream arm of state Kuwait Petroleum Corp, Kuwait's remaining proven and non-proven oil reserves are about 48 billion barrels.

Officials from KOC were not immediately available for comment to Reuters. PIW said the official public Kuwaiti figures do not distinguish between proven, probable and possible reserves.

But it said the data it had seen show that of the current remaining 48 billion barrels of proven and non-proven reserves, only about 24 billion barrels are so far fully proven -- 15 billion in its biggest oilfield Burgan.

I have personally never believed the publicly claimed numbers since the whole issue came to my attention. This graph just reeks:

History of OPEC claimed proved reserves. Source: BP Statistical Review of World Energy. Click to enlarge.

So, presumably the amount of oil left to pump, if PIW has the story straight, is somewhere north of 24gb, and perhaps south of 48gb. So what would our linearization have told us? I can't find that anyone did the exercise before, but I have production data from BP, and Jean Laherrere recently very kindly supplied me with a bunch of early data from an American Petroleum Institute study in 1958 (centennial year of US oil production). The production graphs looks like this:

History of Kuwaiti oil production. Data source: American Petroleum Institute (via Jean Laherrere) and BP Statistical Review of World Energy. Missing years have been linearly interpolated. Click to enlarge.

I have had to interpolate between 1958 and 1965, but it looks like that won't be too much in error. Note that the mathematical form of this data is a little more complex than either a logistic or a Gaussian :-). However, if we press boldly ahead on the theory that the linearization procedure is a robust if rough estimator even when the data sucks, we get:

Linearization of Kuwaiti oil production. Data source: American Petroleum Institute (via Jean Laherrere) and BP Statistical Review of World Energy. Line is fitted to data in purple only. Click to enlarge.

The straight line is fit to the purple data only, which is the nearest thing to a linear regime in this mess. Amazingly, the intercept is at 76gb. Given that current cumulative production is 36gb, this suggest there is 40gb to go. So this is in decent general agreement with the (24gb,48gb) range from the internally leaked information that Petroleum Intelligence Weekly has gotten hold of.

That suggests Kuwait is at 47% of their ultimate recovery - so close to the half-way point. Future declines are projected to be modest based on the K of just over 4%.

Finally, just to remind you of the implications for Saudi Arabia:

Hubbert Linearization of Saudi Oil Production. Credit Jean Laherrere. Click to enlarge.

If the same procedure works, they have produced 105gb out of 180gb or so, and are at around 55%-60% of their ultimate recovery. Note however that the K is higher at around 7%, suggesting significant declines ahead.

Update [2006-1-21 2:25:16 by Stuart Staniford]:

In comments, there was some discussion of the recent uptick in Kuwaiti production visible in the linearization. Here it is - this next graph is the monthly Kuwaiti production according to the EIA Table 1.1a

Monthly Kuwaiti oil production from January 2001 to October 2005. Data source: EIA Table 1.1a.

It doesn't look like that graph has finished increasing, despite the reports of near-term decline fears at Burgan. However, if we look at the percentage increase from the same month one year ago, we see the rate of increase is slowing down (roughly).

Year-on-year increase in Kuwaiti oil production for each month from January 2002 to October 2005. Data source: EIA Table 1.1a.

Update [2006-1-21 2:25:16 by Stuart Staniford]:

Don't read this next part unless you like highly technical discussions.

It should be obvious that in the linearization, taking a great big leaping extrapolation off that little linear area has got to be a rough approximation at best. Stability analysis confirms that. Probably the linearization estimate of URR is only good to a factor of 2 or so (with probably a larger error bar on the downside than the upside). K is maybe uncertain by 50%.

Recall that we developed an error estimation methodology for Hubbert linearization based on varying the start and end years of fitting the line and seeing how much the estimate changed. If it's very sensitive to the choice of years, then one has correspondingly less confidence in the extrapolation. This allowed us to place reasonable error bars on the US production (which is quite a mature area). Kuwait is much less certain, since it is less mature, and has had very large production variations for non-geological reasons.

Anyway, here's the stability surface, or perhaps instability surface would be a better term, for K:

Hubbert linearization estimate of Kuwait's K (y-axis intercept which controls speed of decline) as a function of start year and end year of fit. Click to enlarge.

The same thing as a density plot:

Hubbert linearization estimate of Kuwait's K (y-axis intercept which controls speed of decline) as a function of start year and end year of fit. This is a density plot from 0 to 10%, with 100 contours. Blue is zero, red is 10% or above, green is 5%. Click to enlarge.

Surface of the ultimate recovery estimate. Note that without the recent increase in production, we'd be estimating lower.

Hubbert linearization estimate of Kuwait's URR (eventual total recovery of oil in gb) as a function of start year and end year of fit. Click to enlarge.

The same thing as a density plot.

Hubbert linearization estimate of Kuwait's URR (eventual total recovery of oil in gb) as a function of start year and end year of fit. This is a density plot from 0 to 100gb, with 100 contours (ie each contour is 1gb). Blue is zero, red is 100gb or above, green is 50gb. Click to enlarge.

That was quick!
You are getting good.
So great to have sites like TOD.
Stories like these, would never get to the public without curious people on the hunt for facts.
It's really surprising that the Hubbert Linearization can give a value so close to the 48Gb announced by PIW. Clearly the convergence is due to the small production plateau at 2mbd observed since 1992, the error bar must be pretty wide :).
I should think so.  I'll try to do the sensitivity analysis later tonight after my kids are down.
Very nice analysis. A minor correction, the horizontal axis should be Gb not Gb/yr for the Kuwait graph.

Interesting that both went "linear" at about the same time, 1991 for SA and 1994 for Kuwait, and that both have made excursions above the fitted line the past couple of years.

That is a very interesting observation, Halfin, makes me think it's worth looking at other countries and regions for when they have 'gone linear' and see what they might tell us about future Kuwaiti and Saudi production - particularly where they have blipped above the linear in a similar way. If I recollect correctly one of the big Texas areas (can't remember if it was east or west, someone here will) did likewise then declined more steeply.

If, when looking at other similar but more mature examples, we find that Stuart's linear fit is a reliable predictor of URR, perhaps we would be justified in using those URR numbers rather than the suspect OPEC numbers?

For now I would be cautious in reading too much into the Reuters report which is pretty damn vague. The detail will be important, what are the reserves by field, especially Burgan? There may be direct implications for some of Iraq's southern reserves.

If the Reuters report is accurate this news could be quite seismic. On the bright side it may create overwhelming pressure for a proper audit and assessment of mid east reserves. On the dark side, if Stuart's method of calculating URR for Saudi and Kuwait is an accurate predictor we are possibly past global half way in producing URR, since about 100 billion barrels have just evaporated.

If the Reuters report is accurate this news could be quite seismic.

Seismic indeed since if

true not only was the Kuwaiti revision an illusion, nothing more than an economic fiddle but it is also likely that all the other OPEC revisions are similarly without merit and today is the day we learn the world has a lot less oil than we though and that global peak oil must occur imminently.
Kuwaiti Reserve Reverse

And Campbell has been right all along.

Fantastic work Stuart!

Wow, oil prices are going to jump on Monday
This news hit early on Friday so alot of traders were already aware of it. True, the weekend may spread the understanding of the implications...
Of course, going above the line is on account of opening the taps of shut in production on account of Chinese demand.  So Kuwait/Saudi are much like Texas, controlled by the RR commission, and peak/decline will probably be similar, beginning around 55%? Are we there yet?
I noticed that too but had to run out to dinner and didn't have time to fix it.
texas linearization takes several excursions from the linear...my guess is overproducing to meet demand ( or pay the rent!) on the upside....and weakening demand met with less pumping on the downside.
A picture really is worth a thousand words.

And man, that Saudi Arabia graph is scary-looking.  

Has anyone got linearisations for the other (lying) OPEC countries?

It would be interesting to see if they all predict similar reserves to the figures before the bogus reserve hikes of the 80s.

I've been reading TOD almost daily for the last four or five months.  You are a source so unlike the mass media.  Thanks for your efforts and thanks to all for some very thought provoking discussions. It's amazing what people sharing can learn together.

Any bets on if this news will even be picked up by the "mainstream" media?"

Looking at the OPEC graph, it's also "interesting" how Iran's reserves have been so heavily inflated twice since '85. It's like magic!! Is Harry Potter Persian?  It certainly makes me wonder how effectively the "oil weapon" can be wielded and for how long.

Stuart (and the rest of TOD crew) thanks for your passion for this topic. Our overall political leadership is not interested and would just as soon keep JQ Public in the dark.

tell your friends!  :)  

no seriously, we do this because we have a great community here.  This community makes this worthwhile...so thank you.

My guess is this will not be covered by the media. It requires more than a soundbite to provide proper perspective and, more to the point, the facts, if true, are particularly troubling.

I can't name a big, respected, newspaper that has entertained the possibility of genuine oil scarcity. Has Simmons been interviewed by the NYT or WashPost? Have Deffeye's or Kunstler's books been reviewed?  

There was an article back in Augest in the NYT sunday magazine by Peter Maass  called "The Breaking Point".  It was one of the better articles I have read in the mainstream media dealing with PO. Maass reffrences Matt Simmons book in the article.   Reading this article is the main reason I started paying attention to TOD.

The NYT is charging for the complet article, but I found a copy on the web here.  

See former Secretary Schlesinger's piece in this Winter's National Interest.

Simmons is mentioned more times than Daniel Yergin is just about every news source there is these days mentioning oil.

Peter Maass has been mentioned. He actually wrote abother one about a month ago in the NYT Mag.

So the big downward dip in 1990 was due to the disturbance of the first Gulf War, where the Kuwaitis apparently partially instigated it by diagonally drilling into Iraq. I assume that the upswings since then had something to do with a continuation of this policy. I imagine you could get big swings in production and reserve estimate if the oil-rich land you claim keeps changing its size.
I hadn't heard that Kuwait actually drilled into Iraq. Kuwait would not have been so bold as to provoke Sadaam unless they could see their reserves were not in fact 'unlimited'.
They didn't need to: oil fields do not necessarily observe national boundaries. All Kuwait did was suck on the straw and Saddam felt they were taking some of his oil. There were negotiations between them but Saddam was never the most reasonable negotiator, really he probably just wanted an excuse to invade and steal it all.

Again this is fantastic work.

This Reuters piece and your analysis prove that Kuwait is on a one track slope and all that proven reserves were never proven at all. The day of truth is looming for SA.

Here's another ironic thing. It's amazing how this article has leaked out just after the recent death of the Emir in Kuwait.

Linearization is leading us closer to the fact that serious problems loom and paper barrels don't matter when all is said and done.

I suspect that if you used Linearization on some listed oil companies the true and fair reserve numbers are false and there is probably a whole heap of exploration costs carried forward against reserves, which will never happen and should be written off.

Keep up the great work.

Stuart, here's a query for you:  Does your analysis take appropriate account of the 2GB or so that were lost when Saddam Hussein set the Kuwaiti wells ablaze in 1990?
I think our margins of error here will be much larger than 2gb.
This is a nice piece of work because the Kuwaiti peak would appear to be clear and makes a nice estimation of that country's URR Qt. I suppose future development of some of their relatively unexploited northern oil fields (not the Burgan mega-complex) will make a small upward dent in their ultimately recoverable reserves just as declines continue in Kuwait oil reserves only half official estimate-PIW at Burgan. The overall continuing downward trend as shown by the expected production forecasted by the Hubbert Linearizations will be borne out in mature oil provinces like Burgan. And so also Saudi Arabia. But the time frame is a few years out, Kuwait has just started to invite foreign investment from the IOCs to increase their production in these new fields while all this time Burgan will be flat or more likely declining at some small but significant percentage year-on-year. Or maybe, Burgan will just crash like the North Sea or Cantarell. That is, until the declines become seriously exponential given the age of Burgan and other fields, we can expect some optimistic and delusional forecasts.

What was that Soap Opera? I believe it was called "As the World Turns".

best, Dave
The Reuters report looks like the smoking gun to me. Will CERA and others now update their forecasts? Don't count on it.

I looked at Colin Campbell's estimate for Kuwait in newletter 38 (Feb 2004) on the ASPO Ireland web site. His figure for remaining future production was 58.5 bn. Subtract 1.8 bn for production since then gives 57 bn. That figure includes 4.9 bn from undiscovered fields. Not much different from TOD.

The IEA referred in its WEO 2004 on page 92 to OPEC's overstated reserves and wrote:

"This hike in OPEC countries' estimates of their reserves was driven by negotiations at that time over production quotas, and had little to do with the actual discovery of new reserves"

Later in the WEO 2004, this analysis was dropped for some mysterious reason and the USGS 2000 mean estimate was adopted as a basis for IEA projections.

My summary report with a lot of links on this topic can be found at:


Very good work Stuart. As far as I can tell, I think that you have done far more work than anyone else on the web regarding Hubbert Linearization.  Have you considered submitting an article to technical or oil and gas trade journals?

For the benefit of everyone who has not done these plots, the key to getting an accurate plot is to obtain as much production data from the early years as possible.   Once you have the early data, you can use the EIA data or other sources to finish the plot.  For example, the Texas Railroad Commission has Texas production data starting in 1935.   To get an accurate plot, I had to dig out an estimate of pre-1935 cumulative produciton (3.5 Gb).  

One other point.  Saudi Arabia, Russia, Norway and Iran account for more than half of net world oil exports.  We have P/Q versus Q plots for all of them except Russia.  Anyone want to volunteer?  I think the only way to handle the data is to look at a plot of Soviet Union production and Russia + the FSU Republics.   The three plots that we do have show that all three are at, or beyond the 50% of Qt mark.  I strongly suspect that a Russian/FSU plot will also show them to be at or beyond the 50% mark.  This topic alone would make a very good article--"Hubbert Linearization  Analysis of Top Net World Oil Exporters."

Consider the implications of the four countries accounting more than 50% of net world oil exports going into a permanent and irreversible decline in production.  I disagree with the Neocons move in the Middle East, but you certainly begin to understand their reasoning.   Kenneth Deffeyes predicted that we would see a war for the remaining oil reserves; he just hoped that it would be fought with dollars and not with nuclear weapons.

Here we go:


Production data are BP + Laherrère (Russian Oil Production, letter to Walter Youngquist [2005 June 19]). Looks a little bit too pessimistic to me, Laherrère forecast URR= 200Gb for Russia. The last rebound in production  has a good influence on the linearization result.

Great Work khebab!.
So Westexas observation is that Russia, Iran, Norway and Saudi Arabia account for over 65% of the top 10 oil exporting nations.

Can you stack those 4 together to come up with the coming production projections using hubbert linearization? Then we can use the consumption figures/estimates for those 4 countries to see how much export their might be going forward.

I for one, am coming to the grim conclusion that either Hubbert methodology for the 'world' will be proven wrong (less and less likely) or we are soon (next 5 years) in for a steep decline in oil availability worldwide.

It should gives something like this:
Original Image
Thank you!. Two questions:

a) can you (I?) determine the points from today forward on the regression line in bbl/day or bbl/year? Iran and Saudi have doubled their internal consumption over past 15 years, ( Russia and Norway have actually decreased internal oil consumption). As of 2004, those 4 countries consumed 6 million barrels per day and exported 21 million.
So whats really happening is 1)numerous hubbertian peaks are being reached 2)internal consumption in exporting countries is rising 3) second half of hubbert graph is lower quality and deeper requiring more energy to produce (Net EROI is lower) and 4) overall world population and benchmarks (therefore demand) is increasing. So the net/net/net left is less. The combination of these 4 points makes me want to buy an oil future in the morning.

b) in a tally, how often do the upturns in recent years end up reverting to original red hubbertian line and how often do they end up meaningfully changing ultimate Qt? In other words, had you done this analysis in 2001 instead of today it would have presumed a much lower final Qt - Is there enough world history to conclude much on this?

a) can you (I?) determine the points from today forward on the regression line in bbl/day or bbl/year?

in a tally, how often do the upturns in recent years end up reverting to original red hubbertian line and how often do they end up meaningfully changing ultimate Qt? In other words, had you done this analysis in 2001 instead of today it would have presumed a much lower final Qt - Is there enough world history to conclude much on this?

It's a good question. I think that the possibility of a late modification of Qt is related to the discovery curve (ex: is there a lot of yet-to-be-find) and the time between discovery and the first producing well which depends mainly on political and economical factors. If we look at Russia, they seem to have a very mature production but they managed to push up production anyway. Note that this increase is not influencing the result of the Hubbert Linearization yet because of the important weight of the past production.
Ok - now Im confused. Your graph makes the salient question obvious. The area under the right side of the curve beyond today is less than 50% of the total (because all 4 countries are beyond 50% Qt). Yet the black line representing current production is quite a bit outside of the curve and going straight up.

To me, one of two things will happen -either those 4 nations peak in production very soon and start to deplete faster than average (because production is increasing PAST the halfway point), or Hubberitan linearization trips up when extrapolating to the world. What am I missing here? Is this like the Hotelling chart by Gowdy referenced a few weeks ago, that shows technology basically borrowing from the right half of distribution making it 'appear' as if the whole distribution will be bigger?

Thanks for your efforts Khebab - I dont know how to graph those otherwise I would.

p.s. just to get back to the logistic it looks like a drop of 5mm bpd. World could not handle 5mm bpd drop anytime soon. Where is the hole in this analysis?
The Hubbert linearization is mainly a good tool to get the area under the curve but not necessarly the correct production profile. We need a mixture of logistic to follow multimodal curves (I'm working on it).
I don't have a definitive answer but Russian production went from a very strong increase in the 60s (almost 10% yearly) to a complete collapse int the 80s. The collapse created a delay in production for several years but the potential for a strong rebound was there just awaiting for new investments and privatizations. Clearly, a multicycle Hubbert linearization will be more appropriate.
Excellent stuff Kebab and Stuart. I'll admit to being more concerned today than I was a week ago, and I was none too sanguine then.

The Russian data may well be skewing the analysis. Would it be easy enough to drop Russia and see how the remaining three countries model? Perhaps Russia could then be modelled separately and the results added?

I do realise we are playing with somewhat flaky data - in the sense that exogenous events have significantly affected it, as well as possible inacuracies - but recent analyses here have been ominous. I don't think that is just in the eyes of the beholders, nor just in the eyes of the analysts who've been doing the excellent work.

Great stuff Khebab, you're becoming a very important member of this comunity. This thread is another milestone in TOD.

Khebab, do you have discovery data? It seems to that the recent upturn in FSU production is due to a new cycle of discovery in the republics outside the Russian Federation.

Thanks! No I don't have any data about discoveries. There is this graph from Jean Lahèrrere that seems to indicate some level of rebound in discoveries past 1990.
I would also like to reiterate my challenge.  Can anyone show an example of a country/region showing increasing production beyond 55% of Q?.  My proposed ground rules are:  (1)  reasonable geographic limits; (2)  decades of serious production and (3)  a Qt of at least 50 Gb.  

Note that Saudi Arabia, at about 55% of Qt, has been pretty much stuck at 9.5 mbpd (crude + condensate) since June of 2004, according to the EIA:


Before production starts to fall, it stops increasing.

 Note that I don't think it makes sense to include Alaska into Lower 48 P/Q verus Q plots.  Also, the UK falls short of the 50 Gb mark, but the total North Sea production falls within the limits, i.e, the North Sea is a discrete geological province; it has decades of serious production and it has a Qt of 60 Gb.  The North Sea peaked at 52% of Qt, and production has been in a free fall since 1999.  

Note that the Hubbert Linearization method was far more accurate in predicting the North Sea  production peak (and steep decline) than the reservoir engineers with the largest oil companies in the world, who were predicting  a peak around 2010, with a very gradual decline rate.  

If I'm no mistaken Russia is just doing that, they passed their production midpoint (Qt= 138.8 Gb for an URR between 157 Gb and 200Gb) and they have increased production since 1999 (Qt was then 124.5Gb).
Certainly looks that way, however it remains to be seen if they can increase their production back up to their prior peak. The big drop-off in production prior to 1999 was political/economic, not geological and it makes sense that a strong reintroduction of money and tech could boost production after such a decline, essentially recapturing production that might have been considered "delayed" by outside events.  However, in such a case I would expect a resumption of the decline to occur soon.
Agreed. I don't think they will match their previous maximum especially after the Yukos affair unless there are still significant discoveries out there.
Right, note the FSU violates ground rule #2 of westexas' challenge.
It is important to remember that Saudi's production may or may not be due to what they are capable of.

While obviously most of us here believe there are serious questions about Saudi's ability to produce, it must be said that they have historically been and remain for all intents and purposes the "swing producer." And swing they do.

Notice the recent report of them cutting 100,000 bpd when nobody here can figure out why, when global supply/demand is so tight. Saudi propaganda is hilarious to the Western ear, but is it meant to obfuscate, rather than deceive.

I still don't see definitive evidence that they can't produce 12mbpd.

Many people have asked why the major oil companies (especially ExxonMobil) and OPEC (especially Saudi Arabia) are providing much more optimistic assessments of their reserves than the Hubbert Linearization method indicates.  There are probably a lot of reasons, but I think this year there are two primary reasons:  taxes and war (respectively).

If there are very few big fields left to be found and if oil prices are going up to $200 per barrel in 2005 dollars by 2010 (Simmons' prediction), major oil companies are going to be making a killing producing their remaining reserves, and they won't be able to replace their reserves at anything remotely like the rate that they are producing them.  

Consumers will scream for government to do "something."  "Something" would most likely be higher taxes.  So, would you expect major oil companies to admit that they can't replace their reserves or would you expect them to say that they need the cash flow to bring on new reserves?  As Matt Simmons has pointed out, this also is a factor all around the world regarding Production Sharing Agreements (PSA's).   The problem of course is that major oil companies only control a tiny percentage of reserves worldwide.

Which brings us to OPEC. Would you expect the OPEC countries, which are militarily weak compared to the big consuming nations, to admit that they also can't replace their reserves or would you expect them to tell everyone not to worry?

Actions speak far louder than words.  Consider the current events in the Middle East in light of the foregoing.  

The point about taxation is interesting. The recent buzz about a windfall profits tax has been dismissed as just a bit political grandstanding for the voters at home. But as oil pricing climbs to more serious levels, it's going to become more than that. And I think it may have something to do with the oil drillers springing to life recently after being dormant for several years of the oil price climb. At first, the major, cashflow rich oil companies showed no interest in showering that money on expensive drilling projects for the small amounts of hard-to-recover oil left to be found. They were using that cash to drill on the floors of the stock exchanges buying up smaller companies with a lot of reserves already found and waiting to sell. But now, they are directing a lot of their cash flow to the drillers. You have to wonder how much of this is a tax shelter strategy and how much is based on a genuine belief in finding significant amounts of new oil. It's probably a combination of both, because there are, of course, a lot of smaller prospect areas that have been known about for many years, but were unprofitable at $45/bbl or lower that now are worth the expense. But once those are drilled, you may have mostly a tax consideration driving money flow to the drillers. The drilling budgets may become just a bone to throw at the electorate with a note attached saying "you can't tax us to death, we're going to find new oil for you".
Remember that Uncle Sam owns a whole lot of oil (Alaska, off-shore) and I imagine that the leases permit the USA to capture some revenue in the event of price swings like those of late.

Here's a challenge: does anyone know what portion of US federal government income derives from oil and similar energy resource leases? I have dug around the .gov sites and this number is surprisingly elusive.

Great job, (and fast). Two questions.

a)On your main linearization graph for Kuwait, clearly the purple P/Q vs Q takes an upward jog in the past few years. How often does this happen in past-peak countries? Ever?

b)how does making assumptions of smoothing the offline production from Gulf War change the URR? (making some assumptions to what production would have been IF no war-teim shut down)

The Hubbert Linearization of U.S. production bumped up over the line a few years before the peak.
When the data plot starts showing "linearization," what is really happening is that the amplitude of the fluctuations is vastly decreased.  Compare the amplitude of the most recent uptick to the amplitudes of previous swings in the data.
What is going on with the price of gasoline?  While oil is going through the roof gas in my area is actually dropping a couple of cents.  Are the oil companies afraid of being hit with the windfall profits congress threatened? How long can they wait to raise the pump price?
Both gasoline futures and crude oil futures closed friday about 21% above their respective lows in November.

The gas at your local store was bought a month ago when oil was much lower - there is a refining/transportation/wholesale/retail lag to the process that ends up being several weeks. Rest assured retail gasoline prices will be increasing soon.

Look at the wholesale price of gas.  It was down around $1.50/gal a few weeks back, and is now at $1.82/gal.  When Katrina hit, wholesale gas briefly shot up to $2.92/gal.  We're a long way from there.

I have read that, generally, the national average retail price is $0.60 greater than the wholesale price, with variation from state to state; this seems to be true.  See:


Right now they're showing an average price of $2.32, which is about $0.50 higher than the wholesale price.

Seems like a pretty weak response.  Maybe they just haven't had time to come up with a stronger statement.
"I don't think it's accurate"
Well, what do you "think" buddy?
What a powerful statement by KOC!
Nothing to see here keep moving.......

One year we add (reserves), another year we don't and in the one after that we add more,' Zanki added. 'The additions of reserves are not fixed, and each year we are adding reserves.'

Bullshit.  The line is dead flat except when it takes a massive leap.  These guys aren't even good liars.

Which is going to hapen first: OPEC nations will admit they lied in the 1980s, or Ali al-Naimi will finally announce that Saudi Arabia will double its proven reserves to something like 464 Gb?

How long can he keep up the charade that Saudi Arabia will "soon" double its proven reserves, when in fact, it looks like those reserves should more likely be halved.

Well, knowing the beloved and esteemed Ali Al-Naimi as we do, I'll expect more delusional reserves inflation coming soon not only from Saudi Arabia but Iran too. As for Iraq, who knows? The situation is such a mess there that we'll probably never get a good handle on what their actual reserves are--or at least we'll have to wait a very long time.

I think most of us knew all along, just as Campbell did, that the 1980's adjustments had no basis in reality. Actually, I've been waiting for the day when the asserted OPEC reserves bubble would burst. And that day has finally come. It's not too surprising that the news came out of Kuwait. If you recall, during the ASPO USA conference back in November, Kuwait announced that they had reached a peak production number for Burgan (1.7/mbpd--though this number itself may be on the high side. I believe current production there is closer to 1.4/mbpd). This was a startling admission at the time and I suppose it was inevitable that further information confirming our worst fears would come from the Kuwaitis. Here's an ASPO Ireland article Kuwait Confession written shortly after the original announcement about Burgan. Stuart's linearization intercept indicates 76 Gb with 36 Gb already produced. Here's what that ASPO Ireland article had to say at the time.
It is difficult to explain the implausible increase in reported reserves in 1985. Prior to the increase, it reported reserves of 64 Gb, having produced 22 Gb, meaning that the Original Reserves were 86 Gb, which is close to the 90 Gb it reported in 1985. So, the simplest explanation is that it changed from reporting Remaining to Original reserves, which would also explain why the subsequent estimates have not declined in parallel with production.
These numbers are very close to Stuart's estimates, so we're all in the same ballpark (76 Gb versus 86 Gb). The difference may partly be due to the fact that Stuart uses 36 Gb for cumulative production while ASPO Ireland quotes 32 Gb as of December 2004. This makes both analyses fairly close as far as remaining reserves go at the higher end of the 24 to 48 Gb range Stuart gives but we've got two points of uncertainty--1) the cumulative production to date and 2) the actual reserves number. Just making a Wild Ass Guess, I would say that the oil left to produce in Kuwait is probably nearer the 48 Gb number and that Stuart's Hubbert Linearization estimation predicting his Qt number is based on messy and still incomplete data, as he is the first to admit. But still, his approximation is certainly plausible and both estimates are reasonably close. But we can close the book on the 99 Gb figure that Kuwait has claimed and never revised in the recent past.
I have a question regarding the data we use.

When we discuss production here at TOD, we have been recently been using the 85 mbpd number. 13% of this number(rather large if you ask me) is made up of NGPLs, RPG, lease condensate, and "other liquids."

Yet, in this particular example of Kuwait, Stuart, you are using table 1.1a which only includes lease condensate. To get the number for Kuwait that we use in the 85 mbpd number we would have to take into account the roughly 6% of these other liquids that Kuwait produces.

The question is this: How significantly do you think including those 6%(Kuwait) and 13%(worldwide) numbers would effect the equations? Do they have no effect because they are simply percentages, or would they alter the graphs by billions of barrels and a few years?

The BP annual numbers, which are the main thing affecting the linearization above, if I can determine correctly, include everything except refinery gains and CTL (the latter being pretty negligible so far).  I haven't specifically analyzed your question, but my gut feel is that it won't make much difference in the date of peak, though it makes some difference in the height (as you note).  It's also not clear that all these things should get counted - in particular, it seems that ethane, propane, butane get counted as NGL, but they don't really seem like oil (I'm willing to buy that pentane and above should count).
I agree. As long as you know it's an issue, I'm happy.
So, regarding bogus Kuwaiti oil reserves, etc., it appears that we might now be buying worthless paper oil futures with worthless paper money.

I guess it all evens up in the end.

I've been looking at the Russian and FSU P/Q versus Q plots that Khebab did, and at first they were a little confusing, but then it finally dawned on me.  

If you look at the Russian plot, oil production stopped growing at about 47% of Qt (I'm rounding off Qt at 160 Gb), around 1989.   Production was basically flat for about 10 years until 1999, out to about 59% of Qt.  Production then fell dramaticlly.  Everyone assumed that it was because of the breakup of the Soviet Union, and then production rebounded strongly.  However, the recent production is still significantly below the 1980's decade long peak.  It looks like production peaked as a broad plateau center roughly on the 53% of Qt mark.  In my opinion, and several others have made this same point, the rebound in Russian production was just making up for the falloff in production during the political problems.  

The key point is that Russia is probably poised for a significant drop in production.  In fact, if you believe the plot, Russia has less remaining recoverable reserves than does the U.S.  

Following are the Hubbert/Deffeyes reserve estimates for the top four exporters, and the estimated life of reserve estimates, at current rates of production:

Saudi Arabia:  80 Gb & 21 years
Russia:  20 Gb & 6 (SIX?????) years
Norway:  9 Gb & 8 years
Iran:  60 Gb & 40 years

Total for all four:   169 Gb & 16 years.  These four countries account for the majority of net world oil exports.  

This is based on top four exporters in 2004:


IMO, the world economy is in deep doo-doo.

If I have made a mistake somewhere, could someone let me know?  If this is basically correct we are heading for one hell of a collapse in net exports.

Too many numbers to keep track of.

Russian production was basically flat from about 1979 to 1989.
(Also posted on Weekend Open Thread).

Total for all four:   169 Gb & 16 years.  These four countries account for the majority of net world oil exports.
The Hubbert linearization for all four seems to give 557 - 310= 247 Gb left. We are maybe too pessimistic on Russia, I would say 50Gb left. Do you know what was Russia production for 2005?
I took the four separate plots to get each individual Qt and then adding them to get 169 Gb.  The key differences is probably due to the usual crude + condensate versus crude + condensate + NGL's factor.  

In regard to Russian production, the most recent data I have seen is off the EIA website (I believe that it is basically flat year over year).  In any case, I think that the key point is that Russia's production, while it has rebounded from the post Soviet Union collapse, has not reached the Eighties' peak. Therefore, it has not shown increasing production--relative to the Eighties peak--beyond 55% of Qt.

Based on the individual plots, following are the depletion percentages, for each of the big four--ranked in order of importance of net world oil exports:

Saudi Arabia, 55% depleted
Russia, 87% depleted
Norway, 67% depleted
Iran, 50% depleted

On second thought, 247 versus 169 is a pretty big spread.  The SA plot definitely shows 80 Gb remaining.  The Russian plot definitely shows about 20 Gb remaining, and the Norwegian plot definitely shows 9 Gb remaining.  The Iranian plot definitely shows 60 Gb remaining.  Laherrere did the SA and Iranian plots (and I assume the Russian plot).  
I think that the best Qt estimate for the U.S. (including Alaska) is 225 Gb, with about 190 Gb produced to date, which puts us at about 85% depleted.

I'm using the following EIA data for daily production and exports:  http://www.eia.doe.gov/emeu/cabs/topworldtables1_2.html

Russia:  87% depleted, remaining reserves 20 Gb, daily production 9.3 mbpd, P/Q intercept 11%

US:  85% depleted, remaining reserves 35 Gb, daily production 8.7 mbpd, P/Q intercept 5.5%

I think that we have been overestimating Russian production capacity because of the strong rebound from the post-Soviet collapse in production.  Note that the North Sea P/Q intercept ACCURATELY predicted that the North Sea production would fall at a much faster rate than the Lower 48 US production.

Note that if the US had the same level of consumption as Russia and if Russia had the same level of consumption as the US, the US would be the second largest net oil exporter in the world.  

Based on the Hubbert/Deffeyes method and the above scenario, who among us would consider the US to be a reliable source of oil exports in the years ahead?

Therefore, why should we consider Russia to be a reliable source of oil exports in the years ahead?

On second thought, 247 versus 169 is a pretty big spread.  ...  Laherrere did the SA and Iranian plots (and I assume the Russian plot).  

Yes it's a big spread and I don't know yet why the linearization of all four gives a greater estimate than the sum of all individual estimates. Lahèrrere made a plot for Russia (see my post above) with an URR @ 200Gb which gives him a production plateau starting in 2006 at 7.5 mbpd.

Below an unofficial estimate for 2005 Russia production (9.44 mbpd):

Russia's 2005 Oil Production Highest Since 1991

Created: 10.01.2006 15:40 MSK (GMT +3), Updated: 16:21 MSK

Russian oil production rose 2.4 percent in 2005 compared to a year earlier and reached 470.196 million tons or 9.44 million barrels per day. This is the highest level of Russian production since 1991, according to the Industry and Energy Ministry's figures that were quoted by the Russian press on Tuesday, Jan. 10.

Russia, the world's second largest exporter of crude oil, produced 40.186 million tons of crude oil in the month of December alone, a 3.4 percent rise on the same period of 2004.

However, overall growth in oil production slowed in 2005 from earlier years, after concerns raised by the Yukos affair and a sharp rise in taxation weighed on investments in the sector. Experts warn that if Russian oil companies fail to invest considerable funds in geological exploration and drilling, Russian oil output will begin to decline as early as this year.

In the period 2000-2004, Russia saw an annual rise in production levels of 8.5 percent, following a sharp drop between 1991 and 1998 following the collapse of the Soviet Union.

src: MosNews.com

I think we may begin to see a decline in 2006 for Russia and probably a steep decline for 2007 and beyond.

Apart from Russia those results seem reasonable, Westexas. Could be the pattern of discovery and production there has been too abnormal to apply straightforward methods.

Kebab reproduced a graph above which seemed to show that discoveries had increased in Russia in the latter 1990s and, of all the places in the world, the Russian Artic is probably the last best place to find new fields.

Maybe to model Russia reasonably well one would have to split it into regions and model them separately. Would be difficult to get decent data for that.

The Russian results seem crazy to me too, but I would point you to my post above.  If Russian and US consumption were switched, the US would be the second largest exporter in the world.   When you view it that way, perhaps the Russian results aren't so crazy after all.
True, I did take that point, but perhaps the real problem is US consumption, lol. The important geopolitical truth is: Russia will supply their own consumption, USA will not. Had Jimmy Carter had his way the US might be in a similar position to Russia on oil now, and looking forward to another 50 years of economic dominance, imperialism and hegemony. Spot the crazy ;)
Which brings me back to my original emphasis on net exports--they are being squeezed from two directions, by rising domestic consumption and by falling production.  The numbers I'm looking at suggest to me that we are going to face a ferocious bidding war this year--and perhaps a shooting war--for available net oil exports.  
Yes, and it's been in process for a year or more already. The miasma of 'fungible' oil may have fooled me (perhaps us at TOD, too) longer than is wise, how much oil is actually part of a 'free market'?

If you haven't read this piece by Jim Willie then please do:
There are bits I would quibble with but he is usually close to the mark. What surprised me was the extent he felt the market was being stitched up into contracts. It's probably as good a look at the big picture that I've read.

I've read the piece, and it's a good article.  This analysis of the top four oil exporters, using the P/Q versus Q method, is the first time that I have managed to scare myself.

Stuart is taking a look at the Russian data tonight.  In my opinion, this deserves a thread of its own.  In fact, I think that somebody needs to hold a press conference.  

Everyone--including myself, until today--thought that Russia had vast reserves--and that the US was in terminal decline, producing the last vestiges of our fields. But the US, according to the EIA, is producing 94% of what Russia produces.  If you believe the plots, the US has 75% more recoverable reserves than Russia has.

fyi. westexas. Youve managed to scare me as well. I went and read CERA and peakoildebunked for 40 minutes and it didnt help. Now trying brandy..
Now you folks seem hard to scare, perhaps you get distanced from the implications for reality by discussing the technicalities. I'd be interested in your comments on some of my blog posts (some of which have sneaked in here before):
I really don't know if we are getting worked up into an unnecessary lather about this and other recent news on Kuwait etc. I really don't.

Even if our bleakest premonitions are true we are adaptable monkeys, though too many. Things will not materially change (on the supply, reserve, demand sides) over the next few months, time enough to wait and see. I don't yet accept your Russian conclusions, I think they are a special case due to the disruptions they've suffered, and probably cannot be modelled in a straightforward manner.

That said, when I made my own assessment in late 2005 I concluded that late 2008 was the most likely moment for demand to exceed supply (barring a new great depression). I am already beginning to question that.

I'll join you with a glass of Woodford Reserve bourbon (strange drink for a welshman in England, lol), tls. What's your poison, wt?

I think we will have a glass of port in front of the fire tonight.  I will be very interested in Stuart's take on the Russian data.  
Bless the benefits of global trade :)

US drinking french and portugese, UK drinking US bourbon. One of my sins is good drink, port amongst them. Vintage tends to be expensive (and fiddly for day to day drinking) unless one buys early in good years, LBV is a good compromise - I like Fonseca and Dow of those, what you on?

I do wine (quite seriously, some good US stuff around), whisky (Islay preferred), and real ale (I was surprised how much decent beer one could find in the US if one looked hard), too.

Agric - wait till next summer -Ill invite you over for some 'shine from my new sugar beet still (in progress)

Im sure that will be one local industry that flourishes post peak.....

I'll look forward to that, airplanes permitting. But it raises a topic for me: in UK I have no small scale source of sugar beet seed, it is all commercial, so I will be very interested in your experience of growing and processing it, any advice on sourcing seed etc. I'll also be very interested in the still, I've not done any distillation yet (done most other drink production related things).

Nod beckons me now, must be up in 5 hours...