Plateau update

Average daily oil production, by month, from EIA and IEA, together with 13 month centered moving averages of each line, recursed once. Click to enlarge. Believed to be all liquids. Graph is not zero-scaled. Source: IEA Oil Market Reports, and EIA International Petroleum Monthly Table 1.4. The IEA line is taken from Table 3 of the tables section at the back of the OMR in the last issue for which the number for that month is given; last two points in purple are at earlier stages of revision than the rest of the graph.

Herewith a quick update on the supply situation. I briefly touched on recent declines in Saudi Arabian production the other day. The global supply situation is as above. Essentially, the situation has not qualitatively changed since I last discussed it. The two agencies I track (the US EIA and the OECD IEA) are at increasing variance about what's going on, with the EIA seeing supply basically flat over time, while the IEA sees a very slow rise in available supply (with data through October). For more background on this plateau debate, see this tutorial post. Presumably, this discrepancy will not continue too many more months, as it's going to get a little embarrassing.

At any rate, there's little doubt that the record month is now July 2006.

Expressed as growth rates, the difference between the two agencies is about half a percentage point. This next graph shows the year on year growth in the two moving average lines above (which themselves are thirteen month centered moving averages recursed once).

Year-on-year growth in moving averages of EIA and IEA oil production estimates. Click to enlarge. Believed to be all liquids. Source: IEA Oil Market Reports, and EIA International Petroleum Monthly Table 1.4. The IEA line is taken from Table 3 of the tables section at the back of the OMR in the last issue for which the number for that month is given.

As you can see, the EIA is seeing annual growth of 0.1% - essentially zero - while the IEA is seeing growth at around 0.7% annually. There are two points worth noting about this situation.

Firstly, if it were to continue, even the IEA's growth rate is very low by historical standards. This next graph shows growth rates in production for various data sources. The growth rate here is the average growth over the decade prior to the year in question (for the mathematically oriented, it's (P(n)/P(n-10))^0.1 - 1 ).

Average annual growth rate over the prior decade in oil production from various estimates from 1900-2004.

As you can see, in the heyday of world (and US) economic growth in the 1950s and 1960s, annual growth in oil usage ran around 7-8%. Then, following the 1970 peak in US oil production, came the 1970s oil shocks in which oil usage actually contracted. In the last couple of decades, economic growth has been slower, but steadier, and oil usage has been growing at around 1.5% a year. For reasons that aren't clear, both economic and oil usage growth tends to come in "eras" of relatively constant growth marked by sharp "paradigm shifts" between them.

So, if we are now in for an era of sustained zero or sub 1% growth in global production, that would be a new thing, and require more conservation on an ongoing basis. In particular, with growth in consumption in oil exporting countries and high growth Asian economies, it's likely US and European oil usage would need to contract slightly even if there is slight growth in overall production (a point discussed at greater length here.

The other point, is that there's not likely to be too much "sustained" about growth when a huge fraction of production is coming from the Middle East, where the wheels seem to be coming off the truck. Hard to say whether a crisis will come this year, next year, or later, but the odds of, say, a decade of steady Middle Eastern oil production uninterrupted by major shocks seem discouraging at this point. For example, see Andrew Sullivan on the possibility of a major Shiite-Sunni regional war. Such a war would utterly transform the world economy in very short order and in a very brutal manner.

Let me put up two other graphs of interest. The first is OPEC, which in November allegedly cut production. We'll have to await November/December statistics to see if that creates a noticeable step in the production history. However, here's the data available at present (which goes through September or October depending on source) and shows OPEC production already declining ahead of the planned cut).

Estimates of OPEC production by EIA (both with (Table 1.4) and without (Table 1.1) NGLS) and IEA. Click to enlarge. Believed to be all liquids. Graph is not zero scaled. Click to enlarge. Source: IEA Oil Market Reports, and EIA International Petroleum Monthly Table 1.1 and 1.4. The IEA line is taken from Table 3 of the tables section at the back of the OMR in the last issue for which the number for that month is given.

Finally, during 2001-2004, when global production increased healthily, the bulk of that increase came from Saudi Arabia and Russia. With Saudi production declining, at least for the last year, Russia becomes of particular interest. Here's the latest picture:

Estimates of Russian production by EIA and JODI (Joint Oil Data Initiative) on the left scale, and total drilling rigs in country on the right scale. Click to enlarge. Source: JODI, and EIA International Petroleum Monthly Table 1.1. Rig data is from Schlumberger, and includes rigs drilling for both oil and natural gas.

As you can see, the Russian revival has not peaked out yet, though it has slowed to only around 1/2 mbpd in additional production each year over the last two years (about half the pace of production increases in the early part of the decade).

Again, see here, for more background on these plateau posts if you haven't been following them.

Folks, consider this a reminder to positively rate these articles (using the icons under the tags in the story title) at reddit, digg, and if you are so inclined.  Also, don't forget to submit them to your favorite link farms, such as metafilter, stumbleupon, slashdot, fark, boingboing, furl, or any of the others.  

These posts are a lot of work, and the authors appreciate your helping them get more readers for their work however you can.

I just added it to digg, but I am wondering why the poster is not making the first digg.  That way they can create a good title and summary, rather then relying on someone like me who might not provide a great summary.

Also, most people are lazy and don't mind clicking to vote for the article, but don't want to spend the time to create the summary.

that's weird, because I created one this morning when SS's post first went up...
Do you have any idea why there is a discrepancy between JODI and EIA production data for Russia? Could this explain much of the difference in world production figures between the EIA and IEA?
Doesnt look like that. The Jodi increase starts at 01.05 but the larger difference EIa IEA starts at about 08.05.
In general, I have a poor understanding of why the different agencies report different numbers.  I guess I'd have to actually call and talk to them :-)
As you say, Stuart, not too much has happened in your absence.
I actually think the part of world production you didn't separate out is pretty telling. If you look at global supply ex-former USSR, ex-OPEC, it rose steeply till 1997, and then stopped dead. Still within 1% today of where it was 10 years ago. There just isn't any new source of growth out there on earth.
Smekhovo: Very astute observation.Combined with WT's analysis/predictions re dramatic declines in Russia and KSA, and the crystal ball looks pretty spooky. I think the Yerginizer glossed over this one by saying that the miracle of technology and the invisible hand will fix everything (obviously it has been sleeping for 10 years).  
Yes, when the only parts of the world that has produced without restraining supply to control the price, or suffering a catastrophic social breakdown that idled its fields for years, have been incapable of getting more oil to market,you would think it would make people take notice.
But in Yergin's case, you would be wrong. Unless he speaks with forked tongue.
But in Yergin's case, you would be wrong. Unless he speaks with forked tongue.

Cognitive Dissonance.  I predict that the more in error Yergin's predictions turn out to be, the more vigorous his attacks on Peak Oil will probably become, ditto for Michael Lynch, Peter Huber, et al.

As I said the other day, "Who are the true cultists?"

Those who believe that a physical world has physical limits, or those like Peter Huber, who believe that we can essentially increase our rate of consumption forever?

the more in error Yergin's predictions turn out to be, the more vigorous his attacks on Peak Oil will probably become

How dare you blaspheme the words of our most Reverand Sun Yergin Moon.

He never said there would be oil for all.
Only for those who truly believe.
You are not a true believer.
No oil for you.

Go ahead and cry Texas boy.
No oil for you.
Boo hoo.

Oil only for those who truly believe in the Power of the Invisible Hand, blessed be its name and praise onto our magnificent priests, Yergin ala Huber. For the true believers, the oils will flow forever and beyond. Over hill. Over dale. Over plateaus that never fail. As the barrels go rolling along.

Pretty good. . .
Stuart, you have chosen to display the "All Liquid" production which includes crude, condensate, NGPL, refinery gains and other diluent such as ethanol. However, the share of the "Other Liquid" category has significantly increased lately. My concern is that this growth may hide the eventual decline in crude + condensate production, our true fossil fuel resource, which peak is almost on year ago now in December 2005 (EIA data).
I subscribe your words Khebab, the `Rest Liquids' contains, among others, refining gains (which is recycling) and bio-fuels (which is a renewable resource). They are currently hiding the peak in CO + NGL in late 2005 and the peak in Regular Oil in late 2004.

Still the peak in CO + NGL is probably local; barring world economic recession we'll see major production hikes in the South Atlantic offshore (probably only in 2009) that will adjourn the final peak to circa 2012.

Apart from politics and economic cycles, only a production collapse in KSA or Russia (or a simultaneous mild decline) might make 2005 the final peak epoch.


My prediction for 2007 is confirmed permanent production declines for both KSA and Russia.

I predict that your prediction will be wrong.

Or at least that one of our predictions will be wrong.

I predict your prediction that one of the predictions will be wrong is right.  I further predict no one will appreciate this post.
Thank you for not appreciating that. :-)
bio-fuels (which is a renewable resource)
Just a clarification, here. Biofuels are only potentially renewable. It depends on the rate of production. I think many people can be mislead into thinking that some switch to a potentially renewable source of energy means that such a source can be tapped at any rate required and it will still be renewable. This is not the case.


sofistek said,
"Just a clarification, here. Biofuels are only potentially renewable."

How true, and only patially renewable.  If you count out the imput of natural gas (or coal or bitumen from tar sand, never mind CO2  as nat gas gets too expensive) I have never considered the major bio fuels (ethanol, bio-Diesel) as 'renewable" in the old sense of that word.  They are more in the nature of a "fuel switching operation" than a renewable energy program.

The only added "renewable" energy in the bio fuels is the sun that shines on the crop, then has to be converted to bio-mass, which then has to be dehydrated and processed, and then carried to the sale point.....well, you get my point I hope...why not use the sun directly, burn the natural gas in the vehicle, or better yet, work to direct conversion of water to hydrogen by solar...ohh, that's right, it can't be done because it is not efficient enough, somehow it gets efficient when you add a half dozen extra conversion steps, and thousands of pounds of waste matter and CO2 per potential gallon in a centralized plant, so all the raw material and all the waste now and all the final product has to be shipped about....

Never mind.  As Virginia Woolf once said, "It's like talking with your face pressed a closed door."

Roger Conner  known to you as ThatsItImout

That is a very good point.
The only reason they appear efficient is because we chuck in a bunch of fossil fuels hidden as part of the process.

If fossil fuel is removed from the equation then logically, due to laws of conservation of energy the most efficient method should be the most direct.

The only added "renewable" energy in the bio fuels is the sun that shines on the crop

When are you people going to grow up?

No energy is "renewable".
The sun's fusion output rolls in.
It pauses for a moment here on Earth.
Then it radiates out into space.
Gone forever.

Renewability is a fairy tale.
One way flow is reality.
It has a funny other name: "entropy".

This is pedantic and obscures the real problems we face. As far as planning mankind's future for the next decades and centuries there is no practical difference between a theoretical truly renewable resource that delivers power eternally and one that is certain to deliver a substantially constant power for a billion years. There is every difference in these regards between the latter and oil that we have very good reason to fear will meet a practical production limit and thereafter decline within 15 years and possibly much sooner.

This distinction is made by calling the former power source renewable. No one who uses the term is under any delusion that the sun contravenes the conservation of energy.

Which is the least grown up, to use a common term with a well understood meaning even if not technically precise or to quibble over irrelevant linguistic  distinctions that confuse no one?    

Words themselves are only approximations. In truth there is only this which 'is'. Any abstraction including the use of words and even rational thought are approximations, maps of what 'is'.

We use words to define the map, they never truly fully represent that to which we assign them. It is simply common consensus that allows us to agree upon a definition. I believe I used it correctly.
Though most will simply consider this pedantic I think it is important to think clearly about concepts and have definitions that are accurate.  The objection is valid, the word "renewable" is misleading.  It is, however, a useful distinction to consider energy sources that can be substantially depleted in a few dozen human generations (or less) to be qualitatively different from those that will likely take billions of years to deplete.  For one thing there's the little matter that when the sun dies, we and everything on the planet die.  Despite the doomer point of view, life will go on without fossil fuels.

Take a look at Wikipedia:

Renewable energy is energy which can be replenished at the same rate it is used.

This is a poor definition.  Energy is never "replenished", this is confusing energy and the potential energy inherent in matter.  e.g. filling a tank with gasoline does not "replenish" the energy in the tank, but it does provide a liquid which can be involved in an exothermic reaction from which some energy can do things we find useful.  Likewise, solar energy is never "replenished", it is simply a continuous source.

Contrast the problematic definition of renewable energy with

Energy sources are substances or processes with concentrations of energy at a high enough potential to be feasibly encouraged to convert to lower energy forms under human control for human benefit.

This is a good definition, at least from the point of view of humans.

Having said all the above, it is mostly useless because most people who use the term "renewable energy" understand these distinctions, and we can wave away the whole issue by simply defining the term to mean the right thing.  Trying to promote the adoption of a more accurate term is not likely to work - see, for example, "hydro" to mean electricity when in fact it means water (see, e.g. Ontario Hydro, Manitoba Hydro, BC Hydro - all of which are or were electric utilities) or "America" to mean the United States of America.

A word here.


Linguistics is vitally important.
One word in place of another does make a difference.

It sets up a context, a "framework", a "spin" under which your mind processes everything that follows. Repetition of the "renewable" word, again and again, ingrains it in the mind and reinforces the false illusions beneath it.

So if we, as supposedly scientific TODder's keep reinforcing the false concept of a "renewable" energy source, what chance does the lay public have to finally come to grasp with the truth of the situation? Suppose they vote to kill R&D in fusion because they believe "we" are instead developing "renewable" energy sources? Makes perfect sense in their mind. Renewable means renewable, doesn't it?

We need to be careful about what false delusions we unwittingly ingrain into the minds of the lay voters. It is their vote that counts, not ours.

With the exception of nuclear and geothermal, every other energy source we talk about here is a solar sourced one.

Wind is solar sourced.
Hydroelectric is solar sourced.
PV is solar sourced.
Oil is solar sourced.
Even "coal" (a.k.a. non-hydrogenated carbon) is solar sourced in the sense that the oxygen used to combust coal is a byproduct of photosynthesis.

Here is a more pedantic tag-on,
Something I was thinking about in regard to KURT COBB's latest post regarding  Copernicus, Darwin and .. Autistic Economics

I was less than thrilled with the concept of an "Un-Autisitc Economics" (an oxymoron IMO --no, it's dyslexia when you transpose your letters :-) ).

So I posted the following, linguistically directed comment:

The one word, "Economics" is a pre-Copernicus mind trap.

It causes certain neurons in the brain to fire up and constrain thought process into a very neat and invisible cognitive cage. The Sun revolves yet again around the Golden Calf (money) instead of the other way around.

Try this simple experiment on yourself:

  1. Clear your mind of rational thought by going to your "happy place" (whatever that might be, the beach, the park, the mountain top sitting next to your favorite yogi, etc.)

  2. Now focus on these four words:

  Peak-Oil plus Economics

2a. What came to mind?
2b. Was there a "learned professor" lurking back there in the fog of your educational memorance; waving his arms in front of supply-demand curves drawn on the white board? Was he extoling the virtues of markets, free trade, progress, "money", fiscal responsibility and all that? Did you feel the power of the Invisible Hand reaching out towards you to make everything in the world OK?
2c. All that was back there even if you are consciously unawre of it. When a resource issue like "peak-Oil" is cast into the framework of "Economic" thought, it takes on an entrapping set of nuances.

  1. Now go back again to your "happy place". Clean the white board. Breathe in and out with your yogi friend.

  2. This time focus on only these four words:

  Peak-Oil plus Thermodynamics

5a. What came to mind now?
5b. Something very different, no?
5c. Did you start thinking about conservation of energy, conservation of mass, the three Laws of Thermodaynamics? Did you think about EROI? Did the Sun revolve around the Golden Calf for you this time?

Instead of "Economics", I prefer to keep my mind trained on the concept of: "Inter-sapien Valuation and Exchanges". What do we "value"? What do we trade with each other? (I.e. Money=labor in exchange for a gallon of gasoline?) Why do we "value" these things? What enters our mind as we go about "minding our business"? How autistically disconnected from physical science are we as we do these things?

Are you seriously suggesting that anybody would have made a different decision if they realised the sun would fail in a billion years.

Renewable is a word used to describe those sources of energy for which the amount we may use tomorrow and in the years ahead is not reduced by a significant degree by using that energy source today in the amounts that it is practical to use them and over the future time spans over which it is sensible to plan human activities.

The amount of solar, wind, wave and tide energy that we could practicably  use today will not noticeably affect how much we can use tomorrow or over the next 200 years and thus fits within that definition. Oil clearly does not.

Talking about oil as being solar derived  may be pedantically true but is likely to cause unwise choices by those of the general public who have not considered the problems and are only too ready to accept ideas that will avoid having to change immediately.

Talking about photovoltaic and wind energy as renewable may  be untrue in the strictest pedantic sense but the difference is not going to cause any false decisions.

Fusion energy, if it proves practical, sits on the edge of being renewable by this definition. We cannot noticeably deplete the planet's deuterium by any reasonable future use.
Lithium is rarer but there are thousands of years worth of it that can be extracted using only a small fraction of the energy it will produce. Beryllium, used as a neutron multiplier in the blanket may be a problem in the long term  with very heavy use.

The question of whether we can drop nuclear fusion research
because we are developing photovoltaic and wind energy does not rest on whether they are truly renewable or not but whether we can develop them in sufficient quantities and
in the right places  and for an acceptable price and overcome such problems as  intermittency.

Renewable energy is useful concept and is usually construed
correctly by the public in ways that are meaningful to choices about energy sources  

The question of whether we can drop nuclear fusion research because we are developing photovoltaic and wind energy does not rest on whether they are truly renewable or not but whether we can develop them in sufficient quantities and in the right places  and for an acceptable price

You are assuming that the only time we will "truly" need fusion is when the sun finally runs out of fuel and implodes.

Not true.
What if we have extreme climate change and perpetual clouds ... meaning no sunlight gets to the surface?

Do you ever listen to politicians talking about that there "energy" stuff? Many of them are totally clueless. And they are the ones who cast the important votes --like whether to fund basic R&D or not.

You are assuming that the only time we will "truly" need fusion is when the sun finally runs out of fuel and implodes.

Where do you get this idea from? In fact I support fusion research but the quite the silliest reason for doing so and the silliest reason not to install photovoltaic systems would will be that we might get perpetual cloud cover. If that happens agriculture will collapse and we are dead.

In fact the two do not complete on the medium term. Even the proponents at ITER do not see the first prototype commercial fusion power reactor delivering power for 50 years even with their fast track programme.

It will almost certainly be at least 70 years before fusion has developed to become a major part of the worlds energy supply. Build up cannot be much faster than this because of limitations in tritium supply. Deuterium/tritium fusion reactors use over 55kg per year per GW  thermal. Reactors will be designed to breed their own tritium from lithium but will not produce much more than their own needs and the magnitude of the  spare tritium will limit the rate of growth of new reactors.

Most of the world`s present supply of tritium is from the CANDU reactor which will have accumulated just 27kG for ITER from now to start-up in 2027.

2076 is well past the point at which all but the most starry eyed optimists think the oil production will have suffered major decline.

It is a major topic of this forum as to how we get over the intervening period. Wind and other renewables will be installed at increasing rates and economy and efficiency will be forced on us. Nuclear fission will see a revival and although they should not be used, filthy tar sand and shale will be used. Coal will be used in horrifying amounts with very little of the CO2 sequestered. Will this see us through? A range of opinions have been expressed here, Will renewables be cost competitive with fusion when it is available? Very difficult to judge at this point. Will fusion be practical even then? Far from certain. Will advanced technology and the budget surpluses to support it survive till then? There are many that doubt it.

However the prospect of generating multi-gigawatt power from one compact site near where the power is needed with fuel available for thousands of years from friendly areas and generating no CO2 in actual running, zero chance of a nuclear explosion and limited short lived radioactive waste is a prize so tempting that even at fairly long odds it is worth the price of research and development costs.

Oh and yes, the sun will swell up as a red giant and engulf this planet before finally settling down. It won't implode.

Thanks for the informative discussion. :-)
Although it is classifed, I thought that hydrogen bombs contain a far amount of tritium (half life 5.x years) and the militayr reactors can produce tritium in quantity.

One could also build more CANDUs (perhaps using burned fuel from LWRs) and produce more tritium that way.

Best Hoeps for fusion,


According to this paper a specially designed fission reactor would produce only a few kilograms a year and would cost $200 million/kg.

According to this source nuclear weapons use about 4g each and it has been suggested that the latest designs do no use any. This makes it unlikely that military tritium production is much more than a kilogram per year.

10's of kilograms of tritium will be needed for each new start up and the only practical commercial way of getting  to grow the number of reactors to substantial numbers is from existing reactors. If the tritium breeding blanket produces only  10% to 15% more than it needs for self sufficiency it will take 2 to 3 years to fund a new start up. Given a few months commissioning from delivery of the initial charge to full power, the doubling time will be 3 years or more. This means it will take about 20 years to go from 1 reactor to 100.

From your link:

Total U.S. tritium production since 1955 has been approximately 225 kilograms, an estimated 150 kilograms of which have decayed into helium-3, leaving a current inventory of approximately 75 kilograms of tritium.

This was almost a half-life ago (12.3 years), so 37 kg or so left today.

Inserting Li6 into existing nuclear reactors for neutron bombardment seems the easiest/best way to produce tritium in quantity.  Perhaps, slip one zirconium covered rod of Li6 into a fuel bundle and adjust the control rods slightly (or use slightly more enriched U in the other fuel rods).

IF fusion reactors are seen as our salvation, and tritium is the bottleneck for "more", then "ways will be found".

Best Hopes for Fusion,


Yes US military tritium production was about 7 or 8 kg per year up to 1988 when they closed down the last of the dedicated reactors but I suspect it it is now about the 1kg/year mark I suggested. It was produced at a staggering cost.

World production of uranium in 2004 was about 40,000 tonnes. Of this 0.7% or 280 tonnes was U235. Enrichment usually leaves about 0.2% of the U235 in the depleted uranium so only 200 tonnes a year of U235 finish up as reactor fuel

The fission of one atom of U235 produces an average of about 2.4 neutrons. To maintain the reaction an average of one of these must cause a new fission event. The others being lost or absorbed naturally or by control rods.

Commercial reactors are built to a fairly tight neutron budget and although there are some spare neutrons that could be released by pulling the control rods out further it is unlikely that, in such reactors,  more than 10% of the neutrons could be diverted to tritium production without problems.

This leaves an average of about a quarter of a neutron per fission event or four fission events to produce one spare neutron which can produce one tritium atom.  Four uranium 235 atoms weigh 940 atomic mass units and one tritium atom weighs 3 atomic mass units. Thus 313 tonnes of uranium 235 produce 1 tonne of tritium and the world's 40,000 tonne per year production of uranium could ideally produce 630kg of tritium per year if every reactor in the world were switched to maximum tritium production.

At 20kg initial charge for  a 2GW(thermal)  1GW(electrical) that is a absolute maximum of 32 reactor start-ups per year if we rely on fission generated tritium. To put this in perspective china is at present installing an equivalent to 50  1GW(electrical) coal fired power station a year

This analysis ignores all sorts of factors that would reduce even that yield much further such as that much of it would decay and leak away in the reactor and the sheer improbability of converting every fission reactor in the world to tritium production.

As to the blind faith "ways will be found", I doubt you would be able to show your face on this forum if you said it about oil.

Tritium is a major bottleneck in the future widespread use of fusion and is widely recognised to be so.

I will not live to see the widespread use of fusion energy but I may, and hope to, see enough to know it will become so after my death.

Thank you for the detailed analysis.  Quite educational !

However, if fission reactor produced tritium were able to seed 10 (not 32) 1 GW fusion reactors/year and each one of these went on to seed another within a decade (relatively conservative #s) AND some tritium reactors were built optimised for tritium production, then we could scale up to fusion power as the dominant energy source within a generation or so.

Tritium from commercial reactors would provide a larger base to start the exponential growth from.

And then there is the possibility of accelerator production of tritium.

Given the other many constraints on fusion reactor build out, even an unlimited source of tritium would result in a generation to "build out".  Likley tritium is the "critical path" constraint, but far from the only one.

Best Hopes,


Renewable is a word used to describe those sources of energy for which the amount we may use tomorrow and in the years ahead is not reduced by a significant degree by using that energy source today in the amounts that it is practical to use them and over the future time spans over which it is sensible to plan human activities.

I think your "not reduced by a significant degree" is meant to make it possible to include geothermal as well, am I right?  It's an interesting definition, but the point remains that it doesn't match the normal meaning of the word "renewable".  Further, it doesn't match definitions you will typically find, which do focus on the word renewable.

You may understand the real meaning of the phrase, but that doesn't mean others will.  Thus, it's a bad phrase, just as "hydro" is a stupid thing to call electricity (whether from hydroelectric sources or not).

Sitting here like microbes on a rock, we often get fooled about our place in the Universe. We "feel" that it should all revolve around us. After all, we are "special".

An invisible being called God created all this beauty around us with the force of His intelligent Design and then, as he the infinitely powerful one, grew tired, He "rested" on the 7th day and decided to keep his microscope focused on the comings and goings of each of us little microbes as we brayed and prayed to him. And He spent the rest of his time doing nothing but answering our prayers, bringing into being the essence of each wish we make upon a star. Hope is forever renewable. Life is not a spiral. It's a circle, an unbroken hoop that forever renews itself. Ah, to sing again, with all the colors of the wind.

I often picture the Sun as a mighty river of energy flowing past us, and our 3rd little rock here in the river as intercepting the flow for, oh just a brief moment before it leaves our grasp forever.

Yes, indeed. See for instance the production of hydrogen: While it has the potential to be a clean fuel currently is is produced from NG, producing quite some CO2.

This is my pet peeve.

"All liquids" is a scam. It's basically double counting!

Clearly, analysts should focus on C + C to get a truer picture of what's going on.

"All liquids" is a scam. It's basically double counting!

Clearly, analysts should focus on C + C to get a truer picture of what's going on.

I wrote some on this, and thought a lot about it as I was writing my response to Westexas. The really relevant metric would be net total liquids. Not sure if anyone has used this term (its a bit of an oxymoron), but it would capture what is truly relevant. C + C ignores some legitimate contributions toward liquid fuels, and total liquids does do some double-counting. A net total liquids would take total liquids and subtract out any liquid inputs that went into making the finished product.

The REAL metric should be triple-net liquids, which would account for the increased % of our daily production that's going back into more difficult oil production/refining AND taking an environmental externality cost out of the gross as well.

Now THAT would be a meaningful measure...

Yes, as we began to discuss yesterday I believe this needs much more attention - what is/will be the amount of net useful energy delivered to society?
There you go again, trying to pedal reality.
luis..hi..are you referring only to brasil or the gulf of guinea (which is north atlantic) also? assuming brasil, what is the anticipated increase?
Brasil and Angola mainly, and a bit from the Gulf of Guinea. I'm sorry, in my mental picture the South Atlantic starts at Cape Bojador.
Can someone please explain something to me:
All these liquids are in crude form, but what is the conversion rate to gasoline, heating oil etc.  Is it similar for all liquids or are some better than others.
What really needs to be measured is: End energy usage from liquids rather than raw quantities.  This will tell us more accurately when we are reaching an economic peak rather than crude peak.  It is the economic peak that is most important for our everyday lives.
Stuart - first up, I seem to recall promissing to buy everyone a drink if Dec 05 was peak - so this is really good news for me.

Second - on a more serious technical / terminlogy point - I see your chart as demand, not supply.  I have this simple notion that:

Pre peak:  production = demand
Post peak:  production = supply

± adjustments for stock draws

Would you care to comment?

And a note for investors - there was a correlation between price and demand 2000 to 2006 before the drop (I've not checked this recently) - so increasing demand might be good for oil prices

C+C peak is still Dec. '05.  Deffeyes ain't wrong yet.  ;-)
Oh dear!
Shots of McCallan's all around could get expensive.
Its hedged.
Adjourn to the Green Mill, 4802 N. Broadway in the world's greatest city. The bartender is so embarrassed to charge $12 for MacAllan's 12 that he will pour you 4 oz., more if you're  known to tip well. Only hardcore alkies will need another drink all night.
Yeah, see what I mean about "all liquids"? It sows confusion.

Below are the EIA last numbers by fuel category:

CategorySept 2006Sept 200512 MA12006 9 Months2005 9 MonthsSharePeak DatePeak Value
All Liquids 84.64 84.01 84.43 84.41 84.45100.00%2005-05 85.21
Crude Oil + NGL 81.09 80.86 81.24 81.21 81.30 95.80%2005-05 81.97
Other Liquids 3.55 3.15 3.19 3.20 3.15 4.20%2006-09 3.55
NGPL 7.77 7.58 7.78 7.83 7.81 9.18%2005-02 8.04
Crude Oil + Condensate 73.32 73.28 73.46 73.38 73.50 86.62%2005-12 74.08
To add to Khebab's comments, with the "voluntary" cuts by KSA, and others, it's all but certain that we are going to finish 2006 significantly down from 2005, at least for crude + condensate.  

And we all do remember that this decline corresponded to the highest nominal oil prices in history?

As discussed here. those 'other liquids' require more 'other fossil fuels' to procure. So the total net energy delivered to society is less. Of course, if natural gas was worthless, then this would be less of an issue, but its not.
ng has a relatively low value now, not for long.
Notice that, as is routine, gmxr recovered to pass ard. btw, gmxr scores 161 at, ard 100, hp 0.
Keep saying it. Keep reminding people that this is about OIL, not "liquids."
Khebab - I watch you guys discussing the liquids break down from a distance and do not intend to join the debate.  But here's my tuppence worth:

NGLs are in my opinion an integral part of a petroleum system.  Oil associated gas wil normally be "wet" and contain a fair amount of NGL.  Similarly, "dry gas" fields being developed today tend to have a substantial NGL component, and that is liable to grow going forward - that is if gas production manages to rise in the future.

The "other liquids" I guess I don't understand so well - syn crude, coal liquids, ethanol and refinery gains?

So in terms of peak oil I would pin my colours to crude+condensate+NGL

- and whichever way of measuring this that shows a peak post Dec 05:)

Anyway - Stuart's IEA trend seems to be heading up - so I'd guess that any equivocation will dissappear going forward - barring disasters.

PS - Stuart I'm a bit colour blind and really struggle with the blue and orange symbols used on your chart


He said he was color blind :)
I guess he really is color blind.....
I had a co-worker who was color blind..... he'd some in with a red shirt and green pants and a yellow tie or some shit if he wife didn't choose his clothes for him the night before work....

Color blindness is actually a lot more common than people think.

I asked this guy, What about traffic lights? Turns out red is always on the bottom, yellow between, green on top, something like that, no need to look at colors if you can't see them, you just look at the position of the lit-up light.

I imagine profound color blindness would be like at night, when it's a B&W world for all of us, only bright day of course.

It just proves how we take so many things for granted though...I love color charts and graphs because they say so much so fast, and never thought, until this string of posts, about how difficult they would be for someone with color blindness.

RC  known to you as ThatsItImout

I'm red/green colorblind myself.  The red, yellow and green stoplights all look yellow to me.  I can only tell what to do by the position of the light.  I hope I never encounter a sideways traffic signal, I'll just have to stop and observe for a minute until I understand it.  

Regarding the wonderful charts all the folks at TOD provide us, refraining from the use of red, yellow and green in the same graph would really help people like me.  If just one of them is used at a time most colorblind people can see all the other colors just like everybody else.

I don't comment much here but I always like to thank the contributors for the wealth of knowledge on TOD.

Thank You,


So in terms of peak oil I would pin my colours to crude+condensate+NGL - and whichever way of measuring this that shows a peak post Dec 05:)

If I'm reading Khebab's chart correctly, this peak was in 5/05, and the current value (9/06) is about 900,000 bpd below the 5/05 value (at least for EIA).  And again, with the "voluntary" declines, we are almost certainly going to end up with 2006 below 2005.

I think that Khebab defines crude + condensate + NGL's as crude + NGL's.

This some times crosses my mind....

Those of us (on this site and elsewhere) that offer our time in trying to get the message out that Peak Oil is soon, and serious, have an odd juxtapostion of internal responses to a post like this one by Stuart.

On the one hand, we want to show that our insight and analysis is correct, so we proclaim that so far dec 2005 is the peak! we are right! what a good thing! pat us on the back! Great analysis Stuart!

On the other hand, if Dec 2005 IS the peak, as SS once said, things are about to get a lot less fun. It so far is easy to have an educated, informed, entertaining and civil debate online about these facts, but we all have it in us to be like cats in a sack as well.

Personally, I think peak in C=C plus NGL is soon, but would happily be willing to eat crow for another 5-7 years.

Whoa.  I never said that Dec 2005 (or any other month) was the all time peak.  I'm much too careful to say something that absolute.
no, you said that things could start to get alot less fun. sorry that wasnt clearer.
I'm less excited about crude+condensate as a measure since it's not really that economically relevant - what the consumer cares about is liquid fuel delivered to end-user applications, regardless of source.  This is not to say it's not interesting to track it, but I'm less motivated than by the total number.  I would expect alternative sources of fuel to expand rapidly as part of the supply side response to peaking of crude+condensate, and to the extent that happens, peak oil will be societally less impactful.

That said, I certainly share the concern that the total liquids number may be distorted by not being a "net" number (eg ethanol may be somewhat double counted both as the final ethanol and also the diesel etc used in growing the corn to make the ethanol).  However, there isn't an obvious way to produce a global "net" liquids fuel series with moderate effort.

I like Khebab's compromise:  crude + condensate + NGL's (which I think he defines as crude + NGL's).  This is currently 95.80% of Total Liquids.  This is also essentially how the EIA defines Net Exports.
The all liquids business has many issues as well, aside from those touched upon above.  First and foremost from my perspective is that if the price of North American Natural Gas begins to exceed oil on an energy equivalent basis, which it will again soon if the discussion yesterday is at all correct, roughly 400,000 bbl/d of NGL will mysteriously "vanish" as it will get left in the gas stream.  I haven't seen too much discussion about the sloshing of NGL back and forth between liquid and vapor depending upon whether CL or NG is more expensive, but it certainly acts to couple the two to quite an extent.  In addition, there is a substantial amount of residual fuel oil that is currently not being produced because industrial users are using gas because it is cheaper.  Together, these two effects are on the order of 1 million bbl/d in terms of the supply/demand balance.  Breaking that coupling by going over the gas cliff will have profound effects on CL - demand will increase by 5-600 kbbl/d (residual), and supply will go down by 400 kbbl/d (NGL's).
I'm not expert on this, but I think there are technical hindrances to casually switching how much NGL is left in the gas stream.  Eg there was a big debate about potential problems in the US pipeline infrastructure because LNG contains more high molecular weight components than does natively produced gas.  I'm sure in the long term you'd be right, but I'm not sure the switch is fast.
Presently processing margins in the US are high, thus leaving a good economic incentive to extract as much NGLs as possible from the wellstreams.

During spring of 2003 (if memory serves) some NGLs were fed back to the gas stream as NGL obtained a higher price as gas than as liquids.

This is possible to do as long the mixture stays within the specifications (transport and customer) with regard to hydrocarbon dewpoint and Wobbeindex.

With growth rates as low as is indicated by this data, has anyone considered the possibility that this growth is being entirely consumed by the energy industry in finding and extracting fossil fuels?  I thought I had seen somewhere that on average the EROEI was something like 10:1 now, so that would say that about 8.5 MBPD are consumed in discovery, extraction, transport, etc.  If the growth rate was, say, 0.5% (optimistic average of the two sources), that would be equivalent to a growth rate of 5% in energy industry consumption (if the EROEI is really 10:1 right now).  Seems at least possible.
Exactly. I wonder if there is a way to reasonably estimate net energy production (after energy costs for production are subtracted) by the energy industry and chart this over last few years?
As long as we have ng to burn, eroei for ethanol/tar sands is not important, certainly not to consumers. The earlier thread on ng shows this happy situation will not go on for long.
EROEI "invested" % net        
100:1        1          99    Early oil   
50:1          2          98    Mid 20th cent.    
33:1         3            97    Late 20th cent.   
25:1          4           96    Turn of 21st   
20:1          5           95    Century oil   
15:1          7            93    Oil now?   
10:1          10         90       
9:1            11          89    Deep water oil?   
8:1            13          88       
7:1            14          86    Tar sands?   
6:1            17          83       
5:1            20          80    Polar oil?   
4:1            25          75       
3:1            33          67    Biodiesel   
2:1            50          50       
1.5:1         67          33    Oil shale?   
1.33:1      75          25    Ethanol best   
1.25:1      80          20       
1.1:1         91           9       
1:1            100           0       
1:.7          143         -43    Ethanol worst   

Just a little toy/tool to play with.  IMO, the historic decrease in EROEI hasn't hurt too much, as we've still got 90% or so of the gross extraction to use.  But from here on out, it starts to matter.  Below 7:1, each whole number decrease in EROEI really takes chunks out of the net available.  This gets far too little attention, IMHO.  Thanks for bringing it up in this context.  Consider the confluence of increasing population, decreasing gross extraction post-peak, and declining EROEI.  Yikes is one word that comes to my mind...

If we were really at 20:1 in 2000 and we're at 15:1 now, that works out to about a 5% growth rate.  If we're growing the resource at 0.5% but growing the energy to extract it at 5%, it seems like something bad will happen pretty quickly.  What is your source for the EROEIs that you state for various times/processes?
Seems like a good guest post topic.
No single specific source.  Just what I've absorbed through osmosis in the last year and a half of paying attention to these things (thanks, TOD).  Ethanol #'s largely Pimental and his critics.  Point there being it doesn't much matter who's right, so low is ethanol on the totem pole, so to speak.  I of course welcome others' input to the accuracy of the times/processes, as well as addition of other relevant - CTL, for example.  My purpose was to expand the discussion into an arena I think is to oft overlooked.
If someone will tell me (a computer near-illiterate) how to embed an excel sheet into a comment, I'll post a spreadsheet I've built attempting to integrate +pop/-prod/-EROEI.  Might serve as a good template for framing further work on the subject.

Nice this is actually the underlying reason I'm concerned about asphalt production and other marginal products that were available when light sweet crude was plentiful. I believe that as the EROI goes up more complex refining procedures will be introduced to maintain the gasoline/diesel supplies at the expense of the lower grade produces.

It would be nice to see EROI combined with refinery product distribution to see if they are leading where I think they are. In my opinion  the first shortages and major price hikes will take place in lower end products not gasoline/diesel.

So when we are post peak then the first indicator could be real bunker fuel shortages for example.

As far as bunker fuel goes.

Seems that problems are already occuring.

Wow.  Has anyone read the article?  Does it give a reason for the shortage?

I'm not a full member but it sounds like it was a allocation goof the point is that it shows supplies are very tight in the bunker fuel market.
I didn't read the article.

But I know my customers, shipping companies, have accostumed most of their vessels to run on heavy fuel. ALL new vessels are build to run on heavy fuel. That is not a coincidence.

More and more, specifically in the light of various comments in this thread, I feel we all should define Peak Oil as the peak in light sweet crude, instead of anything else. This proposition is definitely relevant when EROEI is concerned.

And for Leanan and a lot of others: your KROEI is still highly positive (Kudos Returned On Energy Invested)

If accuracy is a concern, you should specify that the ethanol you are referring to is "grain-based ethanol". Much like oil, various sources of ethanol have different EROEIs.

The links below - as well as recent post by Robert Rapier and I understand a presentation by Marciel? at APSO - indicate much higher returns for sugar-cane based ethanol. The same links below give a slightly higher EROEI for some bio-diesel as well (about 4:1).

None of this is to say that sugar cane-based ethanol, is going to save the world. I prefer Engineer-Poets' recent proposals for that. However, it is inaccurate to lump all sources of ethanol into a single figure.


Here are five studies that all cite figures of positive 8-10 EROEI for ethanol from sugar cane. I have given page references for three of them and will find and post the others later.

1) FO Licht presentation to METI,

2) IEA Automotive Fuels for the Future

3) IEA: Biofuels for Transport

4) Worldwatch Institute & Government of Germany: Biofuels for Transport  (Link to register - study is free)

5) Potential for Biofuels for Transport in Developing Countries 161036/Rendered/PDF/ESM3120PAPER0Biofuels.pdf

tar sands is about 1.5:1
EROIE.NET is a website devoted to EROEI.  Here's a link to their page comparing various energy sources.
They are interesting approximate figures on EROEI. I presume in reality the EROEI is different for each field and changes as the field matures.

What would be nice and is perhaps impossible to obtain, but maybe someone has some rough figures or maybe they could even model it, is some kind of chart that shows the EROEI as oil production continues into the future based on the current known fields and their estimate current extraction and future EROEIs.

So in the typical chart for global oil production so far from say the 1940s to 2005, we might have another line graph showing the falling average EROEI from the 50:1 to 25:1 which is a figure someone below gave rather than the 15:1 you give above. At some point falling EROEI has to impact the ability to produce in some sense.

I guess what I am trying to say is that the current relatively complex industrial society is only really viable -if that's the word -at say for example EROEI figures above 10:1 or whatever, because of the way it has implications for energy costs and rates of pollution and so on. In other words the current society setup requires cheap energy and more expensive energy would push it into a different structure -hopefully not as bad as the current one, and the change would be relatively abrupt. In a situation, even in the early stages after peak, when production is falling reasonably slow, the effect of the continuing (slower?) fall in EROEI may have some combined effect that is detrimental to the present regime and hence causes an abrupt structural change.

Perhaps the peak of cheap light sweet crude represents for oil at least a sharp turn downwards in EROEI.

Yes.  The lagging of the 'net' line below the 'gross' line - even as gross extraction has been increasing - is what I think gets too little attention.  I like this way of looking at it, and wish I had the time, data and know-how to plot it.  Going forward, it begins to look ugly fairly rapidly.  I have a first stab spreadsheet, but don't know how to post it.  I could line up the three columns as above by spacing in the text box, but this one has too many columns for that.  If someone will tell me, I'll post it - or I'll send it as an e-mail attachment to anyone who wants it.  The numbers above are soft, sure. I've seen everything from 25:1 to 10:1 for current overall EROEI.  Jack is right about ethanol from different sources.  As are you about different fields, age, etc.  That's what makes it hard to get a handle on.  But it's so important I think we need to be discussing it.  Even if the optimists are right, 100mbd gross extraction ten years from now is going to yield much lower net energy than 100mbd would now, or would have ten or twenty years ago, so we need to account for that.  And if the optimists are wrong, and we're peaking now, then 75mbd gross ten years from now will mean... well, that's some calculation I wish the engineers, computer whizzes and other tech types would do some modeling of.
IMHO, Brazil's ethanol is closer to 8:1 than 1,33:1

There are some diferences between US's corn ethanol from the Brazil's sugarcane ethanol. More sunlight on Brazil, sugarcane is more efficient producing sugar, the refineries burn the sugarcane "bagasso" for destillate the ethanol and they too use the heat from burn the bagasso for produce eletricity. And IMHO bagasso is biomasse and not gas.

Ok, for produce fertilizants they use gas. Well, that ok for any hamburguer you eat.

And it is not sugarcane that is eating the Amazon forest... it is soybean. Sugarcane is being produced at Sao Paulo, Rio de Janeiro, Minas Gerais and the Brazil's Northeast states (Pernambuco, Bahia, Sergipe, and others), that is not amazon basin. But anyway americans are tottally ignorant about geography, they cannot point Iraq on a map and they cannot point where is the Amazon Forest at Brazil.

However, Brazil's sugarcane is not a solution for the world. Brazil problably can produce enough ethanol for help Brazil change to a more viable energy grid. We have a lot of rivers we can use for hidroeletric production (at the Amazon basin, yes, deforestion there) and we can go strongly for wind power and solar power.

But other countries can produce ethanol from sugarcane like Brazil. India is one example. Possibly some African countires too. Other South America and Central america countries can produce it too. Certainly Cuba and Cuba problably will be an ethanol exporter. Can the Third World produce enough ethanol to solve world problems. Problably not, but they can produce enough ethanol for help an energy transition.

But that will not happen if US deide to try protect corn production with fiscal incentives and importation taxes.

Thailand is also promoting sugarcane (and new hydroelectric projects, mainly in Laos) as part of the response to both Global Warming and Peak Oil.  They are also building massive electrified rail projects (most on Bangkok) (an area that Brazil has missed) and helping farmers build small scale biogas (fueled by manure) for cooking and small boigas tractors.  Some small CNG trucks & cars that can run on biogas if need be as well.

Best Hopes for Good Solutions,


Brazil needs to build electric railroads between cities, Urban rail and electric trolley buses in the cities.

thanks for finding the time for this update - much appreciated. And, hope you can continue, on occasion. Meanwhile, good luck on newco.
In my humble opinion, while the higher oil prices of the past 2 years have brought needed investment into the energy sector, that investment has not had time to have much effect.

  We are still suffering from the 1990's, when energy sector investing was on the back there were far better areas for you to invest your money.

  In the long run, higher prices will dampen demand and encourage supply, be it conventional or something new.

  Bottom line: The sky is not falling!!!

2 years? Crude left its 10-year price plateau before 2001 and started a relentless climb north in the middle of 2003-- 3/12 years ago.

In a world of plentiful untapped resources, 5 years of consistent price inflation should at least match discoveries to consumption and even bring in some of the petroleum bacon. Where are the post-2000 giant discoveries? Are there even any significant small ones? Please point to some documented reserve growth and increased production from this 5-year boom.

The high nominal price of oil today compared to 5 years ago is
more the product of the financial fantasyland that blows the price of currencies about the tempest of its whims. In the
same time that we saw oil go from $18 to $70, the money supplies of the world's most important currencies have been expanding at rates which in no way correspond to any actual
economic growth. The money's going to go somewhere, and some
of it reflects the glut of currencies in the higher price of oil. Yes, oil costs more in real terms, too, but the change is not nearly as dramatic as it is in nominal terms. Day to day,
the prices of almost anything traded globally are more
affected by hedge funds and currency traders than by the fundamentals. This is not to say that we didn't peak in 12-2005, but it is to say that the prices have been as much
a comment about the supply of dollars as they have been about
the supply of petroleum.
Completely irrelevant. I was not referring to peak or it's price consequence. I was challenging a rosy assumption that new supplies (resulting from exploration and discoveries)have not really been constrained by previous (1990's) price under-valuation. There has been plenty of time (almost 6 years) for price increase of any kind (whether geologic or economic) to have prompted results. They have not. Discoveries still lag consumption by 5x.
I guess there are at least 2 other reasons:

  • There have been price hikes before, which have proved temporary.  Producers don't want to make billion dollar investments and get burned if the price drops again.

  • Producers are making huge profits. The global economy is reasonably healthy and demand is strong. Why on Earth would producers want to increase supply and reduce their own profits??
On your first point: Bingo!

It's not reality, but the perception of reality, that people act on.  And every time they're burned by a set of circumstances it takes ever more evidence to convince them to take the same action that contributed to their pain the last time around.

The "human factors" of energy and environmental issues can be incredibly maddening, but we have no choice but to deal with them.

Starr asks "where are the post-2000 giant discoveries?"

At the end of Y2K, the average of the 16 recognized URR estimates was 2375-Gb.  By the end of 2005, it had risen to 3228-Gb ... an increase of 171-Gb/year.  Present consumption is 31-Gb/yr.  It is this phenomenom of Reserve Growth + Discoveries growing at five time's consumption that leaves the Peakists w/o merit.  It is this URR growth that has kept BP's annually produced future reserves graph at approx 40 years for the last two decades.  

And at what rate can we suck those extra reserves from the ground at?
Please do not confuse Total Resources with Ultimate Recoverable Resources.  The former figure is about 10,000-Gb.
Something is not right here... if we have 3228Gb, we can sustain current consumption for 104 years. And since we keep finding 171Gb/year, we can sustain 5.5 times current consumption indefinitely. And since we are currently growing at 1% a year, tops, we will not reach 5.5 times consumption until 170 years from now... so according to your logic the world is not going to peak until at least the year 2176. I guess peak oil is just a bad joke, after all...

/sarcasm off

URR includes past consumption of 1073-Gb.  If we divide the net figure by annual consumption it creates an accepted metric for measuring supply.  Nobody on Earth believes the consumption is a straight line and is gone the day after exhaustion.  The correct representation is is displayed in the TrendLines graphs.

The traditional 40-yr metric by BP is based on their 2244-Gb estimate (less past consumption).  The recent growth in URR is mainly due to the economics of $50/barrel oil.  And it has mushroomed the R/P ratio to 71 years.

If we look instead at the Avg of growth of the 6 recognized URR estimates between 1980 to Y2K, the Avg annual growth was only 56-Gb (net of consumption).  That is why URR stats have risen almost every year since estimates commenced in 1915.

The Avg annual URR growth over the last six years has ranged from 31-Gb to 234-Gb using the present 16 Estimates available.

Wasn't that increase in reserves almost entirely due to the sudden inclusion of Tar sands in Canada and Venezuela?

If so your case is misleading at best.

Agreed somewhat.  As stated above, Avg increase was only 56-GB/yr prior to Y2K.
What do you mean somewhat? What were the URR increases not including tar?

Also your 56GB/yr prior to Y2K is again misleading.

That increase includes the magical URR increased in the ME during the 1980's.

You are counting tar as oil, now you want to count nothing as oil.

Sorry Dude, we've had 663-Gb of consumption since the opec announcements.  What u believe was fairy tale reserves has all been pumped out and then some.  Pre-announcement URR was 1225-Gb less 409-Gb of past consumption up to that time.  Now we've gone thru 1077-Gb and still have 2151-Gb in proven and probable reserves.  Your "tar and nothing" comments are inconsequential in the big picture.
Now you are just making crap up.

See my post from earlier today about SA reserves.

Lets start with the assumption that the 1982 URR number of 165GB is valid (RR said so and I have no reason to doubt him).

I then went to the EIA numbers to get actual production data for SA. I added up all the production since 1982 and came up with 62GB.

So if SA had no reserve growth or new discoveries since 1982 their URR is 165GB and remaining is 103GB.

So SA has at least 100Gb of remaining reserves without counting the URR increases in the '80s.

Your "tar and nothing" comments are inconsequential in the big picture.

Now you are just being dishonest.

From the BP numbers

Reserve Growth:

        Middle east   World

80's      295GB        333GB
90's      34GB         114GB
80-2000   329GB        447GB

So you can see in the last 20 years the magical reserve growth in the ME accounts for 66% of the world's reserve growth.

That growth BTW is  an average of 22GB a year for 20 years (where did you come up with 56?). Magical ME growth makes up 15GB a year alone or 68% of the average reserve growth of the entire world for the last twenty years.

Your "tar and nothing" comments are inconsequential in the big picture.

Like I said, now you are just being dishonest.

Great thread. I appreciate your taking the time to carefully review freddy's statements, especially on this subject of enhanced reserves.  My experience with little companies using the latest tech, eg horizontal wells and/or 3d etc to grow their reserves is quite profitable but, overall, inconsequential. Huge reserves that can only be produced slowly, if at all (consider shale), will no more affect the peak than those on the other side of the moon.

Canada's tar sands depend critically on stranded, or 'free' ng. Now that this is running out we will see reduced growth here. And, ethanol might be peaking, too, as corn prices surge. So, the peak in all liquids might not be far behind po.

unless there are strong price incentives to gear up Fischer-Tropsch Coal-to-liquids early enough.

But then we will have seen Peak Cold-Winters

Our figures differ because u are examing BP only.  As mentioned, mine are based on the Avg of 17 suppliers of URR estimates.  And their Avg is 50% higher than BP's numbers.
Like I said you are dishonest.

I sure as heck won't take you at your word.

I posted my numbers, any one can double check them and verify.

Where are your numbers?

BP's URR figure is the third lowest of 17 recognized estimates.  Only OPEC's politcially inspired number and MK Hubbert's 1973 figures are lower.  BP's figure is so low that it does not even reconcile with their own 90-mbd ten year plateau Outlook.  It is easy to see why your tar&nothing stats jump out as being something significant, but your argument is juvenile.

Upon examining tar&nothing with the real world numbers, tar&nothing are reduced to a mere blip.  And when looked at in light of the most optimistic URR estimates ... even moreso.

Freddy you are full of crap.

If you have better numbers post them.

But you don't so you can't.

You sir are a liar.

From eia

Region     BP    Oil&Gas Journal     World Oil
NAmerica   60.092      213.432         46.135     
SAmerica   103.502      103.364      76.497     
Europe     17.646      16.381      15.980     
Eurasia    122.888      77.832      123.223     
MEast      742.711      743.411      711.644     
Africa     114.268      102.580      109.759     
Asia       40.224      35.936      36.378     
World      1,201.332      1,292.936      1,119.615     

Would you look at that. BP's numbers match quite nicely with all the other reserve estimates on the EIA page.

(note: Oil and Gas Journal count Canadian tar sands in N America hence the inflated number, an extra 174GB)

Rethin -

I've given you many chances. I will continue to do so. Only because you have a skillset.

Please re-adjust. I admire you taking on Freddy. It's admirable from where you you are coming from. I guess. Just don't let it happen again.

Now start getting serious about life.

Let's not complicate things!

The Oil CEO is loopy. I'm tellin' ya.

Ms Balding, your focus has changed to attack mode and i find that there is no point debating this with you.  You are presently so consumed that while u have asked for my numbers in the last four posts, yet u forget that this thread commenced with my numbers given to Peter & Infinite. I do concede that your use of WO & OGJ will support your position due to their similarity in conservatisim.

The TrendLines URR Estimates are in a graphic format similar to our Depletion Scenarios.  While this 17-estimate compilation is commited to a proprietary project at this time, i will resolve to post it a TOD or our website shortly so we can compare our interpretations of "blip";  possibly in Rembrandt's upcoming Part2 discussion of Reserve Growth.  Please be patient.

Freddie:  Why don't you cut your reserve data out and paste it into about column ZZ for occasional referral, after all Peak Oil is equal to peak production.

The problem is technology, personnel, and the equipment curves are crossing the demand curve. This causes price increases. In fact the energy required to produce oil is hiding actual net production. Do you have that in your database?  This is what we call EROEI.  This number is steadily falling.

You keep talking about reserves, but the price doesn't care about reserves it only cares about production.
I realize you are trying your best to obfuscate the facts with reserve data. Do higher prices cause more production or do smaller increases in net production cause increasing costs to reduce production? Every day requires more energy, more effort, and more money to produce a barrel of oil. I believe these three things are going to control the peak oil date, independent of how large our reserves are purported to be.

And even to the degree that reserves do matter, Matt Simmons presentation at ASPO Boston speaks pretty well to the reasons why historic reserve growth in US fields cannot be extrapolated to fields elsewhere, especially offshore and OPEC fields.
Price is related to spare capacity and production surplus/deficit, not reserves and certainly not EROEI.  But yes, production volume is related to reserves.
A lovely dance step. I didn't say anything about price related to EROEI. I said its obscuring net production.

And yes reserves are related to production just like a third cousin.

..In the same way that Saudi reserves jumped from ~170 GB
to ~260 GB around 1990, these magical increases on paper
of 'reserves' dont mean very much at all. When there's no
way to really verify such numbers, there is no limit to
what financial or political interests might come up with.
The important factor is the profile of production.
I agree the sky is not falling :-)
Hi Stuart. Welcome back. peter
Not to be a pest but the news is
that the sky is falling.
With respect to the ability to massively increase drilling activities, this article in the Canadian Globe and Mail digs out of the biannual IEA report that the vast increase in  the money invested by the international oil and gas companies over the last 5 years, $340 billion, a 70% increase, has resulted in only a 5% increase in real terms, the rest being swallowed up by inflation. This increase in drilling only yielded a 2% increase in production.

I have Nick Rouse to thank for this link.

How do we interpret this?

$340 billion investment leading to only 2% increase in production, or
a 5% real terms increase in investment led to a 2% increase in production?

Good points. But I would like to add that this was in addition to exploration that was ongoing and while it may have slowed it never stopped. Companies have been using the best technology available and drilling the most propmising prospects they have available to them all along. By definition, the prospects that have been left alone are less promising and/or much more expensive & risky than what has been explored. If these best prospects have yielded so little in recent years, why would people assume that drilling the much more marginal, less promising prospects would result in a boom in supply?
Natural gas has gone up 400% over that period and is the single largest input into oil and gas exploration, so that would explain part of it.
Now you see the exponential curve in the costs of exploration and why more firms turn to buying smaller firms on the stock exchange than spending money on exploration itself.
Re: $340 billion investment leading to only 2% increase in production, or a 5% real terms increase in investment led to a 2% increase in production?

Well, I did devote some of Investment in Oil Exploration and Production -- An "Above Ground" Factor to this subject. Just like the Globe & Mail, I had looked at the IEA report.

It's always so satisfying to see a fresh discussion of something brought up as new "news" that I talked about so recently here at TOD ... sigh.

Sorry, sorry, sorry Dave - just don't get to read everything - and I just checked only 1819 words - I could have read it - but only 2 pictures:)

But what's the answer to the question?

I think this inflation adjustment is pretty suspect. They appear to be arbitrarily discounting increased costs of goods and services. I guess this is partly because fuel costs have risen, but also increased competition for drilling rigs etc.

I think with this accounting trick they are effectively adjusting for reduced EROEI, by calling it "inflation". We would expect reduced EROEI to result in rapidly increasing development costs. They are saying let's assume that the EROEI at 2001 is the reference, and therefore increase in costs above that reference are "inflation".

Bob - using Energy Currency, is falling ERoEI not the same as monetary inflation?
monetary inflation occurs when money supply increases faster than goods (gdp).  OTOH, In the depression, all goods deflated, or became cheaper, in relation to currency.

If energy is the currency, and energy is becoming incrasingly scarce, then all other goods (and money) is deflating in relation to energy. In such an epoch it would be good to be in possession of energy, eg a windmill, or, failing that, shares of oil and gas producing companies.

Bob - using Energy Currency, is falling ERoEI not the same as monetary inflation?

Well no, that is my argument. Inflation is an across the board increase in prices, it doesn't apply to a specific product. The Energy Cost of driving my car has not increased over 5 years, but the Energy Cost of extracting oil has increased. It literally now takes more barrels of oil to find each get barrel. That equates to more rigs, more people. This cost is expressed in monetary terms, but it's down to the fact that more resources are now required.

Energy cost is not the whole thing of course, there are other factors. But I believe that diminishing returns are what causes the inflection point in the production curve. Oil companies have been giving profits back to shareholders. What they are saying is "we can't make a better rate of return than putting it in a bank, so you take the money".

IMO it's a sign that a peak has been reached.


You mention that OPEC output started declining before they announced the cuts. Do you care to expand on this as you see fit. For me this is the smoking gun. Now KSA can claim they started decreasing production in anticipation of cuts but occams razor does not agree.

Next question I think that a reasonable explanation of the error range for these numbers are in order. Personally I think that are about +/- 2mbd  I know that's high but just the differences in numbers between agencies suggest a fairly large confidence interval. This would bring up the second half of my question. At what point do you feel that decreased production minus external events results in a clear signal that we are in decline. My wag was 4mbd.

Although we certainly seem to be at or close to peak oil it is a condition that can only be known in retrospect. Thus a discussion of the s/n ratio is in my opinion important now that we are seeing the bumpy plateau effect.

And finally on a related note there is some intrinsic slop in world oil delivery since a lot of oil sets on the high seas in tankers or in storage or pipelines before it is finally consumed.

I'm not sure what the turn around time is for a barrel of oil to be consumed but it would be nice if someone that knows would go through the consumption loop from the time a barrels leaves the well until its burned in  Soccer moms SUV. I'd have to guess its at least a month or six weeks for OPEC oil.

And last but not least we tend to do simple static snapshots of oil production without forcing functions. But it not that hard to make a few assumptions about production capacity then enumerate effects that would lead to actual production being reduced from capacity. A initial wag would be that 100% efficiency and max production we could ring 4-5mbpd of production from our current capacity.

The importance of discussing capacity is that peak oil detractors love to talk about capacity as if it was production and they like to mix in potential production as if the oil was already here.

Good post Stuart.

I hope I am not taking people off topic by posting some of the things I found surfing today. It all relates to Peak Oil at some level, of course.

This article from BusinessWeek talks about how Iran's lack of investment in their energy infrastructure and soaring domestic demand means they will import 40% of their gasoline this year.
Surprise: Oil Woes In Iran

...Compounding the pressure are policies that encourage profligate energy use. Gasoline prices are set at 35 cents a gallon, which has helped fuel 10%-plus annual growth in consumption, PFC Energy figures. The national thirst for gasoline far outstrips domestic refining capacity, so Iran will import about $5 billion in gasoline this year, or about 40% of its needs. The government is planning a $16 billion refinery building program to boost capacity by 60%. But unless Iran raises fuel prices, the new plants will just mean more consumption....
Ethanol is getting incrementally more efficient to make. This ethanol plant will install wind turbines for power.

Ethanol plant to add wind turbines

...The wind turbines will produce 4.2 megawatts of power, the equivalent of the amount used by well over 1,000 homes. And it will be the second major project Corn Plus has undertaken to reduce its dependency on outside energy sources. Dan Moore, a Blue Earth area farmer and director of project development for Renewable Energy Solutions, said he sees no reason that Corn Plus won't be the first of many Minnesota ethanol plants to add wind energy....

This group wants to make ethanol from municipal solid waste from wastewater treatment plants.
Environmental Implications of Municipal Solid Waste-Derived Ethanol

...We find that the life cycle total energy use per vehicle mile traveled for MSW-ethanol is less than that of corn-ethanol and cellulosic-ethanol; and energy use from petroleum sources for MSW-ethanol is lower than for the other fuels. MSW-ethanol use in vehicles reduces net greenhouse gas (GHG) emissions by 65% compared to gasoline, and by 58% when compared to corn-ethanol....
I hope I am not taking people off topic by posting some of the things I found surfing today.

Better suited to a DrumBeat, IMO.  

And most of these have already been posted to the DrumBeats.  ;-)

IEA data includes biofuels of 180kb/d for October. It also includes nearly 2mb/d tarsands production for Venzuela and Canada, though it is difficult to find precise data by month for tar sands production.

I have a question on the tar sands - is it valid to include this stuff in production? What is included? Is the total boe reported, including the gas and oil (diluent) used in production, or just the net?

On biofuels I have little doubt that gross is being reported, with no account made for the boe in gas and oil used in production.

I agree with one of the postings, we should be looking at C+C only, tar sands and biofuels will hide the peak.

I agree about tracking C+C, or maybe C+C +NGL. Adding ethanol and other energy costly fuels  hides the peak in the liquid fuel energy actually available to uses other than producing liquid fuels--call that, temporarily--the socially available energy. It's analogous to the various free energies of physical chemistry; the energy available to do society's work.

In fact, as mentioned above, even drilling is more energetically costly. It would really be far more meaningful to track the liquid fuel energy available to uses outside the liquid fuel energy industry. I can imagine huge totals of ethanol +crude + condensate while the net energy falls steeply, and CERA still claiming we have no peak and no problem.

This is IEA's latest comment on biofuels:

"Other biofuels, including ethanol and biodiesel for countries outside the US and Brazil, have been revised upwards by 25 kb/d for 2006 and 82 kb/d for 2007. The main changes have been made to European ethanol and biodiesel, following member countries' rapid expansions aimed at adhering to the European Union's ambitious biofuel-blending targets. Stronger 2007 growth is also now expected in China. Total 'other biofuels' supply is now estimated at 179 kb/d for 2006 and 344 kb/d for 2007. A further discussion and update on biofuels, along with more details, will be published in the report dated 18 January 2007."

We can hope that they cover the double counting issue in that address.

I'm just an old landman, with a b.s. artist's appreciation of the issues, but I'd vote that bitumen from tar sands and kerogen from oil shale are not oil. Oil is a liquid hydrocarbon that can flow at temperature of 70 degrees farenheight. Tar and kerogen and coal all require heating and adding hydrogen to become synthetic crude and have a whole lot of waste to be disposed of afterwards. They cost five or ten times as much to process into gasoline and other useable products as even an expensive stripper well. I predict the next major addition to the world crude reserves by the Cornucopians will be coal.
  I'm not sure that total reserves or a geologicially constrained peak matters much to the average consumer. What the people want is a steady supply at a price cheap enough to waste. In TOD terms, deliverability and cheap gasoline. It seems extremely clear that this is soon to end from depletion and growth in demand.
I have a question on the tar sands - is it valid to include this stuff in production? What is included? Is the total boe reported, including the gas and oil (diluent) used in production, or just the net?

I have the same question. Very often, tar sands production numbers are given in term of volume of raw bitumen which is not the final product. The final product is syncrude which is an upgrading of the raw bitumen. The upgrading process is 80-85% efficient.

If you want monthly production numbers check this post.

Given the significant difference between oil production growth and demand growth (well, atleast 1% below the projected demand growth of 1.5%) does anyone know

a) why isn't this being reflected in higher prices for oil?

b) why would opec consider cutting productions? especially given that we are now drawing on oil stocks at 2.2% of production (average of q2,q3 2006, iea data)and considering that on average last year we used drew on stock at 1% of production? (mbpd values for 2003-2006 stock draw are 0.6 0.8 0.9 1.4(average of first 3 quaters)  (

c) (relating to b) does anyone have data for actual oil stocks (ie, production + stock change)?
I've tried to produce the stock changes myself, but (according to the bp statistical review) there is about 154 thousand bpd more consumption than production on average for the last 40 years (so obviously they are counting something other than crude in 'consumption'. (

re: part c) never mind, i've found the eia oil stock data
On b) my speculation is that it's mostly sabre-rattling at the financial markets.  OPEC countries have grown accustomed to $60+ oil, have noted that the sky didn't fall, and now don't want to go back to the bad old days of the $22-$28 price band or anywhere close to it.  I think there's little risk of that, but over the last two years, whenever prices fall to around $60 they always threaten cuts.  We'll see if they did anything that's actually observable.
Remember that most Americans are not cognizant of the dramatic fall of the US Dollar since Jan/2002.  But OPEC is surely aware.  In Real Dollars, they made much more in the previous two oil shocks than the fortunes of this decade.  Pricing of oil and payment for oil in USD has not been as kind as apparent.

Most countries have had a 30% windfall by the usd devaluation thus far.

The fall lately of the US dollar is the only thing more silenced in the US media than Peak Oil......

Talk to Amurricans about peak oil and they think you're a bit looney but may be onto something, but talk about the fall of the dollar and they think you're friggin' nuts.

They would be right:
The dollar has sold off the last few weeks, but is still stronger (slightly) than it was two years ago

p.s be careful what you seem to wish for

What a clown you are. The dollar exchange rate against almost all major currencies declined much more during the 70s than the 00s.
To be fair, the slide may continue... not clear where the bottom lies... valleys, like peaks, are shrouded in mists... must keep one's balance on a rocky slope while rushing forward at midnight.
Whoever it was that mentioned price inflation...nailed it.

Our homes supposedly doubled in value the pst 7 why not oil?

  Surprise!  The hard assets did not double in value. It simply took twice as many paper dollars to purchase those hard assets.

  The sky is not falling.  And pay no attention to the global warming crowd...they are FAR more hysterical than the peak oil crowd.

The highest inflation estimate I've seen is 10% and thats debatable.

Here is a good link.

In general they have 5-8% real inflation numbers.

Inflation is not the cause of our current prices.

And here are oil prices adjusted for inflation.

This information can quicly be found not sure why your making bogus claims.


Your references are for inflation of goods purchased in the U.S. with U.S. dollars.

They don't say anything about the conversion of dollars to other currencies.

WorldWide inflation is not a simple concept. Also the petro dollar rules in the ME so you can discount total inflation.

And finally basked curriences or overall relative inflation has not changed that much over the years. The only real winner has been the Euro so far.

Of more intrest I think would be internal inflation in KSA.

This link shows little inflation.

But I'm not sure what you mean and sorry for the scattered post but the price of oil in real terms has risen a lot lately no matter how you measure it. The dollar is still the main fiat currency and yes the amount of dollars produced lately is enourmous but so far its not resulted in massive inflation mainly because of games played by the CB's.

As a final note the oil producing countries will always be at the mercy of to OECD countries since they must use OECD currencies to buy and sell oil. The vast majority of oil revenue is used to purchase goods from China or the OECD countries so in a sense the dollars are eventually recycled back in the end to the US with the oil producing nations gaining nominal weatlh from the purchased goods.

I think this is one reason we favor corrupt regimes over
real nations in oil producing regions. Corrupt regimes are far more likely to recycle the oil money back into OECD countries instead of turning it into exportable goods.

This same PBS site has a better link that indicates the first shocks were more magnificent.  It's per capita, but does get my point across cuz it's in USD:
Your criticism seems strained here. A 10% inflation rate is a 7 year doubling. An 8% inflation rate is a 71% price increase in just 7 years. A 5% inflation rate is a 40% price increase in just 7 years.

When I look at the chart in Robert Shiller's book Irrational Exuberance (2nd edition) it appears that we have an average US national price increase in real estate of about 80% from 1998 to 2005. Given that the lower real inflation number is at least half of that increase and that the upper real inflation number is almost all of that increase, how do you conclude that inflation is not the primary component of real estate price increases? Of course specific markets that have gone above that can be said to be influenced by other than inflation but nationally as a whole? I find that argument far from compelling and the inflation argument as fitting the facts more closely.

If wages have not increased 71% then we have not had classic inflation. There are plenty of inflation adjusted oil prices.

Now back to the 10% or hidden inflation numbers.

Here is another one.

Now the trick is to show that your wages and everything else increased by some x% generic inflation amount so the price of oil has not changed.

This is not true real wages have certainly not increased much in 10 years. So the price inflation is if anything understated.

I think your economic assement is incorrect. If you want to persue oil inflation real inflation M3 and the world economy
that would be a great post.

Suffice it to say that M3 has increased 10% last year.
The feds have been printing money  like no tomorrow and the world is awash in money. How the price of oil relates to this mess dunno.

Here's some more debatable oil numbers
from the Post

The agency that collects royalties from oil and gas producers lacks the data, coordination and manpower to keep track of companies operating on federal land and in federal waters, a report by the Interior Department's inspector general said.

The report criticized the Minerals Management Service for relying on "compliance reviews," which depend on information provided by the companies, rather than detailed audits, independent information or site visits.

The report said record-keeping was so shoddy that a random selection of five supposedly completed audits found that one had never begun and two were unfinished. "MMS could not accurately count the number of audits and compliance reviews that were completed each fiscal year," the report said.

It's always been good to be an oil company, there's great profit in theft and not paying your taxes.

And to think that probably they didn't even have to slip the auditors plain envelopes for the favour.
Thanks for the gratuitous insult, dickhead
No offense meant to many of the independents, many who have been hard working good citizens, but the history of the majors is a pretty rotten affair of unaccounted power.
Did anybody comment on russian rig count up 2x over the past year, with nearly flat production? very interesting with sa declining production while rig count up 3x... maybe russian production is about to fall as their rig count goes up 3x, too.
and, where are these rigs coming from, anyway? sa is poaching from our gulf to drill in theirs, but what is the source of all these extra land rigs? China?
us ng output declining 8%/year for the next 3 years, oh my.  More rigs here, there, everywhere, please.
New Rigs popping up everywhere. here an example from the World #7 rig company.
Danish APM group has announced that they will invest 2-2.5 billion USD in new rigs. (Danish I'm sorry). APM has ordered 10 new exploration platforms- 3 floating deepwater,6 jackups - 150 meter water depth and 1 FPSO drilling - ship. The rigs should be operational 2010.

inventory of present APM rigs

Maersk Contractors is part of the A.P. Moller - Maersk Group and is a leading drilling contractor and supplier of floating production solutions. The fleet counts 29 drilling rigs and four FPSOs including six high efficiency jack-up rigs, three deepwater development semi-submersibles and one Floating Production Storage and Offloading vessel under construction. Maersk Contractors employs an international staff of 3,000 well-trained people.

And not related to rigs- I came across this detailed presentation of the Dan/Halfdan oil field in the North sea. Field history, production, water injection drilling patterns etc.

Regards And1