November Statistics Updates

Average daily oil production, by month, from various estimates for OPEC and non-OPEC as a percentage of their highest month (May, 2005 in the non-OPEC case, September 2005 in the OPEC case). Click to enlarge. Believed to be all liquids. Graph is not zero-scaled. Source: EIA.

Update [2006-2-5 0:40:43 by Stuart Staniford]: Added this graph of OPEC and non-OPEC supply during the "plateau" period.

I took a quick break from carbon to catch up on some stats from November, the first month of recovering from the hurricanes, as oil (and gasoline) prices started to decline. The EIA has come out with their estimate of world supply, which allowed me to update the plateau graph:

Average daily oil production, by month, from various estimates. Click to enlarge. Believed to be all liquids. Graph is not zero-scaled. Source: IEA, and EIA. The IEA raw line is what they initially state each month. The IEA corrected line is calculated from the month-on-month production change quoted the following month.

Recall that there was some excitement when the IEA initially estimated November production at a high 85mbpd, but they subsequently backed off that with their revised numbers a month later. EIA confirms that while there was some recovery in production in November, it was not near the peak month. Currently, the peak month still stands at May 2005 in both the EIA and IEA corrected lines.

Recall for context that these plateau graphs are focussed on a very small part of the total world history of production - just the rise since the beginning of the economic recovery in 2002. The little yellow box in the following graph (since 1930) is what the graph above shows.

Average annual oil production from various estimates. Click to enlarge. Believed to be all liquids. EIA line includes refinery gains, others do not. Sources: ASPO, BP, and EIA.

As the next graph shows, both EIA and IEA believe production increase year-on-year from November 2004 to November 2005 was very close to zero.

Year on year percentage change in average daily oil production, by month, from various estimates. Click to enlarge. Believed to be all liquids. Graph is not zero-scaled. Source: IEA, and EIA. The IEA corrected line is calculated from the month-on-month production change quoted the following month. Quadratic fits are purely to illustrate the trend.

This was an improvement on September and October, when production was actually down on the same month last year. With a little more oil, Americans drove a little further than they otherwise would have:

Average daily vehicle miles traveled by month in last three years. Source: FHWA.

Unlike September and October when miles driven was down, November showed a very slight increase on last year. However, this is still a very anemic increase compared to a normal year-on-year change, and suggests that high oil prices continued to take a toll on the public's willingness to drive, and likely on the larger economy also.

Average daily oil production, by month, from various estimates for OPEC and non-OPEC as a percentage of their highest month (May, 2005 in the non-OPEC case, September 2005 in the OPEC case). Click to enlarge. Believed to be all liquids. Graph is not zero-scaled. Source: EIA.

Update [2006-2-5 0:40:43 by Stuart Staniford]: Added this graph of OPEC and non-OPEC supply during the "plateau" period. I was looking to see who had plateaued. Looks like both were increasing during 02-03, and both have plateaued now. However, it does look as though OPEC has a tiny cushion of capacity - they were able to notch up slightly in September in response to the hurricanes, but then promptly took it away again.

Stuart, is there anyway you can add a 6-month moving average of the EIA(green)-line to the graph?
and hence why GDP growth has stagnated...?
I understand that the IEA is trying to make a prediction for the future, so perfect accuracy cannot be expected. However, looking at the graph of World Oil Production 2002 - Present, there seems to be an increasing discrepancy between the various sources. Furthermore, the IEA's predictions seem be high-side estimates more frequently now than before.
There is a reason for this Light299. The IEA numbers are for 'total liquids' in just about the widest definition one could devise:   (page 51)

Definition of Supply
In order to achieve a mass balance in the world oil supply and demand table (Table 1), supply includes not only crude oil and NGLs, but also various types of heavy oil-like hydrocarbons and natural gas-based, coal-based and renewable-based sources which are used as oil product equivalents and are included in our definition of demand. These non-conventional oils include other hydrocarbons and alcohols (including Brazilian alcohol fuel and those used in gasoline blending elsewhere), Canadian synthetic oil production, Venezuelan upgraded Orinoco extra-heavy oil and orimulsion, oil shales, South African coal-based and natural gas-based oil substitutes and methanebased blending components such as MTBE. Total supply of these products is estimated at around 1.4 mb/d in 2003. Refinery processing gains are also shown as a source of oil supply in Table 1. Care needs to be taken in reading the text and tables to distinguish between crude oil and total oil supply. Thus, in Tables 1 and 3, total oil supply is shown (excluding OPEC).

So, included are all such things as ethanol; sobering thought that, ne c'est pas? ;)

To elaborate: all non-conventional liquids are included, if these have been increasing in recent years (as, presumably, they have) one can draw certain conclusions about the production of fossil oil over that time.

Yes it looks quite possible that we passed Peak Oil sometime in the first half of 2005, no matter how you do the estimate.
We will have increasing confidence about this during the course of this year if and as more confirming data comes out.
T. Boone said a few months ago that we'd "never get over 85mbpd."  I can't find the quote, (it may have been on tv), but so far, he ain't wrong.
There's a reference to it here:

The article also references the lack of reinvestment by the oil companies that indicate by their behaviour - rather than their words - that they don't believe it's worth looking for more oil.

Boone makes a new "prediction" each time production rises:

"Never again will we pump more than 82 million barrels."
-- T. Boone Pickens, 9th August 2004. On the Kudlow and Cramer Show, MSNBC.

"Global oil [production] is 84 million barrels [per day]. I don't believe you can get it any more than 84 million barrels."
-- T. Boone Pickens, addressing the 11th National Clean Cities conference in May 2005.

"I don't believe that you can increase the supply beyond 84 or 85 million barrel as day."
-- T. Boone Pickens, on "CNN In the Money", June 25, 2005.

"Supply is--you`ve just about had it on supply; 85 million barrels a day world supply is about it. "
-- T. Boone Pickens, on Hardball with Chris Matthews, MSNBC, Aug. 26, 2005

JD - this is an excellent post. I wish you would post this again the next time "predictions" come up. It always fascinates me how once a guy makes his name in the business, he can jabber about anything and be completely wrong, and yet the media will continue to harp on their every word.
Addressing the 11th National Clean Cities conference last month Pickens said, "Global oil [production] is 84 million barrels (a day). I don't believe you can get it any more than 84 million barrels. I don't care what [Saudi Crown Prince] Abdullah, [Russian Premier Vladimir] Putin or anybody else says about oil reserves or production. I think they are on decline in the biggest oil fields in the world today and I know what's it like once you turn the corner and start declining, it's a tread mill that you just can't keep up with...So, when you start adding the reserves in these countries, you're not even replacing what you're taking out."

Something I don't understand on the VMT graphs.  How do you get from the number given for December to that given for January.  It seems like quite a sudden drop.  You can see the same thing in the source cited.  It just seems that you should be able line those two up better as in theory you could have the graph go from July-June and the December to January transition should be meaningful.


That pattern is in all the data I've seen. I think there's two things. One is that in a normal year, traffic has grown 3% or so from one year to the next. However, I think the more important thing is that there really is a huge drop from December (holiday season) to January which seems to have the lowest driving of the year (lousy weather, why go anywhere). It's not that much bigger than the drop which always happens at the end of summer.
I too noticed that May 2005 is looking like a candidate peak.

However the error bars on current oil production are probably 2 mbd - that is the figures are not accurate to anything more than that. For example, Venuzuelan oil production has been reported at either exactly 2.540 or exactly 2.640 for nearly 3 years - a ridiculous precision which disguises a value of between 2 and 3 mbd. For another example, at least 10% of Nigerian Oil production is probably stolen (or reclaimed by the local inhabitants from whom it was looted in the first place.)

If we now move to an Iranian boycott expect another jump in unreported black market oil (and UN bribery).

That we are in a fuzzy plateau at around 85mbd is really the best we can say with any certainty. (I suspect that little "black" oil is in the EIA or IEA statistics so me may be over 85 mbd already.)

I think this is a great tool for keeping track of 'where things seem to be at', Stuart, thanks. It is simple and clear enough for just about anyone who can understand a graph to grasp. I do hope you will make it a regular feature updated every time new data comes out.

Though there could be scope for non-OPEC production to rise a little it's beginning to look like the odds favour non-OPEC production to have plateaued. May 2005 could well have been peak non-OPEC all liquids. It has been within 2.5% below the May 2005 peak for the last two years apart from the post Katrina dip. Let's hope this plateau can be sustained for a few years more, though, with Mexico and North Sea declines looking troublesome, that may be optimistic.

The OPEC reaction does indicate they may have a small surplus of 1 to 2 mbpd that can provide for brief shortfalls but whether that is from production (and so could help with shortfall lasting several months) or just from existing stocks (hence limited to brief, occasional, shortfalls) may be a moot issue. Also, that buffer is no more than projected demand growth in 2006.

Should 'business as usual' continue it's getting mighty difficult to imagine all liquids production exceeding 90 mbpd, which current forecasts of demand project within 3 years. The 95 mbpd that EIA want for 2010 is looking like a delirious pipe dream.

I guess that any significant supply disruption (greater than 1 mbpd for 3 months or more) will result in a supply shortfall...

"There must be some way out of here,"
Said the joker to the thief,
"There's too much confusion, I can't get no relief.
Businessmen, they drink my wine, plowmen dig my earth,
None of them along the line know what any of it is worth."

"No reason to get excited," the thief, he kindly spoke,
"There are many here among us who feel that life is but a joke.
But you and I, we've been through that, and this is not our fate,
So let us not talk falsely now, the hour is getting late."

All along the watchtower, princes kept the view
While all the women came and went, barefoot servants, too.

Outside in the distance a wildcat did growl,
Two riders were approaching, the wind began to howl.

The variability over the last year in OPEC production is only about 700mbpd. Whether that's a reliable estimate of spare capacity is hard to know. And as LeGorfou notes, the error bars here are unknowable. At a minimum, the difference between the IEA and EIA has to be a lower bound on the size of the error bar.
Heheh, Stuart, you came perilously close to calling me an optimist there. I'll not demur, perhaps it was today's weather - a still and pleasant day in SE England with temperatures almost as high as 10 C (50 F) even a few hours sunshine. Can I presume you are tempted to concur with my other points?

Another couple of thoughts occured to me looking at your percentage of max production graph.

  1. Both OPEC and non-OPEC production look a fairly close fit to a linear function recently running up to the Katrina blip. Non-OPEC from the beginning of 2004, OPEC from mid 2004, that might give enough datapoints to give a feel for slope and error bars.
  2. There seems to be a fairly clear negative correlation between OPEC and non-OPEC production whenever non-OPEC production is abnormally high or low, sometimes with a 1 month delay on OPEC production. That smells of there still being an OPEC buffer, albeit small, though a multitude of other explanations are possible.

"No time now for contrition:
the time for that's long past.
The walls are thin as tissue and
if I talk I'll crack the glass."
The big question is: Are the errors consistent and /or counter balancing.

If country A over reports every month and country B under reports every month, the errors may cancel out. However, the extreme consitency of the statistics from places like Venuzuala has all the marks of the EIA or IEA saying, "the figures from Venezuela are obvious nonsense" (or even "we haven't anything from them this month") "so let's use last month".

So I'd set the error bars at 2mbd or so, certainly not less. We probably will never know the exact peak, only that we will be able to say, at some time, 'we have clearly passed the peak".

OPEC does continue to say they have a supply cushion. I don't think we can know from these data however, because they have huge storage capacity and production numbers are just estimates. Simmons has suggested in the past that sharp, transient changes in OPEC "production" numbers may reflect release from storage rather than production changes.
Yes, and ultimately we are unlikely to find out the answer until OPEC are found to be unable to supply demand (from storage or production). Since one of OPEC's objectives would seem to be (by inference) avoiding an accurate knowledge of the true position becoming known we may have to wait till events force that clarity. Perhaps a 3 to 6 month suspension of oil exports by Iran or Nicaragua would be useful at this point to possibly reveal the truth.
Spent too much time over on the Iran post lately, time to get back to the business at hand!  It's still too close to the hurricane transient to see what's going on, but I think the next few months will be revealing.  If we can get a few months between now and the next unusual event, we could reasonably expect to get a pretty good picture.  I think the maximum clean data we can hope for is up to the 2006 hurricane season, but still - that would be pretty good.
Nigeria, Iraq, Iran, fires in Norway, weather in Russia, seems like there's always something going on... It does appear that if we got lucky and a few of these things go quiet at the same time for a month or two, production could go higher in 2006. However, it's probably equally possible that one or other will get significantly worse and May 2005 will stand as the peak. Eg if we have a big Iran oil shock, that will cause a lot of demand destruction ( a la 1979) and by the time demand is ready to get back to the current level (it took until 1993 to exceed 1979 production), we'll have pumped another few hundred gigabarrels and there'll be no way to get production back that high. So in that scenario, I believe May 2005 would become the all-time world peak.
The signs are that we might be tentatively beginning to converge in our views. Now, should that worry me, you or the world, most, I wonder? In answer to your next question: yes.
Current production loss due to hurricane is 373,000 bd. Some of this will never be brought back, but we don't know how much. In the meantime, GOM wells that are producing deplete and decline quickly, and we are just about to see the impact of the delays in new production caused by hurricane damages. How to quantify this, I don't know, but without new production (which we know was set back seriously)  GOM output falls rapidly. In other words, there will be a significant, non-transient aspect to the hurricane damage whose size is yet to be seen.
Thanks for this information.  I was wondering how the GOM recovery was progressing. Why are we "just about to see the impact of the delay" only now? All in all, this point combined with the "news" about increasing unrest in Nigeria suggests an increasinly precarious crude oil supply, irrespective of cat and mouse games the U.S., Britian, the E.U., Israel, Iran, Russia, and China may play.
Not good with graphs, but the following are numbers of oil production shut-in since the hurricanes around the 20-25th of each month:

9/22  1,379,000
10/21   986,000
11/22   621,000
12/22   412,000
01/25   373,000

You can see recovery has slowed dramatically. The MMS said they expect 255,000 still to be offline by the start of the new hurricane season this summer, so not much more will be restored. I said impact of the delay in new production will just start to be noticed soon because the decline in producing wells takes a while to show clearly, many wells have only been up 3-4 months since the storms, and decline rates would have been masked by the return to production of other wells/fields.

Yes, you're right of course - I hadn't considered that.  My comment was more to the issue of how this plot will look if extended another couple of months, and if that will be a representative picture, or polluted by transient events.  Leftover effects from the hurricanes may still be effecting the curve through that period.  But then if I include my personal opinion that "noise" will prevent us from reaching our theoretical max production, perhaps it doesn't matter anyway.  In other words, this may be the new "normal".
I'm staring at the Baker Hughes Rig Counts and trying to make correlations with the data you've highlighted here Stuart.  It seems to me that wildcatting is less common now, so I'm not sure that a superspike spike in rig counts similar to the US in the seventies is pending.  I assume this is a byproduct of better seismic technology and high rig costs.

But do the only slightly rising global rig counts reinforce the idea that peak/plateau is  happening now?  Not much more drilling happening despite prices simply because there's not much more to drill for?  I think this is an important part of the numbers you've posted - I'm just not sure how exactly it's important.

In the non-OPEC case I'm sure that's right. In the OPEC case it's hard to distinguish "we don't have it" from, "we don't feel like drilling it just yet". I think there's got to be at least some of the latter. Of course, from the consumer perspective, it doesn't make a whole lot of difference...
In the Wall Street Journal today, on Page A15 of my version, there is a graph in one of Chevron's "will you join us" ads. I hadn't seen it before, but it shows "world energy demand" broken out by type of fuel. It projects a 25% decline in oil by 2025, from 2000. By my rough guess, it also describes 2000 as the year oil produced the greatest amount of energy, with a permanent decline thereafter.