ASPO-USA: These are the good years

The Energy Information Agency’s latest Short-Term Energy Outlook (STEO) contains a supplement on the Outlook for Non-OPEC Oil Supply Growth in 2008-2009. If the EIA’s forecast is correct, the world is due for a huge increase in liquids production this year and next. The STEO notes that “recent history has shown that non-OPEC capacity growth projections often fall short of expectations,” so it behooves us to review the report’s strengths and weaknesses.

There will probably be a sizeable increase in world oil production in 2008-2009, but the addition will likely be considerably lower than the EIA’s “best case” estimate. The non-OPEC outlook looks bleak thereafter. These are the good years.
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Some Editorial Remarks

It is regrettable that the peak oil debate has now become so debased that opposing statements are usually completely divorced from an actual analysis of how much oil is coming on-stream measured as the net of declines, when it will be produced, and where it is coming from. Speculation runs rampant in the absence of any meticulous, unbiased consideration of the data. Uninformed opinions, or usually, opinions based on uninformed opinions, that do not quote or reference chapter & verse on the oil supply data—all of the data, even if the data not the best we could hope for—are just so much mumbo jumbo. Some people even go so far as to play hide-and-seek with the data. This isn’t high school.

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The EIA has given us specific non-OPEC predictions based on their field-by-field expectations in various countries. The likelihood of their estimate can be examined now. In the future, we will be able to see how the forecast fared in hindsight. The lengthy analysis that follows is a critical review of only part of the territory covered by the EIA. If the review is long and boring—some entertaining bits have been thrown-in to keep the reader’s attention—this is only because looking at actual oil production is not as sensational as talking about trillions of barrels of resources or saying that the end of the world is nigh. People like to talk the talk, but only an analysis of all of the data we can see walks the walk.

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This review of the EIA’s non-OPEC forecast points to a possible increase in C+C production of perhaps 1.4-1.6 million barrels per day in 2008-2009, approximately 750 thousand barrels per day in each year. The EIA’s report covers the period of highest growth outside of OPEC, a pattern that will likely never be repeated in all the years to come. It’s a one-off, this is forever. This finding ought to be a source of concern to policy-makers but, as of now, this historically momentous event seems to be completely off the radar in discussions of the world’s energy future. What can one do about it? The oil supply data is there for all to see.

Energy Bulletin