Peak Oil is You
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Page added on June 16, 2015
The Oil Production Story: Pre- and Post-Peak Nations
In reviewing BP’s latest Review, the big story for world oil last year was obvious: the USA’s third straight record-breaking increase in average annual production. Just over 75% of the net increase in world oil production during 2014 came from the USA; add in Canada and 90% of the total increase came from North America. Throw in Brazil’s first significant increase in three years and you have all the world’s net gain in world oil production accounted for by three non-OPEC players. Production from all other producers combined was flat. So the question for 2015 is straightforward: will we see a repeat of those gains…and the flat-liners?
The second-biggest oil story from 2014 came at year’s end: the oil price crash. While that event came too late to impact production data for 2014, it is already slowing the USA’s shale oil train and dominating investment decisions–near- and long-term–throughout the non-OPEC oil sector. The early indication is that the history-making growth rates from North America during 2014 will be significantly reduced during 2015. If so, where might 2015 production growth come from?
In pursuing possible answers to that question, here are three additional trends from BP’s Statistical Review of World Energy 2014 to consider going forward:
- Production declines related to violence and political upheaval in Libya, Syria and Yemen totaled 521,000 b/day during 2014 on top of 673,000 b/day drop during 2013, with Libya accounting for most of that decline. How likely is a reversal of that trend during 2015? Might production in adjacent nations be impacted?
- Russia and China, the world’s #2 and #5 producers, together produced nearly 18% of the world’s oil. But recently, their annual gains have been shrinking: BP’s Review shows Russia’s gain during 2014 was 0.6% and China edged up 0.7%.
- Iraq and Iran have the potential to make significant production gains going forward. Iraq increased by 144,000 b/day last year, its 9th consecutive annual increase, and BP shows Iran increased a notable 89,000 b/day after declining a total of 848,000 during the two previous years. What are the odds that production from either or both of those two volatile producers will increase as dramatically as some analysts hope and expect?
The chart below tells a story about: 1) nations that are past peak (see “Peak Year,” turquoise fill) because ot geologic limits (e.g., Norway, the U.K.), or for above-ground reasons; and 2) nations that have yet to clearly peak. It appears that 8 of the top 20 producing nations have seen their all-time highs in production. But in a number of these, production is temporarily increasing, with the USA leading the way.
Adding it all up, peak oil appears close but is not yet here, delayed rather than dead (as widely written in the media since 2012), and disguised by the inclusion of natural gas liquids in BP’s accounting. Apart from the three items discussed above, there are upside possibilities (improved application of technology, new discoveries, a retreat from violence, improved energy efficiency, new policy initiatives, etc.) and downside risks (increased violence, geopolitical twists, financial system disruptions, policies, demand destruction, etc.). Despite all the happy talk about “American energy independence,” our petroleum future includes a peaking in world oil production, and the adjustments that is likely to require. Put this writer down for a likely (80% odds) peak in oil production between now and 2020.
Click HERE to see a larger version of the table.
30 Comments on "The Oil Production Story: Pre- and Post-Peak Nations"
rockman on Tue, 16th Jun 2015 6:22 am
” So the question for 2015 is straightforward: will we see a repeat of those gains…and the flat-liners?” A very easy answer by their own admission: since 75% of the global gain came from the US with the primary reason being the spike in oil prices then if we see another spike in oil prices we’ll see similar gains…if there are enough companies/investors left in the game to play. With the current rig count reflecting the decline of oil prices the obvious conclusion is no…there is no reason to expect comparable US gains at this time.
shortonoil on Tue, 16th Jun 2015 6:57 am
US shale production has grown to $360 billion annually in product, and over six years $1 trillion in debt. That was at prices close to $100/ barrel. Now prices are down 40%. Unless prices increase, which they are not going to do:
http://www.thehillsgroup.org/depletion2_022.htm
the only thing that the US will produce more of is going to be debt. US shale producers now find that they have dug themselves into a debt hole. Common sense would seem to tell you that if you find yourself in a hole, the first thing you should do is to stop digging. That is not likely to happen until they can no longer find someone else dumb enough to pay for it.
Cloud9 on Tue, 16th Jun 2015 8:55 am
It is so easy to create funding with a mouse click. The consequences of that action are hidden in the time lag between the immediate benefit and the eventuality of hyperinflation and a collapsed currency. Given a choice between blood in the streets now and some future event horizon, every economist and politician will choose the short term easy out. Roosevelt chose the quick fix and so did Nixon. Nobody is going to let the ship of state roll over when the conjuring of a few more trillion will keep it afloat a few more years, months or days.
Any study of the death of money in other hyperinflationary events reveals a similar pattern. Political choices made to prop up the current structure will be made right up until the point the currency collapses.
marmico on Tue, 16th Jun 2015 9:07 am
the only thing that the US will produce more of is going to be debt
The only thing you are going to produce is atrophy of the brain.
GregT on Tue, 16th Jun 2015 9:17 am
Why do you even bother Marmico? This stuff is so obvious that even a 6 year old should be able to figure it out.
Nony on Tue, 16th Jun 2015 9:33 am
Given the drop in world price, I don’t expect the same gains. But this is not bad. When I go to the pump, what concerns me is price, not volume. US shale helped prevent prices from going to 150+ in the beginning of this decade and more recently have helped crash the price down to 60.
That they cut their own throat is not my concern. As a consumer, I am still much better off than I would have been with no shale. And I know that shale is a powerful engine that will restart if prices go to 100–thus it is unlikely that prices go to 100. 60-70 is the new normal. I wish it could be 30. But 60+ is still mich better than 100+ and even more so than 150+.
Nony on Tue, 16th Jun 2015 9:34 am
Oh..and before any pedants come along, retail gasoline and crude are not the same substance, I know. But their prices are connected.
Nony on Tue, 16th Jun 2015 9:36 am
“US shale producers now find that they have dug themselves into a debt hole. Common sense would seem to tell you that if you find yourself in a hole, the first thing you should do is to stop digging.”
Rig count is down 60% and very quickly. The rest of the world is amazed at how ruthless we are at killing development programs.
GregT on Tue, 16th Jun 2015 10:25 am
Gasoline at the pumps here this morning: $1.3999 per litre. 10 cents from the all time high of $1.49. Still twice what we were paying before the run up in prices that lead to the global financial crisis.
Davy on Tue, 16th Jun 2015 10:33 am
The NOo said : “US shale helped prevent prices from going to 150+ in the beginning of this decade and more recently have helped crash the price down to 60.”
NOo, who says that you the NOo or the experts? I suspect it is more complicated then that NOo don’t you? Lot more going on than US shale. You remind me of a kid that thinks his dad is immortal only to be disappointed when he goes to prison.
marmico on Tue, 16th Jun 2015 10:46 am
Still twice what we were paying before the run up in prices that lead to the global financial crisis.
So seven years after the 2008 global financial crisis you are still driving that 1968 Mustang “Bullitt” GT-390 Fastback.
Atrophy, entropy, it doesn’t matter.
GregT on Tue, 16th Jun 2015 10:49 am
Actually Marmico, I sold both of my ’68 Mustangs back in the 90s.
joe on Tue, 16th Jun 2015 11:03 am
Investors don’t worry about pump price, they want profit. Invest X and get y back. Banks are the best for funding because their risk is minimal, at say 100mln reserve they can invest 1.6bln. And they are paying almost 0 interest whereas the market in general is paying 1 or 2 percent, still low enough risk. And that my guys is the shale revolution.
marmico on Tue, 16th Jun 2015 11:22 am
I sold both of my ’68 Mustangs back in the 90s.
didn’t YOU FUCK UP? ROTFLMFAO. Rolling on the floor laughing my fucking ass off.
rockman on Tue, 16th Jun 2015 11:48 am
Everyone knows the ’68 Mustang was an unreliable piece of crap. LOL.
Nony on Tue, 16th Jun 2015 12:14 pm
Of men and machines
https://www.youtube.com/watch?v=HWBHh1rU75Y
Jimmy on Tue, 16th Jun 2015 12:37 pm
Marmico is Nony
Same person
Same bullshit
Same troll
Davy on Tue, 16th Jun 2015 12:41 pm
Greg did better than I did I rolled my 67 Mustang fastback over a fire hydrant under the influence back in 82. Yeap, just like the movies with a big water fountain shooting up. That was John Daniels fault. He made me do it.
marmico on Tue, 16th Jun 2015 12:53 pm
tHANKS jimmy. cAN YOU TAKE SOME CRAYONS INTO THE CAVE WITH dAVY-dOOMER BOY. pAINT SOME fOXES, CHICKENS, FRIGGIN’ RAPTORS WITH 12 FOOT WING SPANBS.
I LIKE dAVY-dOOMER. hE WILL BE THE FIRST ON THE PEAKOIL.COM BOARD COMMENTARIAT TO MARRY A sINGULARITY CYBORG.
Davy on Tue, 16th Jun 2015 1:03 pm
About time Marmi! I thought you were going to ignore me. You know that hurts my feelings. What a pussy can’t you show more manhood you weenie.
Apneaman on Tue, 16th Jun 2015 1:18 pm
marm A noon, maybe you can lend the boys your, Danny Yergin, Rex Tillerson & Milton Friedman action figures to play with in the lonely Doom cave.
GregT on Tue, 16th Jun 2015 1:36 pm
“didn’t YOU FUCK UP?”
Grew up is probably more like it. I made a good profit on those cars, I used the money to buy my first plane. A Cessna 152 Aerobat.
Davy on Tue, 16th Jun 2015 1:49 pm
Greg, I sold my last plane a 65 Cessna 150 for a downpayment on my first farm back in 96.
GregT on Tue, 16th Jun 2015 1:52 pm
tHANKS jimmy. cAN YOU TAKE SOME CRAYONS INTO THE CAVE WITH dAVY-dOOMER BOY. pAINT SOME fOXES, CHICKENS, FRIGGIN’ RAPTORS WITH 12 FOOT WING SPANBS.
I LIKE dAVY-dOOMER. hE WILL BE THE FIRST ON THE PEAKOIL.COM BOARD COMMENTARIAT TO MARRY A sINGULARITY CYBORG.
Sounds like the Marmi-noo finally ‘snapped’.
GregT on Tue, 16th Jun 2015 2:28 pm
Davy,
You rolled your stang about the same time that I rolled my ’75 Blazer. Canadian Club’s fault.
My last plane was a ’56 172 straight tail with dual exhaust. Loved that plane, super docile. I used the money to buy a jet-boat, which will be on the market as soon as I relocate, two weeks from tomorrow.
Northwest Resident on Tue, 16th Jun 2015 2:34 pm
GregT — Exciting times and lots of hard work on the two week horizon timeline for you, it seems. I hope you’re doing pushups and deep knee bends to tighten up those muscles — you’ll be glad you did! Although, I seriously doubt you’ll be doing as much digging as I did — nobody should ever have to do that. But I look at the bright side — it toughened me up!! Can’t wait for you to do the move and get settled in for what promises to be a spectacular fireworks show!
Ted Wilson on Tue, 16th Jun 2015 9:43 pm
BP includes
Natural Gas Liquids
Biofuels
Even liquids fuels produced from Natgas and Coal
in Oil. This is clear mis-representation of facts.
By doing all these things, they are showing Oil consumption as higher and growing faster.
Makati1 on Tue, 16th Jun 2015 10:34 pm
GregT, gasoline prices here at the pump are about P44/liter on average, or about $3.76/gallon. That is down from about $4.70/gallon average, prior to the oil drop and will be a big help in the ~5.5% GDP growth this year. It will also cut inflation a bit. Here gasoline prices change slowly over weeks or months, not daily as I experienced in the US last month.
GregT on Tue, 16th Jun 2015 11:01 pm
Thanks NWR,
Reality is setting in. The house is 3/4 packed. Still have the kitchen and half the garage left to do. The wife started working on the other end two weeks ago. So I’m on my own until the 27th. Moving day is the 2nd, we have to be out of this house by the 4th.
Interesting leaving my career at this point, people at the senior executive level started openly talking about much of this stuff last week for the first time ever. Big changes are coming down the pipes.
Fireworks show for sure!
GregT on Tue, 16th Jun 2015 11:10 pm
Mak,
We’re paying $5.29 CAD per US gallon, or with the exchange, $4.30 USD per gallon. There is a regional transit tax of 12 cents per litre here, so when we move from the region, we will be paying the equivalent of $3.90 USD/gal.