[J-Rod]

$this->bbcode_second_pass_quote('', '[')b]Technology and Higher Prices Drive a Supply Buildup By Daniel Yergin, Sunday, July 31, 2005; Page B07

We're not running out of oil. Not yet.
"Shortage" is certainly in the air -- and in the price. Right now the oil market is tight, even tighter than it was on the eve of the 1973 oil crisis. In this high-risk market, "surprises" ranging from political instability to hurricanes could send oil prices spiking higher. Moreover, the specter of an energy shortage is not limited to oil. Natural gas supplies are not keeping pace with growing demand. Even supplies of coal, which generates about half of the country's electricity, are constrained at a time when our electric power system has been tested by an extraordinary heat wave.

But it is oil that gets most of the attention. Prices around $60 a barrel, driven by high demand growth, are fueling the fear of imminent shortage -- that the world is going to begin running out of oil in five or 10 years. This shortage, it is argued, will be amplified by the substantial and growing demand from two giants: China and India.

Yet this fear is not borne out by the fundamentals of supply. Our new, field-by-field analysis of production capacity, led by my colleagues Peter Jackson and Robert Esser, is quite at odds with the current view and leads to a strikingly different conclusion: There will be a large, unprecedented buildup of oil supply in the next few years. Between 2004 and 2010, capacity to produce oil (not actual production) could grow by 16 million barrels a day -- from 85 million barrels per day to 101 million barrels a day -- a 20 percent increase. Such growth over the next few years would relieve the current pressure on supply and demand.

[J-Rod]

I forgot to check the date on that link, this obviously doesn't belong in current events. Mods move as needed. Still amusing though, things have changed a bit as far as supply since July '05.

[mekrob]

I've seen those numbers before. I believe they said the areas most likely to increase production are Libya (true) by a mpd or two and Iraq up to 6 mpd, which is a fucking joke even for optimists in the next four years.

[rockdoc123]

the important bit of that report on the CERA work:

$this->bbcode_second_pass_quote('', 'W')here will this growth come from? It is pretty evenly divided between non-OPEC and OPEC. The largest non-OPEC growth is projected for Canada, Kazakhstan, Brazil, Azerbaijan, Angola and Russia. In the OPEC countries, significant growth is expected to occur in Saudi Arabia, Nigeria, Algeria and Libya, among others. Our estimate for growth in Iraq is quite modest -- only 1 million barrels a day -- reflecting the high degree of uncertainty there. In the forecast, the United States remains almost level, with development in the deep-water areas of the Gulf of Mexico compensating for declines elsewhere.

While questions can be raised about specific countries, this forecast is not speculative. It is based on what is already unfolding. The oil industry is governed by a "law of long lead times." Much of the new capacity that will become available between now and 2010 is under development. Many of the projects that embody this new capacity were approved in the 2001-03 period, based on price expectations much lower than current prices.

There are risks to any forecast. In this case, the risks are not the "below ground" ones of geology or lack of resources. Rather, they are "above ground" -- political instability, outright conflict, terrorism or slowdowns in decision making on the part of governments in oil-producing countries. Yet, even with the scaling back of the forecast, it would still constitute a big increase in output.

[Cynus]

rockdoc123, do your calculations take into consideration depletion? If, say, 2 mbpd are brought online each year for the next 6 years, you could say that "supply is going to by 12 mbpd over the next 6 years." But if the world loses 2 mbpd due to depletion over that same period, you could also say that supply will be flat. Isn't this what CERA is going with their 16 mbpd figure?
Also, does Chris Skrebewski's (sp?) field-by-field analysis indicate a peak after 2008? How does your understanding differ from his?

[rockdoc123]

Cynus
all I have done is plot up the IHS energy predictions from their recent database. Remember that Campbell et al do not have access to the most recent IHS Energy data....the database they are using is a number of years out of date. The IHS Energy predicition does take into consideration depletion....haven't pulled it apart but looks like standard hyperbolic. One of the PO members (Taskforce_Unity I think) has made his own prediction based on company press releases etc. and it comes up with a similar peak date.

My understanding is the main difference with the CERA prediction is they throw unconventional oil sources into the prediction which noone else does.

The reason that Campbell and others end up with an imminent peak is that they strongly discount reserves in countries like Saudi and Kuwait. My own opinion is that their decision to do this is rather arbitrary, doesn't agree with what those countries are saying and certainly up for debate. As an example you can go to the Saudi production thread on this site.

[nth]

rockdoc123,

PO in 2014 according to IHS?
What is the production number? 100mbpd?

[J-Rod]

$this->bbcode_second_pass_quote('rockdoc123', '
')The reason that Campbell and others end up with an imminent peak is that they strongly discount reserves in countries like Saudi and Kuwait. My own opinion is that their decision to do this is rather arbitrary, doesn't agree with what those countries are saying and certainly up for debate. As an example you can go to the Saudi production thread on this site.