[Ayoob]

Sprott says we're looking at an 8% decline rate. Do the math, that's a nine-year halving time. 84mbd to 42mbd. I think we're pretty much all in agreement that we're peaking in 05, maybe 06. Nine years puts us out at 2015 at the outside til we're at HALF the production we're at now.

That's just a real stunning couple of numbers to digest.

Two years ago when I found out about this whole thing, I figured I had that long til we peaked! Now, it looks like we'll be in full tilt boogie meltdown by then.

What do you guys think?

[Carrie]

Remember, you also have to factor in the new production, which will offset the decline somewhat (but we'll probably still have a shortfall). Also, we supposedly have those mega projects coming online in 2007-08.

Scary article, though, and it makes a strong argument that this is the year.

[MicroHydro]

Sprott is a CA - that is Certified Accountant? He is no geologist.

If you want comfort, the US is only down 40%, now 35 years after peak.

If you want to be scared, the UK North Sea dropped 17% in a single year.

World rates are moderated by (small) new discoveries, so the world decline will be less than the median for individual wells.

There is a great deal of debate about what intermediate number is correct for the world as a whole. Probably 2% to 5% decline per annum in the first decade after leaving the peak plateau.

[clv101]

$this->bbcode_second_pass_quote('Ayoob', '[')url=http://www.sprott.com/pdf/marketsataglance/06-20-2005.pdf]Sprott[/url] says we're looking at an 8% decline rate. Do the math, that's a nine-year halving time. 84mbd to 42mbd.

[jato]

$this->bbcode_second_pass_quote('', 'I')f you want comfort, the US is only down 40%, now 35 years after peak.

[pepper2000]

You can't deduce from the 8% decline per field that world production also declines by 8%. This is a simple result from statistics. Each individual field can be modelled by an approximate Bell shape curve. World production is simply the sum of all fields in the world. But since the fields are spread out over time (some fields peak earlier than others), the sum turns out to be a Bell shape curve with a much larger standard deviation. Hence, decline rates will be much lower.

[Colorado-Valley]

There's also the distinct possibility that once oil depletion becomes obvious, nations and other entities may hoard their oil or make it unavailable for export to countries short on supply.

For instance, the U.S. has been trying to assassinate Venezuela's Hugo Chavez, a popularly elected leader who now appears to be planning to export oil to China rather than the U.S.

And since U.S. troops may be mired in the ME forever, there will be no chance to invade Venezuela. In fact, the U.S. may essentially be bankrupt in a few years because of its war on terrorism and its debt-ridden economic system.

Matthew Simmons has also pointed out that ME countries have fast-growing populations, and may need what's left of their oil for their own use.

Eight percent depletion might someday soon wonderful to oil-starved Americans.

[clv101]

$this->bbcode_second_pass_quote('Colorado-Valley', 'M')atthew Simmons has also pointed out that ME countries have fast-growing populations, and may need what's left of their oil for their own use.

[Ardalla]

We may or may not see a supply crisis in the 4th quarter. The Saudis may be able to pump 3-4 mbd from storage for a few months.

[jato]

$this->bbcode_second_pass_quote('', 'I') read an article a while back that was looking at countries with the capacity to increase production but also looking at their growing population and increasing local demand. Any increase in production was likely to be taken up internally, never reaching the world market.

[RdSnt]

What you are missing in this discussion is the economic impact of any type of supply shortage. I would suggest that the US economy, in particular, is extremely sensitive to even one or two years of shortened supply. We aren't going to need to wait for supply to be halved before very bad things happen to the world's economies.
Also keep in mind the reaction of the power elite and the citizenry. Both are likely to panic in one form or another and that will compound the purely technical problems exponentially.

[Aaron]

Lower US 48 oil producing states - Conventional extraction

Current major fields - MRE

See North Sea depletion rate \ Ybel depletion rate etc...

[Permanently_Baffled]

$this->bbcode_second_pass_quote('Aaron', 'L')ower US 48 oil producing states - Conventional extraction

Current major fields - MRE

See North Sea depletion rate \ Ybel depletion rate etc...

[Sys1]

Beside decline itself, we could also try to to determine how much percent of the oil extracted will be sweet crude? And will we have enough natural gas to process it?
"I've a bad feeling about this" (tm)

10% world decline is not impossible to me, as the situation is not identical to USA one in 1970. We can drill faster and better with the technologies currently online, but with the major inconvenient to run dry faster...

[khebab]

if we assume a alpha= 8% depletion rate, past peak production with a maximum noted P0, the area (Q) on the right side of the curve is:

$this->bbcode_second_pass_code('', '
Q= P0 / alpha= 12.5 x P0
')
Depending on what is the value of P0 we have the following URR (cumulative production in 2003 being about 1092 Gb):

$this->bbcode_second_pass_code('', '
P0= 29.29 Gb/year (2004) Q= 366.13 Gb URR= 1092 + 366= 1458 Gb
P0= 29.71 Gb/year (2005) Q= 371.38 Gb URR= 1492 Gb
P0= 30.45 Gb/year (2006) Q= 380.68 Gb URR= 1531 Gb
P0= 31.35 Gb/year (2007) Q= 391.87 Gb URR= 1573 Gb
')

For reference ASPO puts the URR around 1800 - 2000 Gb, BP around 2476 Gb, Gueso lately put the value around 1500 Gb (see thread Peak prediction based on the Riccati equation: 2007!).

[aahala]

Sprott is NOT predicting peak this year. He is stating peak MAY occur
this year.

I can state the Yankees may win the World Series this year. My statement
would be considered a WAG(wild ass guess).

Sprott's statement includes numbers, so his is a SWAG(statistical
wild ass guess.)

[Eli]

Opec is the key to world decline and specifically SA.

Looking at the evidence they did cook their books back in the 90's and all of them doubled there known reserves with no evidence to support their claims.

The argument can also be made for a quicker decline because of how the oil has been extracted.

Horizontal drilling and 3-d seismic imaging have made the North Sea the example of what has happened with the use of greater technology in oil extraction. It does allow for higher peak extraction but then a corresponding steep decline.

The SA fields have also been using secondary recovery techniques (pumping in sea water) for years which boosts peak extraction but also decline rates when the field passes prime production. Pumping in see water is also inferior to tertiary extraction in which co2 is pumped in to the field to push the whole reserve towards the well head. Secondary extractions weakens the field and the water breaks through the oil and does not push the whole field.

The large oil fields that the US did not see the these techniques used until much later in there lives so that helps explain why they did not see as steep of declines.

[Dan1195]

There are a couple reasons we should be concerned bout a faster decline rate:

1. Use of secondary and tertiary methods. These keep field production rates up, but make for a steeper decline. This is possible for many of the larger fields, including Canterell an Ghawar those 2 fields along current account for ~10% of world production.

2. Offshore fields. These have been source of much supply growth in the past 10 years, and tend to have shorter lifespans with steep decline (e.g. North Sea) due to higher costs they pump full tilt.

3. Mathematical relationships:

Rate of discovery rose then fell (peak ~1960)
total reserves rose then fell (peak ~1980)
production rose and will fall
Rate of depletion is just beginning to rise (and wont decline under most oil is gone)

[Sparaxis]

pepper2000 is correct. This article makes no distinction between the various types of depletion--type 1, 2, or 3. Type 3--national depletion--is our signpost to world decline, not that of individual fields. An 8% depletion rate in an existing field or well is not unusual, but it is constantly offset by new drilling and production. At some point, these new wells don't offset the decline from others and the entire field enters depletion, and when all new wells and new production don't make up for the decline in all the fields in a country, you have type 3 depletion. The ODAC estimates that at about 1-1.2 mmbd/year.

$this->bbcode_second_pass_quote('', 'B')eside decline itself, we could also try to to determine how much percent of the oil extracted will be sweet crude? And will we have enough natural gas to process it?