[KevO]

Looks like Simmons has been vindicated

$this->bbcode_second_pass_quote('', 'L')ONDON — Reuters Last updated on Wednesday, Sep. 16, 2009 01:23PM EDT

Peak oil supply will be hit this year after the economic crisis and low prices in the first quarter of 2009 slashed much needed investment, a senior executive at Australian investment bank Macquarie said.

“This is our view – capacity has pretty much peaked in the sense that declines equal new resources,” Iain Reid, head of European oil and gas research at Macquarie, told Reuters.

The peak oil theory that oil supply is at or near its peak was long considered marginal.

It gained currency when prices (CL-FT71.85-0.62-0.86%) zoomed towards their record of nearly $150 (U.S.) hit in July last year, with leading exponents suggesting various dates for the supply peak to be reached.

Some oil majors have acknowledged the prospect of dwindling production, but others have argued better extraction techniques and other technological advances will offset any decline.

Mr. Reid's latest research report – The Big Oil Picture: We're not running out, but that doesn't mean we'll have enough – sees global oil production capacity topping out at 89.6 million barrels per day (bpd) this year, a far more pessimistic view than most other banks or traditional forecasters.

Underinvestment in mature fields, rising resource nationalism, and the cost and difficulty of retrieving oil from discoveries in ultra-deep water could see global production capacity fall to 87.3 million bpd by 2015, according to Mr. Reid.

Mr. Reid, who spent 16 years with oil firms Shell and Amerada Hess, saw the current spare capacity cushion of around 5.2 million barrels wiped out by 2012.

[NoWorries]

1. He seems to be saying different things at once here:

a) a peak will be reached this year;
b) oil will remain in the 75-84$ /bbl range through 2012, and settle around 75$ in the long-term (due to more efficiency coming online and alternative fuels);
c) oil will reach 4$ USD per gallon (despite a relatively low 75$/bbl oil projection).

Also, I find his assertion that oil won't hit $147/bbl again "because the Saudis won't let it" to be outright ridiculous.

Like the title of his report ("We aren't running out, but we won't have enough either") I think this fellow likes to speak in riddles, probably to hedge his bets (as most prognosticators would like to do).

Reminds me of the old joke about the smart young fellow who went away to university: 'When he returned after 4 years no one could get a straight answer out of him.'

[shortonsense]

$this->bbcode_second_pass_quote('KevO', 'L')ooks like Simmons has been vindicated

[KevO]

$this->bbcode_second_pass_quote('shortonsense', '')$this->bbcode_second_pass_quote('KevO', 'L')ooks like Simmons has been vindicated

[eastbay]

The article suggests that as production starts to permanently decline this year, the price will also decline, then SA will 'say something' to make the price remain low just in case it tries to rise. Looks like it'll all be fine!

Strange article, but at least they're trying to 'get it'.

[shortonsense]

$this->bbcode_second_pass_quote('pstarr', 'S')hort, you parrot the same same lazy argument over and over, and guess what? You are wrong.

[Carlhole]

$this->bbcode_second_pass_quote('', '�')��In the very long term, we can see demand for oil falling quite substantially.”

[vision-master]

I don't even read shortonbrains posts anymore.

[NoWorries]

$this->bbcode_second_pass_quote('eastbay', 'T')he article suggests that as production starts to permanently decline this year, the price will also decline, then SA will 'say something' to make the price remain low just in case it tries to rise. Looks like it'll all be fine!

Strange article, but at least they're trying to 'get it'.

[americandream]

I blame peak oil on lack of church attendance.

$this->bbcode_second_pass_quote('vision-master', 'I') don't even read shortonbrains posts anymore.

[Homesteader]

$this->bbcode_second_pass_quote('vision-master', 'I') don't even read shortonbrains posts anymore.

[IslandCrow]

Total issues oil shortage warning

$this->bbcode_second_pass_quote('', 'T')he head of oil giant Total has told the BBC the world could face a shortage of oil because of underinvestment.

Chief executive Christophe de Margerie warned that too little has been spent trying to tap into new oil reserves because of the economic crisis.
...

He also said he thought oil prices would rise to more than $100 a barrel, from their current level of around $70.

"The reserves of oil are there, but if you don't invest they don't come on the market," Mr de Margerie said.

"What we have to decide today is production for 2010-2015. So in between we might be faced with insufficient oil to meet demand."

[rangerone314]

$this->bbcode_second_pass_quote('Homesteader', '')$this->bbcode_second_pass_quote('vision-master', 'I') don't even read shortonbrains posts anymore.

[Revi]

Peak oil happened in 2008, if 2009 is down from what we got in '08.

Whatever they say, it looks like it's downhill from here.

The price will have to go up.

Or the economy will have to be kept in a permanent recession/depression.

Chindia will drive the demand for oil.

[mos6507]

Yeah, chart-riders crow about production peaks when what really matters is the oil price, which is the level of balance between supply and demand. Wave a magic wand and transform society into an ecotopia and nobody will give a damn how much or how little oil is being produced because we won't need it.

So this chart-rider thing is a holdover from the idea that:

a) production is always balls-to-the-wall maximum capacity

and

b) demand never goes down

So really all eyes are on the future track of the economy. And longer-term, population growth by itself will drive oil supply.

But it's possible that we could see oil production stagnant or fall for some time without subsequent price increases, just because demand is off, and modern life as we know it still functional as it is today. You know, no zombie hordes.

Is that likely? Probably not. We are probably at the tail end of this lull, with some initial reports of China's economy taking off again. But we'll see how it goes.

[Maddog78]

Yeah, I have to laugh at people crowing about peak production so far.
Of course production peaked, demand is in the tank.
Why the hell would any country or company want to produce more right now?

Do you know what glut means?

Demand is still way down. There is too much oil and gas as it is right now.
It will likely be that way for a year or so.
When demand exceeds that previous production peak that's when I'll pay more attention.

[KevO]

Peak oil review - Sept 21

[quote

* "Our medium-term global oil balance does not balance post 2013…(Oil near $150) would very soon create another set of global economic drivers which would spell much lower demand in the future…In the very long term we can see demand for oil falling quite substantially."[/quote]

FULL REVIEW AT
http://www.energybulletin.net/node/50175