[pup55]

Here is a forecast based on data from the new BP review.

Note: If you want to argue about whether the revisions in this year’s BPSR are bogus or not, please feel free to do so in the “general discussion” forum.

25 of the 53 nations covered in the survey are in depletion. The two most alarming are the UK (10%) and Australia (14%) per our conversations earlier, the Nordic/Aussie Slide is in effect. Total global production was 80.3 mbo/d last year.

If you assume that 2005 will be like 2004, and the nations that had increased production will continue to increase at the same rate, and the same for the nations that decreased, you get about 84 gb of production, an increase of about 4.9% over the “revised” figures from 2003.

But, we know this will not be the case in a couple of instances: First, Russia is thought to be unable to grow this year, due to the Yukos problem. Secondly, Iraq is now thought to be unable to grow because their production and distribution system is “falling apart”. The third case is Saudi Arabia, which the IEA
believes is at or near full capacity:

$this->bbcode_second_pass_quote('', 'h')ttp://omrpublic.iea.org/currentissues/full.pdf

[khebab]

Interesting! It means we have not reach Peak Production yet (probably not before 2010) but demand is largely above production starting this year. How do we qualify this event, Peak Demand? Demand Destruction? because production will impose a ceiling to our consumption and therefore demand has to be pull down by supply. Of course, you are not taking into account new hypothetical discoveries in your projection.

[pup55]

You are right about the discoveries.

If you take the 7 gb discovered last year, and divide by 365 for gb per day, and again by 30 for a 30-year field lifetime, that comes to about .6 mbo/d. So, this does not make up for the increase in demand, even if the spigot can be turned on immediately.

There will be demand destruction, allright. Anybody too poor to afford the oil will not get it.

[khebab]

In fact, PO is a double event: first demand peak (2005) and is constrained then production is peaking several years later (2010-2013?). These two events form a kind of plateau where price will be very instable before depletion really sets in.

[seahorse2]

This depletion thread has always been my favorite, bc it is fact oriented, not simply comment. I appreciate you all that have the mental ability to do all these calculations spending the time to regurgitate them here in a way that those less gifted like myself can understand.

[nth]

$this->bbcode_second_pass_quote('khebab', 'I')n fact, PO is a double event: first demand peak (2005) and is constrained then production is peaking several years later (2010-2013?). These two events form a kind of plateau where price will be very instable before depletion really sets in.

[khebab]

$this->bbcode_second_pass_quote('nth', '
')Can you clarify what you mean by demand peak?

This is what I believed in. Supply restraint before PO.

[nth]

Yes, for non-OPEC, the future looks bleak.
Even if demand stays the same, we are looking for OPEC to provide more and more oil.

How much oil does OPEC has?
I think it is stupid to depend on OPEC, and it seems the world leaders are just beginning to realize this.

[JoeW]

$this->bbcode_second_pass_quote('pup55', 'H')ere is a forecast based on data from the new BP review.

[khebab]

$this->bbcode_second_pass_quote('JoeW', '')$this->bbcode_second_pass_quote('pup55', 'H')ere is a forecast based on data from the new BP review.

[JoeW]

I have downloaded the BP Review data and will work in my spare time to construct a production model based extrapolating the multi-year trend for each country. I am not yet sure how many years to include, but I think that five is a good baseline. That can be called the nominal case.

Then I will consider a 'best-case' scenario in which all countries who are still ramping up production continue their increases, and all countries in decline halt their decreases.

Then I will consider a 'worst-case' scenario in which all countries ramping up production are no longer able to do so, and all countries in decline continue to decline at their current rate.

This may take a few days.

[pup55]

We welcome your input!

Kind of interesting, really. Also, some highbrow economists are doing just this sort of thing and charging $26,000 per report or something, so there is money in it.

[pup55]

Let's revise the forecast based on the following news stories:

http://www.peakoil.com/fortopic7006-0-asc-0.html
Cantarell and Mexico now in decline

Iraq

Iraq’s net production (excluding deliveries into storage and field re-injection) fell by 80 kb/d to
1.75 mb/d in May.

China
I used 9% growth in energy consumption, in the estimate below

Russia Decline

Russia declining slightly (0.2%)


Here is the new forecast:

$this->bbcode_second_pass_code('', ' production consumption Gap
2005 81407.5 83253.8 1846.3
2006 83436.9 85941.3 2504.4
2007 85889.7 88835.1 2945.4
2008 88838.4 91952.5 3114.1')

The deficit will start this year, if these numbers are correct.

[pea-jay]

These estimates all assume Ghawar doesn't collapse on us during this period right?

[pup55]

Of course. Saudi is estimated at 10.5 mbo/d and constant.

[pup55]

Here are some updates to the forecast based on recent news reports:

Mexico: 6% depletion, 3824 mbd this year.
Norway: 7% depletion, 2964 mbd this year

China: 7% overall consumption growth, 6470 mbd
per this article:


Business Week ref by PO.com front page

The new forecast:

$this->bbcode_second_pass_code('', ' production consumption Gap
2005 81373.7 82438.7 1065.0
2006 82995.1 84955.8 1960.7
2007 85037.1 87656.5 2619.5
2008 87553.7 90555.7 3002.0')

The shortfall could only be about 1 mbd which is roundoff error in this estimate. The gap grows by about 900 thousand barrels per day per year.

If china can cut its growth to 2% the following forecast results:

$this->bbcode_second_pass_code('', ' production consumption Gap
2005 81373.7 82438.7 1065.0
2006 82995.1 84599.9 1604.9
2007 85037.1 86911.0 1874.0
2008 87553.7 89384.0 1830.3')

An average shortfall of 1 mbd is probably manageable by the system (thanks to inventory buffers, etc.) So, maybe if China is the "swing consumer" and will walk away from oil at 60 mbd, the system can marginally stay intact through 2008.

[chuck6877]

Pup,

Your assumptions don't take into account any new countries going into decline right?

Which countries should begin decline soon? Can you turn maybe 1 country per year into a decline and see the results then?

When do you think the worldwide Peak will occur?

Do you think ASPO's estimate of 2008 might be correct?

Chuck

[pup55]

$this->bbcode_second_pass_quote('', 'Y')our assumptions don't take into account any new countries going into decline right?

[Taskforce_Unity]

I also started working on this. Going to make a semi official paper with production figures from every country until 2020 probably. (with a few scenario's)

Here are my preliminary figures until 2010:

As you can see in the most optimistic scenario (i took the production increases from the EIA country analysis) we can have 1% worldwide growth every year until 2010). Confirming Pup55's analysis. Also interesting to note is that even if Saudi Arabia would peak (with 8% decline rate) in 2005 there is no sharp drop, just a sort of plateau until russian production starts to drop too.




Demand Gap in case of Business as usual





Difference between scenario's:

Business as usual -->

Saudi Arabia 1 million barrels increase between 2005-2010 and Russian production steady as she goes.

Saudi Peak 2005 scenario includes a peak in 2005 with a decline rate of 8%.

Russia peak scenario includes a Saudi peak in 2005 with a decline rate of 8% and a Russian peak in 2008 with a decline rate of 8%.

Overall Model:

Depletion for UK is given as 7% each year
Depletion for Norway is given as 2% each year (from 2004 onwards)
Iraq stays about the same with 2 million barrels of production in 2010


New Peaks 2005-2010:

China 2005 --> 1% decline
India 2008 --> 3% decline
Denmark 2008 --> 2% decline
Malaysia 2006 --> 4% decline
Mexico 2005 --> 1% decline
Mexico 2006 --> 4% decline
Mexico 2007+ --> 8% decline

Major Increases (rounded and total of period 2005-2010):

Nigeria 1 million barrels
Iran 300.000 barrels
UAE 300.000 barrels
Libya 300.000 barrels
Kuwait 400.000 barrels
Canada 800.000 barrels
Brazil 500.000 barrels
Algeria 500.000 barrels
Angola 1.4 million barrels
Kazakhstan 1.6 million barrels


Total increase in supply = 11.383 million barrels
Total decline in supply = 5.500 million barrels

[Taskforce_Unity]

First Update:

OPEC production, based on BP Statistical review and EIA country analysis. (Plus some Simmons Saudi stuff but not that much)