Peak Oil is You
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Page added on September 16, 2013
The peak in world oil production is yet to come
World oil production stagnated between 2005 and 2007, which given rapid growth in demand from emerging economies sent oil prices shooting up. Some observers suggested that production might never rise much above the levels seen in 2005. Among those who raised this possibility, two of the more thoughtful have changed their mind. Euan Mearns last month summarized what he saw as three (or four) nails in the coffin of peak oil. And Stuart Staniford, an early editor and contributor for the Oil Drum, declared a few weeks ago that the data have spoken.
Certainly world oil production did not stop growing in 2005. Last year’s total was estimated by the EIA to be 4.8 million barrels higher each day than it had been in 2005.
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About a third of the growth between 2005 and 2012 came in the form of natural gas liquids, chief among which are ethane and propane. These are useful hydrocarbons, but you can’t use them to power your car. The growth in NGL production has been a big benefit to industrial users of these chemicals; for motorists, not so much. Another important source of gain has been biofuels, which themselves require a significant energy input to produce. Actual field production of crude oil, which accounted for 87% of the total liquids produced in 2005, accounted for only 41% of the growth since 2005.
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It’s also interesting to look at where the growth in field production came from. U.S. production grew by 1.3 mb/d and Canada by 770,000 b/d. Between them, these two countries could account for more than 100% of the 2.0 mb/d increase in world crude oil production since 2005, Production from all of the other countries in the world combined actually fell a little between 2005 and 2012. Significant gains in places like Iraq, Russia, and Angola were more than offset by declines in the North Sea, Mexico, and Iran.
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Within the United States, more than all of that 1.3 mb/d increase could be attributed to production of oil from tight formations, which the EIA estimates accounted for 2.0 mb/d of total U.S. oil production in 2012. And within Canada, more than all of that 770,000 mb/d increase could be attributed to production of liquids from oil sands, which the National Energy Board estimates increased by 830,000 b/d between 2005 and 2012. In other words, without oil sands and tight oil, crude oil production in the United States and Canada, and for that matter the world as a whole, would have been lower in 2012 than it was in 2005.
The EIA anticipates that U.S. tight oil production can continue to increase another 800,000 b/d above 2012 levels before peaking in 2020.
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It’s interesting to put these numbers in the perspective of the entire history of production from America’s bountiful supplies. The surge over the last two years is unprecedented. Even so, the levels for the first half of 2013 remain 2.5 mb/d below the peak of 1970. If the EIA projections above are correct, none of this is going to change the fact that U.S. production peaked 40 years ago. Instead, tight oil will give a dramatic but temporary bump back up in a longer trajectory of decline, similar to that provided by new production from Alaska in the mid 1980s.
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The new sources of liquid fuel do not come cheap. Production from oil sands and tight formations could not be sustained if the price of oil were to return to the levels to which we were accustomed before 2005. Euan Mearns concluded his obituary for peak oil with these thoughts:
The new higher oil / energy prices are here to stay but I believe they will stay range-bound in $100 to $150 / bbl bracket, perhaps for decades as we munch our way through the $125±25 slab of resource.
That’s a plausible assessment, but Stuart Staniford notes an important qualification:
As I write, Libya, Tunisia, Egypt, Syria, Lebanon, Iraq, and Iran are all subject to varying degrees of economic and political turmoil…. I assume at some point a large oil producer will descend into turmoil and then there will be a large price spike, and that may kick the global oil market out of the current meta-stable state.
To which I would further add, a major economic downturn in China would send the price of oil plunging back down.
Those who thought that world oil production would peak in 2005 have been proven to be wrong. But so, too, were those who thought the run-up in oil prices of the last decade would be a temporary disruption until we found a way to return to the world as it had been for a century up until that point.
11 Comments on "The peak in world oil production is yet to come"
kervennic on Mon, 16th Sep 2013 10:46 am
I think this is completely dishonest to add up any form of liquid hydrocarbon and call it oil,and then pretend that peak oil did not happen in 2007.
Biofuels, liquid gaz are not oil.
The prediction that conventional oil would peak around 2007 is a fact. The crazy move toward expensive, bpth in dollar and energy, form of mined oil is a patent proof of peak oil already past.
We peaked in 2007. Conventional oill supply is decreasing and to replace it we have to waste even a bigger amount of resources, from gaz to metal. This can only accelerate the outcome of a crash.
John_A on Mon, 16th Sep 2013 2:09 pm
We peaked in 2008. TOD said so. Unless you prefer the IEA as a referencce, they said we peaked in 2006. Or maybe you like Simmons? He said we peaked in 2005.
And liquids are what the consumer demands, not oil anyway, and currently we have a peak in like 2012 of that stuff.
2007….please…get with the program already.
BillT on Mon, 16th Sep 2013 4:01 pm
Another disinformation propaganda piece …
rollin on Mon, 16th Sep 2013 4:28 pm
“Certainly world oil production did not stop growing in 2005. Last year’s total was estimated by the EIA to be 4.8 million barrels higher each day than it had been in 2005.”
What does that statement mean???
Confusing liquids production with oil production again. Oil production looks fairly flat to me, a percent or so gain in seven years is nothing to brag about.
Tar sands do not make oil, they make syngas. Tar is not crude oil. I wonder it they count ethanol in the total.
shortonoil on Mon, 16th Sep 2013 6:13 pm
This article is implying that all hydrocarbons are equivalent. Counting all hydrocarbons as equivalent is like saying all trees are equal. Its absurd. Hydrocarbons are a wide range of carbon-hydrogen compounds from a molecular weight of 16 to several hundred. Their chemical formula are different, their densities are different, and their ability to provide an economic benefit are much, much different.
I wonder when this author is going to start selling their brand new, improved perpetual motion machines?
actioncjackson on Mon, 16th Sep 2013 6:28 pm
“Peak oil is the point in time when the maximum rate of petroleum extraction is reached, after which the rate of production is expected to enter terminal decline.”
Takes 300 million years to make it, and only two hundred to break it. It’ll happen globally as it has happened regionally in the past, 90mbpd is nothing to laugh at, that’s insane demand.
DC on Mon, 16th Sep 2013 6:49 pm
Since ‘we’ won’t moderate our demand to drive around aimlessly in 5000 pound garbage cans, or our desire to buy shoddy goods on credit, the only thing left that is proven to work beyond all doubt, is economic depression. That is, the end result of peak oil.
SteveK on Mon, 16th Sep 2013 8:00 pm
What’s the state of crude oil available for export? http://www.ravennacapitalmanagement.com/mrr/2012/04/2012-04-27/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MasterResourceReport+%28The+Master+Resource+Report%29
JB on Mon, 16th Sep 2013 11:23 pm
“Decades of $125 oil.” What will things look like after a few years of that? Do crude prices not matter anymore – or is it only prices at the pump?
Oil production [marginal oil production that is] is not the only determinant of our economy, there’s a financial crisis going on – money printing, credit crisis,overborrowing,overspending,derivatives, etc. – now that is leading our present decline. There is temptation to put a microscope on one area and ignore the rest … and squandering financial resources on marginal production is just one more case of mismanagement.
MrEnergyCzar on Tue, 17th Sep 2013 12:13 am
Will they start counting coal to liquids as oil soon?
MrEnergyCzar
keith on Tue, 17th Sep 2013 2:02 am
The middle class came with conventional oil, it will leave with it as well.
The number crunchers already discount many from the jobless stats. Reality is how I gauge the oil situation. People’s behaviours are changing.