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52 comments on GCC: ExxonMobil's Energy Outlook 2005

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Freddy Hutter on December 21, 2005 - 2:53pm Permalink | Subthread | Comments top
We introduced the MobilExxon Outlook to our compilation of Peak Oil Depletion Scenarios on Sept 22nd.  With a peak of 117-mbd in 2030 and an inferred URR of 4-Tb, it placed third on our "optimism" scale.  It is compared to the others graphically at http://TrendLines.ca/economic.htm

Yesterday we posted our December USA Energy Reserves Report.  It's on the same page.  Global Crude is shown to be regaining "Spare Capacity" in our EIA graph which bodes well for softer prices in 2006.  Global Production has hit a new record of 85-mbd and our new forecast for the trough in working gas is 1050-Bcf.

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Stuart Staniford on December 21, 2005 - 3:29pm Permalink | Subthread | Parent | Comments top
The EIA graph shows 1mbpd or some more spare capacity in 2006 than 2005.  However, 1mbpd is significantly less than our uncertainty in the decline rate of fields in production, and I don't believe the EIA knows it much better than we do, since it shows little sign of serious study of the issue.  So I don't buy that we can have any confidence in this number (I'm not saying it definitely won't be so, just that there's no way to really tell next year's spare capacity with anything like that precision).
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Freddy Hutter on December 21, 2005 - 5:31pm Permalink | Subthread | Parent | Comments top
Of our 11 scenarios, only ASPO/Campbell predicts that we will be held to the 85-mbd present capacity.  Colin says we'll be at this level 'til 2010.  And i respect his work.  But overwhelming outlooks that say we are still going up the ladder cannot be ignored.  The TOD call of a July top in extraction was folly and is easily challenged by the rate of new production records thru 2004 & 2005.  Granted there is a cornucopia of negative post lately at TOD, but that sentiment does not jive with the evidence at hand nor the analyst opinions.

2005 was another year of merely crying wolf.  Any supply/price problems were based on distribution and weather related events and not global supply.  2005Q1 & Q2 saw record excesses going into stock building and reserves as the speculators dropped positions.  There is no indication that this did not continue into Q4.  If extraction does not grow, it will because of lack of parallel refining capacity and not potential production.

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Stuart Staniford on December 21, 2005 - 6:16pm Permalink | Subthread | Parent | Comments top
We didn't call a July top. Several of us noted in November that the then production peak was in April or May depending on time series, and explored what it might take for production to increase or not next year.  I certainly made no conclusive claim, though I do think the balance of the evidence has been shifting towards a nearer peak, rather than a further one.  Some analysts also think that (eg Henry Groppe).

I agree that lack of refining capacity may constrain peak somewhat - as peak gets closer, no-one will want to build more refineries, and this will have a flattening effect on the peak.

What do you believe is the global decline rate in fields in production, and why?

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Freddy Hutter on December 21, 2005 - 7:15pm Permalink | Subthread | Parent | Comments top
Yes Stuart, it was this implied May date "Happy Peak Oil Day" post that i was thinkin' about.  Your valid question about field or country decline rates is better asked of TOD member and TrendLInes scenarioist, Rembrandt Koppelaar.  Myself, i just watch the net annual gains in my work and not the two components.  And my premise for those annual gains to be prolonged is based on my belief that the Peak will accompany the Hubbert Peak in "all liquids".  In that sense, dramatic growth in URR by all analysts over the last five years tell me that we are very far from the 2-Tb URR that would indicate an extraction Peak in 2005-2010.

The avg URR in our Scenarios is presently 3.1-Tb and if i incl OGJ & API, it is 2.95-Tb.  This implies that we have 0.5-Tb to consume 'til Peak, or 16 yrs at present demand rates and assuming 1-Tb has been consumed to this point.  This points to a peak in 2020 ... if URR does not grow.  But it is clearly growing in leaps and bounds.  And an avg contract price of $50/barrel should push redefinition of much of present reserves historically not feasible over to the URR category.

We indeed have a paradox in refining.  If stakeholders believe "u" and pause on new refining capacity because the top is near, then the extraction peak will become self fulfilling.  OTOH, it they see efficiencies of scale and market share wisdom in building new plants, the product will certainly be there regardless, as old plants are shuttered for whatever reason.  

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Dave Cohen on December 21, 2005 - 7:37pm Permalink | Subthread | Parent | Comments top
I'm certain Stuart could defend his work here but may prefer not to. So, I'll be a bit presumptious on his behalf here. When you say "Your valid question about field or country decline rates is better asked of TOD member and TrendLInes scenarioist, Rembrandt Koppelaar".

Nonsense. It is the IEA that does not appear to take into account realistic, empirically discoverable decline rates in those cases where good data is available. When such data is available, these rates appear to be larger than those presumed by the IEA (eg. Norway--see clv101's first post in this thread concerning IEA's pie-in-the-sky predictions--made in 2001--about Norway's post-peak production which show them producing in the year 2020 what they actually managed to produce in 2004 after peaking in the 2000/2001 period). Rembrandt is only one modeller here and so is Stuart and the other well known usual suspects (peak oil people or not) you show at trendlines. Decline rates are everything, the sine qua non of predicted world production curves. This is almost the whole peak oil argument.

If you want to just put up curves showing everybody's predictions, that's fine with me. But a deeper analysis is called for to evaluate their accuracy.
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Freddy Hutter on December 21, 2005 - 9:31pm Permalink | Subthread | Parent | Comments top
Dave, i am sure u have alotta passion about the peak, but the truth is that the only one predicting a 85-mbd peak is Colin Campbell.  Yet we see at http://trendlines.ca/economic.htm#ASPO that he has continually had to push out and up his predictions.  He backed off his 2002-4 projection this year but in the end he will find that it was spot on and both 2002 & 2005 will be revised upwards.

You cast doubt on the IEA ability to predict, and on a country by country basis, perhaps there are a couple of errors, but on the whole, their global extraction record is exemplary.  The third graph above the aforementioned link shows a 1991 graph by Lynch that illustrates that back then the IEA and EIA for that matter were looking forward to 79-mbd (actual 84-mbd) in 2005 whilst Campbell foresaw 52-mbd this year.  The records speak for themselves regardless of the conspiracy theories of hidden stats and inuendo's that are commonplace here.

In short, Dave, if i was a betting man ...

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Dave Cohen on December 21, 2005 - 10:15pm Permalink | Subthread | Parent | Comments top
Re: "IEA ability to predict, and on a country by country basis, perhaps there are a couple of errors...."

No shit. Like Norway, as I said. And perhaps Saudi Arabia, as Matt Simmons claims.

Nowhere in my remarks did I predict, nor has Stuart, that 85/mbd is the peak. I regret inaccurate predictions by Colin Campbell in 1991 based on insufficient data. But really--
The records speak for themselves regardless of the conspiracy theories of hidden stats and inuendo's that are commonplace here [at TOD].
As the Japanese say, sayonara.
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Stuart Staniford on December 21, 2005 - 9:18pm Permalink | Subthread | Parent | Comments top
Well, obviously, much is going to depend on the definition.  The Thanksgiving day post showed data from the Oil and Gas Journal, which does not included NGL, ethanol, GTL, CTL, etc.  It is of interest to know when the black stuff peaks, and that is what I was trying to get a grip on in that post, and in the follow up.  I did not make any categorical statement that oil had peaked.  Instead I noted that there seemed to be something of a plateau, despite the fact that the world economy would obviously like more oil if it could get it (as expressed through the prices it was paying), and looked at who might be able to produce more.  It appeared to me then, as it appears to me now, that there is significant uncertainty as to whether production of black crude can go a whole lot higher.  I'm not saying it definitely cannot - it largely appears to depend on things in Russia and Saudi Arabia that are rather inscrutable.  However, as we explored here, the IOCs have not been able to increase production in the last few years, even though they planned to (Exxon's planned growth of 3% was typical).  Obviously, the decline rate of existing production is both hard to estimate (causing IOCs to miss their growth targets), and pretty large.  As you can see here, the implied decline rate in Exxon's production if you subtract out their new projects is both large and fluctuating.

Hence my comment to you that the EIA's projection of an extra 1mbpd next year of space capacity should be taken with a large grain of salt.  We don't know what the global decline of existing production will be between this year and next with nearly enough precision to say what next year's spare capacity will be and thus project next year's prices.

Now, if you want to talk about "all-liquids" -- certainly a valid topic but not the one I was addressing -- then we have to talk about coal (which obviously dwarfs everything else in potential and will make the URR enormous) biofuels, etc.  But that's a different kind of conversation, I think.  The question then becomes about how hard it is to ramp up very large amounts of CTL and what a global economy and climate running on CTL would look like, what lots of biofuels would do to food prices, and so on.  I certainly mean to get to those topics over time...

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Freddy Hutter on December 21, 2005 - 9:48pm Permalink | Subthread | Parent | Comments top
Perhaps then it would be helpful to use a somewhat less inflammatory subject line as "Happy Peak Oil Day", eh!  For all intents and purposes, oil is "all liquids".  When i drew attention to the Conventional Oil Hubbert Peak last year, it was an academic exercise only.  Nobody cares.  Where it comes from (conv vs non conv) doesn't matter to price or to supply.  Oil is oil.  Crude or by-products.  It is no use struggling over definitions that are lost in the marketplace.  That is for purists and idealists.  It took a very long time for Campbell to come to terms with that.  His disciples should follow suit.
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Stuart Staniford on December 21, 2005 - 10:23pm Permalink | Subthread | Parent | Comments top
The title was a tongue-in-cheek reference to Professor Deffeye's famous prediction.  I try to scrupulous about noting whether NGL is included or not in any given set of numbers I graph - that post footnoted the exclusion of NGL (which is the largest non-crude contribution to liquids at present).  As to whether it's important in the marketplace, it all depends who you are.  If you're a motorist, you only care about whether there's some liquid that will burn in your engine available at the gas pump.  If you are considering investing in a CTL plant or a biodiesel company, I think you should be deeply interested in what's going to happen to the conventional crude supply.  
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Dan Ur on December 22, 2005 - 2:04am Permalink | Subthread | Parent | Comments top
Tell me would you also add in the EXXON CEO's predictions of a few time frames ago, predicting that the URR is really 14 Trillion Barrels of OIL ( USING your "everything that we get is really oil" statement ).  Taking his predictions into account, since you seem to take other folk's of equal standing predictions, you might average out to 5 or 6 Trillion Barrels of URR. Pushing the peak to the 2050 or beyond range.

 PLEASE!

 From all that I have read of your comments both here at TOD and on the Yahoo Energy Groups, you seem to want to debunk Peak Oil.  If so please step forward and show yourself.  I don't mind really, but I do dislike folks hiding their true agendas behind their backs.

P.S.  My agenda is Learn as much as I can to help me live a better life.

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Luis de Sousa on December 22, 2005 - 5:38am Permalink | Subthread | Parent | Comments top
Hi Fred.
Where it comes from (conv vs non conv) doesn't matter to price or to supply.
 
That's quite a naive statement. There's a big difference between regular oil with an EROI of 1:10 and corn ethanol witn an EROI of 1:1.3 at the best.

Imagine I tell you this:
"Yesterday a backery store closed, today wheat is more expensive"
You'd probably think I'm not that smart.

The prices rise since mid 2004 can only be explained by an higher dependence on lower EROI liquids (other than con Oil). I hope you can realize the rest.

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creg on December 22, 2005 - 9:05am Permalink | Subthread | Parent | Comments top
Freddy you left out the question mark. Happy Peak Oil Day?
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Dave Cohen on December 21, 2005 - 10:04pm Permalink | Subthread | Parent | Comments top
I would only add that URR world production predictions--say, about 2350 Gb barrels, a number that Stuart has used lately--are completely meaningless when we are looking at production in the next 10 years. That is the peak oil time frame and that's what we need to care about. This is the crisis period in which large economic dislocations may occur. The potential worldwide economic "recession" based on shortfalls in conventional production due to declines in this period may have longer term impacts on what supply is available later.

I can no longer abide talk from IEA, EIA, USGS, IHS Energy/CERA and others that there is plenty of potentially producible hydrocarbon liquids--3 trillion, 4 trillion, hey, sky's the limit! Reserves growth--not based on new discoveries, of course, but based on better "knowledge" of what actually lies under the ground and is recoverable. There may be lots of potentially recoverable hydrocarbons out there (leaving aside the EROEI) but as far as "conventional oil" goes, which we have not weaned ourselves of, these estimates make no difference whatsoever in any timeframe we care about. Tar sands in Canada provide the best example--the best estimates I've seen put production of these at about 4.0/mbd by 2020. But by that time, declines in major producers (Russia, Indonesia, China, Mexico, Norway, the UK, Quatar, Kuwait, Saudi Arabia?) will have swamped the increases. So, let's get real here. Now would be a good time to do that.

We are concerned about available supply year-to-year to meet demand--that's it--in a timeframe that makes sense. Millions of barrels per day, year to year--2006, 2007, 2008 and so on. That's what we should care about, not proven & probable reserve estimates that indicate trillions of barrels of available supply in the longterm.
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jkissing on December 25, 2005 - 2:59am Permalink | Subthread | Parent | Comments top
It seems we do have a refinery bottleneck, preventing climbing crude stocks from being converted to products and thereby reducing product prices. However, quite a few refiners are expanding as fast as possible, not least Valero, which will profit handily on low cost heavy/sour crudes whether we peak or not. We will then see if the world can produce enough to continue the current high rate of refinery utilization.
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mcgowanjm on December 23, 2005 - 11:23am Permalink | Subthread | Parent | Comments top
"Any supply/price problems were based on distribution and weather related events and not global supply."

Complexity rears it's ugly head.  And any solution-aside from collapse as economizing- requires more complexity and thus more energy.

Venezuela's energy minister said the government was preparing to take over an oil operation of US-based ExxonMobil and Spain's Repsol on January 1 if the US firm refuses to accept new terms for foreign oil companies.
.
"Of course we will take control of it," Energy Minister Rafael Ramirez, who also serves as president of state-owned Petroleos de Venezuela, told reporter in response to a question on the Quiamare-La Ceiba oil field

http://www.todayonline.com/articles/91537.asp

Bloomberg-122306-Venezuela Confiscates Exxon/Repsol Oil Field

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cynus on December 21, 2005 - 3:45pm Permalink | Subthread | Parent | Comments top
Freddy, where did you get the 85-mbd figure for 2005?  I'm curious because I believe that Chris Skrebowski's mega-projects update predicted only 80.3 mbd, and I want to confirm the accuracy of this.
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Freddy Hutter on December 21, 2005 - 5:41pm Permalink | Subthread | Parent | Comments top
Cynus, each month the IEA does a press release on current production and amends past reports with more current data.  The EIA & OPEC have a similar process and there is seldom discrepancy between the data of the three independent agencies.  To summarize recent published data:
2005 June - 84.1 mbd
2005 July - 84.3 mbd
2005 Aug  - 84.7 mbd
2005 Sept - 83.8 mbd (hurricane related)
2005 Oct  - 84.4 mbd
2005 Nov  - 85.0 mbd
 
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Stuart Staniford on December 21, 2005 - 6:37pm Permalink | Subthread | Parent | Comments top
Are these the IEA numbers?  Is there a way to get a past monthly series of what they say without paying $000s?
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Dave Cohen on December 21, 2005 - 7:02pm Permalink | Subthread | Parent | Comments top
Well, here's the last two reports (for October & November numbers)

November (full report)

December (highlights only)

IEA Oil Market Reports All 2005
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Dave Cohen on December 21, 2005 - 7:11pm Permalink | Subthread | Parent | Comments top
Sorry, all monthly supply reports are available back to 1990 here.
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Stuart Staniford on December 22, 2005 - 3:24am Permalink | Subthread | Parent | Comments top
I can't find a reasonable way to get a monthly series for total world production from your link.  It will let me make graphs of individual countries, and it will let me have quarterly balances in PDF.  I want raw monthly data as a CSV or an XLS.  There's a monthly data service, but it costs 5500 euros for a single user license.
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Stuart Staniford on December 22, 2005 - 3:26am Permalink | Subthread | Parent | Comments top
And since EIA gives their data away, and OGJ charges $50, the IEA price seems rather steep.
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Stuart Staniford on December 22, 2005 - 3:31am Permalink | Subthread | Parent | Comments top
Ok - one can get it from

http://omrpublic.iea.org/

but I still have to do it one month at a time.  Grrrr.  How hard can it be to put an XLS of the data on the site.

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Freddy Hutter on December 21, 2005 - 7:25pm Permalink | Subthread | Parent | Comments top
Yes they are IEA, but not much different than the other two.  Our first depletion graphs did not go very far into the future, but for perspective we have pushed the range far into the 22nd Century.  By doing that we lost the resolution of Y2k to 2010 that many of us were concerned about as we feared an imminent peak or one that had passed (ASPO driven).  Perhaps i could graph the post Y2k extraction to illustrate the present situation.  If not, i'll try to post links to or the data series themselves.

On the matter of global unused capacity, imho, the EIA has always been conservative with in their graphs.  The IEA was showing 2-mbd spare capacity as of Sept 30th 2005.

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peakearl on December 21, 2005 - 8:12pm Permalink | Subthread | Parent | Comments top
US EIA numbers are:
2005 Jan 83750
2005 Feb 84260
2005 Mar 84540
2005 Apr 84660
2005 May 84650
2005 Jun 84290
2005 Jul 84065
2005 Aug 84184
2005 Sep 83230

Rather different, go figure. IEA are estimates and will change; Petrologistics just reduced their estimate of Nov OPEC production by 300,000/day. EIA came out with its Nov figures before the countries themselves even announced them (e.g. Mexican numbers came out just two days ago). I am suspicious of IEA numbers both for this reason and that the hurricane recovery was not as fast as they would imply.

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peakearl on December 21, 2005 - 8:33pm Permalink | Subthread | Parent | Comments top
Did you notice that Exxon/Mobil was totally wrong about even their own short-term production estimate for the ensuing 5 years starting in 2000 as illustrated by Stuart on TOD before. If they can't guess their own short-term production from their own fields over a short time span, how do we trust long-term predictions on fields they will never see?
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