The Oil Drum

51 comments on A Gentle Disagreement on Turkmen gas

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westexas on April 10, 2006 - 8:21am

Re: "False Peaks"

We have seen this is in many places, such as Texas. The production declines that count are the ones at or past 50% of Qt.

Question: what do these regions/countries have in common:

Texas; Lower 48; Total US; Russia; North Sea.

Answer: Oil production from these regions has never exceeded the peak they saw in the vicinity of 50% of Qt.

The world, from conventional sources, is at 50% of Qt.

That is why I think it makes sense for Stuart to look at the detailed production numbers. These small production declines--and small declines in imports (IMO)--are small pebbles falling down the mountain just ahead of a massive landslide.

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westexas on April 10, 2006 - 9:20am

Re: Hubbert Linearizaton (HL)

The HL method allows us to estimate the area under the curve on a production versus time graph, which is total estimated recoverable reserves, or what Deffeyes calls Qt. The assumption is that production peaks at about 50% of Qt, and historical records support this.

IMO, for HL to really work we need a region with about two mbpd of production for about 20 years.

Unless one produces a field at a high enough rate to damage it, the production rate, within limits, tends not to have a major effect on cumulative production. Therefore, a region, using a gross simplification, can be compared to a bottle full of water. You can pour it out a a minimal rate all the way up to the maximum rate. But the rate that you pour it out has no effect on the volume of water in the bottle.

The two largest discrete regions which have rolled over and gone downhill in the vicinity of 50% of Qt are the Lower 48 and Russia. Russia had wildly inconsistent production data after the fall of the Soviet Union (in 1989), so Khebab and I just used Lower 48 production data through 1970 and Russian production data through 1984, to predict future production using HL

Using only production data through about 50% of Qt, the HL method was 99% accurate in predicting cumulative Lower 48 production through 2004 and the HL method was 95% accurate in predicting cumulative Russian production through 2004. In other words, the water was poured out of the bottles at different rates, but the rates had no effect on the volume of water.

First, this suggests that Deffeyes' prediction that we have used 50% of total conventional oil reserves should be given a lot of credibility.

Second, this suggests that Russian oil production, and therefore its exports, and in fact the exports from the top four oil exporters, are going to be falling rapidly. Thus, my focus on US imports year over year.

Have we seen very sharp production declines? Yes,. Consider Cantarell (the second largest producing oil field in the world), where the remaining oil column is about 850', and it is falling at the rate of about 300' per year.

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Dan Ur on April 10, 2006 - 11:42am

So given these numbers and thoughts. Where and when do we see a World shortfall of production?

If the USA does something with Iran whatever it is in the next year or at most 2 years, at least before the 2008 Presidental Elections. Where will oil production worldwide go? Down due to conflict, and stay down for years, and never recover. or what?

ps.

I hate being an information junkie with the DOD on my back. Federal Law is a nasty bedfellow. Growl.

IMHO if Pakistan loses its current leader, They won't own the nukes anymore.

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westexas on April 10, 2006 - 12:42pm

"Where and when do we see a World shortfall of production?"

I think that we will see a drop off in oil exports before we see a large overall decline in world oil production.

I think that are seeing a drop off in net oil exports right now. I know that the data are noisy, but what is worrisome is the trend. The drop off in oil imports into the US is widening as time goes forward.

Ponder the impact on US imports of just the crashing production from Cantarell. To predict that we will see increasing production and increasing imports is to predict what historically has never happened, based on the HL model.

I expect to see $100 oil this year. The trillion dollar question is what happens to demand.

Longer term, I think that Simmons is right, i.e., that we will see sustained prices of $200 or more (in 2005 dollars) in 2010.

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