World Crude Oil Production Forecast using Current Fields and Future Megaprojects
Posted by Khebab on December 28, 2006 - 1:18pm
Topic: Supply/Production
Tags: chris skrebowski, megaprojects [list all tags]
This is a guest post by the ace.
Being an oil and gas investor, I have a keen interest in forecast world oil production and its impact on oil prices and the global economy. After reading Khebab's story about many different production forecasts, I decided to build my own model using Chris Skrebowski's megaprojects (each project > 50,000 bpd) database and some decline rate assumptions. The annual decline rates vary from 4% for new fields, 6% for mature field workovers, 7% for mature fields to 14% (for specific field decline rates eg Cantarell). The model has 95 new megaprojects/workovers and 120 existing fields. Each production forecast for a
megaproject assumes simplistically that peak production starts on day 1 and
decreases according to the corresponding annual decline rate. The annual decline
rate is converted into a monthly decline rate.
I update the model for new EIA monthly data and new/revised project info. For example in Iran, Yadavaran and Kushk/Hosseinieh were counted as two projects on Skrebowski's database. Only Yadavaran is counted. Upstreamonline stated that they were different names for the one project. Indonesia's Jeruk which is on Skrebowski's list is not on my model as it's reserves have been downgraded recently to at most 50 mb and economic viability is no longer assured (link). Angola's block 31 NE was on Skrebowski's potential megaproject list. It is included in the model as Upstreamonline has recently stated that it will start production in 2010 at 180,000 bpd.
EIA actual data for crude oil and lease condensate (C&C) production are used. These data show a first peak of 74.06 mbpd on May05 as the beginning of the down trend.
Fig.1 A Slow Irreversible
Decline. Click to enlarge.
This scenario assumes that "Other" oil production declines at 4%/year.
"Other" oil production is from oil fields not on Chris Skrebowski's
database and not from the 120 specified existing fields
above. The "Other" category includes small field projects and small
enhanced oil recovery projects. This scenario forecasts that world C&C
production declines at about 1% per year from May05 to Nov10. The production on
Nov10 is forecast to be 70.6 mbpd.
Fig. 2 A Long Plateau. Click to Enlarge
I update the model for new EIA monthly data and new/revised project info. For example in Iran, Yadavaran and Kushk/Hosseinieh were counted as two projects on Skrebowski's database. Only Yadavaran is counted. Upstreamonline stated that they were different names for the one project. Indonesia's Jeruk which is on Skrebowski's list is not on my model as it's reserves have been downgraded recently to at most 50 mb and economic viability is no longer assured (link). Angola's block 31 NE was on Skrebowski's potential megaproject list. It is included in the model as Upstreamonline has recently stated that it will start production in 2010 at 180,000 bpd.
EIA actual data for crude oil and lease condensate (C&C) production are used. These data show a first peak of 74.06 mbpd on May05 as the beginning of the down trend.
Scenario 1: A Slow Irreversible Decline
Scenario 2: A Long Plateau
This scenario assumes an optimistic decline rate for "Other" at 1% per year
which gives some upside for yet to be discovered fields which are developed
prior to Nov10. The production on Nov10 is forecast to be 73.6 mbpd
which represents no change from Aug06.
Key Points:
Based on optimistic Scenario 2:
- Saudi Arabia is forecast to produce only 8.4 mbpd on Nov10. This assumes that the large new projects (mostly mature field workovers) of AFK (Abu Hadriya, Fadhili, Khursaniyah), Haradh, Khurais expansion, Nuayyim and Shaybah expansion are developed on time and production targets are achieved. Given Saudi Arabia's lack of recent oil exploration success, the forecast above implies that Saudi Arabia will never produce over 9 mbpd again.
- Iran is forecast to produce 4.1 mbpd on Nov10.
- World C&C production is on a plateau until at least Nov10.
Based on Scenario 1:
- The increased forecast production from Nigeria, Qatar, Angola, Brazil, Canada, Kazakhstan and Azerbaijan is not enough to offset the forecast declines from Saudi Arabia, Russia, North Sea, Mexico, Indonesia, Iraq, China, India, Malaysia and the USA.
- Given lag times of at least five years for new megaprojects to start production, world C&C production has begun a slow irreversible decline which started on May 2005.
Comments or questions would be appreciated!
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One problem I have had with Skrebowski's analysis is how he would have handled production from the East Texas Field in 1972, which was then showing a secondary peak in production. In 1973, East Texas, and Texas overall, started a terminal decline in production. In other words, how do you handle rising production from a very mature oil field?
Of course, my answer is the HL method, which Deffeyes--apparently accurately--used to predict a world crude + condensate (C+C) peak for late 2005.
And Saudi Arabia is showing lower production, as predicted by the HL method and the Texas historical analogue.
My prediction is that the world will show about a 2% annual net conventional decline rate from here. I expect Saudi Arabia to show about a 4% net annual conventional decline rate from here.
Chilling! But perhaps you could explain why you get different predictions than Skrebowski using the same data? Is it simply because you posit "6% for mature field workovers, 7% for mature fields to 14% (for specific field decline rates eg Cantarell)" whereas Skreboski just assumes a 5% overall decline rate?
Sorry, but what?
My understanding is that the nominal case is production takes a time to reach a value, maintains a rough plateau for a while, then declines at a rate determined by geology as much as economics.
Is the XLS file around anywhere so that we can see what would happen with more appropriate shapes?
And on a related matter, the megaprojects data is all very well, but by the nature of planning cycles you wouldn't necessarily expect to have any data on new megaprojects past the 2012 timeframe as yet. To me that puts a big hole in predictions of 2011+ timeframes - which is just where we would need good data to access decline rates. How can that data be found?
It used to be that you would bring the first well into production and then drill step out wells, develop better understanding of the field and then bring additional wells into production so that the production profile showed a gradual increment toward a peak for that field.
It is current common practice to assess the field and establish an overall production strategy for the entire field and then drill all the required wells so that peak production is achieved much earlier in the life of the field.
The assumptions made by ACE are not necessarily incorrect.
Agreed, but it still takes time to drill those wells - they don't appear overnight. That's particularly true of a larger field (eg megaprojects). We are talking a minimum of 1-2 years to reach that plateau stage.
Compare the shape of these graphs with those others have provided for forecast production and you can see the impact the assumptions have on available production at any date. In essence its a convolution of "field coming onstream" events with curves for expected production volumes. Different convolved shapes will have a cumulative impact on total volume (eg not getting it right is a systematic rather than random error).
Hi ace, interesting post. I imagine it took some amount of work, thank you for that.
From these tow sentences:
I understand that once a field comes on stream it goes immediately into decline. That doesn’t sound very good, It was like this that you modeled it? It’s a bit awkward, even for offshore exploration there’s usually a production plateau, giving a “boot like” production profile.
I also think that you are using decline rates somewhat high. Decline rates in excess of 10% indeed happen, but it’s not usual to observe such numbers for the entire cycle.
Anyway a good effort and a good concept of introducing different decline rates for different kind of projects. Can you obtain data for the mega-projects of the last, say, 5 years? If so, you could try these models on that data to get an idea how they work.
I use a combination of maturation rate and extraction rates to model this situation. The end result is a convolution of two exponentials, leading to something akin to a gamma distribution of order 2. An infinite extraction rate would correspond to a situation where all the taps were turned on at exactly the same time and at full extraction rate. In practice, after construction completes each will get turned on at a slightly different deferred time and with different ramp-up times. This puts the production plateau away from Time=0, or which as Luis describes leads to a production plateau.
This has a basis in stochastic modeling, and of course works best when one considers a range of fields that can be described by a statistical average for maturation and extraction (as well as fallow and construction times). I call it the oil shock model.
BTW, the best example of something that doesn't follow this general trend is the North Slope/Prudhoe Bay where it looks like the late completion of the Alaska Pipeline allowed the taps to immediately start flowing which leads to an almost immediate peak in production, i.e. the maturation was obscured by the concurrent initiation of a high-throughput delivery mechanism, which essentially deferred the production from gradual to steep.
I think the most important point of this post is that assumptions about the decline rate have a big influence on the overall production.
Their seems to be a consensus that peak is in 2010-2011 time frame mainly because of projects coming on stream. I don't agree with this and the alternative decline rate scenario's point out that indeed we may already be in decline now.
Next of course a less optimistic view on the ability to bring these large projects on line simply adding in normal above ground factor point to even the pessimistic scenario as optimistic. The chance of not having a major above ground factor effect prices in the next 5 years is practically nil.
The only above ground factor that may save the day is if our world economy suffers a major recession which is possible.
Minor point here. This only covers conventional oil right? Even w/scenario one depicted, the unconventional stuff online now and likely to come online looks like it will stave off the real nasty declines for a few years more.
Hopefully that time wont be wasted with a business-as-usual approach to energy planning.
A 2% net decline rate would yield an initial decline of about 1.5 mbpd per year. Over five years, we would see a net decline of about 7.5 mbpd. Canada's total tar sands production is about one mbpd and growing slowly. I don't know what the bitumen production rate is in Venezuela, but I believe that overall production is declining.
There are some Gas To Liquids projects coming on line, and there some Coal To Liquids possibilities, but all of these are high cost, generally low production rate projects. IMO, they will serve to slow, but not reverse the decline in aggregate oil production.
However, the key point is the export picture. Net exports, IMO, are falling much faster than overall world oil production is falling, while what the US wants to import (total petroleum) is going up at close to 5% per year.
"There are some Gas To Liquids projects coming on line, and there some Coal To Liquids possibilities, but all of these are high cost, generally low production rate projects. IMO, they will serve to slow, but not reverse the decline in aggregate oil production."
This is an inaccurate statement. In fact, the projects coming online from these sources are very significant - and if oil stays at $60 per barrel you should expect more to follow. Here are two projects due in the next couple of years just from SA ALONE that add up to 560k per day:
Saudi Arabia Khursaniyah Gas New development 2007 250 bpd
Saudi Arabia Hawiyah New development 2008 310 bpd
So, we only need about 30 Khursaniya projects to meet the net decline over five years at 2% per annum decline rate. And again, net exports are falling much faster than overall production is falling.
A couple of points.
You are only talking about accelerating our rate of extraction of finite fossil fuels, in a desperate attempt to keep the supply of Liquid Transportation Fuels (LTF's) stable to growing. Fossil fuels can be viewed as a continuum, from natural gas to natural gas liquids, to condensate, to light/sweet crude, to heavy/sour crude, to bitumen, to coal. We can get LTF's from the endpoints, but the capital and energy costs goes up significantly, and again, all we are talking about doing is accelerating our rate of extraction of fossil fuel supplies.
In regard to Natural Gas, there have been several articles suggesting that world gas supplies are overestimated, and the US case history doesn't offer much support. Our all time record high natural gas production was three years after oil peaked. In any case, Saudi Arabia has already started curtailing some projects because of a lack of natural gas supplies.
"So, we only need about 30 Khursaniya projects to meet the net decline over five years at 2% per annum decline rate. And again, net exports are falling much faster than overall production is falling."
I disagree. There will 1000's of projects over the next five years. Some big, some small. Some oil, some ethanol. Etc etc. To say that "we need 30 Khursaniya"s may sound good for alarmists - but IMO it's not really looking at the bigger picture objectively.
I agree with you on the extraction of finite fossil fuels and that this will at some point peak. I just disagree with the timing.
Ethanol?
"
Exactly ..
The problems caused by post peak oil issues occur when supply becomes significantly less than normal demand. This only takes a few years post peak.
Lets assume that the "peak effect" occurs when supply is 2-3 mbd less than normal demand.
That's why I'm concerned about peak oil now since it only takes a few years at most after peak oil before major problems occur.
What is "normal demand"? Is the demand created by 5.8l V8s normal? Or is the demand that would be created by a fleet of Prius normal? Is the demand created by people commuting on bus and rail normal? How about the demand created by EVs powered by PV?
The reality of PO only collides with the imaginary reality of a world that drives ever larger and more cars. That particular reality is simply not going to happen. Major economic problems will not occur because there is an enormous amount of waste in the system that can be cut out. We are not truly dependent on oil for survival. There will be major financial problems for those who do not manage to reduce that waste faster than the true supply will collapse. But then... people who had a 50 year warning should not bitch about that. It simply looks silly.
Infinite: What you are saying is very politically incorrect on TOD.
LOL
But it needs to be said anyway.
"Oh, I see it's taken us 3 years since we became PO-aware(or at least acknowledged that prices are high) to shift our fleet to hybrids, looks like our costs are the same as before and our problems are sol.... wait, you're saying gas is gonna cost 20% MORE next year? and the year after that? and the year after that? WTF? How can you expect me to work in these circumstances? May as well go out of business."
See: that conversation repeated time after time after time, and then tell me that major economic problems aren't inevitable. In 1929, we'd concentrated too much wealth at the top of the ladder, and let the poor produce too much that they couldn't themselves buy on their income. Is that anywhere near as serious as a 5% decline rate in the product by which we built our landscape around?
The trillions of dollars that need to be written off by the time oil consumption is reduced to a half or a third of its current level by simple geographic obsolescence will of course affect our economy in a major way if it occurs over even a decade or two. A gradual elimination of all North American imports amidst dollar superinflation, a continued third-world economic awakening, and domino-effect oil nationalism (as the peak is made apparent) seems to be entirely possible, though certainly not assured.
The reality of PO is a sustained decline rate in world supply. If that decline rate is 1 or 2%, we could probably manage with a mere acceleration of our current initiatives, like the much-lauded economic growth following the oil shocks. Relying mostly on imports makes our economy vulnerable to huge geopolitical positive feedback in the decline rate if it's anything over that, however.
And only 69% of consumption is transportation of all types: Slashing every SUV tire in the country can't really offset a significant decline rate for long.
""Oh, I see it's taken us 3 years since we became PO-aware(or at least acknowledged that prices are high) to shift our fleet to hybrids, looks like our costs are the same as before and our problems are sol.... wait, you're saying gas is gonna cost 20% MORE next year? and the year after that? and the year after that? WTF? How can you expect me to work in these circumstances? May as well go out of business."
But why is this guy giving up, instead of going to the next logical step, plug-in hybrids, which can double mileage again?
Plug-in hybrids won't solve the road problem. I've gathered and presented enough evidence I feel to prove that maintaining our road infrastructure post peak will be difficult and expensive.
People forget about the subsidies required to make personal transport cost effective but they are large. Next we can expect zero to negative growth post peak this will cause severe constraints on the amount of taxes that can be collected to continue to maintain our current infrastructure much less expand it.
So overall I don't see plug-in hybrids and being a solution for us. Certainly they should be part of the equation as oil gets more expensive but even looking out 15 years post peak we need to consider alternatives.
You need to identify the absolute best solution which is electric rail/trolley and potentially plug-in hybrid taxi's as the main transport system.
Plug-in hybrid cars would fit in this scenario as local runabouts for shopping/transport to the rail line. If that's the use scenario a all electric car could readily handle the less than 100 mile range needed for this use case.
Its questionable that they are even needed with effective alternative transport.
The end of this sort of analysis is that is far better to focus getting the replacement electric rail/trolley infrastructure in place and foster mixed use areas and basically revive the corner store. The medium term utility of personal transport regardless of power source seems to be marginal at best. Given the 15 year replacement time we can expect to replace the entire fleet twice in 30 years but in 30 years the amount of fuel available seems to be far less than needed for a hybrid fleet/road network. And this does not even account for the global warming issues around maintaining a scattered road based infrastructure.
I'd certainly buy a plugin hybrid if one was available that met my needs but I don't consider them a solution since their viability in even 15 years is questionable.
I'm relatively certain that numerous people have pointed out that asphalt can be recycled and new oil added via biofuel processes. Because of this fact, it will never become un-economic to maintain our roads as long as they are used. Besides, asphalt only uses a tiny fraction of our total oil supply. We wont be running up against that wall for at least 100 years...
This is fallacious logic. Gasoline only uses a fraction of our total oil supply. That does not extend the time that we need to think about the effects of a reduction in supply in gasoline, beyond the period when total oil supply peaks.
It's not like we can avoid thinking about asphalt for 100 years because we'll have no trouble eliminating all non-aphalt uses. Asphalt prices will rise along with everything else. Furthermore, oil currently used in asphalt may enter the energy side of the equation as a fuel, if that utility value ends up greater than the utility value of sitting in a roadbed.
>I'm relatively certain that numerous people have pointed out that asphalt can be recycled and new oil added via biofuel processes. Because of this fact, it will never become un-economic to maintain our roads as long as they are used. Besides, asphalt only uses a tiny fraction of our total oil supply. We wont be running up against that wall for at least 100 years...
We are not just talking about asphalt. A lot of other materials are used such as concrete and steel (or over passes), not to mention the energy inputs to transport materials and install them. To recycle asphalt and concrete still requires energy to transport it to the processing facility and energy to reform it. In the case of asphalt it needs to be reheated and concrete is even more energy intensive since it has to be pulverised and reheated to much higher temperatures.
In the near future road construction and maintainance materials will become considerable more expensive.
I agree to a point, but in this spoiled society if high prices alone are used as rationing tools there will be social unrest. If/when civil order breaks down it will not be pleasant for anyone.
False statement, ergo conclusions drawn therefrom are incorrect. Planetary population was near peak capacity before WWII and global starvation was a concern then. Since then the "green revolution" has allowed population to exceed that 1.5 billion cap and it is entirely dependent on fossil hydrocarbons for fuel, fertilizer, pesticides, etc.
Remove the fossil fuel subsidy and you kill approximately 5 billion human beings.
Now, you will argue that we have enough fossil fuels to feed the planet for a long time and this is true but at what standard of living? Further, you dismiss the move to alternative energy sources, alternatively powered transportation, etc., with a single sentence when in reality all of that represents tens of trillions of dollars of investment. So you are going to just write off all that decades of investment to support 6+ billion people with a wave of the hand and expect no repercussions whatsoever?
Sir, your post smacks of naivety that is laughable were the implications not so horrible.
The costs of moving to alternatives will be gigantic and will disrupt global civilization. Further, some societies will choose to not accept this at first and instead will decide to maneuver for what they perceive is "theirs", even as the US has already begun to do in the Middle East. It's already obvious that China and Russia are taking different but obviously energy related approaches to world affairs. India and Europe are showing these signs too. And if circumstances warrant, they will go to war over oil. In case you forget, the US entry into WWII was precipitated by the world's leading oil producer at that time (the US) placing an embargo on Japan, which then tried to secure alternative fuel supplies via military action. Note also that after the embargo by Saudi Arabia in 1973 that subsequently, Carter enunciated the "Carter Doctrine" which states that free access to fossil fuel supplies in the Middle East is a vital interest to the US. In case you don't speak diplomatic gobbledygook that means that the US has told the entire world that it can and will go to war if Middle Eastern oil supplies are threatened. (That's what a declaration of vital interest means. That's why Japan's reaction was so poorly taken by the world - because they had not declared the oil and rubber of Southeast Asia to be vital national interests to Japan yet they then attacked.)
In short, your post is absurd because it overlooks the ecological impacts of overshoot human population, the dependency of that population on fossil fuels, the global infrastructure investment that is centered around fossil fuels, and the historical documented behavior of homo sapiens when confronted with threats to that fossil fuel supply. You are the one that extols the economy, sir, yet in the next breath you ignore the tens of trillions of dollars of existing investment in the fossil fuel based infrastructure as if it will magically be replaced at the drop of a hat if anything threatens the fossil fuel supply.
Your contradicting assumptions are breathtaking. You have apparently ignored Stuart's documentation that it will take at least a decade and a half to turn over the entire fleet of vehicles and that is only if everyone recognizes and accepts the proposition that oil is in decline. Stuart's other work has shown that housing investment will take the better part of a century to turn over or have to be written off as lost investment. Do you even grasp the scope of the depression we are discussing by writing off the transportation and suburban housing infrastructure in almost its entirety? It seems not.
You, sir, are the one that looks silly.
GZ's casual "Remove the fossil fuel subsidy and you kill approximately 5 billion human beings." is yet another reason TOD and similar sites that push DIEOFF will never attain credibility.
Again we see an amateur futurist making brash statements w/o any sense of timeline. Like those that don't understand the Reserve/Production ratio and the concept that oil won't be at full production and then stop dead in the 40th year, neither will stock availabiltiy to the agri industry halt dead in its tracks.
The Peakster movement still hasn't grasped the work of its own advocates (campbell/laherrere/skrebowski/koppelaar) that oil won't stop on PEAK DAY. There will be flows for necessities until 2075 according to the most pessimistic of the future Outlooks (OPEC). Most of the others don't see exhaustion until the 22nd Century. The optimistic Scenarios see flow 'til the mid 23rd Century.
GZ's DIEOFF many happen. But it presupposes no alternatives at the decadal to centuric level. His post is plain nonsense with its sense of urgency.
Hello Fraudy. Good to see you still posting here. Trolling for more gullibles to pay you money for your unscientific (and not peer reviewed) bullcrap again? You might do better at some other site.
Good luck looking for more suckers for your "Fraudy" Hutter timelines.
Using "peak oil depletion" as keywords, Google has my site at #12 this week. #8 at Metacrawler (world's best search engine). That was out of 1.1 Million results. I found yours, GZ, in the bottom percentile. Great place for the bottom feeders, eh...
I don't write a blog seeking handouts from people by peddling fraudulent and non-scientific data or by trying to pass it off as such. So you are high on the Google list? Whoopdeedoo, Fraudy. Lots of sites get more visits than yours does. Does that mean they are all constructive sites? No, and neither is yours.
Now go try to recruit fools for your "pay-me" schemes elsewhere.
I wouldn’t expect your standing to be anything less than it is, for the ratio of the gullible to the informed is about a thousand to one.
Khebab, great post, thanks a million.
Chris Skrebowski's megaprojects for Saudi Arabia will likely produce far less than half the barrels per day as projected. Only the Haradh III and the Shaybah expansion will come anywhere close to the numbers projected. Haradh III will likely produce near 300 kb/d and the Shaybah expansion will likely produce between 250 and 300 kb/d. Also Manifa is the only mystery there. It has never produced a drop because of very sour oil, so no one really knows what it may produce. But being very familar with the Saudi's predilection for gross exaggeration, I would be shocked if ever produced anywhere near 450 kb/d.
All those other projects are out in dreamland. They are all very old fields that long ago reached their peak. Khurais peaked in 1981 at 144,000 barrels per day then began a very steep decline. A gas injection program was inituated in 1983 to try to restore Khurais back to over 100,000 barrels per day with no success. The field simply kept declining.
The largest one, the Khurais expansion, project at first to produce 800 kb/d, then upgraded to produce 1,200 kb/d, will lilely never reach 200 kb/d. In fact, based on the field's former production history, I would be shocked if it ever reached its former peak of 144 kb/d. And the Abu Hydriya, Fadhili, Khursaniya project will likely never produce more than 150 kb/d.
I have no idea why Aramco has attached such unrealistic figures to these new projects on very old fields. But those numbers are absurd.
Ron Patterson
IMO both projections show very stable oil production going forward, without serious disruptions. This is optimistic, but possible. If I'm not mistaken even Srebowski had production nearing 100 mbpd before the drop off, and he was the most pessimistic of them all! I have been saying for the past couple of years, even he was too optimistic and everyone was like, well, wait and see. Ha! Yeah, we'll see. Thank Jeebus for them oil sands, eh?
Well no, you are a little too high with those numbers:
http://www.oilposter.org/blog/2006/07/aspo-5-day-1-chris-skrebowski-sees...
And you say "he was the most pessimistic of them all." I doubt that, but that all depends on who you regard as "them all" Westtexas and myself are far more pessimistic and I think you will find a few more with the same opinion. We believe the peak is already in the rear view mirrow and we are currently on the plateau.
And by the way, I think 92 mb/d in 1500 days, (from July 18th) is a totally absurd number. There is just no way the world will produce that much oil in that short a time. Hell, we will never produce that much oil.
Ron Patterson
Sorry to come off sounding like that. I know there are many here who think we are past peak. I'm still steaming from the lying industry and EIA projections.