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263 comments on DrumBeat: May 29, 2007

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ace on May 29, 2007 - 9:37pm Permalink | Subthread | Parent | Comments top

Updated World Production Forecasts including UK Oil Production Decline

The UK Govt must believe that peak oil is many decades away! The UK is building more roads while continuing to import more oil. The UK has been a net importer of oil since 2005.

The UK Department of Trade & Industry (DTI) states that UK had proven and probable (2P) reserves of 6,120 million barrels at year ending 2005 (816 million tonnes of crude, condensate & NGLs * 7.5 barrels/tonne).

Ultimate recoverable reserves for the UK is flattening as shown in the chart below. This reflects the lack of recent large UK oil discoveries. No new oil discoveries provides more support to continued decline in UK oil production rates.

Fig 1 - Ultimate recoverable reserves including possible reserves (UK DTI) - Click to enlarge

UK DTI production for 2006 was 535 million barrels. Thus, UK reserves (2P), for year ending 2006, is estimated to be 5,585 million barrels (6,120-535).

The reserves to production (R/P) ratio is only 10.4 years (5,585/535). This means that the UK would have no more oil production after ten years, assuming the UK could produce 535 million barrels per year. In reality, the oil production declines each year so that the UK would still be producing oil after ten years, but at low rates.

The 2006 annual depletion rate of the remaining reserves is a high 8.7% (535/6,120). If the depletion rate is held constant at 8.7% for 2007, then the 2007 UK production will be 486 million barrels (.087*5,585). This represents an annual production decline rate, from 2006 to 2007, of at least 9.2%, which disagrees with this optimistic DTI forecast which shows a production increase from 2006 to 2007. The trend from a peak in 1999, from the DTI forecast, shows a consistent decrease in annual oil production. If depletion rates decrease down to a more reasonable 6%, UK oil production could drop suddenly this year.

Maybe the new high sulphur oil production, starting in 2007, from the Buzzard field is causing the DTI forecast increase. However, Buzzard’s 60 million barrels/year will only be just enough to keep UK production constant from 2006 to 2007. In 2008, the irreversible steep production decline would continue.

The effects of these UK production decline rates have been included in the following updated charts which are derived from a bottom up forecast from over 300 oil regions/megaprojects.

The chart below shows the annual production rate declining at 1%/yr until mid 2009. Afterwards, the production rate declines faster at 3%/yr to the end of 2012.

Fig 2 - Forecast Crude Oil & Lease Condensate Production - Click to enlarge

World total liquids production has been on a peak plateau since the start of 2006. Increased forecast production of natural gas liquids and ethanol should extend the plateau until the end of 2009. After 2009, the world will use less oil.

Fig 3 - Forecast Total Liquids Production - Click to enlarge

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PeakTO on May 29, 2007 - 9:52pm Permalink | Subthread | Parent | Comments top

Ace,

Great work, and thanks for the update.

But, do you EVER post any good news?! :-P

3% decline within 5 years, and less than 80MMBPD by 2010 (eyeballing) not a pretty picture.

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doctorbob on May 30, 2007 - 6:49am Permalink | Subthread | Parent | Comments top

ace - thanks for this. You are right that Buzzard was expected to halt - for just one year - the 9-10% annual decline in production. However, I recall someone here saying a few weeks ago that they were not sure this had actually happened. Does anyone have info on this - has Buzzard come fully onstream to offset the declines elsewhere, or have declines of other fields accelerated so much that Buzzard is unable to stop an overall fall in production?

Maybe Chris Vernon, MUDLOGGER or one of the other seniors working in Scotland have some info.

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doctorbob on May 30, 2007 - 7:40am Permalink | Subthread | Parent | Comments top

ace - another late comment - I see you have moved the total liquids peak from July 2009 forward to mid-2008 compared to the last version I saw. What new data is this based on?

From your chart a DRASTIC and ever-widening gap between demand and supply will exist in little over two years from now. That will surely see the world economy in massive trouble.

Maybe this should be re-posted at the top of today's drumbeat or be an article in its own right with further explanation.

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ace on May 30, 2007 - 9:50pm Permalink | Subthread | Parent | Comments top

Hi doctorbob,

The forecast data have changed due mainly to applying appropriate annual depletion rates of remaining reserves to many other countries after applying it first to Saudi Arabia.

For Saudi Arabia, the annual depletion rate for remaining reserves is assumed to stay below 5.5%/yr as shown by the black line. This produced the declining production rate after mid 2009, shown by the blue line.

Saudi Arabia Forecast to Dec 2020 - Click to enlarge

The main reason for peak total liquids moving to mid 2008 is that I decided to apply the constraint of limiting the annual depletion rate of remaining reserves to other countries which have passed peak production. Essentially, this means that the production decline rates are steeper when the peak is passed as shown by the chart below. At the summit of the curve the production decline rate is zero. A year after, the decline rate is small. However, ten years later the decline rate can be steep.

US Oil Production Theoretical Curve - Click to enlarge

Another example: The North Sea peaked in 1999 followed by three years of very low production decline rates of less than 1%/yr. Seven years later, in 2006, the production decline rate is 9-10%. It could increase to 12% in 2008. Past 2008, the decline rate could drop back to 10%.

Before applying this annual depletion rate methodology, the North Sea C&C forecast for mid 2009 was 3.7 mbd; after 3.3 mbd. Russia: before 9.4; after 9.0. Mexico: before 2.8; after 2.6. USA: before 5.5 mbd; after 5.2 mbd. Other countries also changed.

Before the changes, the total liquids peak was 87 mbd on July 2009. Now, it is 86 mbd on July 2008, but it was also 86 mbd on July 2006. Maybe peak total liquids has passed. Nevertheless, I think that specifying a “peak oil plateau” is more helpful than forecasting a peak month. When world total liquids production goes off the plateau at the end of 2009, the production rate could fall quickly. As Colin Campbell says "It's not as important when you peak, it's the vision of the long decline that follows."

I will post an update of the forecasts after the next EIA data release, due next week.

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