<DrumBeat: June 24, 2007 The Oil Drum DrumBeat: June 25, 2007>

228 comments on In Defense of the Hubbert Linearization Method

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ace on June 25, 2007 - 10:54pm Permalink | Subthread | Parent | Comments top

Hi Engineer,

Here is the latest update!

Updated World Crude Oil & Lease Condensate (C&C) Production Rate Forecast to 2100

The chart below is an updated forecast of C&C production rates. Actual production rates are used up to 2006. A bottom up forecast based on more than 300 projects/regions is used for the years 2007 to 2012.

The dark red line represents an estimate of true remaining reserves which is adjusted for the grossly overstated OPEC reserves. The green line is based on BP’s recently released reserves figures which includes OPEC’s grossly overstated reserves. The forecast from 2013 to 2100, for both the dark red and green lines, is an exponential fit based on remaining recoverable reserves, similar to the HL method.

Click to enlarge - This chart will be updated when EIA Apr 2007 data are released, before mid July 2007.

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memmel on June 25, 2007 - 11:58pm Permalink | Subthread | Parent | Comments top

Your showing a fairly high decline rate not sure I believe it.
You have us down the magic 4mbpd that make peak oil painfully obvious by 2010. Other people are showing it later.
We do have quite a bit of production coming online that should push this out 2012 or so ?

The decline looks to steep to me for the next few years.
I've refusing to consider this decline rate coupled with exportland.

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ace on June 26, 2007 - 3:31am Permalink | Subthread | Parent | Comments top

I also don't want to believe that decline rate. There is a lot of production coming on, but it's not enough. Recently, Aramco is only scheduling one more expansion of Shaybah so that Shaybah will reach plateau production of 0.75 MB/D instead of 1 MB/D. Aramco's Al Khafji project of 0.30 MB/D, in the Neutral Zone, is no longer on their project schedule. Aramco only has 0.5 MB/D from AFK coming on line late this year, 0.1 MB/D from Nuayyim late 2008 and 0.25 MB/D from Shaybah expansion also late 2008. It's just not enough new production to offset declines.

Many of Russia's projects have been delayed to come on line late next year. (It's tough to do work in the long cold Russian winter). Mexico/North Sea are showing very high decline rates.

People like Robelius show an optimistic peak oil date later in 2018 but this assumes that Ghawar has 150 Gb URR. Robelius does show worst case peak oil, including NGLs happening in 2008. Also note that the C&C excludes other liquids such as NGLs (8 MB/D) and ethanol/XTL. Bakhtiari/Deffeyes/Skrebowski/Campbell/Simmons/Savinar/Heinberg probably wouldn't disagree with the decline rate.

Here is the chart that the 2007-2012 bottom up forecast was based.


click to enlarge

If you believe that OPEC's reserves are overestimated by at least 400 billion barrels, the world's total URR is about 1,840 billion barrels and that the world has produced just over 1,000 billion barrels C&C to the end of 2006, then the world has produced over 54% of its total URR of C&C. This means that C&C will decline.

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Sam Foucher on June 26, 2007 - 10:21am Permalink | Subthread | Parent | Comments top

Are you taking into account the Canadian tar sands (already included in the EIA C+C data)?

The production is set to increase by 0.5 mbpd in 2007, check this post:

http://www.theoildrum.com/story/2006/10/20/142436/03

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ace on June 26, 2007 - 10:34pm Permalink | Subthread | Parent | Comments top

Hi Khebab,

Yes, I have taken into account Canadian tar sands, but I think that most forecasts are too optimistic.

Last year, I was optimistic about tar sands production but then I read your comprehensive story a few months ago when I was checking my forecast for tar sands. I also listened to David Hughes http://globalpublicmedia.com//interviews/823 who thought that tar sands production was limited to 2.5 mbd. The Hughes interview was done in 2006, prior to the possible cancellation of the MacKenzie Valley pipeline. His tar sands limit of 2.5 mbd may need to be revised downwards.

The Canadian Association of Petroleum Producers (CAPP) just released their June 2007 forecast http://www.capp.ca/raw.asp?x=1&e=PDF&dt=NTV&dn=123361

Table 7.2, page 32 of CAPP’s forecast (moderate growth case) shows the following tar sands production numbers, mbd (actuals to 2006)

2004, 0.99
2005, 0.99
2006, 1.13
2007, 1.28
2008, 1.49
2009, 1.69
2010, 1.84
2011, 2.03
2012, 2.27

My annual average tar sands forecast numbers, included in the charts above, are lower.

2007, 1.27
2008, 1.36
2009, 1.45
2010, 1.55
2011, 1.65
2012, 1.70

These numbers show an annual growth rate of 7% until 2012, when a ceiling of 1.70 mbd is assumed, which is similar to your logistic curve and the CAPP 2005 (constrained case) from your chart below.

I cannot justify using a higher growth rate than 7%/yr for tar sands production because tar sands uses huge amounts of natural gas, water, infrastructure and produces lots of carbon dioxide/other pollutants. Environmental constraints may also become stronger. Woodland Cree First Nation is challenging Shells Oil Sands expansion from 12,500 bopd to 100,000 bopd.
http://www.marketwire.com/2.0/release.do?id=745361
Tar sands could also be starting to produce acid rain which is derived from sulphur and nitrogen oxides.
http://pubs.acs.org/subscribe/journals/esthag-w/2006/aug/science/jp_acid...

It also appears that a huge source of natural gas is at risk, the $US16b MacKenzie Valley pipeline. However, the Canadian taxpayers might subsidise this pipeline so that tar sands oil can be exported to the US.
http://blog.foreignpolicy.com/node/5110
The $US25b Alaska natural gas pipeline may also be at risk.
http://www.canada.com/nationalpost/financialpost/story.html?id=397fb965-...
Delays in either or both of these pipelines could force gas prices up considerably, making tar sands oil more expensive to produce which could adversely impact the economic viability of new projects.

Even with increasing tar sands production, according to EIA production data, Canada’s total C&C production decreased slightly from the last quarter of 2006, 2.643 mbd to the first quarter of 2007 at 2.636 mbd. This probably means that Canada’s conventional C&C production is declining at 7%/yr to offset the tar sands increase of 7%/yr.

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GreyZone on June 26, 2007 - 10:46am Permalink | Subthread | Parent | Comments top

Memmel,

Ace has spent huge amounts of time in the existing data, something I have never seen you do. If this is Ace's forecast, then I believe that, based upon his assumptions, this is a valid forecast. He always includes all the mega-projects known to be coming online in the future. But generally he has posted the "near term" graphs that focus on now to about 2012. Rarely has he posted this larger graph.

Also, Ace is very close to Bakhtiari, who predicts 55 mbd by 2020. Ace's prediction shows just under 50 mbd by 2020 or 55 mbd by 2020 if you believe OPEC's reserve numbers.

You've talked the talk but the scenario in front of us is worse than most on this website are willing to admit, Far, far worse. Take your economic collapse scenario and expand it and speed it up at the same time. Then you might be closer to the truth. Data like Ace's is why we need to move, as an entire civilization, right now, on this issue. We're almost out of time. And this is the killer of techno-BBs such as those hoped for by some here. If the global economy collapses too fast you are not going to have solar PV producers still producing, nor high tech wind, nor anything else. Add in the global shortfall in grain production for 7 of the last 8 years and we're closing in on several nasty problems at the same time. People who can't eat cannot even be conscripted into slave labor.

Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett

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memmel on June 26, 2007 - 12:50pm Permalink | Subthread | Parent | Comments top

Ace has spent huge amounts of time in the existing data, something I have never seen you do.

I've come close to doing some modeling on my own but I have nothing to add of any value over whats been presented. So I'm not sure where or how I could contribute modeling. I've got lots of ideas I'd like to model but it would be a full time job and in general requires data we don't have. The crux of the problem is to do anything beyond whats been done on the modeling front requires data thats not in our possession.

Take my irrational markets and shortages model all you get is almost immediate system collapse so I'm not sure what to model. My other keen area of interest bunker fuel has most of the data behind a paywall and given the data the model looks complex to me. I've looked for free databases of historical price records and even emailed bunkerworld but no reponse.

The model he presented was the most aggressive I've seen so
maybe I was a bit rude in asking but yes I wanted to understand why/how he got it. I'm sorry if it came off rude.
My ant antenna's went up and got burned off by the implications of the graph.

Now with that said we are completely dependent on total liquids and the EROI of these total liquids to keep this house of cards from collapsing early. Outside of NGL's the EROI of the rest is suspect and NGL's probably are offset by the declining quality of the crude. So even if you throw in all liquids your back to Aces curve. BTW this is why I'm not all that interested in all liquids from a EROI perspective with the decreasing quality of crude thrown in they are pretty much neutral or 1:1 on EROI and can be discounted at best say 3:1 and thats probably pushing it.

Given the way I handle none C&C sources Ace's graph caused me to sh%@t my pants which can have the effect of causing a posting to be a bit rude if done before the trip to the bathroom.

Sorry.

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GreyZone on June 26, 2007 - 4:04pm Permalink | Subthread | Parent | Comments top

I didn't see it as rude at all! More like complete shock. :)

But this is the problem that Ace, WT, Khebab and others keep talking about - decline looks horrid and while the economy can muddle through a few years of tightening its belt, you cannot tighten your belt forever.

By the way, if you've been reading Ace's plots ever since he started, you would see the all liquids peak creeping forward from early 2009 now into 2008. It's moving towards us and we are moving towards it. If it happens in 2008, things could get ugly fast. Also, Ace is predicting noticeable shortages somewhere in the world as early as this fall which probably will create price spikes. So if we get the $80 or $85 per barrel oil in the fall, don't be lulled into thinking the worst is over if it falls again. Volatility is the buzzword of a resource constricted market.

Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett

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memmel on June 26, 2007 - 5:09pm Permalink | Subthread | Parent | Comments top

Yes I figured out that this latest plot has shortages starting this fall not just tight prices. We can only hope that KSA is holding back a little bit at least and will up production once oil crosses 100 a barrel. Also we effectively have a economic crisis scheduled for the late fall early winter. With Aces work this event becomes almost 100% certain. This should cause demand too back off some. So the first shock wave esp if KSA has any excess capacity will give us a small Indian summer.

So regardless of when the first shock from peak oil hits I see a bit of a breather before the next one. I'm guessing it will take three shocks before things start to crumble.

So using Aces work we have a shock sometime this fall.
If we have a hard winter a shock then if not we squeeze by.

This puts a much large shock next summer as we don't have a summer driving season but widespread shortages or very high prices. The fall of 2008 should be another breather period.
2009 is toast.

Now if Ace is too aggressive we get a weaker signal this fall
which is a unexpected price run up when prices should be falling I think a lot of people consider this very likely.
Late summer of 2008 would be shortages etc.

So Aces work moves everything up by 6-8 months. And if we sneak by without a hurricane this year I doubt we make it next year and certainly not for the three year initial crisis period 2007-2008-2009. We are going to have one sometime and in general the chances of a major above ground event making a bad situation horrible is close to 100%.

To some extent a strong hurricane this year causing major problems would be a good thing since it would give use a overly strong initial shock.

Personally the basic problem I have is the recent insanity of the housing market still has not blown off and its really hard to make a prudent buying decision in most markets.
And since you can figure even if prices reverted to the mean quickly the value of property will be very low for a looong time so your only buying it for a personal garden but your locked in forever in effect since you effectively cannot sell.

But waiting till land/houses is dirt cheap is pretty dangerous because it may be difficult to execute a move at that time and of course any fiat money based savings could get wiped out in the interim.

So I need to see a serious crash in prices in the RE market but things still stable enough and the currencies not trashed so I can make a move. Its going to be very very tight. I have a plan B but Ace is mucking up my A plan.

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228 comments on In Defense of the Hubbert Linearization Method

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