The Oil Drum

63 comments on Whither The Bumpy Plateau?

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westexas on February 25, 2008 - 11:43am

Based on EIA (C+C) data, the world 2006 annual decline rate was -0.4%/year, and through November, the 2007 annual decline was was about -0.4%/year.

It's interesting to compare this to the initial Lower 48 (C+C) decline rates:

1970: 9.41 mbpd
1971 9.25 (-1.7%/year)
1972: 9.24 (-0.1%/year)
1973: 9.01 (-2.5%/year)

The long term Lower 48 decline rate, after intense drilling and enhanced recovery efforts, has been about -2%/year.

Note that world production numbers today, unlike the Lower 48 in the early Seventies, are helped by tar sands mining operations.

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memmel on February 25, 2008 - 2:13pm

I think that 1970's trends may not be correct for today. Primarily because of the technical advances in extraction that have happened. Either increased extraction efficiency will result in a accelerating decline rate or reserve additions from better extraction and discovery technology are real and we can keep a fairly flat base production.

The exhaustive drilling campaign in Texas in the 1970's is a good initial fit but it was not smart drilling like we have today. And back then you really could not keep production high right to 90% depletion this is from horizontal drilling and smart completions.

A big factor and one reason that oil technology has advanced like it has is that most of the current oil reserves are controlled by national oil companies forcing the private companies to develop marginal reserves the moment they are economically feasible. Thus we have exploited reserves that probably would not have been developed as early if the national oil companies had not taken control.

So I think we are entering uncharted territory. If technical advances have as I suspect primarily lead to increased extraction then we see a asymmetric decline with accelerated decline rate.

If however we really are better at finding oil and have increased recovery then we should be able to stave off declines as we have to date and see yet again flat to increasing oil supplies in 2008. It also makes the case for a gentle decline esp if Iraq/Iran can be settled and technical advances are applied to fields in these regions.
Also of course Russia could easily change some of its laws and get a bigger inflow of western extraction technology. Of course a lot of politics need to be settled but you can see that if we can see more areas open up over time then we get a slow decline rate.

However is the world decline rate is accelerating then the increments added in 2008 probably will not prevent a decline of some magnitude. There is a chance that the data will not be decisive but we will just have to see. Depending on how it moves we may get a really good idea of what the future has in store for us. If I'm right and we see a 2mpd decline despite the new increments then we are in trouble.

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biologist on February 25, 2008 - 3:00pm

Is the whole world like Texas? We don't know yet. I played around a bit with ANOVA and we need at least four "post-peak" years to prove that the world is different. Will be an interesting wait...

Year post peak Texas World
1 -1.7 -0.4
2 -0.1 -0.4
3 -2.5 0.0???? Still, sample too small...
4 ?? ???? We will know

Until 4 PP, repeat of the same data will not add additional information.

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westexas on February 25, 2008 - 3:54pm

Well, as much as Texans like to think otherwise, Texas is not the only state in the Lower 48 states.

What we can say is that mathematically, based on the HL models, the world in 2005 was at about the same stage of depletion at which the Lower 48 peaked in 1970, and we can further say that, based on EIA (C+C) data, the world, just like the Lower 48, has shown two years of slow production declines after crossing the vicinity of the 50% depleted mark on the HL plots.

BTW, when Hubbert did his low case/high case Lower 48 projections in 1956, he found that a one-third increase in URR delayed the projected peak by all of five years.