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207 comments on How Realistic is EIA's US Domestic Oil Supply and Demand Forecast?

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westexas on April 6, 2008 - 10:10am Permalink | Subthread | Comments top

Top five net oil exports (EIA for 2005 & 2006, my estimate for 2007, Total Liquids):

2005: 23.5 mbpd
2006: 22.7
2007: 21.7 (Est.)

This is an average decline of 900,000 bpd per year. These net export declines tend to be approximately linear, i.e., approximately a fixed volume per year, which is an accelerating decline rate. In any case, if we divide 23.5 by 0.9, we get 26 years, which puts the top five at zero in 2031, which is also the middle case in the Khebab/Brown paper on the top five.

Our middle case is that it will take all of the net oil exports from Saudi Arabia, Russia, Norway, Iran and the UAE in 2016 to meet current US net oil import demand.

My recurring question for the EIA, API, ExxonMobil, et al:

Texas peaked in 1972, and we have seen a long term decline rate of -4%year. The North Sea peaked in 1999, and we have seen a decline rate of -4.5%/year (C+C in both cases). Both regions were developed by private companies, using the best available technology, with virtually no restrictions on drilling. If oil companies can't reverse the long term declines in these two regions, why would they be able to reverse the conventional declines anywhere in the world? Note that oil prices went up about ten-fold from 1972 to 1980, and oil prices went up about four-fold from 1999 to 2007.

In post peak conventional regions, it appears that Increased Drilling + Higher Oil Prices = Lower Crude Oil Production

BTW, some estimates of combined net exports from Venezuela and Canada--the two largest sources of proven nonconventional oil in the Western Hemisphere--show a decline in net exports from December, 2006 to December, 2007.

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beggar on April 6, 2008 - 10:50am Permalink | Subthread | Parent | Comments top

WT -- as others have noted in response to this discussion, it seems that some lipservice is paid to conservation and developing alternative energy sources, but the focus on new domestic drilling seems to be touted as the vital element of any energy plan.

Is that a fair assessment of the main discussion that Gail participated in?

Does that seem to be a fair assessment of the energy policy we need to implement -- more domestic drilling everywhere we can, and then development of alternative energy sources, alternative transportation options, and other conservation efforts?

I myself think that we need to do everything possible at once, but special priority must be given to conservation, as we will not be able to develop new oil and gas resources fast enough to cope with a sudden crisi, and will not even be able to cope with declining imports without a great deal of conservation.

Finally, I think that conservation fits in well with addressing the parallel problem of Global climate Change -- even better than adding new alternative sources and better than more drilling.

Conservation is the closest thing to a silver bullet that we have, and yet is the least emphasized in too many discussions.

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Gail the Actuary on April 6, 2008 - 11:10am Permalink | Subthread | Parent | Comments top

Chevron really is talking about conservation, and I think conservation has to be a major part of whatever combination of things we decide to do.

One of the points I was trying to make is that if governments / oil corporations continue to put out this nonsense, no one will get the idea that conservation is really needed.

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TechGuy on April 6, 2008 - 12:33pm Permalink | Subthread | Parent | Comments top

Chevron really is talking about conservation, and I think conservation has to be a major part of whatever combination of things we decide to do.

Conservation can only be applied to domestic energy supplies. If we conserve by cutting back on only imports, they just be consumed somewhere else, such as China and India.

It would make sense to using existing imports to change the infrastructure (ie more rail, more nuclear, more energy efficient homes and businesses). However there is a catch-22. If the US came out tommorow and announced it was starting a mitigation program for depleting energy resources, so will the rest of the world. With in weeks, every energy exporter (oil, coal, uranium, natural gas) would announce drastic production cuts as exporters choose to conserve there remaining reserves, thus the world loses its ability to begin mitigation programs. Should such a scenerio play out, it would almost certainly cause another world war. If an industrialed power faces a staving population, it doesn't have very much to lose by going to war to obtain resources for its survival.

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Gail the Actuary on April 6, 2008 - 1:28pm Permalink | Subthread | Parent | Comments top

I think that conservation just makes the available oil go farther. 100% of what is available will be used regardless.

I think this may even be true for coal, although it isn't as portable. If we don't build coal-fired electric plants, someone overseas will. I understand our coal exports are up this year. I'm not saying that I think that this is right--just that that is the way it is.

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Nate Hagens on April 6, 2008 - 3:19pm Permalink | Subthread | Parent | Comments top

Conservation does more than make the oil go farther. Rather than tell people to conserve because we are running out, if we ground behavioural change in ultimately selfish (Darwinian) rationales, that we can be HAPPIER and healthier by using less energy, then it makes our society (or whosever CHOOSES an active powerdown strategy) more resilient once/if there are forced reductions in supply. Yes, that means the Chinese will use a greater % of the remaining oil. But a) we will be better off having restructured so that we are not as dependent on liquid fuels and b)if we're successful China might look to us as a role model. They certainly have so far..."To Get Rich is Glorious..",etc.

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oregon7 on April 9, 2008 - 2:49pm Permalink | Subthread | Parent | Comments top

Hmmm. I'm trying to imagine any circumstance that would prevent humanity from transferring all the available carbon in the ground into the atmosphere.

If we reduce the demand that keeps the price lower... sustaining consumption.

If we raise the price that lowers the demand... but creates vested interests (governments with tax revenues) that will support extraction and use.

If we actually face industrial or civillizational collapse... global depression... that might temporarally slow the transfer from ground to atmosphere.... but with the massive reduction in demand, oil/coal/gas prices will plunge, supporting eventual carbon based economic recovery.

It's hard to imagine how we'd reach a condition where there were huge carbon pools in the ground that we did not use to extract energy from and dump into the air. Poverty is too cruel. Energy is too attractive. Global warming a problem of the commons, not of the individual country or person.

It seems like a true Malthusian dilemma.... we must eat and reproduce up to the limits of the system. Jared Diamond likes to point to some island cultures that managed to self limit. But these were small face to face cultures by and large. There would have to be a kind of global solidarity that said "we recognize that there is a giant "food" source in the ground (fossil fuels), and that if we eat it (extract its energy) and dump it into the air, we all die.

But that fossil fuel will always sit there (if we do not consume it) tempting nations with the energy riches it offers. Is humankind capable of dieting? Probably not unless everyone agrees to the same diet, and everyone feels that his/her nation has an equal chance at life and comfort. Otherwise it will just be a mad rat scramble to the top of the jar, everyone stepping over everyone to get the last bits of energy.

Maybe if alternative energy systems could actually be cheaper we could remove the incentive to extract every last bit of fossil fuel and dump it into the atmosphere.... and maybe that will get easier to do as we slide down the slope of oil production and costs increase.

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Aniya on April 7, 2008 - 12:51am Permalink | Subthread | Parent | Comments top

Hi Tech,

This is true, and yet seems a little sad (once I read it over):

re: "It would make sense to using existing imports to change the infrastructure (ie more rail, more nuclear, more energy efficient homes and businesses)."

If we (US) use the imports for infrastructure change without telling exporters why we are doing so...I don't know, just sad, really. They (like everyone) deserves the truth.

There is the option to begin these changes and offer to...share any insights or technology or whatever (methods? principles?) - then at least there's a little balm for the conscience.

re: "If the US came out tomorrow and announced it was starting a mitigation program for depleting energy resources, so will the rest of the world."

As well it should - the rest of the world should also begin mitigation.

I'm not so sure your summary really describes the situation.

We have the overwhelming dominance - (can someone characterize it in quantitative terms? Or, am I mistaken in what I say?) - of the multinational corporations. AKA "Global-ization" - (as it is so benignly termed).

These multinationals are really non-state - or, I should say - *"supra-state"*, actors.

They are the ones who have to "lose" or "change" if there is to be meaningful "re-localization".

They could also (in theory) decide to change ahead of time - ahead of being forced to, and/or participating in and/or being victimized by - the crash.

Likewise,

re: "With in weeks, every energy exporter (oil, coal, uranium, natural gas) would announce drastic production cuts as exporters choose to conserve there remaining reserves, thus the world loses its ability to begin mitigation programs."

A couple of points:

1) What about this: Let's assume every energy exporter already knows the score.

Don't you think this is a possibility? i.e., the entities/persons closest to the scene of the energy businesses know the score.

And they are not making these drastic cuts (intentionally) now. Are they?

2) The same logic of mitigation fairness or ethics would hold for exporters - i.e., they *should* use resources to mitigate, while at the same time helping the rest of the world mitigate.

re: "If an industrialized power faces a staving population, it doesn't have very much to lose by going to war to obtain resources for its survival."

Didn't Steiglitz's book show that the energy (if we can equate it in some rough way to money) cost of the US invasion of Iraq cost more than the gained control of oil?
(Or, again, am I mistaken about this?)

The opposite is true - the industrialized power has very much to lose.

Which doesn't mean it won't make the attempt.

But it does mean that the logic of the situation does not support the attempt.

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FiniteQuantity on April 7, 2008 - 2:57pm Permalink | Subthread | Parent | Comments top

Conservation can only be applied to domestic energy supplies. If we conserve by cutting back on only imports, they just be consumed somewhere else, such as China and India.

If we banned imports from China and India we would give them the incentive to do a lot more conserving.

Anytime conservation is discussed, one things needs to be first and foremost - population growth. If it doesn't stop, conservation is futile. If it reserves, it becomes a great conservation in itself. United States population in 1970 - 200 million. United States population today. 304 million. United States population in 2050 - projected to be 450 million.

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FiniteQuantity on April 7, 2008 - 3:01pm Permalink | Subthread | Parent | Comments top

Conservation can only be applied to domestic energy supplies. If we conserve by cutting back on only imports, they just be consumed somewhere else, such as China and India.

If we banned imports from China and India and Mexico we would give them the incentive to do a lot more conserving. Imports would also include people. Some people would give a knee-jerk reaction that this policy would be an economic disaster. Let's try it first and see. I think that America having to make stuff again would be quite beneficial. And I think workers would benefit most of all.

Anytime conservation is discussed, one thing needs to be first and foremost - population growth. If it doesn't stop, conservation is wasted. If it reverses, it becomes a great conservation in itself. United States population in 1970 - 200 million. United States population today. 304 million. United States population in 2050 - projected to be 450 million.

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btu on April 6, 2008 - 12:43pm Permalink | Subthread | Parent | Comments top

I agree conservation should be the first step in reducing energy needs, if you can live as well using less energy, what is the downside? I had hoped the Minnesota CO2 reduction legislation passed recently would give a major boost to conservation programs but from a building codes standpoint, I see no efficiency improvements for the foreseeable future. This a great opportunity lost im my opinion.

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