The Oil Drum | May 2008 EIA Oil Production Record. Will it Too be Revised Downward?

158 comments on May 2008 EIA Oil Production Record. Will it Too be Revised Downward?

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Datamunger on August 7, 2008 - 11:06am

As far as I can see, the debate is over regarding the peak in conventional oil production.

In their 'high price case', the EIA says conventional liquids will peak soon (2010). It will be earlier than that, of course, because they lump natural gas plant liquids with conventional crude oil to get what they call conventional liquids. Even ASPO believes natural gas plant liquids will increase in coming years. So, even with NGPL increasing, the EIA says peak 2010. The difference between the EIA's 'high price case' and Deffeyes' 2005 peak has diminished to just a few years -- maybe 3.

They currently regard their high price case as more likely than the 'reference case'.

I used "conventional oil" in the title of the graph below rather than "conventional liquids". You can clearly see how the EIA has revised their views over the years.

EDIT: I should add there is likely to still be plenty of debate on the shape of the slope post peak.

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Nate Hagens on August 7, 2008 - 11:14am

Excellent graph!

As far as I can see, the debate is over regarding the peak in conventional oil production.

Given that track record and systematic positive institutional and governmental bias, perhaps amateur hour is not yet over??

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davebygolly on August 7, 2008 - 1:17pm

EDIT: I should add there is likely to still be plenty of debate on the shape of the slope post peak.

The production curves of individual fields and regions may tend towards being more or less bell-shaped (is that true?), but I can see a reason why the world curve would have a sizable plateau.

Because there's a global market in oil, there's no immediate crisis for those large consumers that can buy or otherwise extract the oil from the global market. But matters are quite different in the case of the global peak. Here, given the way things are, there's bound to be a desperate attempt to ward off decline. And it can no doubt be done for a while.

Of course that flattening, a long plateau, means the dropoff is sharper when it does arrive.

Pure speculation -- caveat emptor.

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knightrd on August 8, 2008 - 12:20am

Because there's a global market in oil, there's no immediate crisis for those large consumers that can buy or otherwise extract the oil from the global market. But matters are quite different in the case of the global peak. Here, given the way things are, there's bound to be a desperate attempt to ward off decline. And it can no doubt be done for a while.

This desperation combined with lack of adequate policy change is the worst nightmare regarding peak. I don't place much importance on the idea of a global peak per se. I'm more concerned with the stupidity of the mob mentality.

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ChrisN on August 7, 2008 - 3:24pm

I just love that graph.

Wasn't late 2005 roughly when Fatih Birol replaced Claude Mandil as the face of IEA? (Anybody?) Birol is a peaker and started making statements (and revising estimates) in stark contrast to the Mandil-led regime. I have a theory that this may have effectively shamed EIA into coming correct as well.

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Euan Mearns on August 7, 2008 - 3:39pm

So what have you and Nate been smoking tonight?

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ChrisN on August 7, 2008 - 3:44pm

Like I said, it's just a theory...and I wasn't able to figure out when Birol became the go-to guy...what is your recall?

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Euan Mearns on August 7, 2008 - 4:05pm

Hi Chris - I'm on vacation in S France and have succumbed to some of the local pleasures. Rumors circulating in Scotland that the Sun had gone out I find were over done.

I likely agree with your analysis that Fatih Birol has brought a new sense of realism to the IEA - BUT - the 2008 estimate showing crude production rising to over 80 mmbpd in 2030 is hallucinatory.

What event in the early 2020s is going to turn oil depletion around?

It is interesting to observe the shifting perceptions from 2006 to 2008. 2007 was a bad year for forecasting?

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ChrisN on August 7, 2008 - 4:19pm

You lucky dog...it's been WAY too long since I sampled the pleasures of Provence! Have a duck confit or an epoisse for me.

Agreed that the projections of both are still too optimistic, but I think they're backing into the truth slowly. I, for one, will be extremely interested to see how EIA responds to the IEA report in November.

It's easy enough to say that the supply problem will resolve itself more than a decade in the future, if palliatives are what you're after. Such projections rarely get called out. So that's a nice little safety zone for them.

I think 2007 wasn't a bad year for forecasting so much as a good year for optimism. Energy stocks were all on a tear.

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Rembrandt on August 7, 2008 - 5:02pm

Nobuo Tanaka replaced Claude Mandil his position at the IEA. Fatih Birol is still the chief economist. It is said that the changeover from Mandil to Tanaka did lead to a different perspective within the IEA that is now driving upwards. But I have no proof of this, which makes it speculation.

I don't think this has anything to do with the EIA monthly corrections. Doesn't sound logical at all.

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ChrisN on August 7, 2008 - 5:13pm

Yes, but Tanaka is rarely mentioned in the press, at least on this side of the pond. At some point--wish I could nail down when--the spokesman reguarly cited in the press switched from Mandil to Birol, which seemed to correspond with a distinct change in the tone of their announcements. Scuttlebutt I heard at ASPO-USA last year was that it was due to Birol's being convinced of a relatively near-term peak oil. My point about EIA is that they seem to have followed IEA, starting two or three years ago, in downward revising their projections. (Sorry, I didn't mean the historical monthly corrections.)

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Joe Average on August 7, 2008 - 7:35pm

Hey, even I can follow that graph!

Perhaps when the Olympics are over, you can (try and) impress it upon MS media; tie it in with those current "white-out" back-drops the morning shows keep broadcasting. Or do they need the oil price to veer north again?

(The problem I currently have with with global-production graphs is, although they look flatish, they don't yet seem "scary" - to Average Joes and Janes such as myself, that is. And not-scary indicates little meaningful talk, much less action).

Regards, Matt B
From the Land Down Under

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