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157 comments on The 2008 IEA WEO - Production Decline Rates
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157 comments on The 2008 IEA WEO - Production Decline Rates
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Here are three comments from Oil company CEOs from recent conference calls, giving some support to the higher decline rate theme:
"depletion rates for oil and gas production have surged in the past decade. Because of faster resource recovery drilling methods and lower overall quality prospects, annual oil depletion rates have grown from 4% annually to about 7% today. We need to find and produce an additional 6 million barrels of oil per day worldwide just to compensate for this depletion. The natural depletion story is even more compelling. This is why rig count reductions shouldn't last long."
Doug Rock
Chairman and CEO, Smith International
“… we see overwhelming empirical evidence that suggests the present level of drilling and production enhancement commitments are not sufficient to arrest accelerating decline rates in oil, let alone secure the targeted one plus million barrels a day capacity increase per annum the industry plans on”
Bernard Duroc-Danner
Chairman and CEO, Weatherford International
"I would say that overall we are probably slightly more pessimistic, in other words we think the client rates are slightly worse than we would have thought two our three years ago."
Andrew Gould
Chairman and CEO, Schlumberger
Nate, I imagine all these statements apply to parts of the global production stack that matter most to those who made the statements.
It is not possible to make coherent sense out of Chapter 10 of this report because it is incoherent.
Two things though that bother me:
1. IEA make an allowance for higher decline rates in the 69,200 fields not included in their data base and this seems a reasonable thing to do that sets them apart I believe from CERA. Its just that this allowance of +0.9% disappears in their final analysis (Chapter 11) and in their charts.
2. IEA are forecasting decline to accelerate going forward by 1% (on part of the stack) while CERA concluded that decline was constant.
So my best guess right now is that 4.5+0.9 = 5.4% may be a good figure to use right now and that this may increase to 6.4% by 2030. I think it unlikely that the current observed global average is much higher than 5.4% or it would not have been possible to have grown production this year.
What is the Liebigs Law of the minimum for accurate oil supply forecasts?
Is it data, or politics?
I'm very curious about the 30m bpd (more or less) of crude yet to be found plus the crude oil fields yet be be developed. in light of the statements of the companies that are charged with the development of these fields, the amounts seem extremely optomistic.
Since any 'great finds' are likely to be offshore in very deep water or in arctic regions, I don't see how the 2030 production targets could be met with less investment.]
So ... my question is ...
what are these dudes smoking?
What really strikes me is that light blue "yet to be developed" area.
How much of these are difficult/expensive to develop fields like Tupi? How many are likely to have been mothballed due to the global financial crisis and plummetting oil price? In other words, what feasible proportion of that light blue area is likely to actually undergo development?
Take that light blue away (or significantly reduce it) and we're looking at an imminent slide down the dark-blue hill...
... "Yet to be developed".
Access to reserves and uninterrupted access of crude to the production chain are big question marks and are basically non- calculable.
- There are reserve and discovery areas that are inaccessible because of political/treaty disputes such as areas of the Arctic, the Antarctic, 'borderland' areas surrounding Russia, Taiwan Strait and the oceans surrounding the Falkland Islands.
http://www.worldpoliticsreview.com/Article.aspx?id=1019
http://www.articlearchives.com/environment-natural-resources/ecology-env...
http://www.pinr.com/report.php?ac=view_printable&report_id=439&language_...
- There is supply that cannot be delivered efficiently because of interception risks, or where (substantial) risks are added to costs such as increasing piracy and militancy within and offshore Nigeria, offshore Somalia and Kenya, West Africa, and Indonesia. Piracy seems to be increasing worldwide demanding increased resources from developed countries to combat it. There is another discussion regarding piracy here on TOD;
http://www.theoildrum.com/node/4778#comments_top
- There are attacks on pipelines and other petroleum installations by militant groups; in Turkey, within the Caucausus region, Central Asia, in Iraq and occasionally within Saudi Arabia, itself.
http://www.twq.com/08spring/docs/08spring_riedel.pdf
- There are reserve areas that are questionably accessible because of climate; besides the polar reqions, the Gulf of Mexico and offshore South East Asia have been swept by increasingly powerful storms. There was a cyclone in the Arabian Sea last year, the most iontense ever recorded in the Arabian Sea, which cost significant loss of life and property in Oman and Iran.
http://en.wikipedia.org/wiki/Gonu
All of these non- geological forces work to leverage the physical extraction, refining and delivery process. Costs are costs and have to paid from somewhere, including less funding available for exploration, or exploration/development is postponed until an area is pacified.