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96 comments on IEA WEO 2008 - World Oil Forecasts using Wikipedia Megaprojects, Dec 2008
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96 comments on IEA WEO 2008 - World Oil Forecasts using Wikipedia Megaprojects, Dec 2008
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Nice analysis! Thanks for all of your work and Khebab's work on this.I know that a huge amount of effort is going into keeping up the database.
You have been doing these forecasts for a while now. Are your results staying fairly much the same, or are they changing in one direction or the other? How has the information in the last year changed your thinking about future oil production?
The results are staying pretty much the same.
Due to the recent credit crisis and low oil prices many oil projects have been suspended. Fig 8 includes the impact of these suspended projects.
However, if there are further suspended oil projects then the decline rate in Fig 8 could be more volatile. Nevertheless, the long term forecast in Fig 10 should not be affected by the current economic crisis.
A key uncertainty of the forecasts in Figs 8, 9 and 10 remains Saudi Arabia. If my assumption about Saudi Arabia's ultimate recoverable reserves (URR) is too low then the decline rate in Fig 8 could be much less. The updated long term forecast for Saudi Arabia (including half of Neutral Zone) is below. Even though Saudi Arabia has added new capacity, annual production has not exceeded the peak production in 2005.
click to enlarge, for a forecast to 2020 (including depletion rates) click here
The assumed URR of 185 Gb for crude only is predicted by the HL method shown below. The HL method only gives a rough approximation, but until Saudi Arabia allows its fields to be audited there remains great uncertainty over Saudi Arabia's true reserves.
click to enlarge, for an annual HL plot click here
Tony, I don't think it is right to use monthly figures in HL that we know for sure are affected by KSA withholding production. I still think my stretch HL using annual data from years KSA was producing at capacity is a better indication of reserves in their discovered developed resource. To this needs to be added the discovered undeveloped:
It also needs to be pointed out that your reserves estimates are way lower than those of ASPO stalwarts Campbell and Hart.
Euan,
How can you be sure that the "Dog Leg Up" from 2003 to 2005, caused by ramping to capacity, is sustainable?
Perhaps the "Dog Leg Up" was temporary, made possible by Aramco's increased use of smart wells/multiple branched horizontal maximum reservoir contact(MRC) wells, creating "intelligent fields".
http://www.saudiaramco.com/irj/go/km/docs/SaudiAramcoPublic/ExternalFile...
These smart wells/MRC wells probably increased the production rate by temporarily increasing the extraction rate of the fields. Once this temporary period of high extraction rates is over, the predicted URR for C+C+NGL could possibly be closer to that indicated by the blue line in your first chart, about 180 Gb.
Saudi Arabia includes condensate production and excludes ethane in their NGL production numbers, probably because condensate production is not subject to OPEC quotas as stated in page 33 of http://www.saudiaramco.com/irj/go/km/docs/SaudiAramcoPublic/FactsAndFigu...
Consequently, the EIA also reports Saudi condensate as part of Saudi NGL, but includes ethane.
My assumed URR of 185 Gb is for crude only, excluding condensate. You have 63 Gb remaining for my estimate in your second chart. My estimated remaining crude URR as of Dec 2008 is 68 Gb.
Tony - it seems quite clear that each time Saudi cuts production it is in response to global over supply and that the ramping up is to meet supply shortfall.
The crude - condensate thing is a bit more complex - I'm using BP C+C+NGL - which as you point put includes a healthy slug of ethane.
I still think its poor practice to regress data that we know are affected by political production cuts. And you (and I) need to add in the DUD fraction not embedded in the production data.
On the flip side Saudi Arabia is claiming a 7.2% increase in internal consumption. I doubt this is physically possible esp in a country where half the population is not allowed to drive.
http://www.theoildrum.com/node/4764#comment-435327
A more realistic 3-4% growth rate in consumption with a 3-4% real decline rate makes a lot more sense.
At 7.2% using any reasonable metric for oil use to economic growth results in a growth rate like 20-30%.
Of course this means that KSA's total production numbers are not trustworthy.
In fact there reported numbers are quite flat while production was controlled by the US Saudi production went up and down by about 1mbd on a month on month basis.
GIGO.
Euan,
What about the "Dog Leg"?
Surely, there is a possibility that this "Dog Leg" could be the result of increased extraction rates by using "super straw" MRC wells. The oil is sucked out faster but the corresponding production rates would falsely overestimate the HL URR prediction.
I know that the HL method only gives a rough URR indication but it's still a useful tool. I carefully selected monthly data points which indicated realistic production rates for Saudi Arabia's fields which were close to capacity. For example, the Apr 2003 data point was used because it represented a high production rate, with little surplus capacity, during the invasion of Iraq. Also note that the monthly HL line goes through the months of Jun 2004 to Aug 2006 which many analysts believe that Saudi had little spare capacity.
Here is an annual crude only HL plot showing a "Dog Leg" starting in 2003. If this "Dog Leg" is sustainable, then the HL URR would be about 185 Gb. To this, another say 25 Gb could be added for discovered undeveloped fields, yet to find oil and possible enhanced oil recovery methods.
However, I believe there is a strong possibility that this "Dog Leg" is only temporary. In this case the data points for 2009 and 2010 could fall back to the HL URR 160 Gb trend line. This would imply that the HL URR for existing producing fields is 160 Gb, adding another 25 Gb gives 185 Gb.
click to enlarge
hey Tony
great stuff. i love what you and sam have done with the megaprojects analysis.
on Saudi, i have to agree with euan (which is not always the case :-)
We know that Saudi Arabia have been conservative in the pace of development of their resources, so HL must under-estimate URR. It's not just about choosing years when they were at 'capacity', because that still ignores the fields which lay dormant (undeveloped) at the time. Given the low-angle extrapolation HL is trying to make from such limited data, tiny changes in production over the last few years make an enormous difference to the x-intercept (much different than just adding 25 billion after doing HL).
24 Saudi fields as assessed by western oil companies were reported in the Carmalt and St John paper and totalled 220 billion barrels. The 1979 Senate Committee hauled the US companies in and they said URR around 212 billion barrels at the time. These estimates are from diligent oil company geologists/engineers just doing their job. Stuart/Euan/Joules all agree Ghawar has more potential than as assessed pre-1980 and Euan also the same for Abqaiq. It's still very rough, but that suggests a URR well over 220 billion barrels (but still ridiculously short of Saudi claims!!).
I did a lot my own HL analysis a while back, but for Saudi Arabia I came to the conclusion that it was almost meaningless. Tiny changes in recent years production, possible under a whole host of scenarios, completely change the answer (especially so because of the low-angle of the intercept). I don't believe that extrapolating a handful of dots on a production graph provides a better case than the reserves analysis (eg Oil Reserves: Where Ghawar goes, the rest of OPEC follows). But then I would say that :-)
I think you've put a lot of great work into the megaprojects wiki and your model, but for my two cents worth, I think it would be more robust if you took other Saudi reserves evidence into hand.
All of this just confirms that what we desperately need is some transparency. We shouldn't have to debate plus/minus 100 billion barrels of oil for any country. How did we get ourselves into this mess!?
Until there is some more consensus from geologists and consulting companies about Saudi field URRs, I'm going to be stubborn and assume URR 185 Gb for crude only, excluding condensate and NGLs. It's not that I don't think that Saudi URR crude could be more say 200 Gb, there still remains little consensus among experts. Laherreres Saudi HL indicated 180 Gb URR crude oil.
Your Table 1 from your well referenced story gives 221 Gb for 24 Saudi fields. First, I presume that this 221 Gb is URR for crude only, based on the Carmalt and St John 1986 study.
http://anz.theoildrum.com/node/4033
This 2007 article published in the Oil and Gas Journal by M Horn listed URR of some of the world's largest fields by "linking estimates of ultimate recoverable oil and gas made by industry experts over the last 60 years with current data on 945 giant fields".
http://www.searchanddiscovery.net/documents/2007/07032horn/images/horn.pdf
Guess what Ghawar URR is from Horn's paper? 66 Gb. Since then I've emailed him and he's revised it up to 75 Gb. Do I think it's higher? Probably but Horn doesn't.
Horn's estimate for Safaniya is URR 21 Gb.
If these two numbers are substituted into your Table 1 then the 221 Gb is reduced down to URR 199 Gb.
Here are some Wood Mackenzie (WM) URRs from Laherrere's paper
http://www.peak-oil-crisis.com/Laherrere_PeakOilReportMay2005.pdf
WM 2005 URRs
Manifa 4 Gb
Berri, 8 Gb
If these numbers are also substituted into your Table 1 then the 221 Gb becomes 184 Gb. There are some 75 other fields in Saudi Arabia so that should increase Saudi URR.
WM 2004 URR for Saudi was 236 Gb but with Ghawar at 108 Gb. Horn's estimate is 75 Gb. If that's substituted for WM's Ghawar URR then WM 2004 URR is revised down to 203 Gb.
Next year, perhaps I'll think about increasing my assumption for Saudi crude only URR to 200 Gb. The approximate potential effect of this 15 Gb URR increase in the forecasting model is that the world forecast in Fig 8 would be revised upward to about 67 mbd in Dec 2012 from the current 65.5 mbd. The annual production decline rate would be revised downwards from 3% to about 2.5%, from now until Dec 2012. The forecast in Fig 9 would also be revised upwards to about 81 mbd in Dec 2012. The forecast in Fig 10 would change slightly as it incorporates the Fig 8 forecast.
This chart is for C+C only and uses initial cumulative production at the end of 1959 from the opec website and uses EIA data from 1960 to the present (August 2008 being the most recent data point.) The result is a URR of 198 GB with a 95 % confidence interval of 179 to 218 GB. I think it is best to use all the monthly data from 1991 on. Using monthly rather than annual data gives a tighter confidence interval.
Nice response Tony.. sounds fair enough. I'd concentrate on referencing the field size estimates as the basis for your estimate rather than HL (but that's just my view).
Agree that it doesn't make a big difference in the global picture and that what we must have is better data!
Euan,
Can you highlight (or add) the data points for 2006 and 2007 in your HL plot for Saudi Arabia? I'm curious if the new methods are holding up over time.
Realist - fair request. Neither 2006 or 2007 were capacity years. So my interpretation is that this model still holds - though no doubt others may not agree.
One thing I'm keen to see is the depth of the current round of swing production cuts. I think there's every reason to believe with the global recession that the up trend of shallower cuts may be broken - but if it isn't then we are on a crash course some time post 2011 where KSA will no longer have to cut production to support prices and the 50K$ question will be if they can raise production to keep prices down.
Note that iea chart is to oct 2008 and doesn't include most recent OPEC cuts made on 1 nov.
How do you know that? This was the period of a boom time economy when Saudi Arabia could not deliver and global production went down almost at the same rate as Saudi Arabia itself. This suggests that Saudi Arabia has lost its traditional swing role. It's a negative swing producer now. It's actually exactly as Matthew Simmons predicted: "the coming Saudi oil shock and the world economy". Apparently many cannot connect the dots as there are time delays involved.
Awesome analysis. After two years on the oil drum, there is stuff to learn.
What is very clear to me from your two HL graphs is that Ace's estimate represents a lower bound on Saudi Arabia's URR and yours (Euan) represents an upper bound on said URR. Since S.A. is likely going to govern when the world peaks, it seems relatively easy to construct two estimates for world oil based on these two bounds, no? And you could call them "our most pessimistic estimate for peak oil" and "our most optimistic estimate for peak oil." Just my two cents. Also might save you guys a bunch of time arguing over nothing.
A key uncertainty of the forecasts in Figs 8, 9 and 10 remains Saudi Arabia. If my assumption about Saudi Arabia's ultimate recoverable reserves (URR) is too low then the decline rate in Fig 8 could be much less.
It's probably helpful to point out that your previous predictions of Saudi production have been very poor, i.e.:
ace's April 11, 2007 forecast:
Source
ace's Aug. 6, 2007 forecast:
Source
Compare your predictions against the actual Saudi C&C stats for 2008 from the EIA:
Jan: 9,200kbd
Feb: 9,200
Mar: 9,200
April: 9,100
May: 9,400
June: 9,450
July: 9,700
Aug: 9,600
Note that the figure for July (9,700kbd) is a historic high, last attained almost 30 years ago in 1981.
It's also interesting that your post peak decline rates are steadily decreasing.
This from Aug. 6, 2007:
Morphed into this from Dec. 1, 2008:
Your prediction of a 1% decline followed by a 4% decline... turned into a new peak followed by a 3% decline, with a caveat about how that 3% might be too high if you get Saudi Arabia wrong (which is not unlikely, see above).
Here's hoping you include honest information on your past flubs in your next series of predictions.
what was your forecast jd ? and what is your forecast for the future ?
Ace and Khebab and the others working the megaoil projects tracking are doing a lot of good work.
However, Ace has been very wrong on many forecasts. [As have others, but Ace has been more high profile with his predictions on oil price]
http://www.theoildrum.com/node/4397#comment-392132
Ace Aug 9, 2008: My guess is that oil price will "hit $126 before it hits $102". My forecast indicates that average monthly oil prices will never go back down to $102.
I had indicated back then to remind Ace of this prediction the day after he made those predictions. It was obviously going to be wrong and it was wrong.
The price polling has stopped now that prices have tracked back from triple digits.
to preempt Elwoodelmore:
My own public predictions relate to technology:
http://www.nanotech-now.com/products/nanonewsnow/issues/033/033.htm#Wang
http://nextbigfuture.com/2007/09/reviewing-some-of-my-predictions-no.html
My main forecasts on oil and energy are that there will be enough for a non-disasterous transition from oil to nuclear power, biofuels, greater efficiency and renewables.
There will be more enhanced oil recovery, biofuels (from waste, seaweed, jotrapha, algae, miscanthus and conventional crops) which will ease the transition.
I thought it was well accepted that wild swings in price are expected in the event of a constrained resource. The swings are so wild in fact that it might not be worth predicting anything but a long term trend.
I don't think anyone expects month by month production for one country to match up. In this analysis, Tony is not showing a separate Saudi Arabian forecast, so I don't see that your comment is particularly relevant. Tony is forecasting long run production, across many countries and many years. His model at this point seems stable to me. We won't really know the long-run result for many years,
Can you give examples of anyone who has given better month by month forecasts of Saudi production? What helpful can you add to the discussion? We don't need people who just throw stones for the sake of throwing stones.
Here is an alternative forecast and a list of some other sources.
Apparently Sadad Al Husseini has been more accurate on monthly Saudi oil production (even if the projections are for whole year averages) and some of the Aramco supply targets have not been that far off.
http://www.trendlines.ca/ksa.htm
It would seem that the saudi oil monthly production is in between Ace's numbers and the supply targets, but a lot closer to the supply targets.
There is also a larger list of projected world oil forecasts, charted.
http://www.trendlines.ca/scenarios.htm
Note: I consider projections past 2030 and especially those past 2050 to be meaningless because of likely technological changes.
Jean Laherrere also has some excellent forecasts.
Jean's paper from ASPO 7, Oct 2008, is a good read:
Forecast of liquids production assuming strong economic constraints
http://aspofrance.viabloga.com/files/ASPO7_2008_Laherrere_Wingert.pdf
Similarly, Jean's older 2005 paper also has lots of useful information
Forecasting production from discovery
http://www.peak-oil-crisis.com/Laherrere_PeakOilReportMay2005.pdf
The two charts below are from the 2005 paper. The first chart indicates a URR of 180 Gb for Saudi Arabia.
The second chart shows production forecasts for URR= 200 Gb, 250 Gb and 400 Gb. Note that in both cases of 200 and 250 Gb, production does not exceed 10 mbd. My long term forecast is just below Jean's 200 Gb forecast, as I assume a URR of 185 Gb.
We don't need people who just throw stones for the sake of throwing stones.
I'm not throwing stones. I'm simply stating the raw, unvarnished facts, as anyone can see. When a person is making predictions, that person's past track record is fair game, and in fact the most relevant information there is. You can run a million numbers through the spreadsheet blender, and talk up a good game, but at the end of the day, your predictions don't mean much if your track record is poor.
The thing about JD is that he is evidently much too wary to attack someone that doesn't necessarily just make predictions, but that instead lays down a detailed model of oil discovery and depletion mechanisms. He understands that if he does try to go after such an analysis, he will get whipped and his adversary will learn something to make that particular model even better.
And just what am I implying?
We still need someone like JD, but it doesn't help if the attacks are always something of a strawman.
I dream/dread the day when someone exposes some big holes in these models. On the one hand, it means that I can put this to rest and get on to other things. On the other, ... well, at least it was interesting while it lasted.
show us your track record, jd.
Hi Elwood,
don't waste your breath. JD doesn't have a track record. JD hasn't made predictions. His response is, (you can read his many posts at peakoildebunked) that Peak Oil will eventually happen but that it will be a "non event". His answer to whatever predictions, etc.. from anybody else was "NOT" or "WON'T".
Like, debating him about a housing bubble and collapse of the Dollar and a financial crisis in 2004 (PO.com), his answer was basically "won't happen".
Well, the dollar slid, but didn't collapse, and is miraculously back to where it was in 2004. The housing bubble has let off a bit of air but hardly burst all at once, especially not in 2005. The financial system has likewise been remarkably healthy - at least until summer 2007.
Would he admit that the finanzial system has "collapsed", that the crisis we were talking about way back when has come, that any recovery from it might be short lived, etc..? Probably not.
I think it was 2005 when I tried to make a bet on oil production and/or oil price - á la Ehrlich and Simon.
No takers. He won't.
He won't make predictions and he will nail you to the wall for yours.
JD, I'll make a prediction.
Peak Oil will be an "event". Please don't bother me with the where and when and how. Time scale? Who cares.
Are we at PEAK? Yes. Since about 2005.
Falloff? Soon: Last year, next year, in five years...
Greetings from Munich, Dom
Hi PeakPlus,
You write: “Are we at PEAK? Yes. Since about 2005.
Falloff? Soon: Last year, next year, in five years...”
This estimate was made by the USGS WPA 2000: “Approximately 800 billion barrels are awaiting discovery in the coming 25 years. Implying a tripling of current annual discovery for a period of 25 years”.
Unlike many of geologists and geophysicists, I believe that the USGS forecast for the near future is correct, because there is a great possibility to improve discovery rate as a result of technological progress in exploration methods.
Today, as it was decades before, oil companies drill mostly dry exploration wells. Drilling success rate doesn’t overcome 25% on average. It means that three dry wells go to waste from each four drilled. It means also that discovery occurs too slowly today, but there is a highly productive exploration technologies (for example Seismo-electromagnetic - SEM) for detection of hydrocarbon deposits. It provides a success rate close to 75%. In other words, 3 productive wells for each dry well. Obviously with the technology like this world oil industry could make three times more oil discoveries then using conventional technology, and this technology won't need more investment,time-frame and so on compare to a conventional one. It would significantly mitigate world energy problems. (www.binaryseismoem.weebly.com)
It might not be affected by the current crisis but it will be affected by a declining industrial infrastructure. Moreover the decline could be quite precipitous at some point. Not all the oil in the ground that could, with current infrastructure and technology, be gotten at will be gotten at -- it will remain in the ground.
On days when I'm feeling particularly frisky, I calculate that at my current rate of decline, I could make it to 140 -- using more or less the same methods you use. :)
The current economic crisis will unfortunately become permanent. As Gail pointed out earlier, peak oil will mean that we cannot pay back our debt. We also now know that oil above a certain threshold, say $80 to $90 (other proposals are more than welcome) will result in banks failing, companies collapsing and a world economy going into recession.
The methodology "global decline rates plus megaprojects" does not work. I tried it before. The results are not realistic as the above example from Brazil shows. This has to be done country by country. A new oil field in country A will not necessarily offset decline in country B. Rather, a new oil field in country A will be used to offset decline in country A itself. This could mean that production in aging fields there is reduced either to "rest" the fields (e.g. to allow pressure to build up again) or to install enhanced oil recovery, new hubs, new wells etc. all of which means that production in old fields is disturbed and decline rates are higher than expected.
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d