<DrumBeat: February 25, 2009 The Oil Drum Facing Forward Together: Four Models for Organizing a Community for an Uncertain Future>

80 comments on Analysis of Decline Rates

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Rembrandt on February 25, 2009 - 10:43am Permalink | Subthread | Comments top

Superb analysis Khebab. If I summarise well your analysis suggests that we will peak in 2008/2009, decline for a couple of years rapidly until we hit a new plateau around 2013 as new supply kicks in. Under the assumption that decline rates decrease significantly around 2012/2013.

I think that the effect of increasing number of deepwater fields going into decline between 2012-2016 also should be weighed within the equation as this would spur decline rates to deeper levels.

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Yvan Dutil on February 25, 2009 - 11:26am Permalink | Subthread | Parent | Comments top

The plateau exists only if further investement is done and if new oil is found. If those two conditions are not met, the cliff will be much higher.

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watchinall on February 25, 2009 - 11:44am Permalink | Subthread | Parent | Comments top

There is a very good editorial by Hugh Ebbutt a consultant in the UK that discusses what happens if your annalysis is correct.

"Those companies and people who eventually pull through this severe economic recession, after two or three years as the stronger parts of the world start growing again, may find themselves running straight into energy shortages that will have been made much worse by lower and slower investment now."

http://www.worldenergysource.com/wes/stores/1/Defining-Times-A-Chance-to...

Assuming those investments are not made, recovering from the decline rates may be impossible.

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Sam Foucher on February 25, 2009 - 1:46pm Permalink | Subthread | Parent | Comments top

The trouble seems to come from thousands of small-large and small fields that are composing 30% of the post-peak resource base (Figure 12). This category decline at 10+%, twice as fast as the Super-Giant/Giant category. Unfortunately, it is impossible to keep track of new projects in this category and I don`t know how much supply we can expect.

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The Dude on February 25, 2009 - 5:27pm Permalink | Subthread | Parent | Comments top

Unfortunately, it is impossible to keep track of new projects in this category and I don`t know how much supply we can expect.

According to CERA, quite a bit:

We are barely six months past the last peak in the oil price, but OPEC already has 8 million barrels a day of spare oil production capacity after big output cuts, said the group's Secretary General Abdullah Al-Badri. The group is very concerned about the impact the economic downturn will have on the medium- and long-term oil demand, he said.

OPEC's spare capacity looks likely to grow. Thanks to investment in the boom years, the world's productive capacity should grow faster between 2009 and 2012 than it did from 2003 to 2008, said a report from U.S.-based consultancy Cambridge Energy Research Associates.

Companies May Face Massive Cash Outflows

If companies do not reduce their upstream investment at all during the current economic downturn, CERA said spare capacity could reach 10 million barrels a day by 2013. "This would be an unprecedented margin and would tend to undermine the oil price," the consultancy said.

How OPEC can claim 8 mb/d spare after only cutting 4.2 mb/d is one of those deep mysteries, I guess. RIGZONE - Oil Cos' Bet on Swift Price Rebound Has Its Risks

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westexas on February 25, 2009 - 5:35pm Permalink | Subthread | Parent | Comments top

http://www.energybulletin.net/node/48160

Impressive track record?

It is surprising the kind of standing CERA has among politicians and the media, given their track record. If you look at the report they published in May of 2005 their forecast for 2005 was a capacity of 87.85 million b/d. Yet by the release of CERA’s October report in 2008 the 2005 figure had been revised down by 1.4 million b/d to 86,45. Not very impressive real time data.

CERA makes a big issue out of their fantastic database, that it is why their forecasts are so superior to everyone else’s. If they are far away from other forecasts the reason is simply that they claim they have much better data to back up their views.

It is therefore an interesting experiment to size them up in a country where the data is simple, transparent and public, and where “a better database” therefore is not really a competitive edge. Let us take Norway. In their 2005 report they were expecting Norway to produce 3 million b/d of liquids in 2010. In their 2006 update this figure had been revised up to 3.15 million b/d.

According to the latest IEA figures and the Norwegian Petroleum Directorate it is expected that Norway to produce about 2.1 million b/d in 2010. This actually means that in 2006 CERA was more than 50% too high in their estimate for capacity 4 years down the road for a country with relatively few fields and the most transparent and public statistics in the world.

The UK is also a fairly transparent country. In CERA’s 2005 report the UK should have a capacity of 2.1 million b/d by 2010. According to the latest forecast from the IEA the production in 2010 will be 1.2 million b/d. This time they are 75 percent too high.

When they are that much off in such a near future in transparent countries like Norway and the UK, how likely is it that their forecast for countries like Azerbaijan or Iran 10 years into the future are meaningful at all?

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The Dude on February 25, 2009 - 10:58pm Permalink | Subthread | Parent | Comments top

And right on cue: "Archived Feb 24 2009." Original should be on the ASPO site tomorrow - can't find it now - perhaps it has some additional graphic content. Will post at JD's blog as well, which has, of late, become a bit of a support group for those not enjoying all this bad news, complete with crude ad hominems.

Did you catch a posting of mine recently regarding a statement from peakoil.com member rockdoc123, Jeff? He says he's a petroleum geologist with 3 decades on his resume, and gives every impression of being who he says he is - talks the talk, with exceedingly detailed answers to very technical subjects. Also claims to have access to the IHS database in addition to the Wood Mac and others. Previously he was seeing a 2015 peak, but a few months back said it looks more like 2012. Check out some of his postings in THE OPEC Thread pt 3 (merged) Archived (formerly "Saudi Production: Collecting the Data," now renamed for archival purposes) for some examples of his work, if you haven't already. Interesting too that he has nothing negative to relate to the people working for IHS; I always wonder what prompts or motivates CERA. Are they just the bad apple in the bunch? Strictly a vehicle for the mandates of the top brass? I assume not everyone in the DOE is a bribe taking coke sniffer like those crazy nuts in the RIK division of the MMS, after all.

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Nate Hagens on February 26, 2009 - 12:29pm Permalink | Subthread | Parent | Comments top

They are not 'bad apples' as far as I can tell. Their motivations and training were 'appropriate' for economic growth conditions of previous generation - starting a few years ago (as much as a decade ago) the game began to have different (ecology/sociology as opposed to economic based) rules. Post hoc ergo propter hoc reasoning reined when world economy was growing using high energy profit ratio to suppress necessity of lateral thinking, and that business would always parse the right decisions. The rules have permanently changed now and CERA/IHS methodology will in time prove to be too narrow in scope (to many it already has). This has happened often in history. These are not bad people - just outdated boundaries.

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westexas on February 26, 2009 - 1:14pm Permalink | Subthread | Parent | Comments top

As the article noted, if CERA is that wrong about a province as transparent as the North Sea, why would we expect them to be any better regarding more difficult to evaluate areas?

However, the overall North Sea decline is proceeding exactly as the logistic (HL) model would have suggested (in 1999, the North Sea was about 50% depleted, based on HL, EIA C+C).

And Saudi Arabia is going to show three years of annual production below their 2005 production rate at about the same stage of depletion at which the prior swing producer, Texas, peaked (again based on HL).

Regarding CERA's motivation, I suspect that they are paid to generate optimistic production scenarios, so they generate optimistic production scenarios--in much the same way that the nice ladies working at the Bunny Ranch in Nevada are paid to provide a service.

I do think that the pronouncements by ExxonMobil, CERA, and OPEC that Peak Oil is decades away are doing a lot of damage to ordinary people--by encouraging them, in effect, to "Party On," by maintaining their auto-centric suburban way of life.

In any case, judge for yourself. If you had to put your money on CERA or the logistic model, which one would you pick?

North Sea & Texas plots:

http://www.theoildrum.com/files/TexasAndNorthSea.png

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WebHubbleTelescope on February 26, 2009 - 1:49pm Permalink | Subthread | Parent | Comments top

I had detailed "discussions" with rockdoc123 a few years ago. I argued quite a bit with him over reserve growth. I learned a bit but he is gung-ho about drilling. For one he liked the idea about global warming as it will open up spots in the Arctic for oil exploration. Oh no :0

Overall though, like many of the geologists, they have a pretty thick skin and they get over insults.

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80 comments on Analysis of Decline Rates

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