44 comments on Oilwatch Monthly June 2009
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44 comments on Oilwatch Monthly June 2009
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Here's a few forecast charts updated for last week's energy reports from the EIA, IEA and OPEC.
Assuming that a slight demand growth occurs, the long term oil price trend remains upward shown by the dashed green line below.
The largest part of world liquids supply is crude, condensate and oil sands production. The Jun 2009 estimate is 71.3 mbd which has increased slightly from the previous estimate because OPEC has increased production slightly.
A significant part of world crude, condensate and oil sands production comes from about 90 non OPEC countries. These countries are not subject to production quotas and although oil prices more than tripled from 2003 to mid 2008, production declined at about 0.2 mbd per year. Cumulative declines from Russia, the North Sea and Mexico will be a key factor in accelerating the non OPEC production decline rate to an estimated 1.4 mbd per year starting from Dec 2008.
The production declines in the above two charts are supported by the downward trend in capacity additions to 2012 based on data from http://en.wikipedia.org/wiki/Oil_Megaprojects which has been updated for the recent IEA G8 report detailing 2.0 mbd of suspended project capacity and a further 4.2 mbd of project capacity delayed by at least 18 months.
http://www.g8energy2009.it/pdf/IEA_Paper_for%20G8-Impact_of_the_crisis_o...
Non OPEC capacity additions also show a downward trend to 2012.
For more information on world oil forecasts, please read my post last month
World Oil Production Forecast - Update May 2009
http://www.theoildrum.com/node/5395
Hello Rembrandt & Tony [ACE],
As usual, my thxs to both of you for this important work.
Ace, in reference to basically horizontal black line of the "adjusted EIA AEO 2009 forecast" in your second Non-OPEC C&C chart: do you know if the EIA includes the Wiki-Megaprojects info in their analysis and forecast, or do they have their own in-house version?
You would think the forecasted 2009-2012 discrepancy between your downward trend and their flatline would be much narrower for such a short 3-year period ahead. Eyeballing about [EIA 41.5, ACE 36.0] for roughly a 5.0+ million barrels/day gap in 2012. It will be fascinating to see how this plays out going forward.
Even if the EIA just extended the less-sloping, historical, dotted red trend line forward: it still appears that they might be 500,000 to 750,000 barrels/day too high. IMO, they should have made some allowance for some hurricanes or other event, or a bad economic or political trend, to 'glitch' their forecast downward so that it more closely resembles your future trend. My feeble two cents.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Bob,
I believe that the EIA has their own project list which is supplied by IHS(CERA). IHS use low decline rates for the existing production base.
That 5 mbd gap in 2012 between my forecast and the EIA AEO 2009 is large. However, the EIA has some optimistic forecasts. For example, liquids production from the US is forecast to increase from 8.49 mbd in 2008 to 8.91 mbd in 2010. The Former Soviet Union and Eastern Europe is forecast to increase from 12.76 mbd in 2008 to 13.09 mbd in 2010.
http://tonto.eia.doe.gov/cfapps/STEO_Query/steotables.cfm?tableNumber=29...
My models use a combination of decline rates, extraction rates and remaining recoverable reserves to forecast for each non OPEC country. All the non OPEC forecasts are aggregated to produce a total forecast.
Another way to forecast is to apply a decline rate of about 6%/yr to existing conventional non OPEC crude and condensate production of 40 mbd. That means that 2.4 mbd of production additions are needed just to remain at 40 mbd. My non OPEC capacity addition chart shows about 1.7 mbd capacity for 2009. This capacity has to be discounted by about 20% to estimate the annualised production additions from the projects to give about 1.4 mbd non OPEC production additions for 2009.
That's 1 mbd less than the required 2.4 mbd so that means a 1 mbd production decline for 2009 assuming no unplanned maintenance, hurricane outages, terrorist attacks on oil infrastructure or any other supply interrupting events.
I'm sure that the future non OPEC production will be closer to my forecast than to the EIA's.
Tony
Thxs for the reply, and I agree that your forecast will probably predict future production more accurately than the EIA forecast. They should hire you to help steer them straight, LOL! :)
"Rockdoc123" at peakoil.com says part of the IHS staff keeps tabs on new projects, compiling data in exhaustive detail, as you might expect. This of course isn't available for free like the Wiki.
What is the typical time line for a project's discovery/development, anyway? Tupi is taking 4 years, is that par for the course, or could project startups be announced this year that will see first oil in 2011? This is something I can't recall seeing analyzed here. The impact of new semi subs and drillships should be taken into account as well.
As you probably suspect Dude there’s a wide range depending on specifics. Here’s a time line that wouldn’t be the fastest but it many cases this would be a quick development program. Discovery logged 1 Jan Year 1. Before any detailed planning for facilities and additional wells at least one confirmation well will be drilled. The CF well might be drilled in the next few months but given how rigs are scheduled it would likely be a year before its spudded. So on 1 Jan Year 2 CF is spudded. Well logged in 6 months confirming pay. To confirm reservoir deliverability tests must be conducted. So 1 Jan Year 3 tests begin. Add 4 months for tests. So 1 June Year 3 begin design of production facilities. So 1 Jan Year 4 design complete and bids let (this would be really fast). So 1 June Year 5 production facilities completed (very fast track). So 1 Nov Year 5 facilities set on location. During Years 3 and 4 the development wells might have been drilled subsea and temporarily abandoned. Assume a total of 4 wells. So by 1 Jan Year 6 developed wells tied into production facilities. So by 1 June Year 6 wells are completed and begin producing (again, this was done very quickly by normal standards).
Bottom line: 4 or 5 years wouldn’t be a surprise. Maybe a year quicker but maybe it might take an extra 2 years. Again, just one possible timeline.
Thanks ROCK - figured you might chime in. Analysis of past project timelines would make for a juicy article, including a chart with Kashagan as your outlier. Or kerogen. How long has that been "delayed" now, 120 years?
Actually parsing the 2006 Discoveries List from IHS I can't find any correspondence in the Wiki Megaprojects. Perhaps some of these are halfway through your timeline and will surprise us soon with fresh production?
For our (Brown & Foucher) update to the top five net oil exporters paper, we are planning to look at cumulative remaining net oil exports versus annual export rates. A rough outline follows:
15 Gallons of Fuel in the Tank
Assume a car gets 20 miles per gallon, with a 15 gallon tank, and we embark on a five hour trip at 60 mph, using 3 gallons per hour. So we have five segments of one hour each.
(A)= Percentage of remaining fuel used in each one hour segment. (B) = Fuel used in each segment (always 3 gallons in this example). (C) = Remaining fuel in the tank at the start of each one hour segment. A = (B/C) X 100.
So, for the five segments we have:
(1) 20% = 3/15
(2) 25% = 3/12
(3) 33% = 3/9
(4) 50% = 3/6
(5) 100% = 3/3
We are of course out of fuel at the end of segment five, when we use 100% of remaining fuel in the tank. Note that the depletion rate increases with time.
Indonesia
Based on EIA data, from 1997 to 2003 (their last year of positive net oil exports), Indonesia (net) exported 1.148 Gb, a little over a billion barrels of oil, or 1,148 mb. So, their remaining cumulative net oil exports at the end of 1996 were 1,148 mb. We can of course very simply calculate the remaining cumulative net oil exports at the start of each year (C), and calculate the percentage of remaining cumulative net oil exports shipped in a given year (A), by dividing annual net oil exports (B) by (C) (X 100). The data look like this:
End of 1996/Start of 1997: 1,148 mb in "Net oil export fuel tank"
1997: 21% = 243/1,148
1998: 29% = 259/905
1999: 34% = 221/646
2000: 42% 180/425
2001: 53% = 130/245
2002: 68% = 78/115
2003: 100% = 37/37
2004: Net Oil Importer
Indonesia's net export fuel tank, based on annual data, was empty as of the end of 2003. Note that the depletion rate increased with time.
Top Five Net Oil Exporters (Saudi, Rus., Nor., Iran, UAE)
Based on EIA data, the 2006 to 2008 cumulative net oil exports from the top five fell between Sam's middle case and best case. If we average his middle case and best case projections for post-2005 cumulative net oil exports, we get 117 Gb. The EIA shows the following for annual net exports from the top five (2005 was about 8.8 Gb):
2006: 8.5 Gb
2007: 8.0
2008: 8.2
Using 117 Gb for post-2005 cumulative net oil exports for the top five, the percentage numbers would look like this:
2006: 7.2% = 8.5/117
2007: 7.4% = 8.0/108.5
2008: 8.2% = 8.2/100.5
2009: 8.7% = 8.0/92.3*
*Estimated for 2009
At the end of 2009, based on the above numbers and based on 117 Gb, the top five will have shipped about 28% of post-2005 cumulative net oil exports.
All of this is somewhat analogous to starting off with a full tank of gas and driving until you run out of gas. At the start of the trip, the tank is 100% full. At the end of the trip, the tank is 100% empty, but the point is that even as the volume of net oil exports shipped tends to decline, it appears that the percentage of remaining cumulative net oil exports shipped per year, i.e., the net export depletion rate, tends to increase with time.
The amount actually exported differed from year-to-year thus:
-16
38
41
50
52
Not a very wide band. This perhaps ties in with my question about project timelines - this would be a slow enough rate of decline of exports to send a signal to procure new supplies. If you'll pardon me putting on my economist hat...
We have a globe full of drivers wanting to use that 3 gallons, too. Perhaps another metaphor might suggest itself. When do you calculate that will become an inevitable point of contention? 70s oil shocks suggest only about 2 mb/d will suffice to have populaces glowering.
The numerator in each example is the volume of fuel used or oil exported. Which example are you referencing?
Indonesia, as listed above. The decline in volume was linear, it's only from the perspective of "remaining cumulative net oil exports" that the decline grows like you suggest. This was what JD was griping about on his blog. Anybody with half a brain (declining exponentially even) could read the writing on the wall, of course.
On the subject of framing, how about classing the global decline rate as a massive collection of "negaprojects"? Kudos to Amory Lovins, of course. And me. Heard it here first.
In 2000, note that Indonesia was shipping one percent of remaining net oil exports about every nine days. Based on Sam's modeling, the top five are currently shipping one percent of remaining net oil exports about every 45 days.
When you put it that way it sounds really morbid - like discussing what percentage of beats remaining in your life your heart pumped out for the day...
Thanks for the replies Jeff, great work you and Sam do. Trying to get a handle on what this year will be like, posting stuff in the peakoil.com Weekly US Petroleum and NG Supply Reports 2009 thread off and on, looking for little bolts from the blue that might let us know what the rest of the year will be like - maybe another price spike in the works? That would make for one apocalyptic October in the finance world.
The June trend for price has already exceeded your expectations, I think:
Added a bar line for $75 USD. $68.37 June average so far.