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26 comments on CIBC in more detail, and the first Chevron debate

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Oil CEO on January 13, 2006 - 5:50am

On the one hand:

I agree with you. It is a little bit odd how people classify conventional/unconventional.

On the other hand:

Who cares? The point is that we consume 85 mbpd. So we need to supply that much. This rate increases by anywhere from 1% to 2.5% in any given year(with exceptions, of course). But as long as supply keeps up with demand-rate there is no problem.

Peak-oil is not a new idea, but the fervant debate surrounding it is. As proof, this website and all its popularity has only been happening for less than 6 months(please correct me if I'm wrong).

The key is to document predictions and who they are coming from. With a database of these predictions, we can very quickly identify who is full of it and who has a grasp on the truth.

When I track my data, I have 3-4 lines for every producing country. The first is BP's, then I have two separate lines for the EIA's different tables, and then a fourth for maybe another EIA table or a 3rd source. It doesn't matter that EIA doesn't match BP. Know that they don't and WHY.

The big mystery to me is how we are going to match record forecast demand in 2006 with supply. Will it be Saudi? Will it be Angola? It's not going to be Canada, not this year, at least.

These numbers are fairly simple. It will be pretty hard to dupe the oil community. Price will be a pretty good indicator to what is going on in 2006. So far, no crisis.

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NC on January 13, 2006 - 11:04am

Oil CEO,

I think you put your finger on the bottom line. There may be all this conventional (land and deep sea) and unconventional oil sources but can those reserves be brought to market? At some point we get into splitting hairs in our discussions.

Is field development or refining restricting supply? Are prices or difficulty in maintaining platforms the choke point? Are unconventional not producing because conventional hasn't been limiting enough to make tar sands attractive economically? There is so much complexity in the overall, world supply of liquids that one can't point to a single issue as the major area of concern.

The converse of this is that to maintain (and grow) worldwide supply, all these diverse areas must increase simultaneously to offset conventional oil declines. Declines defined as shrinking daily output not field size. This is the part I have trouble with. Going forward it will be ever more difficult to remain on schedule on all the difficult projects. The oil supply is getting exponentially more complex than a decade ago. Complex things can be very efficient but they are also much easier to break or disrupt. I think the cornucopians discount the effect of the added complexity. As you say, 2006 should tell us what we can do and what we can't.

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