The Oil Drum

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

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BeaconBoy on January 13, 2006 - 6:03am

Having read the CIBC report on the bus coming home from work, I could not get two things out of my head.

1 Declines Rates - They used 1.5% for Middle East aand 3% for the rest of the world. In UK Pretroleum reviewthey used 5%. What is the right answer? Can anyone help out here?

2 They only projected out to 2008. Would have been interesting a bit further out say 2010.

They certainly talk about higher prices and demand destruction.Still I have my doubts about Tar Sands. Nothing about Natural gas prices and declining supply as limiting growth.

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Heading Out on January 14, 2006 - 12:53am

Grin! You've focussed in on the critical question. It's even an argument among a number of us on this site, and unfortunately there is no absolute answer since the depletion rate is a function of the nature of the deposit, the method of extraction and the rate of extraction. What concerns a number of us is that the combination of waterflood and MRC can generate numbers over 10%, and Schlumberger has started to report a more general figure of 8% and this makes a rather large difference in the situation.

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Agric on January 14, 2006 - 12:16pm

Oh yes, BB and HO, that is the very big fly in the ointment.

If I recollect correctly from reading the CIBC report yesterday, their analysis resulted in an overall average decline rate of 3.4%. If planned new production comes online as projected and demand increases as predicted (in the CIBC report) that would give about 2mbpd spare by the end of 2007. A decline rate of 5% would evaporate that, higher implies very imminent peak oil. Even given the 3.4% decline rate they envisage supply and demand coinciding by end 2008.

Since a large proportion of current production is using enhanced recovery techniques and what data we have on decline rates for more mature such fields is generally coming in at the upper end of the 5% to 10% range (in some cases even higher), my guess is we may be facing supply shortfall sooner than most people expect. However, I also suspect that geopolitical events could bring that yet closer.

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BeaconBoy on January 15, 2006 - 2:10am

HO

Thanks.

Is it possible to break out some of the big fields into subsets to get some sort of average based on the various subsets?

Reading between the lines on this subject I suspect that as the newer fields have formations that make oil harder to extract, more expensive to develop and drill due to depth etc. These use water flood etc from the start, so declines will be higher. Is this correct?

So consequently the decline rate may increase longer term, as the average will include more fields with bigger declines. Average may go up, as Cantarell is a big field with big declines. Is this valid?

I suspect this is why Schlumberger is saying 8%. They see more, younger fields with higher decline rates as compared to the older slower decliners. It also backs up what Simmons says as well as technology is pushing up the decline rates.

Are the formations more complicated to extract from then say 50 years ago?

I suspect this may be part of the answer as well.