This is a guest post by Jean Laherrère a long time contributor to TheOilDrum.

Digest

• The BP Statistical Review has the merit to release every year free and convenient updated historical data on energy.
• This data is recopied from what is reported by national agencies, avoiding diplomatic conflicts.
• Despite the heterogeneity of the data, the report displays a ridiculously high number of digits, in contradiction with the real accuracy of the sources.
• The report wrongly adds unconventional to conventional reserves.
• BP ignores backdating, using obsolete reporting rules that lead to artificial reserve growth.
• Most economists believe this reserve growth to be the real, when in fact known Oil and Gas reserves peaked in 1980.

In the introductory remarks to these posts on Chinese energy supplies and usage, I mentioned that one of the concerns beginning to be evident lies in disputes over the ownership of some of the oilfields offshore. Disputes over ownership have been continuing for some time, and this week was no exception, with Chinese moves to create a new city, Sansha, on Woody Island and thereby strengthen their claim to the region. Woody Island, or Yongsing, lies in the Paracel chain of islands in the South China Sea.

(The post has been slightly modified to recognize the speculative nature of the overall resource available.)

Ownership of the territory and underlying potential hydrocarbon reserves, is a matter of dispute between several countries, although China has administered the region since a 1974 conflict with Vietnam.

The Chinese government declared the establishment of Sansha last month, saying its role is to administer the disputed Paracel and Spratly archipelagos and surrounding South China Sea waters, which are believed to hold oil and natural gas deposits. The islands are claimed in whole or in part by Brunei, China, Malaysia, the Philippines, Taiwan and Vietnam.

Note: This article was originally written for World Business Magazine in Singapore, and explores one of the themes I covered in my book Power Plays.

Ed. note: This post first appeared on Robert's blog R-Squared Energy.

Oil Prices Rise, But Demand Growth Remains Strong

Access to affordable, stable energy supplies is critical for economies throughout the world. For developing countries, affordable energy can offer a pathway to a better quality of life. But between 2000 and 2010, world oil prices became much less affordable. The average global oil price advanced from approximately $25 per barrel to more than $100 per barrel – far outpacing rates of inflation in most countries.

Many books and articles have been published that argued that the increase in prices has been due to oil speculation, the restriction of supplies by OPEC, growth in developing countries, peak oil, or various geopolitical factors. Regardless of the cause, the response to higher prices in developed and developing countries may be surprising.

When I first began this review of future production from the different oil producing countries about fifteen months ago, I produced this list of the relative performance of the top 30 producers.

So, after covering the top three, the question becomes which country should be covered next, given the changing ranking? The United States is now producing some 6.36 mbd of crude oil, and after a steady rise in production, seems to have (transiently perhaps) reached a plateau. The number given in the table above includes ethanol and refinery gains, among others, and OPEC considers that the total average production this year will be 9.8 mbd. (MOMR)

In this post, I give an overview of developments in China to create a coal to chemicals industry, primarily using methanol as an intermediary feedstock. In doing this research, to my surprise, I found that the Chinese chemical economy is advancing rapidly in its use of coal as a chemical feedstock, as opposed to crude oil in other countries. In many cases, coal already represents 20% or more of chemical feedstocks, and in special cases such as PVC, the country already sources virtually all of its input from coal. Since China produces 20% of the world's PVC, such transitions have a substantial impact on the global energy system.

This is a guest post by Philip A. Rutter, B. L. Rutter-Daywater, and S. J. Wiegrefe. Phil Rutter is the Founding President of The American Chestnut Foundation; trained in ecology and evolution, he has been working in SE Minnesota for 35 years on domesticating several woody plant genera for commodity agriculture-style food production. I know Phil personally and believe in woody agriculture as a partial response to the energy/environmental constraints we face, (and just planted 300 hazelnut seedlings this spring).

In any attempt to comprehend a puzzle, or choose a new path forward, the first requirement is to see and comprehend each of the possibilities. We wish to bring to the attention of the energy community a potential food and biomass energy paradigm, previously unknown, to your considerations.

Our current agricultural paradigm choices include either “industrial” agriculture; large scale with extensive fossil fuel inputs, or the “organic” routes, usually deemed insufficiently productive by professional agronomists. Claims that agriculture can yield significant energy, while also producing the necessary food for the world, are a matter of rancorous dispute.

The current article will present a 3rd paradigm, depending on newly domesticated woody plants for primary food production, equal to industrial agriculture. These crops capture far more solar input than row-crops can; and always also produce wood; some of which will always be available for energy purposes. This work has been quietly underway for 35 years; farmers are now growing the crops. We here present basics on how the energetics work, practices, outputs, and the state of the art.

The latest OPEC Monthly Oil Market Report (MOMR) foresees that demand for OPEC crude oil will decline over the next year by about 300 kbd. This is largely in anticipation of additional production from elsewhere:

Non-OPEC supply is forecast to increase by 0.7 mb/d in 2012, supported by the anticipated growth from North America, Latin America, and FSU. In 2013, non-OPEC oil supply is expected to grow by 0.9 mb/d. The US, Canada, Brazil, Kazakhstan, and Colombia are expected to be the main contributors to supply growth, while Norway, Mexico, and the UK are seen experiencing the largest declines. OPEC NGLs and non-conventional oils are seen averaging 5.9 mb/d in 2013, indicating an increase of 0.2 mb/d over this year.

Overall, OPEC sees demand staying below 90 mbd over the remainder of this year, with total growth in demand lying at 1.01 mbd.

Much has happened since the late Matt Simmons and Nansen Saleri got together back in February 2004 to debate scenarios for future oil production in Washington. While Matt had developed his research that led into the publication of “Twilight in the Desert”, this was the meeting where Aramco pushed back to explain that there would not be a global problem for at least fifty years. As this series of posts on Saudi Arabia comes to a conclusion and moves on to other countries, it is perhaps of some value to look back on the presentation by Mahmoud Abdul Baqi and Hansen Saleri to remember what was said. Back in those days, oil demand was expected to steadily rise with increasing rates to reach 100 mbd in 2015.

The usual assumption that economists, financial planners, and actuaries make is that future real GDP growth can be expected to be fairly similar to the average past growth rate for some historical time period. This assumption can take a number of forms–how much a portfolio can be expected to yield in a future period, or how high real (that is, net of inflation considerations) interest rates can be expected to be in the future, or what percentage of GDP the government of a country can safely borrow.

But what if this assumption is wrong, and expected growth in real GDP is really declining over time? Then pension funding estimates will prove to be too low, amounts financial planners are telling their clients that invested funds can expect to build to will be too high, and estimates of the amounts that governments of countries can safely borrow will be too high. Other statements may be off as well–such as how much it will cost to mitigate climate change, as a percentage of GDP–since these estimates too depend on GDP growth assumptions.

If we graph historical data, there is significant evidence that growth rates in real GDP are gradually decreasing. In Europe and the United States, expected GDP growth rates appear to be trending toward expected contraction, rather than growth. This could be evidence of Limits to Growth, of the type described in the 1972 book by that name, by Meadows et al.

Trend lines in Figure 1 were fitted to time periods based on oil supply growth patterns (described later in this post), because limited oil supply seems to be one critical factor in real GDP growth. It is important to note that over time, each fitted trend line shows less growth. For example, the earliest fitted period shows average growth of 4.7% per year, and the most recent fitted period shows 1.3% average growth.

In this post we will examine evidence regarding declining economic growth and discuss additional reasons why such a long-term decline in real GDP might be expected.

This is a guest post by Jeroen Haringman introducing a novel concept under development by Siemens for electric freight transport. Jeroen runs a Dutch and English energy blog and is a system administrator at ENECO Energy in the Netherlands. This post originally appeared on Jeroen's blog here.

Electric bicycles, scooters and cars are becoming a normal sight in traffic. The developments happen very fast, and more and more people use some form of electric transport. One area that remains behind in that respect is electric freight transport. Experiments are carried out with freight trams in city centres here and there, but so far the system hasn’t grown to be an operational system anywhere. That’s a shame, because in heavy inner city start-stop traffic, fossil fuel-powered lorries burn an unnecessary amount of fuel and cause local air pollution. For inner city use, the relatively short range is usually not a big problem, but the high purchase price is. It’s likely to just be a question of time before ever stricter emission restrictions in inner cities, together with increasing fuel prices, will stimulate electric freight transport in whatever form.

Saudi Aramco has stated that it designs the well layouts and extraction patterns from its oil fields so that they effectively decline at a rate of 2% per year.* If one divides 100 by 2 it yields 50. If one subtracts 50 from 2012, one gets the year 1962. Even for those with poor math skills, these are not difficult operations, and they lead to the conclusion that those fields which came into production in the early 1960’s and earlier are now reaching the end of their productive lives. They are not there yet, since production took time to ramp up, and some fields have been rested over the years when production was cut back, or even mothballed. But this gives you some perspective on the overall scope of the situation, without the need for complex mathematical modeling.

(*The IEA apparently believes that the figure is closer to 3.5%) (H/t Matt) Saudi Arabia states that, without using advanced recovery techniques and “maintain potential” drilling sites – often not in the same field as that being depleted – the rate would be 8%.(h/t Darwinian ).