The Oil Drum

The sequence of events (covered here on The Oil Drum previously) that led to the Forties Pipeline closure on 27 April 2008 began in 2005 when BP, currently the UK's largest company, sold Innovene, their Grangemouth refinery subsidiary to Ineos. Ineos is privately owned petrochemicals company that has grown from nothing since its formation in 1998, fueled by debt reported to be €9 billion.

BP, once 50% owned by the UK government, used to own and operate the Forties Field, the Forties Pipeline system and the Grangemouth oil refinery. This is a tightly coupled complex system where oil from the North Sea flows by pipeline to Kinneil terminal where it is either diverted to Grangemouth to be refined and then combusted by energy hungry consumers or it is diverted to Hound Point for export by tanker (see map below the fold). The failure of any vital part of this complex system may close the whole system down. This system is now fragmented and its failure has just happened.

Failure by BP to recognise the dependency of the Forties Pipeline upon vital services provided by Grangemouth, and to provide contingency back up for their loss, is the principal cause for over 40% of UK North Sea oil and gas production now being shutdown.

Incident prone BP are of course not the only stake holder to shoulder responsibility and below the fold I explore the responsibilities of the Grangemouth Workers, Ineos, The Banks, Government and The Media in contributing to this debacle.

An update on the latest production numbers from the EIA along with graphs/charts of different oil production forecasts. This post is dedicated to the memory of Dr. Ali Morteza Samsam Bakhtiari who passed away last October.

World oil production (EIA Monthly) for crude oil + NGL. The median forecast is calculated from 13 models that are predicting a peak before 2020 (Bakhtiari, Smith, Staniford, Loglets, Shock model, GBM, ASPO-[70,58,45], Robelius Low/High, HSM). 95% of the predictions  sees a production peak between 2008 and 2010 at 77.5 - 85.0 mbpd (The 95% confidence interval is computed using a bootstrap technique). Click to Enlarge. 

After the CEO of Total (the French oil major) last week, two more CEOs of an oil major came out this Thursday to give stark warnings that mean that peak oil is happening right now. In addition, the chief economist of the International Energy Agency (the IEA), one of the main cheerleaders of the "there's more than enough oil" camp until now, is giving an extraordinarily pessimistic interview in the Financial Times, following the recent publication of their latest World Energy Outlook.

Let me take you through all their affirmations.

An update on the latest production numbers from the EIA along with graphs/charts of different oil production forecasts.

World oil production (EIA Monthly) for crude oil + NGL. The median forecast is calculated from 13 models that are predicting a peak before 2020 (Bakhiarti, Smith, Staniford, Loglets, Shock model, GBM, ASPO-[70,58,45], Robelius Low/High, HSM). 95% of the predictions  sees a production peak between 2008 and 2010 at 77.5 - 85.0 mbpd (The 95% confidence interval is computed using a bootstrap technique). Click to Enlarge. 

Executive Summary:

1. Broad revision (from 1980 to 2004) by the EIA this month but not significant in amplitude.
2. Monthly production peaks are unchanged: 
1. All Liquids: the peak is still July 2006 at 85.54 mbpd ( 0.11 mbpd), the year to date average production in 2007 (6 months) is  84.28 mbpd ( 0.02 mbpd), down 0.07 mbpd from 2006 for the same period.
2. Crude Oil + NGL: the peak date remains May 2005 at 82.09 mbpd ( 0.01 mbpd), the year to date average production for 2007 (6 months) is  81.20 mbpd ( 0.04 mbpd), down 0.06 mbpd from 2006.
3. Crude Oil + Condensate: the peak date remains May 2005 at 74.30 mbpd ( 0.15 mbpd), the year to date average production for 2007 (6 months) is 73.23 mbpd ( 0.14 mbpd), down 0.25 mbpd from 2006.
4. NGPL: the peak date is still February 2007 at 8.03 mbpd ( 0.21 mbpd), the year to date average production for 2007 (6 months) is  7.97 mbpd ( 0.18 mbpd), up 0.19 mbpd from 2006.
3. Decline in crude oil + condensate continues: June 2007 estimate for crude oil + condensate is 72.82 mbpd compared to 73.11 mbpd one year ago and 73.92 mbpd two years ago.
4. Average forecast: the average forecast for crude oil + NGL based on 13 different projections (Figure above)  is showing a kind of production plateau around 81 +/- 4 mbpd with a decline after 2010 +/- 1 year.

I almost choked on my whisky when I heard on the UK national television news (13/06/07), a story about peak oil and questions asked about oil reserves figures quoted in the newly published BP Statistical Review of World Energy.

The news item was referring to a story in Thursday’s Independent (14/06/07) (a national UK newspaper) by Daniel Howden titled “Scientists challenge major review of global reserves and warn that supplies will start to run out in four years’ time.” Howden refers to the work of Chris Skrebowski (Oil Depletion Analysis Centre or ODAC) and Colin Campbell (Association for Peak Oil or ASPO). Kudos to Chris and to Colin for getting this news onto the front page.

There’s more…..

Note that the Indepent's server has been very slow on occasions. A pdf of Howden's article may be downloaded from the TOD server here

An update on the latest production numbers from the EIA along with graphs/charts of different oil production forecasts.

World oil production (EIA Monthly) for crude oil + NGL. The median forecast is calculated from 12 models that are predicting a peak before 2020 (Bakhiarti, Smith, Staniford, Loglets, Shock model, GBM, ASPO-[70,58,45], Robelius Low/High, HSM). 95% of the predictions  sees a production peak between 2009 and 2011 at 78.23 - 87.12 mbpd (The 95% confidence interval is computed using a bootstrap technique). Click to Enlarge. 

Executive Summary:

1. Monthly production records are unchanged except for NGPL: 
1. All Liquids: the peak is still July 2006 at 85.43 mbpd, the year to date average production in 2007 (2 months) is  84.26 mbpd, up 0.2 mbpd from 2006.
2. Crude Oil + NGL: the peak date remains May 2005 at 82.08 mbpd, the year to date average production for 2007 (2 months) is  81.24 mbpd, down 0.06 mbpd from 2006.
3. Crude Oil + Condensate: the peak date remains May 2005 at 74.15 mbpd, the year to date average production for 2007 (2 months) is 73.09 mbpd, down 0.25 mbpd from 2006.
4. NGPL: the peak date is now February 2007 at 8.24 mbpd, the year to date average production for 2007 (2 months) is  8.15 mbpd, up 0.19 mbpd from 2006.
2. Decline in crude oil + condensate continues: February 2007 estimate for crude oil + condensate is 73.35 mbpd compared to 73.47 mbpd one year ago.
3. New forecasts added: Projections from Frederik Robelius and the Hybrid Shock Model.
4. Average forecast: the average forecast for crude oil + NGL based on 12 different projections is showing a kind of production plateau around 83 +/- 4 mbpd with a decline after 2010 +/- 1 year.

Une revue des dernières estimations de la production mondiale de pétrole publiées mensuellement par l'EIA (Agence Américaine de l'Énergie) ainsi qu'une revue, non exhaustive, de différents modèles et prévisions sur la production future.

Fig 1.- Production mondiale mensuelle (EIA mensuelle) pour pétrole brut + NGL. Le modèle médian est calculé à partir de la médiane des 9 modèles qui prévoient un pic avant 2020 (Bakhiarti, Smith, Staniford, Loglets,  Shock model, GBM, ASPO-[70,58,45]). Cliquez pour agrandir.

An update on the latest production numbers from the EIA along with graphs/charts of different oil production forecasts.

World oil production (EIA Monthly) for crude oil + NGL. The median forecast is calculated from 9 models that are predicting a peak before 2020 (Bakhiarti, Smith, Staniford, Loglets,  Shock model, GBM, ASPO-[70,58,45]). Click to Enlarge.

Executive Summary:

1. Monthly production records are unchanged: 
1. All Liquids: the peak is still July 2006 at 85.47 mbpd, the year to date average production in 2006 (11 months) is  84.59 mbpd, up 0.01 mbpd from 2005.
2. Crude Oil + NGL: the peak date remains May 2005 at 82.08 mbpd, the year to date average production for 2006 (11 months) is  81.40 mbpd, down 0.03 mbpd from 2005 (11 months).
3. Crude Oil + Condensate: the peak date remains May 2005 at 74.15 mbpd, the year to date average production for 2006 (11 months) is 73.48 mbpd, down 0.09 mbpd from 2005 (11 months).
4. NGPL: the peak date remains February 2005 at 8.05 mbpd, the year to date average production for 2006 (11 months) is  7.92 mbpd, up 0.06 mbpd from 2005 (11 months).
2. No major revisions on the previous monthly estimates in this month release. 
3. Weak growth continues: November 2006 estimate for crude oil + condensate is 73.41 mbpd compared to 74.11 mbpd one year ago.

A French version is also available on TOD:Canada here

Une revue des dernières estimations de la production mondiale de pétrole publiées mensuellement par l'EIA (Agence Américaine de l'Énergie) ainsi qu'une revue, non exhaustive, de différents modèles et prévisions sur la production future.

Fig 1.- Production mondiale mensuelle (EIA mensuelle) et différentes prédictions (2001-2027). Cliquez pour agrandir.

Quoi de neuf?

• Michael Smith, Energy Institute (Monde, CO+NGL, 2006)
• Michael Smith, (Arabie Saoudite, 2006)

An update on the last production numbers from the EIA along with different oil production forecasts.

World oil production (EIA Monthly) and various forecasts (2001-2027). Click to Enlarge.

What's new:

• Michael Smith from the Energy Institute (World, CO+NGL, 2006)
• Michael Smith (Saudi Arabia, 2006)

A French version is also available on TOD:Canada here.

A pdf version of this article is available here.