The Oil Drum

It is CERA Week and, consequently, there is a steady stream of nonsense emanating from Houston. In this brief note, I will talk a bit more about what the concept Peak Oil is.

My remarks are in reaction to Running out of oil may not be the issue at all by Kristen Hays, reporting in the Houston Chronicle on February 14th on statements by John Watson, head of international exploration and production for Chevron, at the CERA conference.

All the talk of when the world will run out of oil could be rendered irrelevant because of geopolitical issues that block access to untapped reserves, the head of international exploration and production for Chevron Corp. said Wednesday.

Looking at the ASPO Blog, I read these statements by some prominent members of the peak oil community.

[Robert] Hirsch doubts that the world can keep increasing oil flows for much longer. "CERA sees a long plateau ahead," he said. "But I can't find a plateau in the data I'm looking at." The downturn, when it comes, could take the world by surprise. "Peaking could come with little warning and sharp declines," he said....

"We have 1,500 days until peak and tomorrow we'll have one day less," Chris Skrebowski, the editor of Petroleum Review, told the ASPO-5 crowd today. Skrebowski's projections, which focus on oil flows instead of reserves, has the world peaking at between 92 and 94 million barrels per day. Unfortunately, he said, "collectively we're still in denial."

Hirsch is the principal author of the now famous Hirsch Report (large pdf). Skrebowski maintains the Megaprojects Database of future oil production. These quotes got me thinking about the shape of the peak in world oil production which Skrebowski projects as occurring in the fall of 2010.

One of our oil industry insiders has sent us some interesting data on rig rates, well type/depth changes, and more on the oil situation in the GOM, as well as how the industry in Texas and the GOM is staffing its rigs.  Lots of interesting stuff under the fold.

BusinessWeek reports something of a shocker: Fox: Deep-water oil find may top Cantarell (Note that this was discussed in previous threads, but I guess the editors managed to miss it. I can only imagine that many of you did too, so here it is for everyone. Thanks, Leanan. But keep reading—I promise you new content under the fold.)

We've mentioned before that Cantarell is in decline, and this article reports that "Production at Cantarell is expected to decline 6 percent this year, to 1.9 million barrels a day, and decline even more sharply in subsequent years." Cantarell's original total reserves were 11.5 billion barrels. (Khebab's post at EnergyBulletin on the state of Mexican reserves also bears on this issue.)

The emailer who sent us this story noted that he believes that the field is in fact bigger than Cantarell, but also a heavier grade.

Kjell Aleklett has an excellent article in World Watch, which I read at the Energy Bulletin giving a broad view of the developing problem.  He begins with the changes that he saw in Sweden in the small village where he was born.  Oil was not used in the village when he was born, and its impact has been dramatic on Swedish life.

His comment reminded me of the village in South-West Scotland where my grandfather was the village blacksmith.  The impact of oil is such that this attractive  little community has changed from a farming village to a place where the houses are largely owned as vacation homes, and the locals are no longer able to afford to live there.  The local economy also suffered through mad cow and foot and mouth diseases, and thus the small, self-sufficient community of my youth (with the baker at the bottom of the street) has gone, and the skill levels largely with it. When I was a kid we harvested peat to heat the house, now they use gas.

Today's energy headlines are focusing on the announcement, by Jeffrey Rubin that conventional crude peaked in 2004, leaving the increased demand to be met by Deepwater and NGL increases, as the ASPO Ireland predictive curve suggests on page 2 of the current newsletter.  Currently China is anticipating 8.5 - 9% growth with major investments in energy and transport. US demand is anticipated to increase this year, and by some magic apparently US Gulf production is going to return to at least pre-Hurricane levels despite the loss of rigs and platforms that it will never be economic (according to those that know and have commented here) to re-establish. There is still 400,000 bd of oil and 1.8 bcf of gas that has not been restored.

(You should also note that ASPO USA is starting a weekly publication to overview issues as an e-mail, and the address to send for a copy should be posted on their website today.)