Thursday, October 27, 2005

Peaking My Interest

Some new reports are coming out about oil production that are, frankly, really bad news. Via Past Peak, two stories. First:
Quite remarkably, in the first half of 2005 the top five, the top ten and the top 22 publicly quoted oil companies all produced less crude and NGLs than they did in 2004 and only slightly more than they did in 2003 and 2002. Given the global increase in production and demand over the last three years it is clear that, in aggregate, the largest private oil companies are losing marketshare. For ten of the top 22 companies, and for four out of the five largest private companies, the first half of 2005 saw lower crude and NGLs production than in 2004. Ten companies also produced less in first half 2005 than they did in 2003, while nine companies produced less than in 2002.
It's hard to believe that, with oil prices where they are, the major producers wouldn't be pulling out all the stops to make as much oil as they can. So the idea that oil production for 2005 is actually declining relative to 2004 is crazy. But that's what the data says. While I've believed for a while that we faced the terrifying prospect of a near-term Peak in oil production, I really, really hope that it isn't already behind us. I honestly don't know what we'd do. (The above quote is from a report you can read here. Warning - PDF.)

The second terrifying story is also via Past Peak, from the NYT.
WASHINGTON, Oct. 26 - Last spring, the White House publicly embraced plans by Saudi Arabia to increase its oil production capacity significantly. But privately, some officials and others advising the government are skeptical about some of those Saudi forecasts.

The United States relies on a few producers to maintain enough spare capacity to keep prices and markets stable, even during war or disaster. As oil prices have climbed over the last few years amid surging demand and tight supplies, the Bush administration has looked to the Persian Gulf countries, particularly Saudi Arabia, to pump extra oil.

But doubts about Saudi Arabia's assurances of how much it can expand capacity - and for how long - have been raised in a secret intelligence report and in a separate analysis by a leading government oil adviser, according to a federal government official and the oil expert.
So now not only is the major production slowing, but there's serious doubts - even in government circles - about how long the Saudis can keep producing at the rates they're going.

Oh hell. While I'm at it, let's talk depletion rates.
The world has now reached the point where the volumes lost to depletion are much larger than the levels of likely new demand. This means total increments requred (new demand plus depletion) are running at around 7%/y, while the largest supply increments in 2006 and 2007 are contributing 3.6% and 3.5%. It would seem most unlikely that small projects and infill drilling could account for the remaining required 3.5%. The inescapable conclusion is that oil prices will have to remain high enough to destroy demand, bringing supply and demand back into balance.
These two reports come from the Petroleum Review, which is hardly part of the tinfoil-hat crowd.

Meanwhile, the Congress of the United States has decided people don't need help heating their homes this winter. I know the Liberals aren't great, but when contrasted with Republican malfeasance, I'll take Paul Martin any day.

So basically what I'm saying is that it looks more and more like Peak Oil is upon us. Darn. I hope nobody's just bought a car.

No comments: