Yikes

The world's second largest oil field has peaked. The decline hasn't begun yet, but this is bad news.

The peak output of the Burgan oil field will now be around 1.7 million barrels per day, and not the two million barrels per day forecast for the rest of the field's 30 to 40 years of life, Chairman Farouk Al Zanki told Bloomberg.

He said that engineers had tried to maintain 1.9 million barrels per day but that 1.7 million is the optimum rate. Kuwait will now spend some $3 million a year for the next year to boost output and exports from other fields.

Most of the oil-producing countries in the world have already peaked and their production is now in decline. The one exception to this has been the Persian Gulf region, where large producers (Saudi Arabia, Iraq, Kuwait, Iran) haven't yet peaked. It's been hoped and said that the Gulf region would keep producing enough new oil every year to make up for declines worldwide and new consumption. The problem is, this means by definition the world becomes even more dependent on Persian Gulf oil - and that's the good news! The bad news is that the hope of ever-lasting Gulf oil may have been illusory. If Burgan has peaked, we can expect something on the order of 50-100,000 barrels per day of production to begin to disappear over the next few years. And it's not like we had plenty of oil to begin with.

Over the long term, this points to a problem with all the estimates of global oil production. The IEA had expected the Burgan field to Peak fifteen years from now, with almost 20% higher production than it has now. If Burgan is peaking at a low level today, what does that mean for all of the other projections?

You know, it's been a long time since I read any good news about the future of oil prices.

(Link via Green Car Congress, The Oil Drum.)