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200 billion barrels of new oil production is needed by 2030

200 billion barrels of new oil production is needed by 2030 thumbnail

This 21 November the world’s oil analysts are attempting to guess what OPEC will decide at its meeting in Vienna on 27 November. Before each OPEC meeting Bloomberg News asks a number of analysts their opinions on OPEC’s future oil production. Yesterday Bloomberg News published what 20 analysts think regarding the 27 November meeting. Half of them believe that OPEC will reduce its production while the other half believe it will not change. The possibility of impending reductions in oil production affected the oil price such that, in London, the price of Brent crude for delivery in January rose by 67 cents to $80 per barrel while in New York the equivalent price to the WTI rose by 95 cents to $76.80 per barrel.

The fall in the price of oil by 30% since June has raised the issue of the profitability of oil production or what is called the “breakeven point”. This November, Chevron released its “Investor Presentation” and in it they discuss breakeven points for various forms of oil production and also the need for new oil production.

Chevron demand

In around 2008 the IEA and others began to discuss the decline in production from existing oilfields. By that time we at Global Energy Systems of Uppsala University had been researching in this area for some years and, in a scientific article, showed that the rate of decline in production from existing fields was 6% per year. Since then, this has become an accepted fact and even Chevron mentioned it in their recent presentation noting that production from existing fields will fall from 80 Mb/d to 30 Mb/d by 2030. Thus, new production equivalent to 50 Mb/d is needed by 2030 just to keep overall production constant. For the period 2013 to 2030 this is according to Chevron equivalent to approximately 200 billion barrels of oil.

Chevron breakeven

The Chevron presentation also discusses where this enormous volume of oil might come from and as you can see in the image the largest contribution comes from deepwater while 20% comes from US tight oil (shale oil) equivalent to 40 billion barrels. There are various estimates of how much shale oil exists in the USA but they discuss a volume of between 20 and 60 billion barrels. OPEC’s share comes mainly from upgrading of old oilfields and bringing on line some of the smaller fields that have so far been left unexploited. We should not expect large discoveries within OPEC. Once again I can mention that Norway’s new giant field will reach maximal production before 2030 and if that production reaches 300,000 barrels per day then, during 10 years this production will be approximately 1% of the total volume of new oil required. At today’s oil price of around $80 per barrel it is only OPEC’s production that is currently completely profitable and onshore and shallow offshore production are borderline in terms of profitability. Norway’s Jonas Sverdrup oilfield is expected to have a production cost of $40 per barrel and, compared with other oil production internationally, only OPEC’s is more profitable.

Now we wait with excitement to hear what OPEC will say on 27 November. Regardless of whether they restrict production or not we are looking at a future of $100 per barrel or more.


23 Comments on "200 billion barrels of new oil production is needed by 2030"

  1. ghung on Sat, 22nd Nov 2014 9:04 am 

    This is what I keep telling folks. When one does the math, things get ugly for those who insist we have no long-term oil problem.

    I keep hoping ASPO’s TOD successor site will get cranked up:

  2. steve on Sat, 22nd Nov 2014 9:07 am 

    I think predicting the actual price of oil is futile…but I do know that we have to produce a whole lot of new oil at a time when we have declining wells and I don’t think we will find it…..but hey the stock market is going up and up!!! Maybe they can make it up just like they make everything else up…

  3. steve on Sat, 22nd Nov 2014 9:32 am 

    Of course what can and might happen is the mother of all depressions with economies collapsing all over the world and then will we need that much oil? Probably not….the 1 percent will starve us until they realize where there food comes from then….the game is up…

  4. Plantagenet on Sat, 22nd Nov 2014 10:59 am 

    If you look at the figure, Chevron is predicting a 25% INCREASE in production by OPEC. This is insanity. Almost all of OPEC has peaked, and rapid declines in OPEC production are inevitable.

  5. steve on Sat, 22nd Nov 2014 11:13 am 

    Yes plant but we can’t predict the future…if we have an economic collapse or great depression those numbers are way off…they are based on current consumption levels…otherwise you miss the whole story…that is why MSM is able to manipulate the peak oil story….they only tell it from one dimension….

  6. penury on Sat, 22nd Nov 2014 11:40 am 

    Apparently humans now believe that if we need it it shall be done. I really despair reading all the “we shall overcome articles.” Always with the dream and never with a plan.

  7. Jerry McManus on Sat, 22nd Nov 2014 12:22 pm 

    “I keep hoping ASPO’s TOD successor site will get cranked up:”

    No disrespect, but I’m curious: What exactly would be the point of that? We are WAY beyond the point where the bean counters have anything useful to contribute.

    AS you know, the energy crisis is just one of several global slow motion train wrecks that us clever monkeys have set in motion, any one of which has the potential to crush the life out of industrial civilization.

    If you want a clear eyed and hard nosed look at what the immediate future holds for us, complete with an active and intelligent discussion forum, then I recommend “Collapse of Industrial Civilization”

    The page can be slow to load, but is generally well worth the wait.

  8. Dave Thompson on Sat, 22nd Nov 2014 12:24 pm 

    The graph starting in 2013 shows a huge drop in production, at the 2o20 range looks to be down in the 60 mil. per day. Forget 2030, we will have issues long before then.

  9. Boat on Sat, 22nd Nov 2014 12:52 pm 

    The issue will be price.

  10. Northwest Resident on Sat, 22nd Nov 2014 1:18 pm 

    Chevron released its “Investor Presentation”

    There’s what you truly wish and hope will be. And then there’s what IS.

    There’s what they want investors to think is true. And then there’s the actual truth.

    That “reality” that is being projected on your television screens, in print media and through all MSM communication channels is what they want investors (and everybody else) to think is true. Scratch the surface of that fake reality, peel back the thick layer of bullshit, and you’ll see a truth that is both ominous and devastating.

    But until the moment that the real truth is revealed, it’s nothing but nonstop happy faces and stock market bulls. Don’t worry. Everything is going according to plan.

  11. nemteck on Sat, 22nd Nov 2014 1:22 pm 

    All you folks worry for nothing because our own shortonoil on Sun, 26th Oct 2014 8:10 am predicted that the oil price will be close to $0.00 around 2030-2035.

    If “200 billion barrels of new oil production is needed by 2030” then one has to wonder who is paying for the production if oil costs close to $0.00.

  12. Northwest Resident on Sat, 22nd Nov 2014 1:31 pm 

    nemteck — I can’t speak for shortonoil, but I suspect that the zero-dollar per barrel of oil projection has something to do with the fact that by 2030-2035, it will require the energy in a barrel of oil to extract a barrel of oil, leaving zero net energy, which would sell for roughly zero dollars. And I also suspect that the zero-dollar prediction is dependent on BAU continuing “as is”, with ever increasing amounts of oil and debt required to squeeze the oil that still remains from rock layers far below the surface. No economic crashes. No big wars. No major terror attacks or natural disasters. Just smooth sailing until 2030-2035. Small chance of that happening.

  13. nemteck on Sat, 22nd Nov 2014 4:21 pm 

    Northwest: A viable model has to include all these factors (and more) you have mentioned. But how can those be included in a model sine no one has a crystal ball that powerful. Hence, one must refrain from making predictions of price that far out in future.

    I am agitated since the hillsgroup model seems to have only one parameter dwelling only on thermodynamic and entropy, i.e. the energy content of oil. This is always touted by shortonoil. I am a theoretical physicist and my main work is in developing decision models based on energy and entropy and what I am reading here is childish. That upsets me and this is why I am sometimes too harsh when writing comments.

    We all like to predict the future (perhaps after a few beers) but in serious discussions one should refrain from it or one is seen as a fool later on.

  14. Davy on Sat, 22nd Nov 2014 5:33 pm 

    Nem, I have issues with Short’s use of a dollar price in forecasting oil. I feel the economy is not being represented in this forecast as a distinct variable separate from energy and its value to the economy. The economy is not always rational being influenced by human nature. If I were short I would use the price as a means of expressing the decline in value of oil to the economy and not as the actual future price.

    We do not know if and when a collapse is coming. We may have significant deflation or hyperinflation. The dollar may no longer be used to transact oil. I relate very well to Short’s discussions in relation to the thermodynamics of oil and economy relationship but not the forecasting of oils actual price far into the future.

  15. Northwest Resident on Sat, 22nd Nov 2014 7:09 pm 

    nemteck and Davy — I’m out of my league when talking thermodynamic models with theoretical physicists and engineers. I’m smart enough and read enough to “get” the main concepts, but there are deep levels of number crunching going on that my mind would rather not descend to. But still, I think it is useful to have a model that predicts that IF x, y and z variables remain constant, then at a specified point in the future we’ll get a mathematical result of (fill in the blank). A model like that may not be particularly useful for predicting future reality, but it can tell us that the path we are on cannot possibly be sustained — or conversely, it could tell us perhaps that as long as intruding unforeseen events are not significant, then we can predict that the 2030-2035 price of oil will be whatever it is. In all the time that shortonoil has been publicizing that model, I have pointed out to both shortonoil and to others that it is dependent on “no surprises” — everything must remain constant (x, y and z). And shortonoil has acknowledged in a couple of replies that yes, that is true. I still think it is useful, but as you point out, the chances of x, y and z remaining constant until 2030 are absolutely zero — same as shortonoil said in one post. So, what will the stinking price of oil be in 2030? Actually, that’s impossible to predict without that crystal ball you mention. And not even Stephen Hawking has one of those!

  16. Mark Ziegler on Sat, 22nd Nov 2014 8:12 pm 

    In 2030 gas will not cost much more than it does now except for the gas rationing with your special gas card that will automatically set your allotment like a variable interest rate loan.

  17. Joe on Sat, 22nd Nov 2014 8:57 pm 

    I agree with NR’s post on talking about future price and commenting about Short’s models.As stated “surprises” could happen and change pricing.

    One thing I wanted to ask.A surprise can be positive or negative to oil prices/supply.We know what a negative surprise does to prices or supply etc.

    But what would be some examples of a positive surprise that would basically allow for longer or extended BAU and further supply scenarios?

    Hope I am asking this clearly enough.

    Thanks Joe.

  18. steve on Sat, 22nd Nov 2014 9:53 pm 

    Surprise scenario? The Aliens come down and take over our government and show us how to create energy out of thin air…and we stop being greedy humans…

  19. GregT on Sun, 23rd Nov 2014 10:15 am 

    “But what would be some examples of a positive surprise that would basically allow for longer or extended BAU and further supply scenarios?”

    A sudden and massive reduction in human population numbers.

    Divine intervention.

  20. shortonoil on Sun, 23rd Nov 2014 3:43 pm 

    “I am a theoretical physicist and my main work is in developing decision models based on energy and entropy and what I am reading here is childish.”

    If you look at the second graph The Maximum Consumer Price curve you will see a set of arrows pointing off to the right:

    Those arrows represent our “best guess” as to when the petroleum industry will begin to cannibalize the embedded energy in the world’s petroleum industry infrastructure, which we estimate to be equivalent to 87 Gb. There is no where on the graphs, or in the text that we indicate that the price of oil will go to zero dollars. You are making statements for which you have absolutely no evidence to support.

    Now, that is childish! I think that is called “trolling”.

  21. shortonoil on Sun, 23rd Nov 2014 6:03 pm 

    To make a reasonable estimate of where oil prices will bottom we would have to know what the distribution of ERoEI’s of the world’s oil fields is; and that we don’t know! The dead state is 6.9:1 for the average field, but some fields will be higher than that. That is, some fields could still be operating after the the 2030 – 2035 dead state point. Our best estimate comes from Robelius who estimated that 60% of the world’s production comes from 1% of its fields. That indicates that the distribution is bottom loaded. 6.9:1 is important because it is the point where the higher ERoEI fields will no longer be able to support the lower ERoEI fields.

    Of course, the world’s economy may have deteriorated to the point that there won’t be anyone left to count barrels of oil; so the whole thing is likely to reduce to just an academic discussion.

  22. Davy on Sun, 23rd Nov 2014 6:57 pm 

    Joe, a positive surprise would be an effective plan B from both the top down and bottom up. It would be global and inclusive. It could be initiated by a generalized crisis that knocks sense into everyone top to bottom. Hunger and flickering lights have a way of getting people’s attention. In this scenario we would see command and control of vital resources with rationing. Discretionary and wasteful lifestyles and attitudes will evaporate into a contracted world. I call this a positive surprise because the possible negatives in this scenario are worrisome. Instead of cooperation there is conflict. If there is widespread conflict we may have little hope. I have hope we will pull together. This is not what you are looking for in your question but it is a way to keep basic BAU fundamentals operational.

  23. Name on Mon, 24th Nov 2014 7:03 am 

    One assumption of short’s model is that oil value to the economy stays constant. That’s why it gets to the rather absurd low prices. As the more wasteful (eg cars) uses of oil go offline, the remaining application have significantly higher value.

    For example, I would pay 1k $/barrel (and it would make sense economically) if I only needed a cup of it to grease the axes of my horse-buggy.

    Of course, one world price for oil would be out of the question by then, so short’s model should be reasonable enough while there’s still a semblance of BAU (though in time it will prove a bit pessimistic due the above-mentioned increase in oil economic value).

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