[ErikTownsend]

When I think about Peak [Cheap] Oil, I'm constantly looking for holes in my own thinking, and searching for reasons why I might be wrong in my conclusions. The arguments posed by those who seek to discredit PO are generally empty, and easy to disprove. But it occurs to me that most of us in the Peak Oil universe tend to accept the "wedge of hope" decline projections as fact, and I've seen relatively little critical analysis of how accurate they really are. Specifically, I've always been a big fan of this chart:


Source: EIA WEO 2009

But let's face it, if it were to turn out that the existing producing projects represented in this chart are still producing 83mmbpd in 2030 as opposed to the 43mm projected, then Peak Oil would indeed have been proven to be an unfounded scare and nothing more. Don't get me wrong - I'm not saying the projections are excessive - my point is simply that we owe it to ourselves to scrutinize the accuracy of the decline projections, because frankly they're the only potential hole in the PO argument.

I see stuff written all the time about how much the shale "revolution" is going to produce and how much tar sands are going to produce ad nauseum. But I've never seen a really deep, critical review of the decline projections or any sort of "margin of error" analysis associated with them.

I searched this forum for a post on this topic, but was surprised not to find one. Has this been discussed elsewhere on this site? Does anyone have links to any critical analysis of the accuracy of "wedge of hope" decline projections?

Thanks in advance,
Erik

[sparky]

.
All forecast are based on a big heap of bull-crap ,
that's because a forecast is a replication of the past, and things change for complex systems ,
even worst it's a projection of what one knew then , and if the interactions are deep and varied , usually it's a partial knowledge

Forecast are good at telling you what was NOT understood , then they are brilliant
a study of the errors in prediction is very fruitful to increase one's knowledge
In my humble opinion ,the big mistakes for peakoil doomers were several

1-an underestimation of the economic incentive to find new conventional resources
the oilmen are good at their job if there is money at the end of it
classic economic theory state that when price rise so do the endeavour to get more
free market is a hard bitch to kill , she is like the terminator

2- substitution of conventional crude with anything which could be distillated into hydrocarbon products
never mind if twenty years ago it was classified as rubbish , that was true at 5$ a barrel , now it's a valuable resource at 100$
and there is a lot of rubbish out there

3- the shift in consumption , cars are way more efficient ,oil is no more used for power generation as a routine ,
most products now use less energy and materials

I believe it doesn't change the overall picture , never was an porn doomer ,
rather than a fall down a cliff It seems to me societies will over the course of decades manage somewhat a succession of crisis and depressions to lower level

[rockdoc123]

I see stuff written all the time about how much the shale "revolution" is going to produce and how much tar sands are going to produce ad nauseum. But I've never seen a really deep, critical review of the decline projections or any sort of "margin of error" analysis associated with them.

here is an old presentation by Terry Engelder who speaks to the science behind what controls shale decline rates.

http://bakerinstitute.org/media/files/e ... ecured.pdf

I searched this forum for a post on this topic, but was surprised not to find one. Has this been discussed elsewhere on this site? Does anyone have links to any critical analysis of the accuracy of "wedge of hope" decline projections?

I’ve posted on decline rates and type curves numerous times in various threads. I also find the search engine here to be unwieldy, often can’t find posts I’ve made a few months back. Pops seems to have the knack so perhaps PM him.

[Loki]

.
3- the shift in consumption , cars are way more efficient ,oil is no more used for power generation as a routine ,
most products now use less energy and materials

Good list. To #3 I'd add demand destruction in the US, Europe, and Japan in the wake of the Great Recession. This was a "shift in consumption," but not because of fuel efficiency.

All of the factors you listed, and more, have mitigated the impact of peak oil. They will continue to operate as we slide down Mt. Hubbert.

rather than a fall down a cliff It seems to me societies will over the course of decades manage somewhat a succession of crisis and depressions to lower level

Agreed. The slow grind down certainly seems the most likely scenario.

If peak oil was just about geology, it would be relatively easy. But economics is the driving factor. Too complex for primitive ape minds. We can just guess and pretend we know.

[Keith_McClary]

I see stuff written all the time about how much the shale "revolution" is going to produce and how much tar sands are going to produce ad nauseum. But I've never seen a really deep, critical review of the decline projections or any sort of "margin of error" analysis associated with them.

There is just too little data. There are maps like this:

http://www.eia.gov/analysis/studies/worldshalegas/

but nobody knows how much is economic or on what time-scale.

The areas currently exploited are a few tiny dots on that map - a good part of the US shale boom is a few counties in ND. Perhaps other such "sweet spots" will be found.

[sparky]

.
What really worry me is that most of the "new "resources have a steep depletion curve or are small stuff ,rapidly sucked dry
as the big old super giants finally come to rest , a big bunch of the lesser producers will be whiting down too
that's really the stuff of nightmare , like shooting down a white water rapid with a tea spoon for a paddle

[vtsnowedin]

I think the wedge of unidentified projects may well be a lot narrower then the chart shows. There are no guarantees that supply can meet that demand line . Also conventional fields may not decline as gracefully as the chart presumes so their might be a larger gap to fill. But what of it? If total supply is just fifty or sixty million barrels a day in 2030 the world will adjust to it.
It is just how that adjustment gets made that is the real uncertainty. The contenders are ,War Famine, Pestilence, efficiency improvements, birth control, discovery or invention of workable substitutes and austerity.
We will probably try them all before we are through.

[Pops]

I'm no expert but the problem I see with forecasts that show very steep overall decline rates, is they assume no new wells will ever be drilled again, no new tar sands will be mined, no new or old wells fracked, no deepwater horizons to be crossed.

If the average decline rate worldwide is say, 6% as long as there are still a few new wells to be brought online, the overall decline rate will be something less than 6% until there is absolutely no new production to be had.

I've said it before, the "peak" image in our brain is misleading, peak is a result of production not increasing - of new production falling below decline, not new production going to zero.

[vtsnowedin]

I'm no expert but the problem I see with forecasts that show very steep overall decline rates, is they assume no new wells will ever be drilled again, no new tar sands will be mined, no new or old wells fracked, no deepwater horizons to be crossed.

If the average decline rate worldwide is say, 6% as long as there are still a few new wells to be brought online, the overall decline rate will be something less than 6% until there is absolutely no new production to be had.

I've said it before, the "peak" image in our brain is misleading, peak is a result of production not increasing - of new production falling below decline, not new production going to zero.

The people originally creating those charts usually say that their source data takes into account the eventual drilling out and reworking of the known existing sources. The question is what price is assumed in the future years which would determine how much re-drilling and secondary fracking will occur? At $400/bl there are a lot of now played out fields in the lower 48 that would look like Swiss cheese before the quite trying to squeeze more out of them.
At any rate that huge "yet to find" wedge is the point those charts are trying to make. How accurate the projected decline is, is unimportant as long as there is a decline opposed to a rising population and demand.

[ErikTownsend]

Some respondents misinterpreted the original question. I'm not asking about SHALE decline rates. I know those are quite steep and I understand the reasons why.

My point is about the anticipated decline of EXISTING CONVENTIONAL projects. Sure, it's true (per @Pops) that any measure of decline in EXISTING project doesn't consider the effect of new projects. But that's not the point. I have my own models for how much new production Shale, Tar Sands, Deep Water, and other non-conventional sources will add in coming decades. The executive summary is a LOT, but not nearly enough to make up for a LOSS of more than 40mmbpd from EXISTING CONVENTIONAL fields. And therein lies the rub - how confident are we that those EXISTING CONVENTIONAL plays are really going to decline in production by HALF in the next 15 years, as projected by the graph in the base post? If we only lose 10MMBPD instead of 40, then shale and other non-conventional sources will be enough to make up the difference. But if the chart is right about EXISTING CONVENTIONAL decline, the so-called "Shale Revolution" will only solve 10% of the problem. Hence why I see it as essential to better undstand the margin for error in the decline forecasts associated with the giant CONVENTIONAL oilfields that make up most of our current supply.

[Keith_McClary]

Hence why I see it as essential to better undstand the margin for error in the decline forecasts associated with the giant CONVENTIONAL oilfields that make up most of our current supply.

Have you seen this? :

Can anything be confidently stated about the average rate of conventional oilfield decline?

A commonly quoted global decline rate is from CERA: 4.5%. This figure was calculated from an analysis of 811 large to giant size fields, covering ~66% of global production.
CERA notes that most production is from large fields, and that these fields tend to produce on-plateau for longer and to decline at a slower rate than smaller fields. Additionally, they state that offshore fields decline faster than onshore fields.
CERA calculate that 41% of modern production comes from fields that are in build-up or on-plateau. They use complex averaging with the 59% of fields that are in decline to create the future 4.5% decline rate.
The IEA 2008 World Oil Report concentrated on defining future decline rates. They published a production-weighted average decline rate worldwide of 6.7% as of 2007. This is predicted to rise to 8.6% by 2030 as more and more old giant fields pass their plateau and start to decline, and the long tail of global production shifts to smaller more rapidly depleted oilfields. As of the IEA 2010 World Oil Report (the latest freely availble) the IEA stood by these predictions.
IEA uses IHS data. Decline rates are calculated for all fields in the database (including 798 “giants”). The overall decline prediction method may over-state decline rates, as pre- plateau fields have an assumed rate.
The IEA differentiate between Natural Decline (9%) and Observed Decline (6.7%), the difference being attributed to field interventions such as infill drilling. In total they calculate a 5.1% decline for 580 fields post-peak, and 5.8% for 479 fields post-plateau. The total is adjusted to account for thousands of smaller fields not included in their dataset to reach the 6.7% number.
IEA observe that Non-OPEC fields, with fewer Giant and Super-Giant fields, decline at a faster rate than OPEC fields. Additionally, offshore fields decline at faster rates than onshore, and deep-water fields decline at a faster rate than shelfal fields.
http://grandemotte.wordpress.com/oil-an ... ine-rates/

[sparky]

.
Thanks for the link Keith , that's the point I was trying to make , super giants and giants fields make the whole market more stable
so the crux of the matter is ...where are the future super giants fields ,
they might be out there but I doubt if they are going to be cheap or easy

[rockdoc123]

OK, now that you clarify it is not shales you are interested in (which your post didn't make clear) what I would say is that there is a wide range of decline rates around the world. Here is what influences them:

- porosity and effective permeability, higher effective K means you can drain the reservoir quicker so decline will be higher
- reservoir management issues.....a lot of operators look to get as much money as they can quickly but often that isn't in the best interests of the ultimate recovery and hence decline rate. Producing too fast can result in an artificially high decline rate and your ultimate primary recovery is reduced.
- reservoir drive. A strong water drive generally yields a lower and predictable decline rate, gas depletion drives tend to have higher decline rates
- subsequent interventions in the reservoir. Nobody, unless they are a completely irresponsible operator (and there are a lot in various countries) drills all of their development wells and then just produces them without looking into re-completions, in-fill drilling, pressure maintenance etc. Any of these interventions alter the decline rate and usually the ultimate recovery.
- field size considerations. As an example very high porosity/permeability reservoirs in Colombia have a very high decline rate simply because it is measured in percentage of reserves and the fields tend to be small. On the other hand in Saudi Arabia where reservoirs have better or at least similar porosity/permeabilty the decline rate is lower simply because the field size is much larger.

So looking for an average decline rate is a bit of a fools errand. That being said my guess is (ignoring the tight reservoirs) you could use 6%- 10% as a conservative norm this being based on what I usually used as a rule of thumb for conventional reservoirs. You are usually wrong as much to the downside as you are to the upside. But that is just my opinion.

If it wasn't so difficult to search the archives on this site (let alone the merging of threads that has occurred over the years) I could direct you to some predictions I made regarding peak a number of years ago. At that time I had access to Wood Mackenzies full global database that included production analysis for all of the existing fields around the world. There were some adjustments I made regarding things like Kashagan (which I delayed wrt to WoodMac view, and I was right) and a few other things I knew would be delayed but the bottom line is the individual field decline rates they use are based on actual production and country forecasts. That's a better number I believe. My prediction at that time was somewhere between 2013 and 2017 if memory serves, but that was made before the shale revolution which would possibly delay a couple of years and likely make the peak look even more undulating and long-winded.

[vtsnowedin]

My prediction at that time was somewhere between 2013 and 2017 if memory serves, but that was made before the shale revolution which would possibly delay a couple of years and likely make the peak look even more undulating and long-winded.

So you see the true peak in world oil production between now and 2020? How much confidence would you place on that. Personnel planning and such?

[ErikTownsend]

@Keith_McClary

Thanks very much for the link and quote. This was very helpful.

@Rockdoc123

Thanks very much for taking the time to reply. You provided some excellent information. But honestly, this was a little hard to swallow:

OK, now that you clarify it is not shales you are interested in (which your post didn't make clear)

It's hard for me to imagine how I could have been more clear. I said:

if it were to turn out that the existing producing projects represented in this chart are still producing 83mmbpd in 2030 as opposed to the 43mm projected, then Peak Oil would indeed have been proven to be an unfounded scare and nothing more.

...and I provided a copy of the chart from EIA's WEO 2009 which clearly shows the bulk of production from existing conventional projects expected to be cut in half by 2030 as a result of production declines. How you got from that to thinking I was discussing shale decline rates I'm not sure, but in any case I really don't think it accurate to say my post was unclear.

The reason I started the thread is that there is a LOT of information readily available about how much new production will come from shale, tar sands, deepwater offshore, etc. And plenty of contrasting views from which one can draw conclusions about the realistic range of possibilities. But with regard to anticipated production decline from existing conventional projects (read: how much we have to make up for with new sources of oil), I see very little in the way of contrasting views.

So that chart from EIA in 2009 projected the output from then-existing conventional resources would be cut in half by 2030. EIA seems to have backed away from using that chart, but to my knowledge has not retracted it or expressed a new opinion that it is wrong. So what I'm really asking is, who are the credible analysts who think that the loss of fully HALF of 2009 conventional production by 2030 is excessive, and who thinks it's really even worse than that, and where can I find their work?

Thanks again to all who replied.

[Pops]

Here is a good article on decline rates from Reuters that takes the fall in prices into account. I'll just post a snip but the entire article is worth reading - as are the above posts ...

RED QUEEN'S RACE

The precise impact of decline rates on the 90 million barrels per day global oil industry is hard to calculate because some fields are still ramping up, while others are declining at different rates depending on age and type and the amount of sustaining investment.

In its 2013 World Energy Outlook, the IEA assumed an actual decline rate of 2 percent per year across all current conventional fields, rising to 4 percent per year in the 2020s.

But that projection was produced when oil prices were averaging well above $100 per barrel and expected to remain at that level throughout the second half of the current decade and into the 2020s.

In a world where oil prices are expected to average just $50-$70 per barrel over the next few years, actual decline rates could easily reach 3 percent or even 4 percent per year.

[ennui2]

It's brown-tech as David Holmgren's Future Scenarios says. (It's unfortunate but shaking your fist at BAU is pointless and, frankly, a little repetitive and tiresome.) We really don't know the timing of the fall-off on the cliff and it could very well be that ecological limits hit harder/faster than hydrocarbon limits.

[Pops]

For fields which have passed their peak, observed output declined on average by 6.2 percent per year, according to the IEA ("World Energy Outlook 2013").

In a low price and or credit constricted scenario I'm thinking 6% per year is plenty steep enough to cause as much pain as any tree hugger can stand.

Subbing in rapid CC as the apocalypse du jour for those bored with the timeline of peak is all well and good but off topic here