The Export Land Model

[AirlinePilot]

I think its time we start talking seriously about this here at PO.com. I see it mentioned frequently but it appears that we hand wave it away at times. This IS likely the real bump coming in the road when it comes to the effects of PO. This link to the Wiki on the topic is a good primer and there is much info over at TOD on this topic.

Lately one of the members over at TOD (west texas) makes regular posts concerning this metric and what it means with regard to global declines and i will link his data routinely here in this thread. Other discussions are encouraged. I believe getting a handle on this particular aspect of the current global oil picture is very important in the search for where all this leads. link

[Grautr]

The two examples I know of are Britain, which peaked in North Sea crude in 2000 and became a net importer by 2007.

Mexico peaked in 2005 and is due to begin importing in 2011.

The real blip will occur when this happens to SA.

[shortonsense]

I think its time we start talking seriously about this here at PO.com. I see it mentioned frequently but it appears that we hand wave it away at times. This IS likely the real bump coming in the road when it comes to the effects of PO. This link to the Wiki on the topic is a good primer and there is much info over at TOD on this topic.

Lately one of the members over at TOD (west texas) makes regular posts concerning this metric and what it means with regard to global declines and i will link his data routinely here in this thread. Other discussions are encouraged. I believe getting a handle on this particular aspect of the current global oil picture is very important in the search for where all this leads.


http://en.wikipedia.org/wiki/Export_Land_Model

I suppose we can start with some due diligence done by a member right here at PO.com

http://peakoildebunked.blogspot.com/200 ... gence.html

[Tanada]

The two examples I know of are Britain, which peaked in North Sea crude in 2000 and became a net importer by 2007.

Mexico peaked in 2005 and is due to begin importing in 2011.

The real blip will occur when this happens to SA.

Net importers can only be such as long as the aggregate net exporters are able to keep up the supply. SA won't be able to import unless there is enough supply to go around by then, which seems unlikely.

[shortonsense]

The two examples I know of are Britain, which peaked in North Sea crude in 2000 and became a net importer by 2007.

Mexico peaked in 2005 and is due to begin importing in 2011.

The real blip will occur when this happens to SA.

Net importers can only be such as long as the aggregate net exporters are able to keep up the supply. SA won't be able to import unless there is enough supply to go around by then, which seems unlikely.

As the owners of the largest recoverable accumulation known to man, perhaps it will be Venezuela to the rescue? But in the near future, my bet is on Russia.

[Revi]

I think the way they'll deal with it is to crash the economies of certain countries to limit demand. We are using less now in the US for example.

The export land model assumes that demand is robust, which may not be the case if people can't afford to buy oil.

Nigeria has riots because people can't afford to buy cooking oil, while people use it for wave runners over here.

There are export states where the domestic population uses oxcarts while huge amounts of oil are exported to places where it's wasted.

[AirlinePilot]

EIA data show that Chindia's net oil imports increased at about 9%/year from 2005 to 2008, while (2005) top five net exports fell at about 2%/year from 2005 to 2008.

Over the 2005 to 2008 time frame, US net oil imports fell at 4.3%/year. All of this occurred as annual US oil prices went from $57 to $100.

So, to summarize, from 2005 to 2008:

Net oil exports went down, especially from the top five;

Oil prices went up;

US net oil imports went down;

Chindia's net oil imports went up.



JD, all but agrees with Brown on the principles of the model, he just unsuccessfully debunks the results as a "molehill". ANYTHING which can act to increase the total decline picture is something to be concerned about. I find it interesting that someone even tires to "debunk" this, its actually happening right in front of our faces.

[TheDude]

I never saw the point in coining a term for this, Net Exports is a widely understood and simple enough concept to grasp. Jeff has been clogging up TOD articles for years now with the same old message, and I mean almost cut and paste versions of the same rap, which got very tiresome for me a long time ago - I just skim over his stuff now.

That wiki article fails to mention Sam Foucher, aka Khebab, who did all the serious number crunching for this. The whole idea of the ELM is predicated around an a priori assumption about a producer's capabilities - that Iran are shipping 6% (or whatever) of their Net export capacity this year. But quantifying this number is only possible if you know when they will go into decline in the first place, so you're back to square one with HL or whatever.

As JD pointed out producers don't accelerate consumption as they go into decline - that's beyond absurd, the populace don't collectively decide to ramp up the party when they hear the news. It has nothing to with real world examples, of course. UK consumption increased only 5.94 kb/d on average 1999-2005, when their production went into decline. In many years demand contracted sharply, check the BP data.

All this business about consumption assumes producers will never address domestic demand in any fashion, too, thus your late 70s Carter + Schlesinger warning of world peak in the mid-90s. The reason that didn't happened was because URR estimates were low and conservation measures were implemented. This latter can still be a deciding factor at this stage, every OPEC member wastes oil in a more than wanton fashion, and simple solutions like deploying solar thermal in KSA would free up a fair amount of export capacity. Whether this runs ahead of soaring BRIC demand is another matter, and why peak oil is still a horse race. But the ELM is just an extraneous construct, far as I'm concerned.

[Tanada]

EIA data show that Chindia's net oil imports increased at about 9%/year from 2005 to 2008, while (2005) top five net exports fell at about 2%/year from 2005 to 2008.

Over the 2005 to 2008 time frame, US net oil imports fell at 4.3%/year. All of this occurred as annual US oil prices went from $57 to $100.

So, to summarize, from 2005 to 2008:

Net oil exports went down, especially from the top five;

Oil prices went up;

US net oil imports went down;

Chindia's net oil imports went up.



JD, all but agrees with Brown on the principles of the model, he just unsuccessfully debunks the results as a "molehill". ANYTHING which can act to increase the total decline picture is something to be concerned about. I find it interesting that someone even tires to "debunk" this, its actually happening right in front of our faces.

BUT the USA net production was greatly encouraged by the higher prices, why import more expensive petroleum when you can produce more domestic oil at $50.00/bbl in 2008 than you could at $35.00/bbl in 2005?

[shortonsense]

JD, all but agrees with Brown on the principles of the model, he just unsuccessfully debunks the results as a "molehill".

That would depend on whether or not you understood how his model effectively creates an accelerating decline through a simple poor calculation, and one which is just as suspect as, say, Hirschs famous triangles.

ANYTHING which can act to increase the total decline picture is something to be concerned about. I find it interesting that someone even tires to "debunk" this, its actually happening right in front of our faces.

Just as PO did 5 years ago. And now that it has been revealed that the claimed effects of that event were pretty much a bust, now its time to manufacture something else to get excited over.

For example, countries suffering from "the resource curse" have a vested interest in suppressing increases in demand internally, because they need the foreign exchange, few of them having much in the way of other exports. I didn't see anything in Jeffs work where he simulated the non linear effect of this suppression in his model...did you? I'm sure an economist would notice the omission.

Certainly Saudi Arabia is the poster child for exactly this type of knowledge.

http://industry.bnet.com/energy/1000306 ... y-embrace/

[pup55]

I have not done the modeling on this for a couple of years, but it is important to look for nations that have big populations yet are still net exporters of oil....

and it came down to Iran and Mexico. These two countries fell into this category.l.

In the case of Mexico, a few years ago their internal consumption was growing about 2% per year in the 2003-2005 time frame but has since decreased to about zero growth.

In Iran, their internal consumption was growing by 4% per year for the period 2003-2006, and in the last couple of years, it went to zero....

Now, to be sure, Mexico's internal production has cratered, off nearly 10% year over year for the last year the BP review gives...as we know. Iran's internal production was about flat. But the point is, as long as the internal growth in these crazy countries remains reasonable, or until Mexico gets all the way down to zero, there is a chance for this effect to be extended out a couple of years....

[AirlinePilot]

Just as PO did 5 years ago. And now that it has been revealed that the claimed effects of that event were pretty much a bust, now its time to manufacture something else to get excited over.

Your continued observance of some doomer prognostication is completely against the grain of what most of us here think will be the actual effects of Peak Oil.
You also are in error in stating that PO was 5 years ago. There has been no general consensus yet that we have even peaked. Incorrectly pointing to the histoirc variations in countries/fields/or global production does not make it so.

How can the "claimed events" have busted if we haven't peaked yet? You got a logic problem with that with your misunderstanding of what THE peak is.

[AirlinePilot]

In the case of Mexico, a few years ago their internal consumption was growing about 2% per year in the 2003-2005 time frame but has since decreased to about zero growth.

In Iran, their internal consumption was growing by 4% per year for the period 2003-2006, and in the last couple of years, it went to zero....

Which is what I'd expect given the global recession. If you do not believe the global recession was caused by high energy costs,(I do not), then at some point we will get back on that growth paradigm treadmill and the observed demand declines will probably reverse. Maybe not as much as some think, but growth in demand will return if the global economy comes out of its funk. I will readily admit that without a modicum of recovery all bets are off and demand may not allow this particular issue to become quantifiable or important. I still think its worthy of discussion.

I do believe it is possible for the global debt to be worked out of the system and some sort of mild recovery to take place. According to our more corny types here its already occurring!

[AirlinePilot]

Some good graphs of the top 5 export nations in this link.....

http://graphoilogy.blogspot.com/2008/01 ... e-net.html

[TheDude]

Consumption shift YOY:

Code: Select all

Year  2000   2001   2002   2003   2004   2005   2006   2007   2008
Iran  6.08%   1.06%   6.99%   5.68%   3.85%   3.78%   4.34%   0.01%   2.11%

Mex 3.57%   -0.55%   -3.31%   2.56%   1.76%   2.81%   -0.20%   2.80%   0.63%


I keep a work copy of the Stat review for data like this, and can upload it to a file hosting service if anyone's interested.

[AirlinePilot]

As JD pointed out producers don't accelerate consumption as they go into decline - that's beyond absurd, the populace don't collectively decide to ramp up the party when they hear the news. It has nothing to with real world examples, of course. UK consumption increased only 5.94 kb/d on average 1999-2005, when their production went into decline. In many years demand contracted sharply, check the BP data.

I think part of what you may be missing with this is the fact that as oil prices rise, producing nations (specifically the top 5) tend to do better economically due to the increased revenue and the industry expenditure as a result of that. I don't know how one measures that but to me it's intuitive.

[shortonsense]

Just as PO did 5 years ago. And now that it has been revealed that the claimed effects of that event were pretty much a bust, now its time to manufacture something else to get excited over.

Your continued observance of some doomer prognostication is completely against the grain of what most of us here think will be the actual effects of Peak Oil.

If you do not like the predictions of Deffeyes, Ruppert and Simmons feel free to tell them about it, I just notice the claim, and them being the Prophets they used to have quite a bit of credibility.

As far as against the grain of what peakers think, I have news, you aren't the only peakers, and quite a few at this site have referenced all sorts of things as PO effects which certainly have not happened. And some experts have proclaimed some terrible things and you know it. The fact that they don't say it ANY MORE is very telling...sort of hard to proclaim that peak oil will stop walmart trucks when A) its happened asccording to the Prophets and B) the walmart trucks still run.

It is not my fault that I notice what was claimed, and what has happened, and I certainly don't limit my view to only what the few regulars here think NOW.

You also are in error in stating that PO was 5 years ago. There has been no general consensus yet that we have even peaked. Incorrectly pointing to the histoirc variations in countries/fields/or global production does not make it so.

Again, I am only referencing the Prophets. Tell it to Deffeyes, Simmons and Ruppert, all of whom claim peak was 2005.

How can the "claimed events" have busted if we haven't peaked yet? You got a logic problem with that with your misunderstanding of what THE peak is.

Tell it to Deffeyes, Simmons and Ruppert...its THEIR claim...I simply notice and reference it appropriately. I'd throw in Lundberg, but he doesn't seem to have as much Peaker street cred and the Prophets.

[shortonsense]

I think part of what you may be missing with this is the fact that as oil prices rise, producing nations (specifically the top 5) tend to do better economically due to the increased revenue and the industry expenditure as a result of that. I don't know how one measures that but to me it's intuitive.

Chavez doesn't seem to be making this intuitive theory of yours work very well. While he certainly did pretty well while prices were increasing, he hasn't done so well when the natural and completely expected reaction ( demand destruction ) clobbers his revenue stream.

They don't call it the resource curse for nothing.

[GoghGoner]

Khebab blog post from March 2006 on Mexico's oil export future:

Mexico's Ability to Export Oil

Khebab was overly optimistic. Mexico's exports dropped by 22% in 2008 alone. Most people see a prediction that global oil supply is going to drop by 2-3% a year and do not consider that drop is going to affect only the importing countries -- that is why the importance of ELM cannot be understated. As Mexico's exports slide to zero over the next couple of years they are in for real trouble with their government budgets.

We can observe that the oil exports are expected to go down by 2006-2007. The fraction of oil exports may fall below 40% after 2015 (Figure 10) and the US could lose an important and reliable source of oil imports (92% of Mexico's exports are for the US).

Energy Export Data Browser

[AirlinePilot]

I think part of what you may be missing with this is the fact that as oil prices rise, producing nations (specifically the top 5) tend to do better economically due to the increased revenue and the industry expenditure as a result of that. I don't know how one measures that but to me it's intuitive.

Chavez doesn't seem to be making this intuitive theory of yours work very well. While he certainly did pretty well while prices were increasing, he hasn't done so well when the natural and completely expected reaction ( demand destruction ) clobbers his revenue stream.

They don't call it the resource curse for nothing.

Well Gee no kidding? That sort of thing tends to happen when you have a crazy person leading your communist country.
I'd suggest that he will see the error of his ways soon and allow for more foreign involvement, especially China. Their oil WILL
be bought by someone and prices are likely to go higher in the future.

I'd say its basic economics, at least on a macro scale, that as the price paid for a resource climbs, a producing nations economy(especially one so driven by oil) will heat up. it follows that internal consumption will also grow, even if its at a low rate, there will still likely be growth. Pointing to Chavez as an example I'd call a serious anomaly, a short term issue, and far from the norm.