THE International Energy Agency (IEA) Thread pt 2 (merged) A

[AirlinePilot]

We are not going to wean ourselves off the oil tit in the next 5 years. Thats a fantasy pure and simple. If you believe so, you do not understand the magnitude of oil use and our obvious inability to go towards alternatives even at ridiculous prices.

The IEA report is cornucopian in their outlook on possible production increases. Kind of like Oilfinder...lots of shoulds, mights, and coulds in there.

May I remind you all we are on a OIL PRODUCTION PLATEAU and have been for nearly 4 years. There is a reason. Matt Simmons knows it.

RE,

I like what your saying, but the thing that many are missing, is that this latest price drop is NOT TOTALLY ABOUT DEMAND. It has a lot to do with the global banking/monetary crisis too. I doubt we can have demand slow greater than the decline over the longer haul after watching this for so long.

Is that possible? Sure, but only with a significant event causing non OECD demand to topple. Think Nuclear war, or a large meteorite impact. I'm not kidding here. The proof is in the IEA graph sections which is available. Non OECD demand is forecast to far outpace the OECD negative demand. I think the problems they lay out in the report come sooner rather than later. The immediate threat right now is LOSS of significant fringe production due to the price crash. Exactly what their report is claiming, albeit on a much longer time scale.

The crisis is now, not in twenty years.

[dohboi]

Very well put, J.

All the "solutions" involve huge energy (not to mentiong ecological) costs. If we haven't hit the EROEI wall yet (where the energy we get out of oil is equal to or less than the energy we put into exploring for it, extracting it, shipping it, refining it...), we soon will be. Then things will get really interesting.

[AirlinePilot]

"World oil supply is projected to rise to 106 million barrels a day in 2030 from 84 million in 2007, with the bulk of the increase expected to come from members of the Organization of Petroleum Exporting Countries."

84 million in 2007.

106 million in 2030.

World oil production has been on a plateau for almost 4 years.
Who here believes that with the global economic climate we are currently experiencing the needed production can or will happen?

Who here believes we can markedly move off that plateau without SIGNIFICANT discoveries soon?

WHO HERE BELIEVES OIL SANDS/ CTL/ GTL MAKES UP THAT DIFFERENCE?? 22 million bbls/ day increase AFTER DECLINE???

Read that again.. thats AFTER DECLINE!!!!!!!!!!

Ain't gonna happen folks. It just ain't.

[Revi]

We went and saw Michael Klare on Monday at Colby College.

Michael Klare thought that the IEA report would break the news about peak oil today, but it looks like it is meant to reassure everyone that it's not going to happen until 2030.

I'll be that the 2030 peak is all that we will hear about this report.

Everything is fine. Go buy a Hummer.

[ROCKMAN]

As far as the IEA making an accurate appraisal of future oil production capability we’ll have to wait for “Part B of the OUTLOOK to discover their exact methodology. But I do believe I’ve read between the lines of the Executive Summery correctly and now understand their method. The most supportive statement they make of my conclusion was that the bulk of future oil production will come from reserves AS STATED BY THE OPEC PRODUCERS WHICH MORE THEN DOUBLED IN THE PERIOD IN THE 1980’S. You may recall this period: OPEC had changed the production allocation rules to take into account each country’s PROVEN RESERVES. Throughout the 80’s we saw those reserve values grow tremendously even though no new significant drilling was done. The OPEC countries just sat down with a new sharp pencil and found many billions of barrels of oil that were there all along but that they didn’t know about them.

We’ll have to wait for the details but it appears the IEA’s great new analysis of remaining oil reserves is based upon numbers supplied by OPEC and other producing entities for the most part. In other words, they haven’t studied one producing field themselves to determine a global reserve base. They just accept the numbers provided and ASSUME sufficient investments will be made to produce this “proven” reserve base. Another telling point is made by the IEA regarding decline rates of mega fields: they’ll have the lowest decline rates of all field size categories because of their huge reserve base. One little problem with this assumption: it doesn’t work with Cantarell Field. According to the IEA assumption, this field should be experiencing a 5% or so decline rate now that it has passed its peak instead of the 35%+ decline rate PEMEX has last reported. Rut row…could this be a faulty assumption? Another assumption I find very dangerous: enhanced oil recovery techniques can increase ultimate recovery and thus provide sustained high flow rates. The water injection at Ghawar and the N2 injection at Cantarell have certainly done that. But that wasn’t the primary goal of either effort or most other similar projects. These techniques were employed to maximize production rate. This actually shortens the production of every field. Again, Cantarell is a perfect example. The N2 injection program kept rates high and probably increased ultimate recovery 2 to 3 three fold ( such pressure depletion fields typically have a very low ultimate recovery…..10% to 25%). But these techniques eventually generate much higher decline rates then would be encountered if these reservoirs were allowed to decline naturally. Had not the water injection at Ghawar been implemented its max production rate would have fallen long ago. But when the water level starts hitting the majority of the producing wells the max rate will decline much faster then the IEA assumes. This not my opinion: this is the late stage decline rate seen in every water injected reservoir in the world. Water injection essentially accelerates natural water drive seen in the fields. But this also accelerates the decline phase also. Again, not my opinion, but a fact taught in every petroleum engineer school in the world.

Again, to be fair, we have to wait for the full report to confirm their methodology. But for now it appears they are making the same assumption as they have always made: future oil production rates will be dependent upon demand and not upon the actual physical capability to produce oil. There will always be enough oil to develop to meet demand for at least the next 30 or 40 years. But they do hedge their bets a little by saying any oil rate increases may be hampered by insufficient investments. But not by lack of opportunities.

[TheDude]

For WEO 2007:

Special discounts:
- 80% discount for clients based in India and China

We'll give you a discount so you can spend more money on our predicament.

The graph doesn't indicate a peak this year, but rather that fields in the process of being developed will give a global peak ca. 2015, sans EOR or any new finds, which will plateau us out to 2030.

The really striking graph is the one showing Non-OPEC fields declining over 14% in their first year of production.

Around 7 mb/d of additional capacity, over and above the 23 mb/d that will come from the significant number of projects currently under way, needs to be brought on stream by 2015. The current wave of upstream investment looks set to boost net oil-production capacity in the next two to three years but tail off after 2010. More capacity will need to be sanctioned within the next two years, to avoid a fall in spare capacity towards the middle of the next decade and a possible supply crunch. In view of the current financial crisis, there are growing doubts about whether all of this capacity will be forthcoming.

To quote my usual antagonist on this site, sound's like they've been reading my thread.

TOD has purchased a copy of the new WEO and will be having threads starting today. Mods need to aggregate the dozen threads we've started on it, too.

[Quinny]

I'm not normally into conspiracy theory, but... Anyone think they could have been leaned on a bit?

[CrudeAwakening]

Canadian oil sands, extra heavy oil, gas-to-liquids and coal-to-liquids will have to make up the difference.

Perhaps the IEA is relying on a massive global CTL program to provide the necessary oil to meet demand? This could be the hat they are hoping to pull the rabbit out of.

It strikes me that their claim of "Peak oil in 2030" is based on an assumed reversion to coal.

[Voice_du_More]

The EEE wrote, the AAA wrote, the IEA wrote, the EAI wrote,...

Listen, 27 trillion dollars in investment with half needed by 2015? Global GDP is ish 47 trillion per year that gives us ish 300 trillion by 2015 so that we are talking about 5% of global gdp required by then? How will they come up with the credit for that? There is really nothing positive in that statement. The wall has been hit and low oil prices are not helping.

You have witnessed peak oil ladies and gentlemen. Everything from here on out for at least a decade or more is incrementally greater pain interspersed with false hope.

[sameu]

I don't see a peak either
IF the investments are made, and IF the non-conventional oil will fill up the gap
But it wo'nt be like that, hence we willl have peakoil
right about now

[TheDude]

Canadian oil sands, extra heavy oil, gas-to-liquids and coal-to-liquids will have to make up the difference.

Perhaps the IEA is relying on a massive global CTL program to provide the necessary oil to meet demand? This could be the hat they are hoping to pull the rabbit out of.
It strikes me that their claim of "Peak oil in 2030" is based on an assumed reversion to coal.

That prognostication is also straight out of the Hirsch Report. Fischer-Tropsch Now, Baby!

From the Birol presentation:

World primary energy demand in the Reference Scenario: this is unsustainable!

Parsimony - what a concept!

I notice the chart of oil supply in that doesn't include the EOR factor in the key graphs section.

Made this graph for TOD attempting to illustrate what it would take to meet these production forecasts:


They're calling for 32 mb/d extra gross by 2015, so you'll know in a year - hell, six months - whether anybody wants to fly off of this here plateau.

[smiley]

As far as the IEA making an accurate appraisal of future oil production capability we’ll have to wait for “Part B of the OUTLOOK to discover their exact methodology

Up to now the IEA calculated the oil production based on a derivation of the Hotellings rule, I expect that to be the same for this study.

Black and Lafrance wrote an interesting article on these kinds of models. J. Environmental Economics and Management 36, 149]169 1998, Is Hotelling’s Rule Relevant to Domestic Oil Production?.

The problem with the rule as it is applied by the IEA is in the preconditions.

These include the existence of a purely competitive market, that the amount of oil in the reservoir is known with certainty, and that the costs of extraction do not depend on the amount of oil remaining in the reservoir.

Basically it is a purely economic model which does not bother with earthly things like geology (rising lift costs), and geopolitics. Moreover it relies heavily on the overinflated reserve claims by OPEC.

It is funny. As long as I follow this stuff they have been predicting that production will suddenly take-off. And each year they are proven wrong. You are wondering whether by now they are not doubting their models.

Ah well, at least they are an optimistic bunch. It must be nice working at the IEA, good lunches, long breaks, and not a flinter of a doubt about the future.

[TonyPrep]

this latest price drop is NOT TOTALLY ABOUT DEMAND.

True. The latest STEO estimates consumption has exceeded production for the last two months (Sept and Oct).

[shortonsense]

For those interested: Freddy H's page on URR Estimates, where he takes issue with ASPO's backdating.

Good for Freddy.

Maybe not. His site is excellent, just chock full of random information, but one of the things discovered here....

http://www.trendlines.ca/energy.htm

was this....

Triple Crown! Aug 5th ~ Freddy Hutter is Pleased to Announce that PeakOil.com has Banned Several of Us from Posting our Comments & Charts. Added to similar Mass Bans at theOilDrum.com & EnergyResources-YahooGroup, this Marks the 3rd Agenda-Driven Forum to Shield its Members from the Realities of Peak Oil.

Oops. Seems kind of unfair to use the guy as a reference when his ideas have been deemed dangerous enough to get him banned for not complying with groupthink.

[SweetSmellofMoney]

...within a 5 year time frame crude for the most part will have become obsolete as a fuel source.

...crude will continue to trend lower as demand and fears of production cuts lead technologies to develop other means of alternative energy ie... Wind, Solar, Hydro etc...

Could you please demonstrate how, in 5 years, we'll replace and/or retrofit the 300 million registered vehicles in the U.S. currently running on oil? Thanks!

Google Air Cars!

Easy as PIE!

Regards

[SweetSmellofMoney]

We are not going to wean ourselves off the oil tit in the next 5 years. Thats a fantasy pure and simple. If you believe so, you do not understand the magnitude of oil use and our obvious inability to go towards alternatives even at ridiculous prices.

The IEA report is cornucopian in their outlook on possible production increases. Kind of like Oilfinder...lots of shoulds, mights, and coulds in there.

May I remind you all we are on a OIL PRODUCTION PLATEAU and have been for nearly 4 years. There is a reason. Matt Simmons knows it.

RE,

I like what your saying, but the thing that many are missing, is that this latest price drop is NOT TOTALLY ABOUT DEMAND. It has a lot to do with the global banking/monetary crisis too. I doubt we can have demand slow greater than the decline over the longer haul after watching this for so long.

Is that possible? Sure, but only with a significant event causing non OECD demand to topple. Think Nuclear war, or a large meteorite impact. I'm not kidding here. The proof is in the IEA graph sections which is available. Non OECD demand is forecast to far outpace the OECD negative demand. I think the problems they lay out in the report come sooner rather than later. The immediate threat right now is LOSS of significant fringe production due to the price crash. Exactly what their report is claiming, albeit on a much longer time scale.

The crisis is now, not in twenty years.

TTM and others are currently spending Billion and proving that it can in fact be done in a timely manner!

While recycling larger quanities of Metals and Plastics.

Regards

[AirlinePilot]

TTM and others are currently spending Billion and proving that it can in fact be done in a timely manner!While recycling larger quanities of Metals and Plastics. Regards

TTM? Not sure who that is.

I'm not saying it cant happen. I'm saying its not likely to happen. Come bang on my cage when it starts will ya?

There are many studies out there that conclude it will take a minimum of 15 years to penetrate the automobile market significantly with any new technology. Disregard them at your whim. The only way any of this happens quickly is after an economic and societal catastrophe. It seems the only way we are going to move away from the current paradigm of transportation in this country.

[alokin]

Look at the graph p8 of the graph section:
"Crude oil Fields yet to be found".
I am not an expert. But until 2015 they think they won't find anything or very little. But then very much. Due to the ice free Arctic by then?
Or is it simply to fill up the gap somehow?

[TonyPrep]

Seems kind of unfair to use the guy as a reference when his ideas have been deemed dangerous enough to get him banned for not complying with groupthink.

Have you been banned? There must be more to it than not complying with what you regard as groupthink, since there are many posters who also fit that label and have been here for years.

[ROCKMAN]

Quinny,

Not that they need me defending their report, I can offer a non-conspiracy explanation for the lack of soundness to the report: it really can't be done with any great accuracy. I've been doing such analysis for over 33 years and can confirm the difficulty of the task. I've spent months working on one small field where I had every bit of detailed data at my disposal as well as a staff of skilled geologists and engineers who were intimately knowledgable about the field.. Even with all this my estimate of ultimate recovery and a projected production rate schedule could be off by 50% in the worst case.

But I'm certain the IEA does not have access to even the minimum amount of data to do the math. In some fields they may have a verified decline rate. But look at the biggie: the KSA has never released a verifiable historic production rate history on Ghawar. The IEA can't even verify how much the field produced during any one recent month. But if they did it wouldn't help too much. All fields have at least one major shift in decline rate during their life. This is especially true for fields that have undergone enhanced recovery operation such as Ghawar and Cantarell. In the last year or two Cantarell has hit that slope change and is now declining much more rapidly then it had been. The fact that it hit this slope change is 100% predictable. But when it would hit the change requires very intensive analysis with all critical data available. But such analysis still provides only a crude and often less then accurate model.

Knowing what generating the answer would take I've never expected a reliable answer from them. At worst, I think we should be critical of their lack of disclaimer stating that they didn't have the data to make any reasonable prediction of future production rates. Instead they just make assumptions which are easily dismissed and depend on future production from unknown sources to meet their demand projections.

In other words, I doubt anyone leaned on them to offer an inaccurate answer. They never had the "truth" in the first place.