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Page added on March 26, 2014

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World crude production 2013 without shale oil is back to 2005 levels

World crude production 2013 without shale oil is back to 2005 levels thumbnail

Unnoticed by the mainstream media, US shale oil covers up a recent decline of crude oil production of 1.5 mb/d in the rest of world (using data up to Oct 2013). This means that without US shale oil the world would be in a deep oil crisis similar to the decline phase 2006/07 when oil prices went up. The decline comes from many countries but is also caused by fights over oil and oil-related issues in Iran, Libya and other countries which can be seen on TV every day.

Fig 1: World’s incremental crude oil production Oct 2013

Incremental production for each country is calculated as the difference between total production and the minimum production between Jan 2001 and Oct 2013. The sum of minima is the base production. Countries which had substantial changes in production appear as large areas in the graph. Russia supplied – quite reliably – the largest increment and the North Sea (UK and Norway) had the largest losses. Countries which feature prominently are Venezuela (low production in Jan 2003 due to a strike), Iraq (low production in April 2003 during the Iraq war), Libya (war in 2011), Iran (sanctions) and Saudi Arabia (production increase since 2002 and swing role)

Production is stacked from bottom as follows:

(1) countries with growing production: Kazachstan (recently flat), Russia (only +100 kb/d last year), Colombia (+60 kb/d), China (recently flat) and Canada (+200 kb/d syncrude from tarsands)

(2) Countries flat or in decline like UK and Norway

(3) countries which recently peaked: Brazil and Azerbaijan

Groups (1) to (3) peaked in Nov 2011 (dashed line) and declined by 1.2 mb/ since then

(4) OPEC countries with Iraq, Saudi Arabia, Iran and Libya

(5) US on top to see the impact of shale oil

Fig 2: US shale covers up recent decline in rest of world

The world without shale oil declined after a recent peak in Feb 2012.to an average of 73.4 mb/d in 2013, incidentally the same average seen for the whole period since 2005 when crude production was 73.6 mb/d

Fig 3: Annual crude oil production and US shale oil vs IAE’s WEO projections

The rest of world continues on a bumpy crude oil production plateau. Oil demand and supply projections of the International Energy Agency in 2004 and 2008 did not materialize. Only the 2010 WEO came close but only due to US shale oil which had not been predicted at the time to the extend it actually increased.

Let’s have a look at the main players in the upper part of Fig 1

Fig 4: Incremental crude production of Iraq, Iran, Libya, Saudi Arabia and US

We can see that Saudi Arabia declined in 2006/07 (prices up), pumped more in the Oilympic peak year of 2008, (but not enough and prices skyrocketed), served as a (negative) swing producer during the financial crisis year of 2009 and stepped in (belatedly) when the war in Libya started and continued pumping at record levels when sanctions on Iran started. US shale oil has not brought down oil prices substantially and definitely the US does not act as swing producer. Most shale oil producers would go into receivership if they stopped pumping. Saudi Arabia apparently tries to compensate for Libyan and Iranian production losses but does not seem to reduce crude production to offset US shale oil. Iraq will have to return to OPEC’s quota system. It will be interesting to watch at which production level that will be agreed upon and whether Iraq will adhere to it. In any case, all ME oil producers need to balance their budgets as highlighted in this post:

14/8/2013 OPEC’s average fiscal break-even oil price increases by 7% in 2013
http://crudeoilpeak.info/opec-fiscal-breakeven-oil-price-increases-7-in-2013
.

Fig 5: Middle East only.

Decline in Syria and Yemen was offset by increases in Kuwait, UEA and Qatar. Iraq could not offset Iran’s production drops.

Russia and FSU

Fig 6: Eurasia

Former FSU countries: Azerbaijan declines at 50 kb/d after its peak in 2010. Kazakhstan is flat since 2010.

Fig 7: Russian crude oil production growth is slowing

Russia, producing now at 10 mb/d, is still growing at around 100 kb/d but this growth rate is down from 2010 and 2012 years.

The IEA WEO 2013 writes: “Oil production in Russia is approaching the record levels of the Soviet era, but maintaining this trend will be difficult, given the need to combat declines at the giant western Siberian fields that currently produce the bulk of the country’s oil.”

http://www.worldenergyoutlook.org/publications/weo-2013/

Europe

Fig 8: The North Sea is in full decline

Africa

Fig 9: Incremental production in Africa

Irrespective of what is happening in Libya, Africa peaked.

Latin America

Fig 10: Latin America

Brazil seems to have peaked while Colombia slowly increased heavy oil production. Venezuela’s data appear sustained as they have not been updated since Jan 2011.

Summary

Since end 2010, the group of still growing countries (+1.2 mb/d) can’t offset decline elsewhere (-2.4 mb/d), giving a resulting decline of 1.2 mb/d or 400 kb/d p.a. This is mainly oil-geologically determined decline.

OPEC, which is usually called upon to provide for the difference between demand and non-OPEC production, has got its own problems (geopolitical feed-back loops caused by peaking oil production) and was not able to fill that gap. Global crude oil without US shale oil declined by 1.5 mb/d since its most recent peak in Feb 2012.

Conclusion:

While the mainstream media lulls the public into believing that US shale oil is a revolution, peaking oil production in many countries eats like a cancer through the oil supply system. The big problem is that more oil dependent infrastructure is being built which will not be needed when US shale oil peaks and the underlying decline is revealed.

Crude Oil Peak



30 Comments on "World crude production 2013 without shale oil is back to 2005 levels"

  1. Davey on Wed, 26th Mar 2014 7:57 pm 

    This could be why Iran is being brought back into the fold. Everyone acknowledges US shale oil is a retirement party. If there is one thing the global economy does not need now is an oil shock. This is why the Crimean crisis is a soap opera and little more than a show.

  2. Northwest Resident on Wed, 26th Mar 2014 8:21 pm 

    “This could be why Iran is being brought back into the fold.”

    Exactly what I was thinking as I read this article, Davy.

    “Everyone acknowledges US shale oil is a retirement party.”

    Except Nony and other like-minded highly optimistic analysts.

    “Crimean crisis is a soap opera…”

    More like a media and political 3-ring-circus (yes, I repeat myself). Threats of war, financial sanctions, drama unfolding before our very eyes, intrigue and plots a-plenty, our very existence hanging from the clutches of that blue-eyed monster Putin, China and Russia secretly plotting to destroy America in one fell swoop by dumping their god-damn dollars, proxy wars, blah blah blah. Mere distraction and entertainment for the masses, nothing more.

  3. Stilgar Wilcox on Wed, 26th Mar 2014 8:48 pm 

    Clarity registering for those not in denial, this is the Indian Summer of the oil age.

  4. Plantagenet on Wed, 26th Mar 2014 9:02 pm 

    The end of the oil age is the beginning of the Natural Gas age.

  5. Northwest Resident on Wed, 26th Mar 2014 9:16 pm 

    “… this is the Indian Summer of the oil age.”

    And the first cold gusts of wind are stirring the leaves around our feet, hinting at a long frigid winter yet to come.

  6. Plantagenet on Wed, 26th Mar 2014 9:50 pm 

    This is why Iran is being brought into the fold, and this is why Libya was brought into the fold and this is why Iraq was brought into the fold.

    Its the all the same story.

    Good to see people are wising up.

  7. meld on Wed, 26th Mar 2014 9:50 pm 

    Don’t shale recovery rates decline rapidly? Isn’t that supposed to happen later this year? Umm 2015 should be fun….

  8. GregT on Wed, 26th Mar 2014 10:21 pm 

    “And the first cold gusts of wind are stirring the leaves around our feet, hinting at a long frigid winter yet to come.”

    Well, thank the Good Lord for the coming of the natural gas age!

    We may not have any jobs, transportation, electricity, or food, but at least some of us will be able to heat our homes.

  9. Davy, Hermann, MO on Wed, 26th Mar 2014 10:23 pm 

    fed is talking rate increase 2015….more fun I am sure

  10. GregT on Wed, 26th Mar 2014 10:31 pm 

    “fed is talking rate increase ”

    Ya, amazing how ‘talking’ about an event, that ‘might’ happen a year in the future, has such immediate effects on the markets.

  11. shortonoil on Wed, 26th Mar 2014 10:43 pm 

    Our models indicate that total conventional crude production is 5 to 6 mb/d less than what is generally being reported. To reiterate a previous post, the majority of crude production results from self reporting. Many nations today could not financially withstand the reporting of declining production. The impact on their sovereign bond markets would be devastating.

    Petroleum is produced to supply energy to the general economy, and it has a monopoly on providing energy to power the world’s transportation fleet. It has little value otherwise. As the energy provided by petroleum declines so also will the world’s economy. Graph# 12 at our site is a $ to energy conversion function. Taking the total energy delivered by 5 mb/d, and dividing by 6380 BTU/$ (the 2012 value from the graph) gives a little over $2 trillion. That is the impact that a reduction of 5 mb/d would have on the world’s economy in a year. That is also the amount of currency now being printed by the world’s Central Banks. Coincidence? We don’t think so.

    http://www.thehillsgroup.org

  12. J-Gav on Wed, 26th Mar 2014 10:55 pm 

    No, Shorton, I don’t think it’s a coincidence either … but shshhhh! People aren’t supposed to see that sort of thing.

  13. Mr.TW. on Wed, 26th Mar 2014 11:00 pm 

    Can somebody tell me if there is anything in the ground after shale, or is this their finale role of the dice?

  14. Benny on Wed, 26th Mar 2014 11:26 pm 

    Very silly. You don’t get to subtract LTO from the picture just because you don’t like it. So-called shale oil is oil.

    How many of you predicted this would happen? None. Almost all of you said the world would fall apart around 2010.

    And now you expect people believe yet more of your predictions?

  15. Kenz300 on Wed, 26th Mar 2014 11:47 pm 

    Time to buy a bicycle or an electric vehicle.

  16. rockman on Wed, 26th Mar 2014 11:53 pm 

    Meld – For clarity you need to separate the decline rates of individual wells from the rate of the entire trend. Virtually all of the initial Eagle Ford Shale wells are currently producing at insignificant rates. The rate of the trend has remained high due to the continuous drilling of new wells. If no new EFS or Bakken wells were drilled starting tomorrow this “revolutionary” boom of new high US oil production would completely disappear in several years. No technology can change the very high decline rate of any new well. And nothing can perpetuate the current high US oil production rate without a high level of new drilling.

  17. Northwest Resident on Thu, 27th Mar 2014 12:25 am 

    “Many nations today could not financially withstand the reporting of declining production. The impact on their sovereign bond markets would be devastating.”

    The truth in this case IS devastating, which is why “they” must lie about it, distort and deny it and create endless half-truths and imaginary technological saviors for the nervous masses to comfort themselves with. There will come a time when the truth by virtue of its swelling mass will no longer be able to be concealed. That truth, when it becomes apparent, might as well be a ten mile wide asteroid smacking planet earth — the shock wave will be instantaneous and felt around the world, and the devastation will be on an epic scale.

  18. Makati1 on Thu, 27th Mar 2014 12:35 am 

    NWR, I could not have said it better.

    The NET energy from those barrels has been falling also as more and more of the recovered oil seems to be heavy, sour crude, requiring more refining to be useful and is coming from more expensive (energy intensive) wells.

  19. dashster on Thu, 27th Mar 2014 12:40 am 

    According to Steven Kopits of Douglas-Westwood, conventional crude oil production peaked in 2005. Why does he differ from this graph? Does this graph include tar sands production (his doesn’t)?

  20. Nony on Thu, 27th Mar 2014 2:30 am 

    The analysis of using incremental is confusing. Incremental is defined as anything over the absolute minimum shown in last 13 years. But then we end up magnifying the apparent contribution of producers that had an interruption. How meaningful is to have Iraq larger than SA, just because Iraq shut off during the war briefly?

    On the other hand, US LTO is really going through a systemic change (increasing) while North Sea oil is going through a systemic change of declining. So fine to show them. But Iraq and Libya are just confusing. And in a way some of the other OPEC countries are since they actively manipulate(d) price.

  21. andya on Thu, 27th Mar 2014 2:51 am 

    Damn that LTO. Peak oil doomers would’ve been right if not for LTO.

  22. andya on Thu, 27th Mar 2014 2:55 am 

    “Can somebody tell me if there is anything in the ground after shale, or is this their finale role of the dice?”

    Sub Salt. Once they work out how to make it rain.

  23. GregT on Thu, 27th Mar 2014 5:20 am 

    “Can somebody tell me if there is anything in the ground after shale, or is this their finale role of the dice?”

    Shale would be the final roll of the dice, if we burn the remaining known fossil fuel reserves, we cook the planet.

    https://www.youtube.com/watch?v=m6pFDu7lLV4

    We have about 6 years remaining to stop burning 80% of all fossil fuels, if we have any chance at an international concerted effort to stop a runaway greenhouse event. I know, not going to happen. Especially when the majority of people are more concerned with the ‘markets’, then they are with the well being of the planet that they live on.

    Intelligent species? Yup. Smart? Not so much.

  24. Davy, Hermann, MO on Thu, 27th Mar 2014 10:16 am 

    Greg, Andya, now wait a minute Greg, there is this resource in the American West with more oil equivalent than the entire globe combined, I heard Daniel Yergin say that on a Fox news special report. It is called http://en.wikipedia.org/wiki/Oil_shale:

    The largest deposits in the world occur in the United States in the Green River Formation, which covers portions of Colorado, Utah, and Wyoming; [26] Deposits in the United States constitute 62% of world resources….. more than 1 trillion barrels (160×109 m3) may be technically recoverable.[22] For comparison, the world’s proven conventional oil reserves were estimated at 1.317 trillion barrels (209.4×109 m3), as of 1 January 2007.

    You see there is a thing called fusion and I have read they are getting near ignition and I believe ignition means the power plant will start generating lots of free, clean, and unlimited energy. At that point we will see multiple fusion plants built on top the Green River formation out West. With all this free, clean, and unlimited power we will cook the livin shit out of that rock and become “ENERGY INDEPENDENT”. At that point we will stick out our tongue out at all those foreign countries that hate us and want to destroy us and use oil as a tool of foreign policy to shape the world in our image. We will see a massive expansion of Walmart, McDonalds, and suburbia. Long live the American dream and Utopia.

  25. shortonoil on Thu, 27th Mar 2014 12:10 pm 

    “Can somebody tell me if there is anything in the ground after shale, or is this their finale role of the dice?”

    Shale is not even part of the game. The last role of the dice will come later on this decade when the giants start coming off their plateau. Shale is nothing more than a poker game on the deck of the Titanic!

    Read Robelius: http://www.tsl.uu.se/uhdsg/Publications/GOF_decline_Article.pdf

    http://www.thehillsgroup.org

  26. bobinget on Thu, 27th Mar 2014 2:05 pm 

    Argentina’s Shale Industry Lures International Oil Companies

    The whole world knows that shale revolutionized the U.S. energy industry. Now oil and gas executives are salivating when they think of Argentina’s booming shale industry.

    Argentina ranks second in the world, behind China, in potentially recoverable shale-gas reserves, with 802 trillion cubic feet, according to a study last October by the U.S. Energy Information Administration. Argentina also ranks fourth in shale oil with an estimated 27 billion barrels.

    In July, YPF and Chevron inked a deal to spend $1.2 billion to further develop shale oil and gas resources in the Vaca Muerta formation. The deal calls for an initial phase in which 100 wells will be drilled in a 5,000-acre tract in the Loma La Lata Norte and Loma Campana areas.

    Chevron said the deal gives it the chance to grow production beyond its 2017 target of 3.3 million barrels per day. Chevron says shale will help it make Argentina energy independent.

    Chevron Argentina currently produces an average of 21,000 barrels of crude oil and 4 million cubic feet of natural gas in the Neuquen Basin. The Loma La Lata area is currently producing more than 10,000 barrels of oil-equivalent per day.

    “This strategic investment will allow Chevron to take part in the Vaca Muerta, one of the most exciting shale oil and gas plays in the world today,” Chevron vice chairman George Kirkland said in a statement.

    YPF said that Chevron will spend the first $300 million of the total planned outlay once a concession is granted by local officials. After that, both companies may continue with the total development of the areas, YPF said.

    YPF said that including money it has already spent on the project together with the new contribution outlined in the deal with Chevron marks a total investment of $1.5 billion.

    Royal Dutch Shell Plc Argentine unit plans to triple shale investments on prospects that the government will change energy policies to spur development of the Vaca Muerta formation and cut fuel imports.

    Shell Argentina will increase its shale capital expenditures to about $500 million next year from $170 million at year-end, Chief Executive Officer Juan Jose Aranguren said. The company that mainly refines crude in Argentina will boost test drilling in Vaca Muerta with a long-term goal of producing light crude from its shale operations, he said.

    Argentina will need $300 billion to develop Vaca Muerta in a six-year period that would make the country oil sufficient starting in 2020 and will keep producing for as many as 40 years, Aranguren said yesterday in an interview at his Buenos Aires office.
    (More)
    http://www.rigzone.com/news/oil_gas/a/131293/Argentinas_Shale_Industry_Lures_International_Oil_Companies/?all=HG2

  27. Nony on Thu, 27th Mar 2014 3:36 pm 

    Seems like this Argentina thing has been talked about for a while but not taken off. One factor was the nationalization that burned one oil company and scares others off to invest. But I wonder about the geology also. Surely a few test wells could be drilled without the whole *Carl Sagan voice* billions of dollars. But I’m not hearing about them. I guess it takes some money to explore, but I still wonder…

  28. Davey on Thu, 27th Mar 2014 4:01 pm 

    Noony, if you want to see an economy in a state of slow collapse research Argentina. Do you know Argentinas history with foreign firms and expropriation. Who I their right mind who go there and invest with that ever present risk? If China has not been there yet that should tell you something! Their risk appetite is higher then more conservative western companies

  29. ian807 on Thu, 27th Mar 2014 9:11 pm 

    Davy, Hermann,

    Whatever you’ve been smoking, I want some.

  30. Sudhir Jatar on Fri, 28th Mar 2014 4:08 pm 

    EIA had also said that US shale oil production will reach a high in 2016 and then decline steadily.
    Only Yergin believes that the peak is nowhere in sight.

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