Who's peaked, who hasn't.
Posted: Sat 19 Jun 2004, 20:57:30
Looking at the BP report, there are a few interesting trends in the biggest oil producers.
Of the top 25 or so producers, and putting the Gulf States to one side for a moment, it seems clear that the USA, Argentina, Norway, UK, Oman, Egypt and Indonesia are now in terminal decline. Their output is falling, never to rise again.
Venezeulan production has actually declined for three years in a row. It's not clear whether this is the industrial disputes there or whether it's something more permanant.
Brazil is interesting, but doesn't have a lot of proved reserves. It can probably ramp production up a bit further for a while yet, but it's doubtful whether this can offset the decline elsewhere.
China's production is still rising, and it's hard to say when it might peak, but China is a net importer so it can't make much difference to when the crisis arrives (only cover more of its own rapidly growing consumption).
Russia and Kasakh have been steadily increasing production and are the most important unknown quantities. There are capacity issues with how much they can export, but those can be fixed in time and with investment. They will be important in whether the declines elsewhere can be offset.
Canada and Mexico must both be close to the peak if not already there. Mexico has been revising its proved reserves downwards for years and its R/P ratio is now the same as the US. Canada is a bit of a special case because some of its production is the tarsands, and they're very energy intensive. Currently that energy comes from natural gas: and Canada is squeezed there with all the exports to the US. At some point, they will say 'terribly sorry, we have our own houses to heat', and that presumably means the tar sands project ends, slashing Canada's production just as Mexico peaks. It doesn't look good for North America....
The three biggest African producers (Libya, Nigeria and Algeria) who together with Angola made up a lot of the shortfall in '03 may be close to peak. Being Africa, they have their own set of stability issues. According to ASPO, Algeria is forecast to peak in 2006. Libya's increased production in '03 may have been a dead cat bounce, with three years of decline preceding it. Libya can't be far from peak.
Finally, turning to the five Gulf States where production will concentrate in the coming years.
* Iran may already be in terminal decline. Production bounced in '03 but this followed a long plateau and three years of decline. OPEC quotas? Investment issues? Or, as colin campbell would say, the immutable physics of their reserves?
* Saudi has now maxed their production and can probably pump no more. Can it increase capacity with more investment? Maybe, maybe not. If Ghawar isn't already dying, it must be close.
* It's hard to see Kuwait producing much more from that tiny area. It can probably sustain production for a few more years but not increase it by much.
* The United Arab Emirates are down the other end of the gulf, next to Oman. Their production history looks similar to Iran's and they may be close to their peak now.
* Iraq is the only Gulf State that can clearly increase it's production in the medium term with lots of investment. With the sabotage continuing, how long will this take, and can it ramp up fast enough to offset the decline elsewhere?
The best case is that beginning now, our oil supplies are concentrating in places like the Middle East and sub-saharan Africa: an unhealthy geopolitical dependence.
The worst case is that the beginning of peak oil is upon us, and the terminal decline that is clearly underway in around ten of the top 25 producers.
Comments?
Of the top 25 or so producers, and putting the Gulf States to one side for a moment, it seems clear that the USA, Argentina, Norway, UK, Oman, Egypt and Indonesia are now in terminal decline. Their output is falling, never to rise again.
Venezeulan production has actually declined for three years in a row. It's not clear whether this is the industrial disputes there or whether it's something more permanant.
Brazil is interesting, but doesn't have a lot of proved reserves. It can probably ramp production up a bit further for a while yet, but it's doubtful whether this can offset the decline elsewhere.
China's production is still rising, and it's hard to say when it might peak, but China is a net importer so it can't make much difference to when the crisis arrives (only cover more of its own rapidly growing consumption).
Russia and Kasakh have been steadily increasing production and are the most important unknown quantities. There are capacity issues with how much they can export, but those can be fixed in time and with investment. They will be important in whether the declines elsewhere can be offset.
Canada and Mexico must both be close to the peak if not already there. Mexico has been revising its proved reserves downwards for years and its R/P ratio is now the same as the US. Canada is a bit of a special case because some of its production is the tarsands, and they're very energy intensive. Currently that energy comes from natural gas: and Canada is squeezed there with all the exports to the US. At some point, they will say 'terribly sorry, we have our own houses to heat', and that presumably means the tar sands project ends, slashing Canada's production just as Mexico peaks. It doesn't look good for North America....
The three biggest African producers (Libya, Nigeria and Algeria) who together with Angola made up a lot of the shortfall in '03 may be close to peak. Being Africa, they have their own set of stability issues. According to ASPO, Algeria is forecast to peak in 2006. Libya's increased production in '03 may have been a dead cat bounce, with three years of decline preceding it. Libya can't be far from peak.
Finally, turning to the five Gulf States where production will concentrate in the coming years.
* Iran may already be in terminal decline. Production bounced in '03 but this followed a long plateau and three years of decline. OPEC quotas? Investment issues? Or, as colin campbell would say, the immutable physics of their reserves?
* Saudi has now maxed their production and can probably pump no more. Can it increase capacity with more investment? Maybe, maybe not. If Ghawar isn't already dying, it must be close.
* It's hard to see Kuwait producing much more from that tiny area. It can probably sustain production for a few more years but not increase it by much.
* The United Arab Emirates are down the other end of the gulf, next to Oman. Their production history looks similar to Iran's and they may be close to their peak now.
* Iraq is the only Gulf State that can clearly increase it's production in the medium term with lots of investment. With the sabotage continuing, how long will this take, and can it ramp up fast enough to offset the decline elsewhere?
The best case is that beginning now, our oil supplies are concentrating in places like the Middle East and sub-saharan Africa: an unhealthy geopolitical dependence.
The worst case is that the beginning of peak oil is upon us, and the terminal decline that is clearly underway in around ten of the top 25 producers.
Comments?