[Zardoz]

For those of us in oil-importing nations, the peak of global oil production is obviously a concern, but more important is when oil exports (to us) peak out and start to decline.

According to Luis de Sousa, in his article just posted on the Energy Bulletin site, we've hit the export peak, and it's all downhill from here:

An assessment of world oil exports

...More than worrying with a Peak Oil date, importing countries should worry on the future availability of tradable oil.

...Oil exporting countries are defined as having in 2005 an oil production greater than oil consumption, thus resulting in a surplus.

...Four different periods can be identified:

2006 - 2010 : slow decline below 2%/year;
2011 - 2013 : first acceleration to a decline rate above 3.5%/year;
2014 - 2017 : steady decline between 3.5%/year and 4%/year;
2018 - 2020 : new acceleration up 4.5%/year.

The first acceleration is probably the most critical period and follows the peak in world oil production. The final years of the 2010s decade will also present great challenges for oil importing nations.

Finally it is worth mentioning that these four periods seem to fit Samsam Bakhtiari's Four Transitions of which the first started last year.

...Once the amount oil available for export becomes lower than the amount required by the importing countries costs start to rise, forcing an abnormal wealth transfer from buyers to sellers. This newly acquired wealth will improve affluence in exporting countries, which in turn drives up internal consumption (better automobiles, better and farther away from center homes, more goods imports and transportation, etc). This feedback loop will perpetuate itself until some event or constraint tackles consumption growth in the exporters' side, or until the importers collapse from lack of new wealth to transfer. The former is the most likely scenario.

...It is hard to envision less wealthy countries reducing their consumption in order to provide oil to wealthier countries. Let's just hope for the best.

Well, let's see now: We've got the peak of total global production, the peak of light crude, and the peak of exported oil. We've apparently hit the last two already, and we may or may not have hit the first.

How many times, and how many ways, can we say "we're screwed"?

[den]

Hi
Ken Deffeyes predicted the peak in Dec 2005. Also why did OPEC cut prodiction by 1.2 mbd, annouce that they were a month ago? Or is this a spin, meaning they can't reach these production quotas any more? Matt Simmons said the world had its highest production of 84.35 mbd Dec 2005(4th Q 2005). During the 2nd Q of 2006 production was down to 83.98 mbd.
Thanks denis

[uNkNowN ElEmEnt]

we've seen that OPEC doesn't live in the same world as the rest of us for a couple years now. They kept saying they were going to increase production, 2 million barrels here and one or two more there but they never did. So what will actually happen in the "real" world is anyones guess.

[sch_peakoiler]

I would say, this whole system is frigging robust and stable. I mean, we have had zillion peaks already (light, sweet, sour, bitter, heavy, medium, ultra and infra heavy crude, total production, peak export, peak pipeline pumping and many many more peaks). And yet, no result.

Sorry my sarcasm, but for me this lack of immediate response of markets etc. says one thing : this response will be even more severe afterwards.

[dukey]

i love that graph at the top of the page
it basically shows that saudi arabias output will not decline, at least up until about 2020.

But SA is probably in decline right now ..

[JustinFrankl]

I would say, this whole system is frigging robust and stable. I mean, we have had zillion peaks already (light, sweet, sour, bitter, heavy, medium, ultra and infra heavy crude, total production, peak export, peak pipeline pumping and many many more peaks). And yet, no result.

Sorry my sarcasm, but for me this lack of immediate response of markets etc. says one thing : this response will be even more severe afterwards.

I would say, the whole system is a freaking crystal meth whore, looking for one more John, and then looking to filter the byproducts out of her own piss to scrape together a few more pulls on the pipe. This is where we are.

And when the crystal dries out, then she goes ape-shit. This is where we are going.

[Jack]

Sorry my sarcasm, but for me this lack of immediate response of markets etc. says one thing : this response will be even more severe afterwards.[/quote]

So, in January, 2000, the December 2006 contract for crude oil was about $18.34. And presently, it is $59.59 after a big decline.

That sounds like a compound growth rate of about 18% per year.

How much increase would be required to meet the test of "immediate response"?

Should the present rate continue until 2015, we'd see $215 oil - equating to gasoline at $7 per gallon. Not doomer level, perhaps...but not something we could ignore, either.

[RdSnt]

You missed factoring in the depreciation of the $USD.
I'm expecting the total collapse of the USD before 2015. Americans simply won't be able to afford gas by then.

Should the present rate continue until 2015, we'd see $215 oil - equating to gasoline at $7 per gallon. Not doomer level, perhaps...but not something we could ignore, either.

[kokoda]

Iraq hasn't been factored into the equation.

With 112 billion barrels of proved reserves and total reserves of perhaps 300 billion barrels it could push the peak back by a decade or more ... if order can be restored.

[Jack]

You missed factoring in the depreciation of the $USD.

No question that the dollar has been going down - but note that gold has not enjoyed an equivalent price increase. Also, the dollar decline against other major currencies has been small, since other nations are debasing their currencies as well.

So we can quibble about the increase - but I still contend that the move, adjusted for inflation, is significant.

[AgentR]

That graph is the perfect explanation for why China and the US are teamed up to squeeze everyone else out of the picture.

Its just a sprint now to the finish, we have to stay ahead of the rest, or we are both totally hosed.

Example:
Oil or Democratic India... hmmm, choices, choices.....

Sorry guys, democracy or not, we never did like you very much.
China sends guns and toys, you guys steal service jobs. Maybe not your best decision afterall.

What I wonder is: if the US, China, and Japan can create a viable economic system around a total of 30 mbpd at a valuation of $200 / barrel. We may need a new name though... Oceania or Pacifica. I like Pacifica so we can figuratively moon Europe.

[Ayame]

Iraq hasn't been factored into the equation.

With 112 billion barrels of proved reserves and total reserves of perhaps 300 billion barrels it could push the peak back by a decade or more ... if order can be restored.

Not really as there is only so much oil that can be extracted at a time that probably won't mitigate against other big fields going into decline elsewhere.

[MD]

.... and then looking to filter the byproducts out of her own piss to scrape together a few more pulls on the pipe. This is where we are.

And when the crystal dries out, then she goes ape-shit. This is where we are going.

That's one nasty analogy.

Well done!

[MD]

The pissing contest between consumers will now commence in earnest.

[pup55]

we have had zillion peaks already (light, sweet, sour, bitter, heavy, medium, ultra and infra heavy crude

I agree with this one. Anybody looking at this graph in 1974, 1981-1985, 1999, or 2001 would have come to the conclusion that exports had peaked.

total collapse of the USD

you can't rule this out as a possibility. Those of us who were trying to make a living and buy a house with a 15% mortgage in 1981-1983 have some experience with the effects of this.

OPEC doesn't live in the same world as the rest of us

Opec (except for Hugo chavez) wants to portray itself on the world stage as a moderating force for oil prices. Reason: They do not want to be attacked by some outside power looking for oil. So, when the market is strong, they will talk it down if they can, by putting out public statements saying that they will pump all they can, and when the market is weak, like it is right now, they will put out public statements that say how they are cutting back production.

I think the lack of price stability makes them nervous. They see their role as providing a relatively stable price. They have been marginally successful at this, as we all know. They have been experimenting with various "target prices" ($40, $50 and now $60) and I believe have been intervening in the market when it gets too frothy for too long. Reason: They do not want the world economy to collapse just when they are investing all of that money in refining and production capacity.

I thnk unless there is evidence otherwise, the reason they have "cut back" is because there is plenty of oil around right now. The inventory in the US is strong, Europe has all they need, China is buying all they see fit and filling up their SPR. With the exception of low-sulfur diesel, the US is not seeing any shortages yet, even though the gasoline demand is still over 9.4 mbpd.

Last year, most of the big countries in Europe (France, Germany, Italy) actually had a decline in usage, due to conservation efforts. Japan used less oil in 2005 than they did in 2003. Even the USA, oil gluttons that we are, had a decrease in crude oil usage between 2004 and 2005. We made up for it in coal and natural gas.

I am not going to argue too hard on this, because an "effective peak" namely the point at which demand exceeds the available supply, was reached a couple of years back. These temporary peaks are potentially just as painful as the real peak, as we have found out in 1973 and 1981.

The "geological peak" might not have been reached yet. We will not know for sure until maybe five years from now, when the effects of the production scaleup in Saudi, the effects of the Gulf of Mexico discovery, and the Caspian region capacity are all well known.

we're screwed
crystal meth whore
she goes ape-shit

All still plausible, for various reasons.

[sch_peakoiler]

Iraq hasn't been factored into the equation.

With 112 billion barrels of proved reserves and total reserves of perhaps 300 billion barrels it could push the peak back by a decade or more ... if order can be restored.

No, not if the decline is at least 2% per year. 2% per year means approximately 1.6 mbd. Even if Irak had all the democracy and order of the world, extending its production by 1.6 mbd yearly (several years in a row) is a no-go task. Such a yearly increase over several years in a row is a tough ride even for SA, and they have many more fields than Irak.

This of course is based on the decline model of Hubbert. Should we see a lesser decline or a plateau with ups and downs, than what you've said would be possible.

[morph]

so iraq could push the peak back by a few years but thats only if the forces and government there can get hold of the security situation and by the time thats happened we will probably be over the slippery edge.

[zberry]

...Four different periods can be identified:

2006 - 2010 : slow decline below 2%/year;
2011 - 2013 : first acceleration to a decline rate above 3.5%/year;
2014 - 2017 : steady decline between 3.5%/year and 4%/year;
2018 - 2020 : new acceleration up 4.5%/year.

The first acceleration is probably the most critical period and follows the peak in world oil production. The final years of the 2010s decade will also present great challenges for oil importing nations.

These numbers seem overly optimistic to me. CEO of Schlumberger has said we can expect 8% avg year over year declines.
Both Cantarell and Burgan super giant fields are confirmed at 10% or more per year, and Ghawar may be experiencing a similar catastrophic decline.
I think the first number might be correct, but I think the "enhanced recovery techniques" being used will actually serve to accelerate the declines.

[shakespear1]

Code: Select all

CEO of Schlumberger has said we can expect 8% avg year over year declines

I find this interesting. Schlumberger works FOR oil companies and handles their data. To make a comment on what this data suggests is ahhhhh ... violation of client-consultant relation.

[sch_peakoiler]

Sorry my sarcasm, but for me this lack of immediate response of markets etc. says one thing : this response will be even more severe afterwards.

So, in January, 2000, the December 2006 contract for crude oil was about $18.34. And presently, it is $59.59 after a big decline.

That sounds like a compound growth rate of about 18% per year.

How much increase would be required to meet the test of "immediate response"?

Should the present rate continue until 2015, we'd see $215 oil - equating to gasoline at $7 per gallon. Not doomer level, perhaps...but not something we could ignore, either.[/quote]


Jack I perfectly understand what you mean.

What I meant was rather the lack of the "immediate response" in Peakoil style. Some data speaks in favor of the fact that the peak was in 2005. And various PO-Theories forecast that there will be immediate consequences should the supply start to drop (stopping the growth, for example). One year after peak and nothing of this happened, except for a rise in prices. That is actually what I meant.