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Page added on October 3, 2018

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How to keep the spectre of peak oil supply at bay

Geology

The warning signs are there – the industry isn’t finding enough oil. Guyana is one of the very few giant oil discoveries made during the downturn. Fact is, we need more Guyanas, a lot more, and we need them soon. Without them, the oil market is in danger of tightening in the not too distant future.

We need more Guyanas, a lot more, and we need them soon.

The risk is laid bare by our oil supply analysts, Dougie Thyne and Matt Deane. They’ve refreshed our forecasts for the sources of oil supply to meet global oil demand through to 2040. The starting point is our database of projects onstream and under development. We layer on risked assumptions for the following:

  • Future reserves growth for conventional field and unconventional oil plays
  • Production forecasts for pre-FID projects and pre-drill tight oil
  • Volumes from other existing discoveries.

High cost discoveries we deem sub-commercial are excluded.

Invariably, the opportunity to develop known sources diminishes. A supply gap opens up in the mid-2020s, reaching 3 million b/d by 2030, 9 million b/d by 2035 and a formidable 15 million b/d by 2040. Barring technology breakthrough beyond what we already assume, we’ll need new oil discoveries.

Barring technology breakthrough, we’ll need new oil discoveries.

The problem is that the recent rate of commercial volumes found gives little confidence that there will be enough new discoveries to fill the gap. Spend on exploration globally has collapsed from US$60 bn p.a. in 2014 to just US$25 bn p.a. in 2018. The drop has fed directly through to significantly lower volumes of reserves discovered. Exploration found 8 bn bbls p.a. of commercial liquids on average in the early part of this decade; it’s only delivered around 2 bn bbls p.a. in the three years since 2014.

The oil market could be running short of oil capacity by the late-2020s at the current, low discovery rate. That’s worryingly near at hand given it takes the best part of 10 years for the average new discovery to build to peak production even with a marked improvement in project execution post-downturn. Even if new volumes discovered double, a gap opens up in the 2030s and climbs to 6 million b/d by 2040. This will have to be filled by presently sub-commercial discoveries with implications for price.

The one bit of good news is that volumes discovered correlate with spend. Reserves per exploration well has held at a reassuringly consistent rate of 25 mn boe since 2014, around half liquids.

The oil is out there – what three things have to happen for the industry to crank up investment and do the job?

First, capital availability.

Major or minnow, explorers have found it difficult to persuade boards and investors to fund high impact exploration since the downturn. But in 2018, there is money – around US$160 bn p.a. of free cash flow for the 48 IOCs and NOCs covered in our Corporate Service. The mind set for most E&Ps is still to be conservative, and default is to return capital to shareholders. Yet the duty to shareholders’ interests cannot be myopically short term. More of the ‘windfall’ cash needs to find its way into exploration to sustain the business in the long term.

Second, the reward has to justify the risk. 

Exploration is performing better now than it was when oil prices were above US$100 per barrel. Tight discipline has led to double-digit returns in 2017, the highest for more than a decade. So better economics justify more investment; the industry just needs to demonstrate it can continue to create value as it ramps up spend.

Third, a portfolio that can deliver. 

Big oil discoveries are more likely to be made in frontier areas. As well as Guyana, among the most eagerly watched potential play opening wells will be in Suriname, and the Brazilian Equatorial Margin; Mexico; Senegal, Gambia, Namibia and South Africa; Australia (where Quadrant’s Dorado discovery is the biggest oil discovery this century); and Alaska. The Majors, a few internationalising NOCs and a handful of global E&Ps have built exposure in some of these frontier provinces.

More explorers need to get in on the action if the spectre of ‘peak supply’ is to be kept at bay.

woodmac.com



41 Comments on "How to keep the spectre of peak oil supply at bay"

  1. dave thompson on Wed, 3rd Oct 2018 12:56 pm 

    “The oil is out there – what three things have to happen for the industry to crank up investment and do the job?” The oil is where?

  2. Dredd on Wed, 3rd Oct 2018 4:09 pm 

    Oil-Qaeda wants to (Make Steroids Great Again).

  3. Anonymous on Wed, 3rd Oct 2018 5:06 pm 

    what about all the growth in the Permian? Sometimes we just get more out of the played out old areas. For example California Kern River has produced more than 3 times as much oil as was originally estimated size.

  4. Outcast_Searcher on Wed, 3rd Oct 2018 5:19 pm 

    “The reward has to justify the risk.”

    That’s all that really needed to be said. The market will raise the price of oil, if the demand justifies it.

    The rising price will also incent more people to buy more fuel efficient cars like HEV’s, PHEV’s, and BEV’s, which will help lower the aggregate demand for oil.

    Also, higher prices will incent people to seek alternative types of transportation, including banging on their elected representitives to push for more public transit — or seek new employment.

    Also, the assumption that technology won’t improve meaningfully goes against history (both for exploration and for recovery).

    Same as it ever was, as much as the Cassandras hate to admit it.

  5. Anonymous on Wed, 3rd Oct 2018 5:35 pm 

    Here is Stuart Staniford, esteemed physicist of the peak oiler crowd, in 2007 saying that Saudi decline to 8.5 million bopd was “not voluntary” and would continue.

    http://www.theoildrum.com/node/2331

    And look…here we are more than a decade later and the Saudis are doing over 10 million bopd.

    That should show you all you need to know about the peak oil crowd. Their most analytical analyst…screwed up. And look…has he learned? Has he changed his views? Is he writing about shale? No. No interest in following the story when it doesn’t break his way.

  6. eugene on Wed, 3rd Oct 2018 6:05 pm 

    I always enjoy the “infinite supplies” crowd with their statements re history. I figure I’ve “historically” been alive which, of course, means I will be alive in the infinite future. But one never knows. We have a messiah in the white house.

  7. KEVIN COBLEY on Wed, 3rd Oct 2018 6:36 pm 

    “Australia (where Quadrant’s Dorado discovery is the biggest oil discovery this century)”, this field is a 171MB minnow, not a whale it could supply the Australian market for 5 months. It the biggest find this century, it’s also the only find this century.

  8. Nostradamus on Wed, 3rd Oct 2018 7:40 pm 

    What ? The supply of oil is not infinite ? Production will peak someday ? Say it ain’t so !

  9. makati1 on Thu, 4th Oct 2018 12:38 am 

    Food for thought: “Are You Prepared For 19th Century Living?”

    https://projectchesapeake.wordpress.com/2018/05/24/are-you-prepared-for-19th-century-living/

    I am.

  10. makati1 on Thu, 4th Oct 2018 4:39 am 

    Go Trump! Keep increasing the uS’ isolation!

    “…the worry here is, again, that the escalating trade battle with China will spill over into an all out trade war with the US on one side and the rest of the world on the other. Such a development could see foreign economies blackball US crude – and the possibility that trade tensions could persist might be enough incentive for foreign refineries to look elsewhere. What’s worse all of this is happening just two years after the US allowed crude producers to begin exporting after a more than 30-year ban.”

    https://www.zerohedge.com/news/2018-10-03/chinese-imports-us-crude-have-totally-stopped-tariff-threats-persist

    “Energy Shipping Co, said on Wednesday that crude oil shipments to China have “totally stopped” as the trade war has taken its toll, reversing growth in what had been a rapidly expanding market for US shale producers.”

    Nuff said.

  11. I AM THE MOB on Thu, 4th Oct 2018 5:20 am 

    Existing oil reserves are scheduled to begin a catastrophic crash within 1 to 3 years. When it hits the economic and social damage will be catastrophic. The end of Western Civilization, from China to Europe, to the US, will not occur when oil runs out. The economic and social chaos will occur when supplies are merely reduced sufficiently..

    https://imgur.com/a/6dEDt
    https://arxiv.org/pdf/1708.03150.pdf
    https://www.scientificamerican.com/article/has-peak-oil-already-happened/
    http://www.sciencedirect.com/science/article/pii/S0301421509001281
    https://www.scribd.com/document/375110698/The-end-of-Peak-Oil-Why-this-topic-is-still-relevant-despite-recent-denials-Chapman-2014
    https://www.scribd.com/document/375110317/Projection-of-World-Fossil-Fuels-by-Country-Mohr-2015
    http://www.scribd.com/document/367688629/HSBC-Peak-Oil-Report-2017

  12. Davy on Thu, 4th Oct 2018 5:22 am 

    “Food for thought: “Are You Prepared For 19th Century Living?”

    billy, you are pushing 80 in a 3rd world country. You are not at all ready for 19th century living. In regards to 19th century living you are dead already

  13. Davy on Thu, 4th Oct 2018 5:25 am 

    “Energy Shipping Co, said on Wednesday that crude oil shipments to China have “totally stopped” as the trade war has taken its toll, reversing growth in what had been a rapidly expanding market for US shale producers.”

    Oil markets are global and fungible, who cares if China goes elsewhere because there are plenty of other markets.

  14. I AM THE MOB on Thu, 4th Oct 2018 5:54 am 

    “Donald, if you want to find the culprit for the rise in prices, you need to look in the mirror.

    “It’s the result of irresponsible policies which have a direct impact on the world economy.”

    –V. Putin

    https://www.bloomberg.com/news/articles/2018-10-03/putin-tells-trump-to-blame-guy-in-the-mirror-for-high-oil-prices

  15. Davy on Thu, 4th Oct 2018 6:17 am 

    Who says higher oil prices are bad? Oil prices that are too high or low are bad. In my opinion they are about right. The US weaponization of the financial system is not right but that is another story. I do agree with the trade war against China. Mixed bag

  16. I AM THE MOB on Thu, 4th Oct 2018 7:30 am 

    Davy

    Who says high oil prices are bad? How about the entire global economy and every industry in the world who uses transportation to deliver their products?

    Get a brain Moran!

  17. Davy on Thu, 4th Oct 2018 9:05 am 

    Stupid, higher prices stimulate more efficient behavior. Renewables and conservation will get a boost. Stupid, the key is higher within a range that is manageable. Didn’t they teach you that sort of thing in your internet PHD course?

  18. I AM THE MOB on Thu, 4th Oct 2018 10:11 am 

    Davy

    Renewable’s are a joke and they produce electricity..Oil is used for transportation..

    I have to explain this to clogg all the time as well..You both are fucking morons..

  19. pat on Thu, 4th Oct 2018 11:41 am 

    the world oil supply gap, shortages already seeing only going to get much wider and 2020 will look like 2040. prepare

  20. Davy on Thu, 4th Oct 2018 12:17 pm 

    Iam stupid, a joke for you means it does not fit into your fantasy future. Educated commenters here know better. We know you are the moron and you have little understanding of energy evidenced by your many weak comments. Renewables may not be a transition solution but they are part of the solution to mitigate energy decline.

  21. Davy on Thu, 4th Oct 2018 12:59 pm 

    Here is one possible result of liberal extremist activity, create enemies in high places:

    “Flake, Collins Say FBI Report “Thorough”, Fails To Corroborate Claims By Kavanaugh Accuser”
    https://tinyurl.com/y7wdy78n

    “And while Kavanaugh is supposed to rule impartially during his lifetime appointment on the bench of the highest court in the land, we somehow doubt he’ll ever forget what the Democrats did to he and his family during what should have been one of their proudest moments.”

  22. I AM THE MOB on Thu, 4th Oct 2018 1:13 pm 

    Pat

    We live in frightening times. It’s my belief that “you personally” will most likely die of starvation or conflict between 2020 to 2040.
    You will experience a collapse of human civilization, a die-off of humans, a destruction of the ecosystem, a loss of access to mined and drilled resources, and a dark age from which your descendent’s will not reemerge.
    Simple really….when the World Economy Collapses everything shuts down…the end… We’re talking about grids down all over the world and 7.5B people dropping like f*** flies in short order. The collapse will be absolutely horrible..There is no collapse or horror movie ever produced that has even come close to imagining what the collapse of BAU might look like. I’m talking about every corporation and every social program going bankrupt at once. I’m talking about people eating people. I’m talking about the Worst Catastrophe to ever happen in the history of mankind. Nothing has ever, or will ever come close..

    https://imgur.com/a/pYxKa

  23. Anonymouse1 on Thu, 4th Oct 2018 2:19 pm 

    The exceptionalturd is so desperate for a fight, he is pretty much reduced to arguing
    full-time with his OWN SOCK PUPPET these days (IamtheDavyturd).

    Whats the matter, is NederYid not providing enough material for you, dumbass?

    Check yourself into the nearest Asylum asap, dumbass.

  24. rockman on Thu, 4th Oct 2018 4:16 pm 

    For sure nice discoveries in Guyana: 3.5 billion bbls and growing. But a huge change in our path? Currently we are depleting the global reserve base at 34.6 billion bbls per year. IOW the world consumed those newly discovered reserves in 5 weeks. Or in another perspective: if 10 more Guyana’s were discovered it would reduce global depletion by one year.

    As they say: beats a poke in the eye with a sharp stick. But not by much. LOL.

  25. Sissyfuss on Fri, 5th Oct 2018 4:38 pm 

    “Get a brain, Moran!” Does anybody else revel in this essence of irony?

  26. I AM THE MOB on Fri, 5th Oct 2018 6:27 pm 

    There is no way to stop peak supply..Mothers are going to have to eat their babies soon..

  27. makati1 on Fri, 5th Oct 2018 7:10 pm 

    MOB, you are one sick puppy. Your sadism knows no bounds. You and Davy should share a room at the funny farm. Only a sick person would even consider such a thing.

    Even during the two plus year siege of Leningrad, only some people, out of over one million, ever became cannibals. Even those only ate from others that had died of starvation or freezing, not murder.

    “The effects of starvation lead to the consumption of zoo animals and household pets. Much of the wallpaper paste in the buildings was made from potato starches. People began to strip the walls of rooms, removing the paste, and boiling it to make soup. Old leathers were also boiled and eaten. The extreme hunger drove some to eat the corpses of the dead who had been largely preserved by the below freezing temperatures. Reports of cannibalism began to appear in the winter of 1941–1942 after all food sources were exhausted. Meat patties, made from minced human flesh went on sale in the ‘Haymarket’ in November 1941 leading to the banning of ground meat sales in the city. Many bodies brought to cemeteries in the city were missing parts. Starvation-level food rationing was eased by new vegetable gardens that covered most open ground in the city by 1942.” WIKI

    THIS may be in YOUR future. Are YOU prepared? I am. I can go out into the jungle for my food. No freezing to death here. Plenty of water. Etc.

  28. Davy on Fri, 5th Oct 2018 7:24 pm 

    Billy, lusting after a 3:00am NUK flash over the US is not sick? Lol, look in the mirror war pig.

  29. makati1 on Fri, 5th Oct 2018 8:12 pm 

    Davy, you are the one in denial of your own countries actions. Keep beating on the Russian Bear and that 3AM may happen. I hooe not.

    More likely, and my actual desire, is for the Us to be taken down financially and economically. The process is accelerating daily. The end is near. The USD is worth about zero and will be abandoned by the rest of the world when the crash comes. That will take the Us to 3rd world levels. The IMF and BIS are prepared to take over. Are you ready for that day? I am.

  30. I AM THE MOB on Fri, 5th Oct 2018 8:28 pm 

    In 2004 Donald Trump accepted $160 million from George Soros.

    https://www.thedailybeast.com/donald-trump-took-liberal-icon-george-soross-money

  31. boney joe on Fri, 5th Oct 2018 8:35 pm 

    Just to reiterate the insanity:

    The exceptionalturd is so desperate for a fight, he is pretty much reduced to arguing
    full-time with his OWN SOCK PUPPET these days (IamtheDavyturd).

    Check yourself into the nearest Asylum asap, dumbass.

    “I am a moderate liberal.” ~~IamtheDavyturd

    And I am the walrus
    Sitting on a cornflake waiting for the van to come
    Corporation tee-shirt, stupid bloody Tuesday
    DavyDonaldTurd (DDT), you been a naughty boy
    I am the eggman, we are the eggmen, I am the walrus
    Goo goo g’joob

  32. Davy on Fri, 5th Oct 2018 8:50 pm 

    “Davy, you are the one in denial of your own countries actions.”

    Billy can’t distinguish his behavior from that of nations. Billy there are forest and there are trees. Your illness is personal and you justify it by playing your nation state games.

  33. Davy on Fri, 5th Oct 2018 8:52 pm 

    sloppy joe, speaking in tongues again. You and anonymouse1 need a room together.

  34. makati1 on Fri, 5th Oct 2018 10:01 pm 

    Davy is delusional as usual. Cannot help but try to point the finger at someone else. Typical American hypocrite.

  35. I AM THE MOB on Fri, 5th Oct 2018 10:25 pm 

    Kavanaugh protesters bring beer, chant ‘chug’ outside McConnell’s home

    https://thehill.com/blogs/blog-briefing-room/news/410089-kavanaugh-protesters-bring-beer-chant-chug-outside-mcconnells

    The people are rising up! Just wait till the oil starts to run out..Then its game on!

  36. I AM THE MOB on Fri, 5th Oct 2018 10:35 pm 

    Florida man threatens to kill Democratic Congress members over Kavanaugh vote, police say

    https://www.wpxi.com/news/trending-now/florida-man-threatens-to-kill-democratic-congress-members-over-kavanaugh-vote-police-say/846989558

  37. boney joe on Fri, 5th Oct 2018 11:53 pm 

    “And while Kavanaugh is supposed to rule impartially during his lifetime appointment on the bench of the highest court in the land, we somehow doubt he’ll ever forget what the Democrats did to he and his family during what should have been one of their proudest moments.”~~~IamtheDavyturd (DDT)~~~

    DavyDonaldTurd (DDT), your resentment, anger and desire for revenge reveal anger and contempt of yourself, rooted in jealously, fear, and a sense of failure with who you are, questioning your ability to aptly compete with others. Your thoughts and postings reflect AND project perfectly like a mirror; the subconscious perceptions that are held about the Self. What you fail to comprehend is your incessant assaults are a perfect reflection of your present state of mind and how you feel about yourself on the inside.

    DavyTurd, use this knowledge to become more self-aware and introspective. By doing so, you can diffuse inner conflict and confusion and become a pacifist of the mind rather than a bellicose, xenophobic, and hateful Trumptard of the mind.

    DDT, clean-up your act, now, before it’s too late. The clock is ticking, and the hour is late.

    You poor, unfortunate thing- Ms. DDT Thing, with your permission.

  38. Davy on Sat, 6th Oct 2018 12:45 am 

    “The people are rising up! Just wait till the oil starts to run out..Then its game on!”
    Well, pretty obvious when lies and deceit don’t work then the liberal extremist thieves whine and stomp their feet. You idiots are going down the stool where you belong. First the whole Russian collusion fiasco now Kavanaugh.

    “Florida man threatens to kill Democratic Congress members over Kavanaugh vote, police say”
    Cherry picking!

    “And while Kavanaugh is supposed to rule impartially during his lifetime appointment on the bench of the highest court in the land, we somehow doubt he’ll ever forget what the Democrats did to he and his family during what should have been one of their proudest moments.”~~~IamtheDavyturd (DDT)~~~
    Get a grip sloppy joe, there are consequences for your actions. You idiot extremist liberals are trashing the Democrats and good liberal values. You are fascist thugs that are leading your party into the trash heap. Your policy of victimization and win at any cost by inept leadership is a policy of failure.

  39. Davy on Sat, 6th Oct 2018 12:56 am 

    “Blasey Ford’s FBI “Polygraph” Buddy Pressured Woman From Mystery Groping Party To Change Story”
    https://tinyurl.com/yaldg6z7

    “A former FBI agent and lifelong friend of Brett Kavanaugh accuser Christine Blasey Ford allegedly pressured a woman to change her statement that she knew nothing about an alleged sexual assault by Kavanaugh in 1982, reports the Wall Street Journal.“

    The Journal also reports that after the FBI sent their initial report on the Kavanaugh allegations to the White House, they sent the White House and Senate an additional package of information which included text messages from McLean to Keyser.

    About that polygraph On Wednesday, Senate Judiciary Committee Chairman Chuck Grassley (R-IA) fired off an intriguing letter to Christine Blasey Ford’s attorneys on Tuesday, requesting several pieces of evidence related to her testimony – including all materials from the polygraph test she took, after her ex-boyfriend of six years refuted statements she made under oath last week. Grassley writes: “The full details of Dr. Ford’s polygraph are particularly important because the Senate Judiciary Committee has received a sworn statement from a longtime boyfriend of Dr. Ford’s, stating that he personally witnessed Dr. Ford coaching a friend on polygraph examinations. When asked under oath in the hearing whether she’d ever given any tips or advice to someone who was planning on taking a polygraph, Dr. Ford replied, “Never.” This statement raises specific concerns about the reliability of her polygraph examination results.” McLean issued a Wednesday statement rejecting the ex-boyfriend’s claims that she was coached on how to take a polygraph test.”

    “So we have Dr. Blasey-Ford in Rehoboth Beach, DE, on 26th July 2018. We’ve got her life-long BFF, Monica L McLean, who worked as attorney and POI in the DOJ/FBI in Rehoboth Beach, DE…. Apparently at same time she wrote letter to Senator Dianne Feinstein. -Conservative Treehouse Thus, it appears that Blasey Ford was with McLean for four days leading up to the actual writing of the letter, from July 26th to July 30th. Not only did Ms. McLean possesses a particular set of skills to assist Ms. Ford, but Ms. McLean would also have a network of DOJ and FBI resources to assist in the endeavor. A former friendly FBI agent to do the polygraph; a network of politically motivated allies? Does the appearance of FBI insider and Deputy FBI Director to Andrew McCabe, Michael Bromwich, begin to make more sense? Do the loud and overwhelming requests by political allies for FBI intervention, take on a different meaning or make more sense, now? Standing back and taking a look at the bigger, BIG PICTURE….. could it be that Mrs. McLean and her team of ideological compatriots within the DOJ and FBI, who have massive axes to grind against the current Trump administration, are behind this entire endeavor? -Conservative Treehouse”

  40. boney joe on Sat, 6th Oct 2018 2:33 am 

    DavyDonaldTurd (DDT)-

    You’re the most reliable, consistent, and predictable “I am a moderate liberal” liar and hypocrite.

    First, you cite well known Republican conspiracy theories as the gospel truth. Then when evidence is presented that contradicts your lies or casts an unfavorable light on any of your right-wing heroes, you attack the investigating agency as being a member of a “Democratic Fifth Column”.

    You operate exactly like a serial killer. By now your MO is well known and as predictable as your hypocrisy and lies.

    Worst of all is your frequent condemnation of others for being “fake green” when, in fact, you openly and aggressively support the most environmentally destructive political party ever to have existed. You do this in a feeble attempt to feel better about yourself.
    Your resentment, anger and desire for revenge reveal anger and contempt of yourself, rooted in jealously, fear, and a sense of failure with who you are, questioning your ability to aptly compete with others. Your thoughts and postings reflect AND project perfectly like a mirror; the subconscious perceptions that are held about the Self. What you fail to comprehend is your incessant assaults are a perfect reflection of your present state of mind and how you feel about yourself on the inside.

    p.s. How is a farmer like yourself able to participate on this site 24 hours a day and 7 days a week WITHOUT interruption.

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