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Decline In World Conventional Oil Output And Peak Oil

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Summary

  • World Conventional Oil output peaked at a centered twelve-month average (CTMA) of 74193 kb/d in July 2016.
  • The general trend for non-OPEC conventional oil has been an annual decline rate of about 48 kb/d over this period, and for OPEC, output has increased at an annual rate of 171 kb/d over the same period.
  • My expectation is the new peak will be due to an increase in unconventional oil, both tight oil and Canadian oil sands, with an increase from 10.5 Mb/d in 2021 to 15.4 Mb/d in 2029 as shown in the chart below.
oil pump

witoldkr1/iStock via Getty Images

A guest post by D Coyne

World Conventional Oil output peaked at a centered twelve-month average (CTMA) of 74193 kb/d in July 2016. This peak is unlikely to be surpassed in the future. I do not include an estimate of unconventional oil produced in Venezuela as this data is difficult to find. In the chart below, I compare World C+C output to World conventional oil, which I define in this post as World C+C minus the sum of US tight oil and Canadian oil sands. The units for most charts (figures 11 and 12 are exceptions) will be kb/d on vertical axes. Data for oil output in all charts that follow will be the centered twelve-month average output. Data is from the EIA’s International Energy Statistics.

World Conventional Oil & World C+C

Figure 1

For comparison, World Unconventional Oil output is shown in the chart below.

World Unconventional Crude Oil

Figure 2

About 85% of the increase in World C+C output from 2010 to 2018 was from unconventional oil, the average annual rate of increase was about 887 kb/d from 2011 to 2019. Note that the annual rate of increase in World unconventional oil output over the 2017 to 2018 period was considerably higher at about 1649 kb/d.

The rest of this post will focus on World conventional oil output to attempt to find a likely decline rate for future unconventional World output, especially the period after the World unconventional CTMA peak in July 2016 up to July 2018 (where the start of OPEC cuts in 2019 affects the CTMA after July 2018).

The chart below shows the overview of OPEC output and non-OPEC conventional oil output from Jan 2005 to Dec 2019

OPEC C+C & Non-OPEC Conventional

Figure 3

The general trend for non-OPEC conventional oil has been an annual decline rate of about 48 kb/d over this period, and for OPEC, output has increased at an annual rate of 171 kb/d over the same period.

The chart below focuses on the shorter period from July 2016 to July 2018 for World Conventional output.

World Conventional Output

Figure 4

In the chart below, note that much of this decline in output is from Venezuela, about 78% of the total.

Venezuela CTMA

Figure 5

After July 2018 Venezuelan output has continued to decline reaching a low point for the CTMA of 458 kb/d in November 2020 and has since recovered to 595 kb/d by July 2021. My expectation is that Venezuelan oil output will stabilize around 700 kb/d and will cease to be a source of significant decline in World conventional oil output over the next 5 to 7 years. The chart below shows World conventional output minus Venezuelan oil output.

World conventional output minus Venezuelan oil output

Figure 6

Output decreases at an annual rate of 104 kb/d over the July 2016 to July 2018 period.

OPEC CTMA

Figure 7

OPEC output decreases at an annual rate of 127 kb/d, but if we exclude Venezuela, we get the following chart.

OPEC minus Venezuela CTMA

Figure 8

Without further future decline in Venezuela, we might see a rise in OPEC output as was the case from July 2016 to July 2018, especially while oil prices remain high.

Most of the Period from July 2016 to Dec 2017 was a period of low oil prices and may explain the steeper decline in non-OPEC conventional output in the period from July 2016 to July 2018, relative to the longer-term trend (2005 to 2019 in figure 3 above). This steeper decline is shown below, an annual rate of 348 kb/d rather than the longer-term trend of 48 kb/d.

Non-OPEC Conventional

Figure 9

I expect that the high oil prices (over $90/b in 2021$) that are likely from now until 2030 may cause the annual decline rate to return to the 2005-2019 trend of 48 kb/d.

World Unconventional Oil

Figure 10

Chart in Figure 10 above shows the annual rate of increase in unconventional oil from July 2016 to July 2018. I expect future annual rates of increase will be significantly lower, on the order of 600 kb/d from 2022 to 2029.

It is unclear if conventional oil will continue to recover at the rapid pace we have seen over the past 18 months where the annual rate of increase in World unconventional output has been about 4384 kb/d, if that rate should continue, (doubtful due to Russian aggression in Ukraine and resulting sanctions) in 12 months, World conventional output would reach 73324 kb/d, not far below the level when the World was at its previous peak in Nov 2018 (74132 kb/d and CTMA was 73051 kb/d). This is a highly unlikely result due to a permanent decline in Venezuelan output of roughly 1500 kb/d from July 2016 to December 2021, it is possible other OPEC producers might increase their output over the long term, but I doubt future World conventional output reaches a CTMA of 71500 kb/d or higher in the future.

My scenarios for future World output assume conventional oil output recovers much more slowly as in the chart below.

World Conventional Scenario

Figure 11

My expectation is the new peak will be due to an increase in unconventional oil, both tight oil and Canadian oil sands, with an increase from 10.5 Mb/d in 2021 to 15.4 Mb/d in 2029 as shown in the chart below.

World Unconventional Oil

Figure 12

These two scenarios combine to give a scenario which peaks in 2030 at about 85 Mb/d.

Peak Oil Barrel



One Comment on "Decline In World Conventional Oil Output And Peak Oil"

  1. Theedrich Yeat on Thu, 28th Apr 2022 1:43 pm 

    But verbal defecations from Biden will save us. “Diversity” by importing dark parasites and criminals will help. We will fly jumbo jets powered by Eveready batteries. Ditto semis, farm tractors and other heavy-duty machinery. Meanwhile the indispensable nation will continue to wage proxy wars to conquer the globe. And go out in a mushroom cloud.

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