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Page added on January 6, 2012

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Oil will decline shortly after 2015, says former oil expert of International Energy Agency

Production

Olivier Rech developed petroleum scenarios for the International Energy Agency over a three year period, up until 2009. This French economist now advises large investment funds on behalf of La Française AM, a Parisian assets management firm.

His forecasts for future petroleum production are now much more pessimistic than those published by the IEA. He expects stronger tensions as of 2013, and an inevitable overall decline of oil production “somewhere between 2015 and 2020”, in the following interview.

Olivier Rech, responsible for petroleum issues at the International Energy Agency from 2006 to 2009.

Rech’s outlook serves as another significant contribution to the expanding list of leading sources portraying the threat of an imminent decline in global extraction of crude oil.

MA: What do you foresee? Let’s begin with the non-OPEC producers (which represent 58% of production and 23% of global reserves).

OR: Outside OPEC, things are clear: of 40 million barrels per day (mb/d) of conventional petroleum extracted from existing fields, we face an annual decline on the order of 1 to 2 mb/d.

MA: In your view, are we therefore close to the 5% decline per year from existing production mentioned by Royal Dutch Shell?

OR: Yes, that’s about it.

MA: And for OPEC production (42% of production and 77% of global reserves) ?

OR: It’s more difficult to say; the data are still opaque. We are stuck in a haze. Nevertheless, I note that Barclays and Goldman Sachs banks estimate that the spare production capacity of OPEC, more particularly that of Saudi Arabia, is significantly lower that what is officially claimed.

MA: Many new production projects are presently under development all around the world. What should we expect of them?

OR: There are new projects off the coasts of Brazil, Ghana and Guyana. The Gulf of Mexico is far from being depleted. The Arctic is far less certain, but there is real potential for natural gas there. Nevertheless, we must still expect a decade before seeing eventual and significant production of petroleum.

MA: In that case, what is your view on the timing of the global peak and decline of total world oil and alternative liquid fuels output?

OR: It is always delicate to project a precise date. The recovery rate of existing fields is increasing. The US on-shore production is declining very slowly (and one must add that they are drilling in a frenzy over there). It is an error to underestimate the know-how of drilling engineers.

MA: Taking account of all these factors capable of slowing a decline, what conclusion do you draw?

OR: We will certainly remain below 95 mb/d for the combined totals of conventional and non-conventional oil.

MA: Therefore, you are clearly more alarmist than the IEA and Total, the most pessimistic of petroleum companies. Total evokes the possibility of maintaining production on a plateau of about 95 mb/d until 2030.

OR: It’s true. The production of oil has already been on a plateau since 2005 at around 82 mb/d. [NB: with biofuels and coal-to-liquid, we approximate 88 mb/d for all liquid fuels.] It appears to me impossible to go much higher. Since demand is still on an increasing trajectory (unless, possibly, the economic crisis engulfs the emerging economies), I expect to see the first tensions arising between 2013 and 2015.

MA: And after that?

OR: Afterwards, in my view, we will have to face a decline of the production of all forms of liquid fuels somewhere between 2015 to 2020. This decline will not necessarily be rapid, however, but it will be a decline, that much seems clear.

MA: You state “not necessarily rapid”. Why?

OR: This will all depend on the speed at which streams of non-conventional oil will be able to be developed. Conversion of coal and natural gas to liquid fuels will remain infinitesimal. For first-generation biofuels, I believe we are already approaching the maximal limit. As for second-generation biofuels, we are still at the stage of industrial pilot projects. It should take another quarter century before we achieve a significant production on a world scale, let’s say around 2.4 mb/d.

MA: In your view, will all of this be insufficient to compensate for the decline of existing conventional oil fields?

OR: Insufficient, yes.

The Oil Drum



11 Comments on "Oil will decline shortly after 2015, says former oil expert of International Energy Agency"

  1. SilentRunning on Fri, 6th Jan 2012 2:10 pm 

    Where are the cornucopian naysayers now?

  2. dsula on Fri, 6th Jan 2012 3:40 pm 

    in 2004 they said it will decline in 2005, in 2005 thay said in 2008, in 2008 they said in 2012, in 2012 they said in 2015, in 2015 they will say?…

  3. BillT on Fri, 6th Jan 2012 3:48 pm 

    dsula, it IS declining..but the other liquid fuels (bio-fuels, natural gas liquids, etc.) are keeping the liquids totals up. Oil is actually declining and has been, The amount of oil per person is shrinking and has been since the 70s. Do you think the gas prices are going up because there is a glut of oil? With oil at $100+/bbl, you better realize that it IS shrinking.

  4. dsula on Fri, 6th Jan 2012 3:54 pm 

    BillT, I don’t dispute the fact that it WILL decline sometime. However it doesn’t seem to be so easily predicted as doomers like to think.

  5. Indigoboy on Fri, 6th Jan 2012 7:41 pm 

    dsula

    The date that oil has, or will, peak is not all that important. What is important is that cheap oil, is now in decline. The oil from here on in, is going to be progressively more expensive. We have built a global economy based on cheap oil. That same global economy cannot thrive on expensive oil. Neither can it thrive on renewables, which do not have anything close to the same BTU that oil has.

    It’s best not to get bogged down with dates and predictions. But the economic growth that we have enjoyed for the last century, is now on the downside due to increasingly expensive energy, and the decline in our living standards has already begun.

    Indigo

  6. dsula on Fri, 6th Jan 2012 8:12 pm 

    Indigo: The date is actually very important (for me). I’m waiting eagerly for the day I can read the headline “WORLD POPULATION IN DECLINE”. And each passing prediction I’m being disappointed and postponed. Am I going to live to see?

  7. Indigoboy on Fri, 6th Jan 2012 8:42 pm 

    dsula

    Things don’t follow in a linear fashion. Even during the decline in oil, it is quite possible (and likely), that population will increase for some years ahead.

    In my last comment I said that the decline in our living standards has already begun. Let’s look at Healthcare. (just one example). The prosperity of our rich economy (based on cheap oil), has meant that we are living longer due to better hygiene, and technologies and drugs that are keeping us alive longer that we would have expected decades ago.

    At the other end, babies are being incubated to a viable life due to drugs and technologies where once they would have died at, or shortly after birth.

    It could be argued that these health ‘rescues’ are based on an affluence, that in turn is based on cheap affordable oil.

    Once the cheap affordable oil is in decline, as it is now, it might be realistically argued that the kind of supportive healthcare that has given us this expected quality of life and longevity, might also begin to disappear.

    As childhood mortality rates begin to rise to the level they were a century ago, and people stop living into their 90’s, we are likely to see the demographic changes that you are expecting. But again I am not willing to put a prediction of when this will happen, only that it will.

    Indigo

  8. DC on Fri, 6th Jan 2012 10:38 pm 

    I think you all forget to point to the the corny that all those so called ‘non-oil’ liquids that are keeping volumes up are in fact, on per-unit basis, less energetic than the old fashioned crude they are ‘replaceing’. How can they be anything but. Dusla might be fooled that volumes are being maintained, sorta, but the amount of net-energy being delivered to society keeps slowing declineing. Bio-fools are just that. A Ponzi-energy scheme designed to fool people into thinking they have fuel, when all they have is been fooled, or fueled, sorta, take your pick.

  9. BillT on Sat, 7th Jan 2012 1:25 am 

    DC, you are correct. It’s like saying that the production of alcoholic beverages is slowly growing but the details show that it is mostly wine and not Scotch. If the liquids have only 50% of the BTU energy of oil but there are 20% more of them, it is still a net loss of energy.

  10. gnufish on Sat, 7th Jan 2012 11:18 am 

    BillT, it is true that NGLs are keeping the total up, but they are just “normal” hydrocarbons that are extracted like oil. So why separate between crude and NGLs? In fact, natural gas and NGLs are ample in supply. Crude & NGL extraction has gone up, just look at the BP figures. On top of this come biofuels and GTL, which further increase total liquids supply.

  11. BillT on Sun, 8th Jan 2012 1:56 am 

    gnufish, again, you are comparing apples to plums. Not nearly the same. And how long do you think those ‘ample’ supplies of NG & NGLs will last when oil is not used? Only a few years at most. Why? Because it takes much more of either to do the work (energy) that a gallon of oil does. You can have one burly muscled man working for you or you can have 3 slim, weak men. Same difference, except at pay time.

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