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Page added on June 7, 2016

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The Seneca Cliff of Oil Production

The Seneca Cliff of Oil Production thumbnail

 

The concept of the “Seneca Cliff” seems to have gone mainstream. Below, it is mentioned in a recent post by Dennis Coyne on “peakoilbarrell” as an obvious concept. Just as when you say “Gaussian Curve”, you don’t have to specify what shape the curve has, so it is for the “Seneca Curve”. It looks like I started some kind of avalanche with my 2011 post when I introduced the term. See also my blog wholly dedicated to the subject.

Here, the projections by AEO (annual energy outlook) seem to me very optimistic; can production really keep growing until 2035-2040? If that were to happen, however, the subsequent collapse would be truly abrupt.

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EIA’s Annual Energy Outlook and the Seneca Cliff

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The scenario above shows an Oil Shock Model with a URR of 3600 Gb and EIA data from 1970 to 2015 and the Annual Energy Outlook (AEO) 2016 early release reference projection from 2016 to 2040. The oil shock model was originally developed by Webhubbletelescope and presented at his blog Mobjectivist and in a free book The Oil Conundrum.
The World extraction rate from producing reserves must rise to 15% in 2040 to accomplish this for this “high” URR scenario. This high scenario is 100 Gb lower than my earlier high scenario because I reduced my estimate of extra heavy oil URR (API gravity<10) to 500 Gb. The annual decline rate rises to 5% from 2043 to 2047 creating a “Seneca cliff”, the decline rate is reduced to 2% by 2060.
blogchart/
The scenario presented above uses BP’s Energy Outlook 2035, published in Feb 2016. This outlook does not extend to 2040, maximum output is 88 Mb/d in 2035 at the end of the scenario. This scenario is still optimistic, but is more reasonable than the EIA AEO 2016. Extraction rates rise to 10.6% and the annual decline rate rises to 2.5% in 2042 and is reduced to under 2% by 2053.

Cassandra’s legacy by Ugo Bardi



17 Comments on "The Seneca Cliff of Oil Production"

  1. Stuifzand on Tue, 7th Jun 2016 6:58 pm 

    Now for the bad news:

    http://www.dailymail.co.uk/news/article-2593032/Coal-fuel-UK-centuries-Vast-deposits-totalling-23trillion-tonnes-North-Sea.html

    In the sea bed between Britain and Holland alone there is up to 23 trillion ton worth of coal (which could be burned ‘on location’, leaving the coal were it is).

    Up until 2009 merely 0.1 trillion ton of crude oil have been consumed so far in the entire history.

    In other words, there is more than enough to fry us all thousand times over. The technology admittedly doesn’t exist and hopefully will never be developed, but prematurely running out of fuel should be the least of our worries.

  2. Stuifzand on Tue, 7th Jun 2016 7:01 pm 

    Underground Coal Gasification 3D Animation

    https://www.youtube.com/watch?v=lOBXsmKdlcA

  3. Roger on Tue, 7th Jun 2016 7:18 pm 

    “… but prematurely running out of fuel should be the least of our worries.”

    Correct. But, that’s much different than peak oil…and that’s a done deal. Should be in our “top five” worries I suspect?

  4. Davy on Tue, 7th Jun 2016 8:07 pm 

    Stu, lots of coal all over the world in fact I imagine Antarctica is full of it but economic coal is very limited. I don’t see the development of uneconomic coal even if we become desperate. We just don’t have the prosperity anymore to move mountains and mine the sea.

  5. shortonoil on Tue, 7th Jun 2016 9:03 pm 

    I agree with you Davy, a lot of the world’s coal reserve has already been extracted. Using Post and Pillar mining techniques as mines get deeper the amount of coal reaming declines rapidly. Bigger, wider Posts must be left to hold up the roof. Strip mines also have the problem that overburden increases, and, or seams get thinner. All and all we we will see a continued decline in coal production both in the US and Europe; and eventually in Asia

    Bardi sees the crash in production happening in 2040 as indicated in his graph. We think he is ten years late. He also sees production continuing to increase until then. The price of oil will keep that from happening. The average full life cycle production cost calculated from the ERoEI data, and energy intensity data is now $125/ barrel. From here on out producers pump what is remaining in their reserves. Once the giants start off their plagues production will declining rapidly. There is no money for large scale redevelopment.

  6. Cloud9 on Wed, 8th Jun 2016 6:52 am 

    It’s over, we are done, it’s collapsing will not secure new investors or keep the political Ponzi going. Therefore, the concept of the end of oil will never hit mainstream until you see ox carts on US-1. What it will do is upend the flow of credit. Credit may very well freeze up a decade or more before we reach a huge decline in energy production. At some point knowledgeable investors will seek the exits. This will collapse credit. When credit freezes the political system collapses.
    An exponential printing of the currency buys a little time, but then the currency collapses.

  7. makati1 on Wed, 8th Jun 2016 7:27 am 

    Cloud9, I don’t think there are any knowledgeable investors left. Greed has paralyzed the Wall Street crowd’s ability to make rational decisions. All signs in the world economy are negative, yet the Market Casino continues to levitate on every hint of a positive, even if it obviously a lie. Insanity?

    Credit has hit the immovable wall of debt. They might buy another year or two with printing and lies, but I doubt it will go much longer. We seem to have hit the end times in so many ways all at once. The Perfect Storm, so to speak. I hope you are preparing.

  8. Revi on Wed, 8th Jun 2016 9:09 am 

    Peak oil has become a joke lately among people I know. Meanwhile I think we may have hit it. We’ll see, but I think the amount that comes out of the ground will be lower in 2016, and since the base is dropping we may see a decline as early as the end of this year.

  9. penury on Wed, 8th Jun 2016 9:33 am 

    With the only buyers of stock being the Corps buying their own stock and the Central Bank buying the rest, the crash when (and if) it comes will be a doosy. This s the problem keeping the Elites awake at night.

  10. Davy on Wed, 8th Jun 2016 9:35 am 

    Pen, exactly, the ECB just started to buy corporate bonds. What does that tell you! It screams demand destruction and deflation which are fancy words for systematic decay.

  11. Ralph on Wed, 8th Jun 2016 10:10 am 

    For the month of May coal generated less electricity in the UK than solar.

    http://www.theguardian.com/environment/2016/jun/07/solar-sets-british-record-for-may-producing-more-electricity-than-coal

    The North Sea coal will never be burnt. All UK coal stations are to be closed by 2025, or sooner.

  12. shortonoil on Wed, 8th Jun 2016 10:16 am 

    “It’s over, we are done, it’s collapsing will not secure new investors or keep the political Ponzi going.”

    The bulk of the world’s capital is held by pension funds, SWF, and the 1%. The 1% are noted for squeezing the last nickel out of a dead man’s hand, but they aren’t stupid. Just incredibly greedy. It is that greed that keeps them in the game, and the belief that their god, the FED, will never desert them. But they do appear to be getting closer, and closer to the exit. The crash in oil prices has probably cost them better than a $ trillion in the last couple of years. NIRP has sent European banks heading for cash and gold.

    Interest rates are a measure of the time value of money. NIRP means that cash is no longer a place to make money; it has become a place to lose money. The 1% are now looking for any place that can preserve their wealth. That is not going to be in oil, or buying additional debt. Without their cash to support credit markets there will soon be no credit market. Corporations will not be able to roll over their bloated debt holdings, and mom&pop won’t be looking to buy next year’s F250.

    The CBs will lose control when the FX markets sweep them out of the way. Oil producing nations are already seeing their currencies crash. The US petro-dollar is getting to be the last man standing. The petro-dollar, however, depends on petro, and with most producers now losing money on every barrel that they produce, that can not last for long. The end of the oil age will not be a massive collapse all in one day. It will be a series of crises coming one after the other. It will be the world sitting around waiting for the next shoe to drop, and completely void of any idea of what to do to prevent it! Most will never understand that it is an energy problem; that the world is simply running out of gas.

  13. Northwest Resident on Wed, 8th Jun 2016 1:12 pm 

    The crises are coming one after the other already, and have been for quite a while, with many more queued up in line waiting for their turn to strike. And those are just the ones that we know about. The world is already waiting for the next shoe to drop, sitting on a pile of shoes that have already dropped. Shortonoil is 100% correct. The Age of Oil won’t end in a sudden flash, but in a series of increasingly more destabilizing events — exactly what we are currently witness to in these last days of the Age of Oil. I continue to believe that we are in for some very big shocks, shocks so large that in the aftermath of the tectonic shifts produced by those shocks everyone will be wondering what the hell just happened, peering through the smoke and debris of what used to be their known world, feeling every bit like THIS is collapse. Many people around the world are already there. Everybody else is just waiting their turn. The big shock that shakes your part of the world is on the way, you can be certain of it. And at some point, one of those shocks will be the proverbial straw that breaks the camel’s back, at which point panic and mayhem will spread through the frightened masses like a tidal wave. And the final stage of collapse will be game ON.

  14. rockman on Wed, 8th Jun 2016 2:16 pm 

    OK…for those SC believers let me offer some easily confirmed FACTS. We’ll start with individual wells. Very rarely does a well in a conventional reservoir desplay a SC decline profile. Of course we all know wells in unconventional reservoirs like the shales will typically look a but like a SC. More on those later.

    Now let’s ramp up to a collection of wells we’ll call a field. And again wells in a conventional reservoir. Obviously since SC wells are rare a collection in one field would be even more rare. Now let’s look at a trend…a collectyion of similar fields. And thus SC trends would be even less likely. Now a basin…etc. Now a state…etc. Now a country…etc. And now the world…are we seeing the trend now?

    OK…now the shales. A SC profile the first few years. But the SC profile then mutates into a slow dercline similar to a conventional reservoir. Which means the great majority of US shale wells have reached their much lower decline rasraster phase. IOW as a whole most if the shale wells (given the huge reduction in the number drilled in the last 2 years) won’t see SC.

    So if folks want to argue a SC for the US or global oil production that’s OK but they need forget about that one big THEORETICAL SC chart and show the individual charts for the different categories (old conventional fields, Deep Water GOM fields, legacy shale wells, recent shale wells, etc.). And then collect them into one big chart again. The problem there is you can’t make a SC when most of the individual components don’t have a SC profile.

  15. Ken Barrows on Wed, 8th Jun 2016 5:17 pm 

    Rockman,

    If it’s true that half of US oil production (EIA?) is from wells drilled since 1/1/2014, might that suggest a SC? Bakken is about 1,000+ additional wells year over year for a 6.3% decline in production.

  16. Survivalist on Wed, 8th Jun 2016 5:57 pm 

    Infill drilling is often resorted to in order to avoid production declines. This brings future production to the present, so to speak, and results in a longer production plateau and an eventual sharper production decline. This production profile more closely resembles a SC as opposed to a bell curve. Given the increased rig counts in GCC OPEC (KSA, Kuwait, UAE, Qatar) it seems likely that a massive infill drilling program has taken place. Once the plateau is over the steep decline will begin.

  17. rockman on Wed, 8th Jun 2016 8:05 pm 

    Ken – Are you suggesting that something like a 6% decline comes close to plotting a SC like decline curve? Have you a plot of a 6% decline? Of course you need to attach the right side of that curve to the left side to make a complete picture.

    Obviously in the case of the Bakken, Eagle Ford and particularly the entire US oil production curve it would look more like reverse SC. IOW the increase would be more rapid then the decline.

    Which is why I asked for actual curves and not some description. And while we’re at it doesn’t the US oil production curve prior to the shale boom also look like the opposite of a SC curve? IOW a rather plateau to slow decline following a more robust increasing curve? And now look at the truly rapid rate of the US oil production increase since the beginning of the shale boom: to see a SC for just the shale component you need to plot a production decline at a much greater rate then the amazing (and unprecedented) rate of increase. Want to draw that curve and present to our group?

    If you do be prepared to be severely flogged by our cohorts. LOL. But seriously: it takesd no effort to SAY there is a SC coming. But now plot one using the actual data attached to whatever assumptions one cares to make about future rates.

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