Science Magazine: Peak Oil Production may have happened in 2005

[It’s widely known that peak conventional oil arrived in 2005. Yet it appears in EIA and IEA statistics that oil production has risen. This is because unconventional oil from natural gas liquids (mostly used to make plastic, not transportation fuel),  heavy oil, tar sands oil, and so on are included. 

Conventional oil is great!  It is “the easiest oil to get at, oil that freely flows out of a well of its own accord or with a minimum of encouragement, such as pumping it out or pushing it out with water. All agree the problem is increasing difficulties extracting conventional oil. In the past decade, analysts have realized that rather than the 2% to 3% per year decline once assumed, production from existing fields is declining 4% to 5% per year. Some believe the depletion is even faster.”

The problem is that unconventional oil will soon be unable to replace the declining conventional oil, which is still 90% of the oil we use. As ExxonMobil’s energy and economics group manager Robert Gardner explains: “We’re not optimistic we’ll see a significant increase in unconventional liquids.”  The problem with unconventional oil is that, by definition, it is hard to extract.

Alice Friedemann   www.energyskeptic.com  author of “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer and “Crunch! Whole Grain Artisan Chips and Crackers”]

Kerr, R. A. March 25, 2011.Peak Oil Production May Already Be Here. Science 33: 1510-1511.

Outside of OPEC’s vast resources, oil production has leveled off, and it’s looking like it may never rise again.

Despite a near tripling of world oil prices, non-OPEC production, which accounts for 60% of world output, hasn’t increased significantly since 2004.

Five years ago, many oil experts saw trouble looming. In 10 years or so, they said, oil producers outside the Organization of the Petroleum Exporting Countries (OPEC) would likely be unable to pump oil any faster (Science, 18 November 2005, p. 1106). Non-OPEC oil production would peak, no matter the effort applied. All the high-technology exploration and drilling, all the frontier-pushing bravado of the oil industry would no longer stave off the inevitable as OPEC gains an even stronger hand among the world’s oil producers.

Five years on, it appears those experts may have been unduly optimistic—non-OPEC oil production may have been peaking as they spoke. Despite a near tripling of world oil prices, non-OPEC production, which accounts for 60% of world output, hasn’t increased significantly since 2004. And many of those same experts, as well as some major oil companies, don’t see it increasing again—ever. In their view, it’s stuck on a flat-topped peak or plateau at present levels of production for another decade or so before starting to decline. “Stable [non-OPEC] production is the best we can hope for,” says energy economist Robert Kaufmann of Boston University. “I have trouble seeing it increase more. It’s a wake-up call.”

Optimists remain. Some experts still see production from new frontiers, such as Kazakhstan, the deep waters off Brazil, and the oil sands of Canada, pushing production above the current plateau in the next few years. But time’s running out to prove that newly discovered fields and new technology can more than compensate for flagging production from the rapidly aging fields beyond OPEC.

Running to stay in place

There’s no debate about the reality of the 6-year-and-counting plateau of non-OPEC production. Output stagnated at about 40 million barrels a day beginning in 2004 after rising from an earlier plateau in the early 1990s, one induced by a low price for oil. But prices have been anything but low lately. They have gone from about $35 a barrel early in the past decade to double and nearly triple that. Normally, higher prices would encourage more production, but not this time. Since 2004, “there’s been a tremendous increase in price, yet this is all we get for it, stable production,” Kaufmann says. “It’s quite stark.”

The problem up to this point, all agree, has been increasing difficulties extracting conventional oil. That’s the easiest oil to get at, oil that freely flows out of a well of its own accord or with a minimum of encouragement, such as pumping it out or pushing it out with water. Production of conventional oil from any one well or field typically increases, peaks, and then goes into decline. Larger producing regions behave the same way. Production from the United States, once the world’s largest oil producer, peaked in 1970 as rising output from newly discovered fields failed to compensate for declines in old fields. Mexico’s production peaked in 2004 as its huge, aging Cantarell field went into steep decline. North Sea production peaked in 1999, just 28 years after starting up.

The same pattern now seems to be emerging across much of the world. “We believe—and pretty much everybody else believes—that non-OPEC [conventional] production has plateaued,” says oil analyst Michael Rodgers, a partner with PFC Energy in Kuala Lumpur. “Arguing that you’re going to get continued and sustained growth of conventional oil is a very hard case to make.” PFC Energy has just done a complete reassessment of the prospects for non-OPEC conventional production, he says. As in most oil outlooks, a country-by-country or even field-by-field survey of what producers are planning for the next 5 to 10 years was combined with an educated guess of how much oil remains to be discovered in each region.

That forecast of added production is balanced against how fast production from existing fields is declining. In the past decade, analysts have realized that rather than the 2% to 3% per year decline once assumed, production from existing fields is declining 4% to 5% per year. Some believe the depletion is even faster. The balance between added and declining production, in the PFC Energy assessment, is a plateau, though the plateau may undulate from year to year. “You bring on a [new] 100,000-barrel-a-day field,” Rodgers says, “and somewhere else you’ve lost a 100,000-barrel-a-day field.”

Tough oil to the rescue?

But what about unconventional oil, the hard-to-get-at oil that’s only extractable using the latest in high technology? There’s the oil beneath kilometers of seawater far offshore of the U.S. Gulf Coast, Brazil, and West Africa. It wasn’t reachable until development of the necessary deep-water drilling and production technology. There is also the oil—more like tar—that is so viscous that steam must be piped underground to thin it before pumping it out. In Alberta, Canada, huge shovels just dig up the “oil sands” so it can be trucked to oil-extraction plants.

ExxonMobil’s energy and economics group manager Robert Gardner: “We’re not optimistic we’ll see a significant increase in unconventional liquids.”  The problem with unconventional oil is that, by definition, it is hard to extract. “It’s a matter of timing,” Gardner says. “It depends on the pace of technology development.”

Even after the essential technology is developed, unconventional oil will still be difficult—as well as expensive—to extract, limiting the RATE at which it can be produced.

All in all, “technology matters, economics matters, but geology really does matter,” says oil analyst David Greene of the U.S. Department of Energy’s Oak Ridge National Laboratory in Tennessee. “Progress in technology is not fast enough to keep up with depletion” of oil reservoirs.

Perhaps the most sobering outcome of a non-OPEC plateau might be reminding everyone that even planet-scale resources have their limits. And that when you are consuming them at close to 1,000 gallons a second, the limits can catch you unaware. 

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2 Responses to Science Magazine: Peak Oil Production may have happened in 2005

  1. Joe D. says:

    ‘1000 GALLONS per second’, Don’t you mean 1000 BARRELS per second?
    If the world uses 86. 4 million barrels per day (86.4E6/86400=1000).
    That would equate to 42,000 GALLONS per second @ 42 gallons per barrel.

    • energyskeptic says:

      Joe — I’m quoting directly from the article in Science, I think Kerr got it wrong, good catch,

      Alice