The Associated Press A new report suggests that oil production will not peak for at least two more decades and will plateau for decades after that. Few topics can inflame oil watchers more than the debate over “peak oil” – that difficult-to-predict moment when the world’s oil production reaches its highest level before beginning a long and irreversible path of decline.
November 17, 2009, 8:15 am
No Peak in Oil Before 2030, Study Says
By JAD MOUAWAD
In recent years, ominous warnings about peaking production have gained some prominence among traders and some analysts. They helped explain why oil prices soared last year on fears that oil supplies would fail to catch up with the projected growth in consumption.
A retired geologist predicted, wrongly it turned out, that global oil production would peak on Thanksgiving Day, 2005. Others believe that the peak in production will happen from 2011 to 2015.
In this minefield, IHS Cambridge Energy Research Associates, the consulting firm founded by the oil historian Daniel Yergin, has resolutely been on the optimistic side of the peak oil abyss.
In a new report released this week, the firm once again explains why it believes that oil supplies will keep growing for the next two decades. After that, the firm says, production will reach “an undulating plateau,” meaning it will remain more or less flat for a couple more decades after that.
The report, called “The Future of Global Oil Supplies: Understanding the Building Blocks,” shows how oil supplies will reach 115 million barrels a day around 2030, up from 92 million barrels today. They will remain at that level through 2050. (The report sets a lower peak level than in recent years, IHS said, because the recession had led companies to reduce their investments and demand is not expected to rise as high as previously thought.)
Any long-term forecast is by definition tricky. But analysts at IHS said they have coaxed production data from more than 450 fields around the world, including in OPEC, as well as projects outlined by oil companies to develop new reserves.
They found that the average decline rate in oil fields is 4.5 percent, less than many pessimists assume; second, 60 percent of world production still comes from nearly 550 so-called giant fields that are not in danger of suddenly plummeting; and finally, the world’s oil endowment is much bigger than many estimates about peak oil allow for.
“The longer-term problem lies not below ground.” — IHS Cambridge Energy Research Associates
The ultimate point of the report, said Peter Jackson, the study’s main author, was to point out that while geological issues are important, future oil production will be mostly driven by the “above ground elements of the equation.”
“Looking ahead, we can see that the upstream industry faces many challenges,” the report said. “The longer-term problem lies not below ground, but in obtaining the investment and resources that the industry will need to grow supply significantly from current levels.”
This analysis of these risks parallels what many executives have been warning: that limited opportunities to invest in new supplies could lead to an oil shock in the next decade. The chairman of Hess Corporation, John Hess, recently told an oil conference in London that last year’s record price “was not an aberration; it was a warning.”
The chief executive of France’s Total, Christophe de Margerie, has also sounded the alarm, saying that the world would be hard pressed to pump more than 90 million barrels of oil a day by 2015 because of geopolitical constraints.
Steve Andrews, the co-founder of ASPO-USA, the domestic chapter of the Association for the Study of Peak Oil, said the optimism of IHS is misplaced and “irresponsible.” But his analysis also tracks with the concerns about how much the world can produce.
“In the theoretical world where Exxon could drill in Saudi Arabia, in Iran and in Iraq, as well as offshore California, you know we could get considerably higher production,” said Mr. Andrews. “But there is what we call practical peak oil. It’s the real world.”
He expects global oil supplies to reach a peak of around 92 million barrels a day sometime early in the next decade.