Sunday, December 16, 2012

Peak Oil As You've Never Seen It

Stuart Staniford provides an evolving look at oil production numbers in The Bumpy Plateau Tilts Upward. Using EIA numbers, Stuart breaks liquid fuel production down into crude + condensate, natural gas liquids, refinery gain, and other liquids. The composite picture shows a slow rise in overall production, including a slow but definite 0.33% rate of rise in crude oil + condensate production.

The recent Exxon energy outlook to 2040 indicates that both oil demand and oil supply are likely to rise. The Exxon report accounts for most of the coming rise in oil production by advances in unconventional oil production.
By 2040, only about 55 percent of the world’s liquid supply will come from conventional crude oil production. The rest will be provided by deepwater, tight oil and NGLs, as well as oil sand and biofuels, as technology enables increased development of these resources. As we look to the future, energy sources considered “unconventional” today are rapidly becoming conventional, thanks to the technologies available to produce them, giving them an increasingly significant role in the global energy mix. _Exxon 2040 Outlook
The Exxon report significantly understates the coming of synthetic fuels, which are likely to achieve a significant (10%+) proportion of overall liquids by 2030. The report's demand estimates to 2040 are likely to be overstated, due to overly optimistic assumptions about global economic growth.

All the same, global population growth is likely to continue for decades, creating its own rise in demand for new liquid fuel supplies as long as a significant global economic collapse can be avoided.

In the face of global political / economic mismanagement, oil has become a type of global quasi-currency and repository of wealth in its own right. Oil prices have come to occupy a much greater role to the global economy, financial systems, and geopolitics, than as a mere price of fuel. This importance to multiple key global systems and institutions provides more price support to oil markets than might be assumed.

As long as the greater part of conventional oil reserves are held by oil dictatorships and their national oil companies, the free-market oil producers will have to settle for unconventionals such as deep sea oil, tight oil, natural gas liquids, and synthetic fuels such as GTL, CTL, BTL, bitumens, kerogens, and the like. This growing dependency on more expensive sources of liquid fuel is another reason for higher oil prices than would have otherwise been expected at this stage of development of the global hydrocarbon complement.

Nevertheless, the prolonged production plateau is likely to continue to rise along with population growth and consequent demand growth -- as long as price signals are allowed to operate in markets.

A look at the ongoing oil production plateau by the Total Chairman and CEO

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