Exxon joins the peak oil crowd?
Submitted by praktike on May 25, 2005 - 12:09pm.
Sort of. So says Alfred J. Cavallo in the Bulletin of Atomic Scientists. He interprets Exxon's annual report, Outlook for Energy: A 2030 View, as predicting a peak in non-OPEC production just five years from now.
More below.
The key graph is this one:
And the text accompanying it reads as follows:
Now let’s look at the demand relative to the total liquids supply base out to 2030. The non-OPEC crude + condensate outlook is shown in green at the bottom of this chart. Non-OPEC production is expected to peak in the next 10 years or so, with 70% of production from seven areas: Russia, the U.S., the North Sea, Mexico, Canada, China and Brazil.
The light green wedge is our assessment of worldwide natural gas liquids, OPEC condensate and all other liquids. That includes gas-to-liquid production, ethanol, synthetics and refinery gain. Refinery gain is the gain in volume that results from the refining of crude oil into products.
The hatched section is an assessment of non-OPEC frontier production, which during this time period comes from Canadian oil sands. Tar sands production includes both mined and insitu extra-heavy oil (EHO) and oil sands.
The worldwide liquids demand outlook, which is discussed earlier, is shown as the red line on this chart. The difference between demand and these supplies is the “call on OPEC crude.”
The estimated call on OPEC increases slowly from about 28 million barrels a day to around 30 million barrels a day in 2010. During this time, growth in non-OPEC supplies satisfies most of the demand growth, leaving little room for OPEC growth.
After 2010, the call on OPEC increases quickly, requiring OPEC to add more than 1 MBD of capacity every year. OPEC’s resources are large enough to achieve this rate of expansion, and we expect that investments will be made in a timely manner.
Cavallo concludes:
OPEC has not expanded production capacity much at all recently. Moreover, such production increases are only possible from Iraq, Saudi Arabia, Kuwait, and the United Arab Emirates. For these countries, and indeed for most OPEC members, petroleum and petroleum products are their only significant export. As such, they have a vested interest in obtaining the best possible price for their non-renewable resources. OPEC nations would be quite unlikely to increase production as rapidly as needed unless compelled to do so. To put this shortfall in perspective, in 2003 Algeria produced 1.1 million barrels per day; a new Algeria would need to be brought on line in the Persian Gulf each and every year beyond 2010 just to keep up with the projected increase in demand. Consequently, once non-OPEC production reaches a peak, conventional world oil production could peak shortly thereafter, and prices (never explicitly mentioned in the Outlook) would rise in accordance with the laws of supply and demand.
What all this means is that the petroleum industry is approaching a turning point. Conventional petroleum production will soon--perhaps in five years, ten at best--no longer be able to satisfy demand. For their part, American consumers would do well to take a cue from their Western European counterparts, who enjoy a comfortable lifestyle despite a per capita use of petroleum that is half of that in the United States. The sooner the United States begins this transition away from oil, the easier it will be. That's a far more attractive option than trying to squeeze oil from stone.
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