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Avg of 20 tier-1 models infers Peak Oil 94-mbd in 2023

Apr. 05, 2011 3:20 PM ET
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Seeking Alpha Analyst Since 2008

As a data analyst, Freddy Hutter of Trendlines Research provides guidance in chart format on the specialties of peak oil, realty bubbles, baseline GDP projections and election predictions. Virtually each day an update is published to the website's MemberVenue. All charts are made publicly available the site's FreeVenue after a 90-day exclusivity to subscribers. TRENDLines coverage commenced in 1989, but Hutter's macro economic guidance goes back to 1971. Accurate and timely analysis includes the TRENDLines Recession Indicators (TRI) for Canada, China & USA; the Realty Bubble Monitor's tracking of housing bubbles in Australia, Canada, UK & USA; the Barrel Meter's tracking of price components for gasoline and crude oil along with 1/5/10/23-year crude price projections; and the PS2500's multi-century forecast for oil production & depletion; and the Debt Wall - USA 30-year Debt/Deficit projections. Randomly the firm provides c02 projections on the effects of fossil fuel contribution to climate change; and key international election forecasts.
click to enlarge ... more peak oil charts @ my Instablog & website

Peak Oil: 94-mbd in 2023

April 5 2011 delayed FreeVenue public release of Nov 30th guidance @ Trendlines MemberVenue ~ Below, this month's revision: (a) updates Tier-1 Outlooks by Sadad Ibrahim Al Husseini, IEA & our own Hutter Peak Scenario-2500.

We're pleased to report 2010 global production is on a pace that exceeds the 85.5-mbd annual record set in 2008. Indeed new quarterly records were set in 2010Q1, Q2 & another in Q3. Monthly flow, which had slipped from its 86.7-mbd record of July 2008 record to only 83.2 (Jan-2009) at the depth of the Recession era, is poised for a new record in January. See our World Production Records venue for higher resolution charts of current extraction. Historical analysis of Crude & Gasoline Price components & future target prices (out to 2035) can be viewed via our Gas Pump & Barrel Meter charts. See the chart comparing our projections with long term Crude Oil Price Forecasts by Deutsche Bank, EIA, IEA, IHS & OPEC. On the lighter side, this chart includes "to the moon Alice" forecasts by Charles Maxwell, Jeff Rubin, Michael Smith, Matt Simmons & theOilDrum.


In 1972, the Club of Rome attempted to shock stakeholders and policy makers with its Limits to Growth study forecast of All Liquids Peak Oil: 117-mbd in 1995. Their attempt at awareness that natural resources are finite and in jeopardy with a growing global population was underscored in 1974 with M K Hubbert's similar prediction: 111-mbd in 1995 (excl NGL, deep sea, polar, Orinoco & tar sands).

Because OPEC manipulation invalidated both these projections, Colin Campbell attempted to update the long term prospects for All Liquids. The Irish geologist stunned many when in 1989 he declared that All Liquids flow (65.5mbd) would never again re-attain its 1979 pre-crisis Peak of 67-mbd (see all 3 charted). Well, he was very wrong (86mbd today!). This episode made it quite clear that the uncertainty & price volatility caused by such pessimistic reports (even by well-intentioned professionals) required addressing by the energy sector.

In that regard, we saw OECD's IEA, USA's EIA, OPEC and major IOCs step forward with their own annual & bi-annual long term projections in an attempt to set the record straight and stabilize the marketplace. It didn't happen. As the ranks of McPeaksters were swelled by a growing element from the lunatic fringe, their well-intentioned message was hijacked and discourse deteriorated to the realm of economic and social collapse as the world runs out of oil. As the rhetoric escalated, we thought it would be constructive to provide a comparative platform for these opposing views of the future.

TrendLines Research has been analysing the world's very best All Liquids long term production profiles (and the not-so-good ones) since 2003. Our database includes six decades of forecast studies. A year later we commenced to share these results at our website.

Back in 2005, the 7-model Average indicated a 94-mbd PEAK in 2020. Our not-so-hidden agenda has been to provide a venue where collaboration and comparison encourages a merging of the pessimistic/optimistic camps. After screening hundreds of scenario proposals, we are humbled with this project's contribution to the narrowing of the spread by an incredible 2.6-mbd/yr: reduced from 41-mbd (Campbell 85 & CERA 126) in 2005 to today's 28-mbd (Husseini/Laherrère 86 & EIA-Sweetnam 114) spread.

Interested in who had the best forecast a dozen years ago? Scroll to our Top-16 Vintage Predictions Scoreboard.

Today's Model Reviews:

Sadad Ibrahim al Husseini has conducted a second major update of his Outlook this month by postponing Peak from 86-mbd in 2011 to 87 spanning a 2013-2019 plateau. This was a timely revision as both the al Husseini & Jean Laherrère Outlooks were at risk of downgrade from Tier-1 status since quarterly production is presently surpassing their identical 86-mbd Peak Rate targets.

This month's IEA WEO 2010 Outlook also postpones Peak (from 2030 to 2035) but most noteworthy has pared its All Liquids Peak Rate to 104-mbd (from 105 in WEO-2009 & 107 in WEO-2008). We chastised IEA upon its 2008 release for its utilization of an irresponsibly low Underlying Decline Rate Observed of 2% per year for All Liquids. We later amended its UDRO calculation to 1.9%. It was our position at the time that this absurdly low UDRO was only adopted in its methodology to fabricate and justify its high Peak Rate target.

I regret to reveal today nothing has changed in that regard. WEO-2010 again sports the identical average 1.9% UDRO to 2035 ... putting its 104-mbd Peak Rate at substantial risk of future downward revision. Regular Trendliners will be familiar that my own PS-2500 currently projects a potential Supply Peak @ 105-mbd in 2039. So my issue is not with WEO's optimism, but rather a seemingly politicization of its final analysis whilst it purports to be a bottom-up study. PS-2500's analysis of long term UDRO indicates its 1970-2009 average was 2.7%, is 2.8% in 2010 and will rise to 4.1% by 2050. Every author is allowed their point-of-view, but I want to be clear that IEA (& CERA @ 1.5%) appear to justifying political targets by employing tainted methodology. Just saying...

For those watching the future of renewables, IEA projects that by 2035 this category will comprise 14% of primary energy. This is up from 7% today and sounds pretty good 'til one finds hydro is included in the tally (with wind, solar, geothermal, marine & biomass).

A favourite contribution of this 20-model Depletion study is of course my Peak Scenario-2500. The only depletion model that publishes updates monthly, the current revision reflects three factors: (a) the fifth run of our new Peak Demand module; (b) a further trimming of Annual New Capacity projection to 2.8-mbd; & (c) a 16-Gb reduction of our URR estimate (mostly Arctic). For the second month PS-2500 is predicting Peak Demand (88-mbd) will pre-empt potential Peak Supply (105-mbd in 2039).

In its early life it had become clear via the model that the onset of terminal production decline was going to be brought on by either (a) constraints in securing sufficient proven reserves at will on an annual basis, or (b) due to the magnitude of rising annual Underlying Decline Observed finally surpassing the annual New Capacity installations. PS-2500 pegs dates on these two events: 2062 & 2040. The earliest factor had been establishing Peak Date.

As with most depletion models, the long-term Supply growth rate assumed a continuation of the 1-mbd/yr pace in play since 1970. However, a sea change occurred in July 2010 when a newly implemented Demand module began to detect a waning growth rate in long-term Demand. The module's feedback serves to explain the inability of Consumption to mop up the growing global surplus capacity in the system since the end of the G-20 Recessions.

At 6.4-mbd, idle capacity has reached levels not seen since the Spring of 2002. The module is presently signalling that Demand will peak in 2016, resulting in a long-term plateau interrupted only by normal business cycle downturns and ending in 2042 after the level of Underlying Decline Observed finally prevails over new Capacity installations and remaining surplus capacity exhausts. When the Demand module is deactivated, PS-2500 projects a potential Supply Peak of 105-mbd in 2039 and assumes the New annual Capacity build trend of 3.5-mbd rather than the pared back 2.8-mbd/yr pace indicated by the Demand module.

The Peak Scenario-2500 serves up a warning to policy makers to target their strategies for transition away from gasoline/diesel transportation fuels at the 2040 time frame. This revised projection forecasts All Liquids production will commence an avg 0.5% annual decline rate in the two post-peak decades.

The update further elaborates on its bold hypothesis that Underlying Decline Rate Observed (UDRO) rises and falls with the American Recessions. Confidence in this position is high with UDRO having just demonstrated this phenomenon for a sixth time since 1970. The crests and troughs of UDRO are charted back to 1970. It contends UDRO (2.8% in 2010) will next trough (2.7%) in 2012 and climb back to 3.7% during a probable 2017 Recession whilst on a journey to 4.1% by 2050.

The model estimates 76-mbd of the 119-mbd of All Liquids Capacity added since 1970 addressed Underlying Decline Observed, and 77 of the 78-mbd needed to satisfy and maintain the 1-mbd rise in Capacity by 2035 will be for the purpose of addressing UDO.

Visit our PS-2500 venue for lots more details and charts on non-conventional dynamics, Underlying Decline Observed & the inherent flaws (and myths) incorporated within the McPeakster fraternity.

Further to the 20 Tier-1 models, we regularly track 15 Tier-2 & Hail Mary outlooks. For discussion and posterity purposes, 4 Regular Conventional Oil projections & 11 Invalidated Outlooks are presented as well. But, it is the Average of the 20 Tier-1 models that offers up the very best guidance, such as:

Future Extraction Rates:

2007 84.5


2008 85.5 -
2009 84.3 -
2010 86.4


2023 94 Peak Year & Peak Rate
2031 92 50% Extraction of URR
2034 90 extraction passes 2 trillion
2040 86 first year flow is less than today
2052 77 today's 1236-Gb of proven reserves exhausted
2050 78 milestone
2073 57 extraction passes 3 trillion barrels
2075 55 9.2-billion peak in global population
2088 43 flow is 1/2 of today
2100 35 milestone
2110 29 100 yrs down the road...
2200 8 flows limited to X-Heavy, GTL, CTL & BTL
2300 3 flows limited to GTL, CTL & renewable BTL

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