|8,007 Gb||All Liquids URR/EUR 2011/8/18||98 Mbd PEAK 2029||2011 flow: 88 Mbd|
|2,058 Gb||Regular Conventional Oil||69-mbd 2005||64 Mbd|
|801 Gb||Bitumen/X-Heavy||21-mbd 2115||2 Mbd|
|1,708 Gb||NGL-GTL-Ref/Gain||17-mbd 2040||11 Mbd|
|938 Gb||Kerogen||20-mbd 2058||0 Mbd|
|266 Gb||Deep Sea & Arctic||15-mbd 2028||9 Mbd|
|2,236 Gb||CTL||14-mbd 2046||0 Mbd|
1,256 Gb PAST (excl 4Gb BTL, to 2010/12/31)
|2 Mbd BTL|
Competing Peaks: 98 Mbd Demand Peak 2029 vs 115 Mbd Geologic Peak 2039
Post-Peak Decline Rate: 0.3%/yr avg 'til 2050
2011 Capacity: 93 Mbd incl global Surplus Capacity of 5 Mbd
The year flow breaches below 2011 level of 88 Mbd: 2059
URR/EUR: 8,007 Gb (consumed to 2010/12/31: 1,261-Gb incl 4-Gb BTL)
Depletion of URR: 16% Annual Gross Depletion Rate: 0.4% (Net: 0.5%)
The year 50% of URR consumed: 2103
The year oil (excl BTL) runs out: 2497
Underlying Decline Rate Observed 2011: 3.4% (3.0 Mbd) of Worldwide All Liquids
Peak Demand (98 Mbd 2029) Truncating Geologic Peak (115 Mbd 2039)
Aug 18 2011 ~ Today's monthly update of our global oil depletion model, Peak Scenario-2500, reveals there is sufficient Proved Reserves and demonstrated capacity build for Geologic Peak of 115 Mbd in 2039. Production would suffer an average 2.5%/yr post-peak decline rate during the following decade. This scenario assumes extrapolation of the long-term Supply-Demand trend (1 Mbd/yr) and annual New Capacity averaging 3.1 Mbd to 2050. The Underlying Decline Observed (UDO) generally increases from 3.0 Mbd today to 3.7 Mbd by 2050, inevitably exceeding the New Capacity build rate in 2040 (hence Peak in the preceding year). Resource constraint (the inability to draw upon Proved Reserves at will) becomes an additional factor for accelerating the decline rate in 2046. But in all likelihood, this growth-as-usual oriented scenario will never come to fruition.
Starting in 2004, Demand oriented medium-term extraction forecasts began to take a backseat to a new breed of practitioners using a new genre of "bottom-up" flow efforts. They were inspired by the realization actual Production could not attain the high magnitude numbers being forecast on the journey to future consumption as high as 126 Mbd. But lately, an ironic reversal seems to be in play. It is increasingly apparent these (bottom-up) flow determined targets are now themselves significantly over-estimating probable production.
New Demand modules are currently re-stating projections to take into account the reality of demand destruction in an environment where there exists the potential of future spiking of Crude Prices to as high as $379/barrel by 2034. The four-decade 1 Mbd/yr Demand trend (upon which our Geologic Peak scenario is based) is giving way to a waning growth rate in Demand that could see it cease to rise after attaining the 98 Mbd level (in 2029). Because production is more likely to take this dampened path rather than one creating excessive surplus capacity, the emphasis of my monthly Outlook updates have since July 2010 reflected the more conservative Peak Demand inspired scenario. The March 2011 model run was the first to indicate production will PEAK due to Demand rather than geologic constraints.
Today's PS-2500 monthly revision of the Peak Demand Scenario reflects four factors: (a) target for Underlying Decline Rate Observed (UDRO) in 2050 decreases to 4.0% (from 4.5%); (b) the projected annual New Capacity trend to Year 2100 decreased to 3.3 Mbd (from 4.1 Mbd); (d) to maintain the integrity of supply chain realities the model assumes Proved Reserves will continue to be developed from available resource at a rate consistent with the historic 40-yr Reserves/Production ratio; (e) in a quest to preserve the aspirational soundness of price discovery, global Surplus Capacity is prevented from dipping below 3 Mbd throughout the timeline; & (f) 48 Gb increase in URR/EUR.
PS-2500's Peak Demand scenario projects All Liquids flow will peak @ 98 Mbd in 2029 and will not fall back below this year's pace of 88 Mbd 'til 2059 ... ensuring many decades of plentiful supply. All Liquids will cross the midpoint of its 8.0-Tb URR in 2103. With petroleum-based liquids exhausting around Year 2497, there appears to be only about 500 years of oil left! After that date, flow will be solely dependent on renewable Biofuels.
Global production has increased dramatically from the Recession low of 83.1 Mbd (Jan/2009), setting yet another monthly record (88.8 Mbd) in July 2011. The oil sector is on pace to shatter last year's annual record and monthly production is poised to break the 90-mbd threshold in January 2013, the 95 milepost in 2019 & geologic peak should be pre-empted by Peak Demand of 98 Mbd in 2029. International Inventories are well above the 5-yr avg and 5% of global capacity is presently idle eagerly awaiting new Demand.
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.
It is little known the pause in global production seen in 2009 was actually the 11th annual decline since 1975. Applying my study of North American business cycle patterns, it is almost certain similar softness can be expected from 2017, 2026 & 2034 contractions - and these potential economic downturns are indeed reflected in the PS-2500 modelling. As BRIC nations become more prominent on the global scene, USA Recessions should have reduced influence over the decades.
A record 5.0 Mbd of flow from new facilities was set in 2010. A sign of the health and robustness of the sector is evident in that after addressing Underlying Decline loss and higher production, global Surplus Capacity is only a tad lower this year @ 5 Mbd & Total Capacity is a record 93 Mbd.
Year-to-date stats reveal Underlying Decline Rate Observed (UDRO) for All Liquids is up modestly @ 3.4% (2.98 Mbd) worldwide, up as well to 3.2% (0.33 Mbd) in Saudi Arabia & steady @ 2.5% (0.22 Mbd) in the USA. In keeping with its cyclical nature, the loss factor should see its next high during a probable 2017 Recession. Modelling of the secular trend (including its 8.5 year cycles) suggests UDRO will rise to 4.0% by 2050.
Due to the limited horizon of accurate Demand projections, the post-2050 production profile still reflects available flows from prudent Proved Reserves development ... not Demand. To maintain the integrity of supply chain realities the model assumes Proved Reserves will continue to be developed from available resource at a rate consistent with the historic 40-yr Reserves/Production ratio.
PS-2500 is a composite analysis of the 7 major components of All Liquids. Regular Conventional Oil (RCO) is the only category that is post-Peak, down over 5 Mbd from 69 Mbd in 2005. The 11 streams tracked as All Liquids include RCO, NGL, refinery gain and the non-conventionals: GTL (gas-to-liquid), Deep Sea, Arctic, Bitumen (oil sands), X-Heavy, CTL (coal-to-liquid), Kerogen (shale) & BTL (biofuels-to-liquid) ... each with its own unique production profile.
PS-2500 is a flow based bottom-up study as constrained by Demand realities by Trendlines Research energy analyst, Freddy Hutter. It is our contribution to the 17 models that comprise the TRENDLines Depletion Scenarios Avg we track each month, illustrating industry consensus on the timing of Peak Oil.
Target All Liquids Extraction Rates :
|2029||98||Peak Year & Peak Rate (Demand)|
|2033||96||extraction passes 2 trillion barrels|
|2039||92||regular conventional drops to 50% of All Liquids|
|2050||91||today's 1,256-Gb of proven reserves exhausted|
|2059||87||first year with flow less than today|
|2065||83||extraction passes 3 trillion barrels|
|2124||72||regular conventional oil exhausts|
|2103||74||Extraction 50% of URR|
|2103||74||extraction passes 4 trillion barrels|
|2145||64||extraction passes 5 trillion barrels|
|43||flow is 1/2 of today|
|2200||33||milestone ~ flows limited to X-Heavy, GTL, CTL & BTL|
|2216||32||extraction passes 6 trillion barrels|
|2300||31||milestone ~ flows limited to CTL & BTL|
|2400||20||milestone ~ flows limited to CTL & BTL|
|2497||5||world runs out of (NYSE:CTL) oil ... (excl BTL)|
Toward Peak Demand
It is has been my judgment since July 2010 that the oil sector is on a path leading toward Peak Demand ... not Geologic Peak. A record flow of 5.0 Mbd from new Capacity was set in 2010. As shown in the chart#4 inset, this 5.5% of production pace had not been seen since 1983. Today's 98 Mbd 2029 projection of Peak Demand mandates a construction pace of 3.0 Mbd/yr of new facilities to that date. On the contrary, should there be a continuation of the four-decade growth rate of 1 Mbd/yr, Production would PEAK @ 115 Mbd in 2039, requires a capacity build of 3.7 Mbd/yr & assumes 4 Mbd of Surplus Capacity at Peak.
PS-2500's Peak Demand module addresses the recent deterioration of the Demand growth rate - mostly inspired by a decline in OECD consumption. Since its first monthly run in July 2010, it has been suggesting it is less and less likely a resource constrained geologic peak will occur. This is welcome news from a Crude Price context as it is much easier to maintain reasonable Inventory balance & Surplus Capacity in such an environment.
My current analysis of the Demand growth rates indicates global consumption started to break away from the long-time 1 Mbd/yr growth trend in 2004 and will level off by 2029. With generally lower targets on that journey, the model found it necessary to pare back Annual New Capacity by 19% to prevent an excess build in global Spare Capacity. To moderate Crude Price thru to 2035, the model found an avg Spare Capacity of 4.8 Mbd will be sufficient ... somewhat less than the recent April 2010 high (6.1 Mbd) and comparable to today's status of 4.6 Mbd.
End of Highlights - balance & original article