|7,075-Gb||All Liquids URR/EUR 2010/9/29||PEAK 92-mbd in 2049||2010 flow: 86-mbd|
|2,130-Gb||Regular Conventional Oil||68-mbd 2005||62-mbd|
|1,663-Gb||NGL-GTL-Ref/Gain||15-mbd 2043 & 11-mbd 2200||11-mbd|
|260-Gb||Deep Sea & Arctic||13-mbd 2029 & 6-mbd 2080||8-mbd|
Demand Growth Virtually Non-Existent
Peak Demand of 92-mbd in 2049 pre-empting Supply Peak of 102-mbd in 2030
Sept 29 2010 ~ Today's update of our global oil depletion model, Peak Scenario 2500, reveals maximum All Liquids production will be 92-mbd in 2049. Post-peak decline will average 4.6% per annum in the first dozen years ... a rate that could be catastrophic but for the very long lead-up time for necessary mitigation & transition.
The current revision reflects three factors: (a) the third run of our new Peak Demand module; (b) a further trimming of annual new capacity projection to 3.1-mbd; & (c) a 438-Gb reduction of our URR estimate (mostly CTL).
All Liquids flow will not fall below this year's pace 'til 2061 ... ensuring decades of plentiful supply. All Liquids will cross the midpoint of its 7.1-Tb URR in 2104, fifty-five years after Peak. With petroleum-based liquids exhausting around Year 2510, there appears to be only 400 years of oil left! After that date, flow will be solely dependent on renewable Biofuels.
With all G-20 nations officially free of Recession, my 2008 forecast that most of the world would see economic expansion in 2009Q3 (including the USA) has come to fruition. Renewed Demand enabled the quarterly production record set in 2008Q1 to be surpassed in 2010Q1 ... with yet another record in Q2. Tracking of seasonal flows indicates a new monthly record should be set next January. The pace of 2010 production (86.0-mbd) has surpassed the 2008 annual record (85.5). See monthly report.
As we discussed from the onset, McPeakster fabricated concern over future MegaProjects was grossly overblown during the Recession, and in reality the majority of cancellations proved to be opportunities to re-contract at more favourable deflated costs. The pause in annual global production in 2008 was the the 11th since 1975. Business cycle patterns indicate that we can expect similar softness in 2017, 2026, 2034 & 2043, and these potential downturns are reflected in the PS-2200 modelling.
A record 4.7-mbd of new facilities were commissioned in 2009, resulting in an estimated 4.1-mbd of immediate new flows. Of this New Capacity, 2.3-mbd was required to offset loss of production due to Underlying Decline Observed (UDO) and the balance brought global Surplus Capacity to a twenty year record of 6.3-mbd by year-end.
Mid-year stats reveal that the Underlying Decline Rate Observed for Year 2010 All Liquids is: 2.9% (2.47-mbd) worldwide, 2.7% (0.27-mbd) in Saudi Arabia & 2.5% (0.22-mbd) in the USA. This confirms UDRO has formed a sixth cycle top since 1970, with another surge of the decline rate to 3.1% in 2008, and further builds the case that our hypothesis that UDRO is cyclical is correct. By past experience, we expect the loss factor will bottom @ 2.7% in 2012, before its next cycle high (3.7%) during a probable 2017 Recession. Modelling of the general trend (including its 8.5 year cycles) suggests a rise in UDRO to 4.1% by 2050.
The average post-peak production Decline Rate of 4.6% could be catastrophic. It occurs at a time when the industry can neither draw from Regular Conventional reserves at will nor make up the difference from idle capacity. Its reserve/production ratio leaps to 9 ... a staggering 10% Decline Rate. This has the potential to be troublesome should the transportation sector have not significantly weaned itself off gasoline/diesel based fuels by that juncture.
PS-2200 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 6-mbd since 2005. The 11 streams tracked as All Liquids include RCC, NGL (incl 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-2200 is a flow based bottom-up analysis by TrendLines Research energy analyst, Freddy Hutter. It is our contribution to the 20 models that comprise the TrendLines Scenarios Avg that we track each month, illustrating industry consensus on the timing of Peak Oil.
Target Extraction Rates :
|2034||90||extraction passes 2 trillion|
|2049||92||Peak Year & Peak Rate|
|2050||92||today's 1,236-Gb of proven reserves exhausted|
|2061||85||first year with flow less than today|
|2061||85||regular conventional drops below 50% of All Liquids|
|2068||67||extraction passes 3 trillion barrels|
|2075||61||9.2-billion peak of global population|
|2104||44||regular conventional oil exhausts|
|2097||46||Extraction 50% of URR|
|43||flow is 1/2 of today|
|2134||34||extraction passes 4 trillion barrels|
|2200||31||flows limited to X-Heavy, GTL, CTL & BTL|
|2241||30||extraction passes 5 trillion barrels|
|2291||30||extraction passes 6 trillion barrels|
|2300||30||flows limited to GTL, CTL & BTL|
|2476||19||extraction passes 7 trillion barrels|
|2510||6||world runs out of oil... (excl BTL)|
Toward Peak Demand
A record 4.7-mbd of new capacity was commissioned in 2009. As shown in the chart#4 inset, this 5% of production pace has not been seen since 1983. Should the seven-year trend of 3.5-mbd/yr continue until impeded by resource constraints in 2061, and assuming continuity of the four-decade growth rate of 1-mbd/yr, Supply would PEAK @ 102-mbd in 2030. The ultimate cause would be that annual Underlying Decline Observed (UDO) finally surpasses the model's new capacity trend. UDO is 2.5-mbd today and is projected to reach 3.8-mbd in 2050.
Peak Scenario 2500's new Peak Demand module addresses the recent deterioration of the Demand growth rate - mostly inspired by a decline in OECD consumption. In its first run in July, it was revealed that the Potential Supply Peak would be nine years later and pared by 4-mbd due to the long term effects of a waning rate of growth in Demand. Rather than the aforementioned 102-mbd Peak, production would be 98-mbd in 2039. August's run required the model to cut the estimate of annual new capacity to 3.4-mbd (from 3.5) to prevent an excess build of global surplus capacity.
The September run forecasts 92-mbd Peak Demand in 2049 (ten years later) and required the cutting back of new capacity to 3.1-mbd/yr. Even at that, there would be 7.8-mbd of idle capacity in 2022, compared to 6.5 today, and it exhausts in 2048. But the sector was at this stage already a dead man walking. UDO had already exceeded annual new capacity and was drawing upon spare capacity to show apparent growth. In the absence of idle capacity, terminal production decline sets in.
It can be seen in chart#1 that moderation of Demand produces a more plateauish profile with a later peak and a gentler post-peak production decline (compare to older chart versions). Had Demand continued on its 1-mbd/yr growth trend, peak would have been followed by a potentially calamitous 2.9% annual decline rate much sooner than perhaps stakeholders can prepare. The oil sector appears to be heading toward Peak Demand. We are not there yet. In the end, the proposed 92-mbd peak was still determined by the loss factor associated with underlying decline. Even a light appetite could not be quenched. For true Peak Demand, some available supply is left wanting...
Disclosure: no positions