Tuesday, November 13, 2007
oil industry executives, economists concede oil "peak"
ConocoPhillips (COP) Chief Executive James Mulva had earlier told a New York financial conference that he doubted that world oil producers would be able to meet forecast long-term energy demand growth. The International Energy Agency, the energy watchdog for western economies, has projected 2030 world oil demand of 116 million barrels a day. But Mulva said he doesn't believe oil supply will ever exceed 100 million barrels a day. He didn't offer a price forecast.
"Demand will be going up, but it will be constrained by supply," Mulva said. " I don't think we are going to see the supply going over 100 million barrels a day and the reason is: Where is all that going to come from?"
"Where is the oil going to come from?" This is the CEO of the third biggest oil major in the USA, admitting that we no longer know where we can get access to oil.
"peak oil" -- the concept of a global maxima in oil production rates which we have either reached or are about to reach -- has been forecast for decades and for just as long openly despised and ridiculed by many as a "doomsday" fantasy.
but now it is apparently here, the admission of oil company leadership themselves and very probably already driving national policy. indeed, we are never leaving iraq because iraq represents in many respects the last, best hope of major oilfield discovery and development.
and success in that endeavor, which underlies everything the united states has done in iraq, is beyond important precisely because oil shortfalls are already upon us and will worsen markedly, even if global recession slackens demand growth.
On the energy security, oil prices part, the numbers, one doesn’t need to be a big energy expert or anything: it’s just mathematics. I can tell you that we, in the next seven to eight years, need to bring about 37.5 million barrels per day of oil into the markets, for two reasons. One, the increase in the demand, about one third of it, and two thirds, there is a decline in the existing fields [and there is a need] to compensate for the decline. (...) [what] we expect [to be put in production] is 25 million barrels per day, and this is in the case of no slippages, no delays in the projects, and everything goes on time, which is very rare. So, there is a gap of 13.5 [sic] million barrels per day. (...) Within the next seven years.
What needs to be underlined here is that we already know, to a large extent, what oil fields will be put in production over the next 5-7 years. It takes several years to put a field online, and thus most of that medium term future capacity is already in the planning stage or in the construction phase, and is known to the industry and to institutions like the IEA which can have access to confidential company or national data.
And they are telling us we have this HUGE gap - just to give you an idea, it's almost equal to US imports... unless OPEC suddenly decides to invest more.
"unless opec suddenly decides to invest more" is a key phrase, as the industry view is that, while non-opec nations are experiencing peak oil as a group, reserves are plentiful in opec nations and that merely more drilling capacity is required to make up shortfalls. however, this supposition is tenuous at best, and in many ways contradicted by what outsiders are implying from saudi drilling activity.
regardless, the oil industry is finally admitting that production will not keep up with demand in the intermediate term -- not nearly. as it comes to pass, this will obviously have major international economic ramifications.