118 comments on Peak oil: BP, Conoco CEOs say it's here - also IEA's Fatih Birol really freaks out
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Fatih Birol is reported as saying that "this is not Peak". The IEA also project oil supplies rising to 2030. So however much you would like to think he is admitting to a peak, he is not.
My favorite part is this:
If I interpret this correctly, it matches up to my personally held belief. I think many of us amateur oil depletion sleuths have no special knowledge about geology and fossil fuels. However, we do know bean counting, have lots of knowledge about statistics, and possess some ability to logically state premises and make inferences.
As Bill Clinton would say: "It's the math, stupid"
Well, yes, formally, that is true - they use words like "we're not at peak" and "we don't think there will be a peak", except that they say essentially the same thing using different words
Call it "the wheels will fall off" if you will, it's still the same thing: less oil than we'd like to have, and the very real consequences that follow as someone's oil demand will need to be denied, either by higher prices, shortages or else.
Like many people you confuse PO with the effects of PO. At TOD we really should try to be precise with terms.
Strictly speaking Peak Oil means peak of production, you are talking about consequences of PO. You are referring to what Roger Rapier calls Peak Oil Lite - even if production has not peaked, it will have effects similar to an actual peak.
I would concede they are saying the same thing as Peak Oil Lite, a shortfall will cause high prices. But they haven't admitted that oil supply will go into terminal decline - not yet.
I think there is an important difference. The message that IEA gives is that while the consumers will have a rough ride for a bit, the onus is on the suppliers to get their act together. This allows consumers to remain complacent.
The message we would like to give, is that consumers must not wait for suppliers to increase supplies (we believe they can't), but must be proactive in developing alternative sources and promoting conservation. If IEA said forget about oil, develop renewables, it would be quite a different outlook.
Even with the IEA's fairly stern warning, I expect we will have several more rounds of calls on OPEC to increase output, and OPEC saying they are not going to. OPEC play a dangerous game with that.
BobC:
I understand what you say, but I think that what you are describing was the IEA's earlier position - flag the potential effect and urge OPEC to produce more. Now, they are saying that non-OPEC is in decline ("geological" fact), and that overall production is likely to be 12.5mb/d less than we expect it to be - in 7 years!, i.e. that it will be lower than today, unless some sort of miracle happens (ie Iran and Iraq investing massively; and SA pushing its production up).
It's even more negative than the CEOs, in my view, and pretty damn close to real PO.
Did they use the word miracle? No.
You are still reading what you want to hear, not what they said.
Well, he does say that existing production will decline by 25mb/d by 2015, and will be replaced by 25 mb/d if all goes well:
Lots of conditions for production just to remain flat... Fine, I said "miracle", but it's not really a stretch from his words.
The way I read it, he foresees declines of 25 mbd from existing fields (2/3 of 37.5), offset by anticipated additions of 25 mbd. So he sees a supply plateau, not an actual decline. But also no growth to meet growing demand (i.e. a shift in the demand curve) unless OPEC does something surprising. Peak Lite, high prices.
The long-term numbers are pure fantasy. I expect he knows that, but can't speak to it until it becomes internal consensus at IEA, so he's putting the warning into the medium-term scenarios. It's pretty easy to extrapolate from questions about OPEC's medium-term capabilities, to even bigger questions about the even bigger increases that would be required in the long term, as non-OPEC continues to decline "geologically".
peace,
lilnev
Good job BobCousins, and likewise De Marjarie of Total. If we read only a bit further into the EuroTrib article linked right here on TOD Europe, we read:
"It's quite simple in fact. Supply is constrained by lack of production capacity (whether this is because of depleted resources or, like Margeris proposes, voluntary limitation of investment by oil-rich countries, is irrelevant)."
There is a lot of "selective quoting" going on.
De Marjarie says it exactly right....some claim the OPEC nations are "holding back" on oil production. That I think, is false....but they are, as I have said in many posts, either holding back, or being very indecisive concerning investment to maintain surplus production, which does not benefit them, but simply protects the West from the risk of major oil shocks.
RC
ThatsItI'mOut
Roger Conners
You've put your finger on the problem. The strategy of the powers that be has shifted to maintain the status quo as long as possible, rather than outright denial. If the gurus and talking heads get honest the handwriting is on the wall for multinational oil companies, and the multinationals don't want to go out of business or change their paradigm so that their personal power and positions change for good.
Think about this for a bit: Everything changed with the first oil crisis in 1972
Before 1972
-major oil companies produce nearly
100% of the non-communist oil
-Only Majors have technology to drill and produce
Major oil companies can drill virtually all of the non communist world
-Russians and majors boycott each other, so markets are safe
-Majors control prices through swing capability of Texas
Now
-Multi-nationals produce less than 12% of the world production
-almost all prodction and new exploration technology controlled by geophysical and engineering firms with no interest in production (Schlumerger, Baker-Hughes Haliburton ect)
-Multinationals are restricted to less than 1/8th the potentially productive areas for E&P
-National oil companies control the products markets by petrochemical and refinery building decisions being made for political as well as profit motive
-prices controlled by demand and by investment decisions made by national companies
In other words, I'm saying the whole nature of the international oil business has changed and the former major oil companies don't control the oil business anymore. Yet our national governments in the OECD are buffaloed into believing that its true. Do you really think that the Neocons would have started the attempted conquest of Iraq if they'd thought about how the real power has shifted in the international oil business.
I might add that I started reading The Oil Drum 1 year and 27 weeks ago. I've studied the situation now for about a year and a half, but I believed like most people on the planet that the Multinationals were still people controlling the oil business. But, as I've read and thought about the problem my perception and conclusions have changed.
I think the multi-nationals are quickly accelerating on a downhill slide, and the whole integrated oil business is fixing to morph out of existance. There's a place for large independents in both the production and petrochemical/refining business and in the marketing business. So I'm fixing to sell my major company stock while the gettings good, I think CNBC noticing that the liquids production is down at ExxonMobil and ChevronTexaco is the start of the crack in the dam thats going to bring it all down.
So, ladies and gentlemen, please argue with me about this, or add your own supporting observations. My conclusion is just too extreme for me to be comfortable with, yet, there it is-the multinationals will be out of business within 10 years and the oil business so changed as to be unrecognisable.
Bob Ebersole
You appear to consider all the fancy exploration and production techniques to the province of Schlumberger et al. What about Chinese companies? They seem to be pretty capable and I wouldn't be certain they aren't or won't soon be on a pretty equal footing with the traditional big players.
Any thoughts on that? It almost seems like the usual American exceptionalism to think that you need these guys to drill sideways in 2007, but maybe so. ??
These are great charts Jerome - it would be good to see them updated to 2007. These are the guys who promise us there is plenty oil and that increased recovery factors will save the day.
Its worth noting that the production boost that bp has comes from TNK - where BP's earnings are pegged to a relatively low $ / bbl - somewhere in the 20s I believe - so they don't get much benefit from high price from this part of there production. But the fact this is a very favourable deal for Russia means that BP may get to keep it. Production growth since 04 has come from improved reservoir management and de-bottlenecking. This is one reason why Exxon are still a larger company than BP by cap.
Oilmanbob,
To use your exact words, "You've put your finger on the problem."
I think your exactly right about the decline of the oil majors, and I think you are right to take the history of the changing situation back to the early 1970's, at the American peak. So whether or not we are at Peak oil production in the world, we seem to surely be at what I have called "Peak 7 sisters productions", referencing the famous old book of the title "The 7 Sisters", a reference to the old oil majors. And no, I don't now own a single share of any of them, anymore than I own shares in the old "big 3" automakers. I think the future for both industries is now one of gradual but advancing decline, and finally, diversification out of their primary industries.
Does that mean that cars will not be built? Of course not. Does that mean that oil and gas will not be drilled? Of course not. What we are seeing is a long running process of decentralization in all industry, and it looks very much like a "great collapse". Instead, it may be a "great opportunity".
RC
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