Wow, the combination of total liquids data from the EIA and IEA is just poetic. The US energy department reports total liquids reaches an unquestionable new peak (just ignore the other line showing crashing production created by the man behind the curtain). World wide demand must be crashing. I now must side with those predicting declining oil prices for the next year and probably two. With production capacity up over that period and demand falling, the inelastic nature of the demand curve should take over unless the Saudi’s cut production millions of barrels a day. Peak oil is unquestionable here as existing field depletion continues in an environment of inadequate investment.

Or then again, maybe it's tomorrow. Just because it hasn't happened yet doesn't mean it's not going to happen for a while. This month could have the highest production of all time. We just don't know until after it's happened.

It may be a way off if you feel the July 2008 records will be surpassed in the future. We now have new records in the rear view mirror. Time will tell if they stand. The global "recession" or whatever you want to call it will likely hold down demand for a while, perhaps allowing the July record to stand for some time to come. How long? Who knows...

The data here is all total liquids. When people talk about a peak in 2005, the data they're usually using is conventional crude oil plus condensate. That said, even that peak was busted slightly this year.

It remains to be seen whether the "peak" of July 2008 remains standing from the perspective of C+C production. There were other "peaks" that came and fell after May 2005. The following chart is from the latest Monthly Energy Review (EIA) which, like the IPM product, periodically gets readjusted with new data. Some of the earlier months that beat May 2005 have subsequently been reigned back, so we will just have to wait and see what the future holds and whether the values for May and July 2008 remain higher than the peak of 2005.

It's possible that, in the grand scheme of things, July 2008 is just a final spike in the struggle for ever increasing production (notice the average oil aquisition cost for the month also spiked) before the prices brought the struggle to an end with the ensuing cascade of issues.

It is also worth noting that the US $ has gained dramatically in the past several months compared to the €. On the basis of the €, the cost rise has not been as dramatic, though the same type of trend is visible.

Link to the larger version of this image: http://farm4.static.flickr.com/3275/2966690637_67a86ec0e4_o_d.jpg

Just remember, it's not over, 'til it's over (and then it may go on for several years beyond that).

The Starship Trooper

Beechcraft (Raytheon) Starship 2000

Figures 1 and 2 are based on September data and Figure 5 is based on July data.
When September data is released, figure 5 will be down too.
With the World economy sliding down the canyon, peak oil has already occurred.
Now there will not be enough investment to drive up production any higher.
By the time the economy recovers, we will be on the downward cliff for oil production.
Without sufficent increase in future supply, growth will not go up again.

@marcosdumay

Figure 1 and 2 are until September 2008, figure 5 is until July 2008, that explains the difference.

From mamba's statement that PO is "way off" I suppose we're back to defining what PO actually means to each of us. It seems to fall into two general categories: 1) Maximum sustained production rate beyond which decline is inevitable. 2) That point in time when maximum production rate cannot meet global demand. At the moment (or even since 2005) if the oil producers of the world could not increase production rate beyond a certain level regardless of demand then definition 1 would apply. Global demand destruction, either from the price spike or the current financial meltdown, has delayed the negative impact of PO as defined by definition 2.

I don't think the two definitions are entirely incompatible. Producers may not have been able to significantly increase production beyond levels established in 2005 and were thus about to go into a somewhat steady decline (or an undulating plateau for a while). OTOH, take an extreme scenario where the world goes into a prolonged recession where demand remains below an ever decreasing production capability for the next 30 years. Thus definition 2 would apply and PO (or more precisely its negative effects) would arrive sometime beyond 2040 or so. But if using definition 1 PO arrived, perhaps, several years ago. In fact, one could argue that a decline in demand would hasten the arrival of PO: decreased demand = decreased price = decreased exploration = decreased development of whatever reserves are remaining untapped. Regardless of how much or how little crude oil the world demands, producing fields will continue to decline. Perhaps at a slower rate but does not increase their ultimate recovery or their maximum flow rates.

Maybe that’s a distinction worth discussing: the point in time when the negative effects of PO are felt. In fact, if global demand were always below maximum production capacity, the physical limits of production capacity would be of little relevance. Of course, that’s not where the world is going in the long term. There is also an additional caveat which can confuse the issue: the negative effect of PO arriving before the physical PO arrives. Depending upon the discipline of the OPEC members we may shortly see what could be called an “artificial PO”. Should OPEC voluntarily reduce production rates to a level below world demand we would see increasing prices and negative global reactions just as if the exporters had maxed out their production rates.

@khebab,

The decline from August to September is caused by mainly:

(in kb/d)

Iraq -140
Angola - 100
Iran - 130
US - 1240

Rembrandt

Just eyeballing the charts it looks like Non-OPEC oil production took about a 1.75 mbpd hit from July to Sept. That's a heck of a drop. I wonder if the traders are taking that into consideration, yet? How much of that was U.S.?

@bikerboyOR

Thanks, switched figure 15 to the proper Graph of China.

As was explained on TOD many times, the problem is not the size of reserves. Therefore the availability of reserves is a poor metric for peak oil monitoring purposes.

According to the Hubbert logistics curve, peak of conventional oil production occurs when the recoverable reserves, both known and unknown, are somewhere around 50% depleted. Therefore the peak occurs when the other half of the recoverable reserves is still in the ground. This is a lot of oil remaining in place, including a large quantity that is still to be discovered.

The problem is the flow rate. There is a three way race between the depletion rate of aging fields, the discovery end development of new fields, and the growth of oil demand resulting from global economic growth. The combined effect of new developments and depletion of existing fields is a flow of oil extracted from the ground. The target for this flow is to achieve a rate that is sufficient to match the demand. Finding the point in time where there is permanent failure to do that is a big part of what peak oil study is about.

The economics of oil are such that the easy fields are put in production first and the hard ones come next. As the depletion of the easy fields progresses and demand continues to grow, it is harder and harder to put new fields in production at a satisfactory pace. In other words keeping ahead in the race is getting tougher every year.

The question is when will the oil industry permanently fall behind in the race. This is asking when the difficulty of new oil fields development becomes so great that the industry turns permanently unable to grow production fast enough to meet the cumulative pace of depletion and growth in demand. When this happens, the negative impacts of the peak are felt in full force. This is why peakists put much more efforts in monitoring the flow of production than in monitoring reserves. This is a much better indicator of the peak.

So you are correct to point out that there are large and not so large oil fields yet to be found but this is not the question. The question is how long can we maintain a flow rate that meet demand? When we dig into the details this is a much more complex question than "is there still oil in the ground?" although the latter is part of it. And the answer we got so far is we have been unable to grow production significantly since 2005 but in 2008 we still managed to keep ahead because demand has been declining.

Technologies can be brought in to help keep up with the race. BSE could be one of them but I don't have the expertise to offer an opinion. Technologies do what they are meant to do but they don't change the fundamentals of the three way race I mentioned above. At best the industry can keep growing production a few more years and reach a higher peak before the terminal decline starts. But this also means there is less oil in the ground when the peak is reached while demand had some extra time to grow higher. Therefore there is a faster and steeper descent after the peak has been reached. This is not a good thing. Extending the time before the peak with new technologies is not the best strategy. It is much better to invest in post-peak mitigation.

However there is a Binary Seismo-Electromagnetic (BSE) technology which uses new physical mechanism for creation the direct response from hydrocarbon deposits. It can significantly mitigate statistic data cited above because BSE success rate is more then 75% for wildcats with discovering commercial pays. Or to put it another way, failure rate is 25% only (one well in four drilled). So, new method is at least in three (3) times more effective then conventional methods. The BSE survey can find and outline at list 75% of all reserves in any region before any drilling is done or it can add 25-30% reserves in old provinces. www.binaryseismoem.weebly.com

hahahaha, another geophysical majic bullet. Sorry to burst your bubble, but this is classic snake oil salesmanship.

I think that there are very few regions of the world where exploration is economic at $65/bbl--at least with current drilling costs.

Cornhole? It appears exactly the opposite to me. Rapidly rising prices were the result of the need to eliminate demand, As evidenced by the some thirty or more countries which had resource riots or upheavals in the last couple of years. When the price finally got high enough to limit demand in the worlds biggest demander, economic turmoil created enough demand destruction that prices finally started back down again.The turmoil continues. While there were many other issues relating to the economic crash, it seems amazingly coincidental that it was exactly that type of maelstrom which finally got the price down about 1 month after it hit $147.

My opinion is that the internal strife is the main cause of declining oil production. Couple of years ago I made a long comment on Nigeria in which I opined that things were very bad there and likely to get worse. They did get worse. Is there any shred of evidence to suggest that conditions in Nigeria will get better? None that I know of; hence, I think that if Nigeria's production continues to fall it will be due to worsening social and political disorder and increasing violence rather than a geological peak.

When I count my blessings, I include the fact that I do not live in Nigeria.

Actually, Bruce, there's very little diesel connected with the production of ethanol. The farmer will use about one gallon of diesel for every one hundred gallons of ethanol, and you'll use, maybe, two gallons of diesel in the transportation of same one hundred gallons.

Most of the fossil fuels used are from nat gas. It won't be very many years, though, that most of the process energy will come from gassified biomass.