Note that the graphs do not include any view of EROEI, or the shift to heavier crude grades.

A very important point - if we could graph such a thing it would make financial policies a bit clearer. Costs are undoubtedly coming down, but not as fast as revenues. But the data does exist on crude grades/% light sweet higher API, etc. I don't have link handy - anyone?

Figure 6 shows OPEC production rising steadily since third quarter of 2007 passing its mid 2005 (july 2005) level in third quarter of 2008.

Figure 7 shows NON-OPEC production declining since start of 2007 never reaching that level again until end of 2008. There is ofcourse a major decline then come-back near the end of 2008.

World crude oil production as shown in figure 5 is almost a balance between OPEC and NON-OPEC (I think each of them produce a half of their sum). I do see a plateau in world crude oil production since about third quarter 2007 (if we take average of production since then).

The fast rise in OPEC's crude oil production near mid 2008 is balanced by a close fall.

There seems still some potential in rise of liquid fuels' production.

On the basis of quantitive production data we can't clearly say that peak is near but on the basis of qualitative production data (all liquids are not equal, EROEI etc) we are near to peak in liquid fuel production if not passed it.

I was confused by the date in the title :)

According to "Chart 33: EIA OPEC Spare Capacity Jan. 2003 - December 2008" OPEC spare crude oil capacity began increasing in July 2008 from 1.3 Mb/d to 3.2 Mb/d. I think some of this spare capacity is sour, but the recent increase is likely light sweet crude oil. The disruption in production caused by the fire in the BTC pipeline in Turkey, Russia's invasion of Georgia and the 2 hurricanes in the Gulf of Mexico causing the dip in production in August and September 2008 can not be attributed to peak oil. Those dips drag the 2008 average down. I suspect average crude oil production plus spare capacity increased in 2008 compared to the May 2005 rate of 74.2 Mb/d. Producers got it up a little bit in 2008 making last year the most recent peak year.

Even with a new peak year, world crude oil production is still on an extended plateau since 2005.

Thanks a lot westtexas from the behalf of all of your readers for the effort of collecting, analyzing and presenting highly useful and important information. You keep me coming back to TOD :).

Last seven months of 2005 + 2006 + 2007 + first ten months of 2008 = 214 + 365 + 365 + 304 = 1248 days. 885 mb/1248 days = 0.71 mb/day. A reduction of 0.96%, worthy enough to be valued?

Good point that decrease or plateau in production at time of high energy prices is a clear sign of peak production.

Actually this is close to what I'm looking for.

In my opinion we are looking at a end of our civilization as we know it if the following occurs.

1.) Demand remains flat to slowly falling and oil prices stop falling.

2.) Demand continues its flat to slowly falling trend as prices increase.

3.) Ever increasing energy costs make it impossible to play financial games to escape our
debt bubble no matter what funny games we play with our fiat currencies more and more of our economy is devoted to energy/food security.

4.) Implosion.

This is the scenario I see if energy constraints result in the collapse of our civilization. We of course are facing a number of potentially civilization ending events
from global warming to world war so it need not be the one that takes us out but in my opinion if we get in this cycle its a death spiral we won't pull out. A strong move to renewable and alternative sources could allow a new civilization to rise even as the old one collapses but its not the same SUV/McMansion flagrant consumption society we have today and over time it would diverge significantly from our current one.
We can of course hope that a new society can emerge fast enough to replace our current one as one of the major killers we face finally take us down but ...

Hello WHT,

IMO, that is an excellent analysis. For us to have any future springboard effect to significantly launch above the 2005 annual peak and/or the '04-'08 plateau: it would also require a meaningful shift to a larger percentage of global labor force to exploration, extraction, and production, plus much more funding, too. With all the rig layoffs and credit crisis problems, it looks like that is not happening anytime soon.

Like Matt Simmons says [from memory],"The oil industry is barely held together by the thin coat of paint on the rusting steel, and the old farts are retiring faster than the new kids are entering."

I'd think your right but perhaps a technical effect underlying this may play a big role.

A big reason for our undulating plateau up till now has been intensive infield drilling and exploitation of older known resources. Generally the biggest win was via expensive lateral wells. I suspect that this activity will cut back sharply. And closely related we will probably push our fields hard now esp the older ones that are profitable at 50 dollars a barrel. Thus for larger operators that have a mix of fields with different breakeven costs it makes sense to push the profitable ones as hard as possible vs the unprofitable wells.

This is of course our "easy oil". Given that we have evidence that our underlying average decline rate for existing fields was already climbing from 4% to 6% per year it will be interesting what the decline rate will be for 2009. I'd not be surprised to see it go to 10%.

Next one would assume that when prices go higher that the effort to invest will be lower and the move to pushing fields hard will continue. Thus one would expect the rate at which production declines will actually increase. This is offset like you say by a longer tail as the extraction rate is not increased via more new wells. However one would suspect that field damage is increase or the rate of stranded oil forming via coning of wells or other effects of pushing fields will increase. This lost oil will probably offset any fattened tail effect.

As and example one would expect given Russia and say Mexico's financial situation that we could easily see both the rate of production decline faster in these two countries and the longer term total recovery decline from field damage.

The Middle East is esp interesting since it has older fields with lower lifting costs mixed in with newer developments it will also be interesting to see if this situation develops in that region.

And finally since lifting costs are often higher for the heavier grades of oil we could easily be seeing a bit of a paradox developing. Countries may preferentially push their lighter higher quality fields to maximize profits and mothball the lower quality fields. This would over the short term lead to a bit of a increase in the light sweet oil available lowering the benchmark prices but leading to a increasing heavy/sour mix longer term.

I've been of the opinion that KSA would use this time to rest Ghawar and conserver its higher quality oil but we could just as easily see economic pressure result in cutback primarily for heavier grades. If OPEC is cheating in the sense that the producers are actually cutting back primarily in the heaviest grades then we should see oil prices remain soft even as the cutbacks are finally implemented. Given what we suspect about Ghawar I'm keenly interested in hearing any news about the quality of the production that Saudi Arabia has shut in recently. It would potentially tell us a lot.

This tells us little except overall they seem to be able to successfully pass on price increases of a few dollars. I don't see any obvious attempt to curtail Arab Light which
is what Ghawar produces.

http://saudioilproduction.blogspot.com/2008/01/saudi-aramco-raises-crude...

The point is that given the importance of Ghawar to overall world exports if light oil if it does go into serious decline this single field will have a huge effect on the shorter term oil markets.

We also have similar concepts with ultra-deep water etc in short we probably have at least 20 valid "micro shocks" that are occuring or can potentially occur over the coming months and years that just about ensure that peak production has been reached.

Add in export land EROI etc etc and its a pretty safe bet that we are now on the path to declining energy and that price will be determined by the supply/demand balance.
I can't image given the long list of micro shocks that are possible and the short list of positive shocks that we can expect the surplus of oil to remain for long.

Of course we could always continue on to a full blown depression of the next year or two but I'm still of the opinion that the biggest drop is being felt right now and although our economy probably won't recover the rate of decline will slow. For example on the demand side as housing prices fall back to sanity or even cheap by historical rent/mortgage payment ratios the velocity of housing purchases will begin to pick up a bit.
Historically unemployment is a lagging indicator of recessions and we have had a steep increase in unemployment and increases in corporate bankruptcies. As the weakest companies fold the remaining vendors tend to be more resilient as long as the financial system itself does not collapse. Or probably more correctly until it does.

So on the demand side I still see no reason why we won't see demand move to steady or slowly declining at least for a year or two this implies that peak oil should play a big role in the final collapse as financial games simply cannot overcome both the huge financial bubble and rising base energy costs. I'm pretty sure both effects are needed to finally take out the world economy.

Web,

I’ll offer a side bar to your analysis of oil development (or lack there off) during this downturn. It’s the collateral effect on our NG rates which had been increasing thanks to the hyper activity in the unconventional NG plays. You may recall that I consult for one of the biggest UNG players. Just saw our new drilling schedule. During the 1Q 2009 we’re dropping 15 of our 18 rigs in the UNG trends I deal with. That decision was made last year but it takes a while to pull the plug on ops. I haven’t seen numbers from other operators but I’m sure we’re not alone in the cut backs.

With the rapid decline rates most UNG wells experience it won’t take long for NG rates to start dropping significantly. And as you point out any re-ignition of the effort won’t happen as quickly as the cut backs. We may see a disconnect between economic activity and pricing: increasing NG prices in the face of continued demand destruction. An economic turn around might only aggregate that situation.

There might be some debate as to whether the recession increased the velocity of PO or not. But I suspect in the next 24 months or so we might have proof that the recession brought on PNG in the US.

What better example than the addition of Alaskan oil to U.S. production. Billions of barrels from Barrow gave us a nice hefty "bump" in the production curve, and served to make the tail a bit fatter, but it did absolutely nothing to reverse the overall decline already in evidence at that point. IIRC, it didn't even get us back to the all-time peak in U.S. production, never mind above it.

Shifiting our perspective for a moment, as always, I must remind people to look at the system as a whole. Resource consumption, pollution, growth in population, growth in industrial production, all of these factors are contributing to our ongoing global ecological overshoot. As the human race continues to hit hard biophysical limits then all of these factors will go into decline, if they haven't peaked already.

The only question in front of us now is can we manage that decline in a way that mitigates the pain, or will we allow it to be an all-out chaotic, brutal, and bloody collapse like so many other civilizations have done before us?

Cheers,
Jerry