I work in the industry and follow several of the independent producers. One thing I have noticed is that many of these companies are now focusing on more oily unconventional shale plays. The Bakken is the big one, but they seem to be working on proving up others. The Niobrara shale in NE Colorado and SE Wyoming seems to be getting a lot of attention. EOG has a position that I think they call the Barnett Combo that must be in the oil leg of the Barnett shale. The Eagleford shale in South Texas also seems to be getting a lot of attention lately because it has a lot of liquids associated with its gas (higher BTU content gas). There are lots of potential shale's out there and many of these companies are focusing on the ones with higher liquids content because natural gas prices are weak (partially because of the success of all the shale gas plays).

Another oil play that must be pretty significant, but does not get the attention that the Bakken does is the Spraberry (now called Wolfberry) in West Texas. The Spraberry was once considered the biggest un-economical oil field in the world, but of course that has changed in the last four or five years, and consequently, there have been thousands of wells drilled in this play over that time.

Obviously the Spraberry is not going to bring Texas back to its original peak production (as I am sure "westexas" will point out if I don't) and obviously all of these shale plays won't bring the US production back either, but as the recent data suggest these plays must be making a dent.

This is my latest graph:

http://www.crudeoilpeak.com/?p=1149

Not bad, Ron. It looks like we're wringing out the last drops from US sources now. How rapid is the decline predicted (if it is) from US fields? How long will the US remain at its current levels?

Craig

Raindog, I am unsure whether you are really serious or just being sarcastic. OPEC, all OPEC, was producing flat out in July of 2008 when oil prices hit an all time high. They are currently producing 2.48 million barrels less. Since then there have been some additions come on line but likely just as much, if not more, decline.

Saudi Arabia brought Khurais on line but their old fields are declining at an alarming rate. Saudi Arabia

One challenge for the Saudis in achieving this objective is that their existing fields sustain 5 percent-12 percent annual "decline rates," (according to Aramco Senior Vice President Abdullah Saif, as reported in Petroleum Intelligence Weekly and the International Oil Daily) meaning that the country needs around 500,000-1 million bbl/d in new capacity each year just to compensate.

Five OPEC nations are still producing flat out, at or higher than they produced in July 2008. In fact Angola reached a new all time high last month (January 2010). If all OPEC nations were to start producing flat out I doubt seriously that combined, they could exceed the level they reached in 2008. In fact I think they would be producing considerably less.

The spare capacity figures by the EIA and the IEA are pure fantasy.

Ron P.

Dog -- looking at the non-OPEC production data it seems like there's really only two possibilities. With the non-OPEC producing every drop of oil they can we should be very thankful to OPEC for holding back and letting us reap the rewards of current high prices. And I do mean high. I doubt very little of the non-OPEC production was drilled years ago with such expectations. It shows remarkable (and highly uncharacteristic) discipline on their part. Of course, holding back production and supporting higher prices certainly doesn't help the world economy to recover. Which should be a goal of OPEC that would allow a return to BAU and thus increasing demand for their crude. If this is the explanation then as a domestic producer of oil I should really put these folks on my Christmas card list as an indication of my appreciation.

OTOH, maybe that estimate of spare capacity is a tad high. But I can offer one possible explanation for just the KSA to be holding back: they should be able to see the diminishing capabilities of other OPEC producers and foresee a day when the KSA alone controls the price of oil. Beyond the revenue aspect consider the political power they might have when that day comes.

Here's what Wiki says:

In an effort to improve air quality, the city placed restrictions on construction sites, gas stations, and on the use of commercial and passenger vehicles in Beijing.[20] From June 20 through September 20, passenger vehicle restrictions were placed on alternate days depending on the terminal digit of the car's license plate. It was anticipated that this measure would take 45% of Beijing's 3.3 million cars off the streets. The boosted public transport network was expected to absorb the demand created by these restrictions and the influx of visitors, which was estimated at more than 4 million extra passengers per day.[21]

2008 Summer Olympics - Wikipedia, the free encyclopedia

What percentage of overall Chinese demand is wrapped up in Beijing's drivers and backhoes? It all seems a bit too steep to be accounted for, I should run some numbers on consumption in US cities. Might learn something about the extent of the recession in China as well.

A related observation is that there is a price above which people are motivated to invest in alternatives, and can somewhat afford to do so, and there is a higher price above which so much economic damage is done that societies can't afford to invest in much of anything. If that band is too narrow we are in worse trouble than if it is wider.

What will end it? A necessary (though perhaps not sufficient) condition would be that petroleum ceases to be the largest source of energy for global civilization. The effects on the economy would also end if/when other sources of energy grow faster than petroleum declines. That's of course leaving out a lot of complicating factors...

zaphod42:

This is a variation of the peak demand argument and actually probably the best version I've read so far. The claim is of course that prices will be stable where they are now for years if not decades. Extending this is the assumption that although prices won't go high the force of economic contraction aka falling demand somehow will spur alternatives to allow for growth.

I'd call it the Little Red Riding Hood economic model. Demand flexibility and underlying price support needed to spur production will result in a price thats just right for the current economy even if this means a bit of demand decline. However this demand decline is steadily building potential demand for alternatives like EV's that will allow the economy to begin growing again even as oil production declines.

Its certainly a very interesting model. And of course one can argue that currently the long term futures market support this model. The Saudi's with tons of spare capacity have the ability to manage oil supplies to support this fairy tale model via spare capacity thus it has to be true.

Now that was not a slip saying its a fairy tale model because thats exactly what it is. If anyone of the components that make up the model are false then the entire thing fails.

1.) 70-80 is a fair price and will spur development of new oil production to offset declines.
2.) Oil Demand is very flexible and retreats rapidly above a certain price point.
3.) Saudi Arabia has ample spare capacity and the price is high enough they will maintain it.

Well lets look at history.

1.) Oil prices rose from 30 a barrel to 140 over a number of years and production remained relatively flat even as prices increased.

2.) After the sharp fall in prices during the height of the financial crises they have risen steadily even as unemployment and a large range of economic indicators have remained weak to negative i.e a jobless recovery. Also looking at the report supposedly oil production has steadily increased. No matter how you slice and dice it the truth is that OECD demand changes have had little effect on prices through most of the time period. Attributing the price collapse to intrinsic demand in the OECD is simply wrong. Fear of the end the world drove prices it was not a rational price change related to supply and demand. Rational if you think we are headed for the stone age but not rational if you thought we would survive. Of course once it was clear that the world was not coming to and end then price rose. Of course it takes time for smashed markets to recover and of course in the midst of the crises it just so happens that production exceeded demand allowing substantial quantities of oil to be stored that would later help temper the price increase.
Of course it just happened to work that way right ? So now back to demand well at no point in the progression of events has OECD demand clearly been a driving factor in oil prices. Its not to date and probably not in the future regardless of what its real level is. Economic crisis in the OECD shaking the foundations of our economy certainly can and will have and effect on prices in the future but the next time around it could just as easily be a rapid devaluation of their currencies as they are no longer seen as a safe haven.

3.) Saudi Arabia has not once in almost a decade convincingly increased production to a level that had any long term impact on oil prices. The one exception is perhaps continuing to pump oil beyond the level needed for the shocked demand during the crises resulting in a build in offshore storage before finally perhaps cutting back to "support" prices. Certainly I think there is some truth in that how much as unknown. My best guess is the sequence of events was actually different as prices rose over 70 they actually started storing oil taking it off the market spurring even higher prices than would have naturally occurred then only after the US just happened to spark the banking crises with its meddling later in 2008 and problems where starting to mount did they release the stored oil back on the market driving down falling prices even further. So yes I think they did flood the market but the sequence is obviously important.

I've included my counter arguments for the fairly tale model simply because its become so common few look at alternative explanations.
But even without my own interpretation its I think obvious that at no point did the model work with all its criteria met. Its been incorrect since its inception. You don't have to consider alternative explanations to prove its false since the published facts don't support the model.

And last but not least I say published facts because at some point I'd assume that the fact that oil prices are touching 80 right now simply does not square with whats reported in this article. At some point one has to think that blaming speculators betting on a rapid recovery will ring hollow and just perhaps its time to consider that there might just be a small chance that the truth is different from the "official" facts ?

I guess oil is going to have to hit 100 a barrel with all the official numbers claiming everything is over the 5 year averages and plenty of spare capacity from OPEC before people finally wake up and consider that things might not be as claimed.

To a large extent I don't really care people can believe in fairy tales it makes no difference however if I'm even close to right about what the real situation is at some point and not to far out into the future the fairy tale will be forcefully unmasked as the lie that it is. Care to guess the price of oil if we have such a rude awakening ?

Thats one of the most beautiful things about the real world and that is eventually if your lying the lies catch up with you and you have to pay the piper. From a larger perspective the US has lied to the world for almost 50 years thats obvious looking at our various imbalances. Sure we "got away" with it but in the end we are going to pay. Oil is no different and in fact since its a consumable commodity the length of time you can bluff is much shorter. We are not in a fairy tail economy but on the verge of the biggest margin call in history. My opinion is oil will be one of the first but its not the last by a long shot as we have 50 years of IOU's to deal with and once the margin calls start they are not going to stop.

Looking back at the past then 140 dollar oil and the financial crises was nothing more than a warning or tremor the earthquake is coming.

Nothing been fixed nothing works the current theories about are economic situation are bogus etc etc. The chances of the real situation with oil being as claimed are zero. When faced with the warnings in 2008 all we did was double done split and double down again moving to a command economy model to hide the losses aka Soviet style. You want to play Soviet economy fine but your going to eventually play the final round of that game and we know how that ended. Realistically however thats not the game we are playing certainly its inspired by the Russians but its called Roulette.

You reading way too much into the data.

All data has a stochastic component. You're confusing noise with signal.

The game is over and Canada has pounded the Russians into submission. Ovetchkin never saw open ice.

You are correct, I should have compared the same categories. I saw the NGL's in ace's first chart and thought it meant all-liquids.

At any rate, I wonder if ace is still willing to maintain his prediction in the other thread:

Do you think that non OPEC-12 crude oil, lease condensate and oil sands production has passed its peak five years ago in 2004 at 42.1 mbd?

My answer to that question is, No.

I am hoping for expensive oil to finally put an end to the little construction (mostly now it is the govt funding it to dole out jobs) that is still going on. I am really happy when it`s over $80 now (it often is) and am cheering for $90-$100 soon. We are definitely seeing a slow rise in prices and I think $100/bl by summer. It is just an intuitive guess. Maybe that will cause another crash---maybe in China as some are predicting----shortly thereafter, who knows. We can only hope. We all want the oil god to just go away, I`m sure, and bring us back the sun god instead!

-I think global crude oil production is still on an extended plateau, and am uncertain when the falling edge will arrive.-

I think if you put a line of best fit through that top graph, i'm betting a slow decline from 2005 onwards will be shown. Your plateau appears to be subsiding i'm afraid.

You could be right. It could be an extended plateau because the OPEC oil fields appear to decline more slowly according to this Upsala University Peak Oil group study.

I think the plateau will be extended in part due to Saudia Arabia's efforts to maintain production. Iraq could also make a difference.

Still, if the world is losing 4 million barrels of daily production each year, that requires a new Saudia Arabia every three years.

I don't think tar sands and shale oil and even Iraq stand a chance against erosion of the base of production. .

indeed

End as in end of the argument rather than doomerville....

ain't no doomer myself

double post .....

By that logic I don't believe you would have predicted, in the year 2000, that U.S. production would have remained essentially flat for the coming decade.

How much oil have you discovered?

Web -- I would readily agree with you re: oil discovery. Though some of the trends are old and fairly worn out we have essentially the same type of petroleum provinces as seen around the world. But production profiles between the US and the rest of the world may not appear as similar. See my post above for details if you're interested.