Oilwatch Monthly June 2010

The June 2010 edition of Oilwatch Monthly can be downloaded at this weblink (PDF, 1.24 MB, 33 pp).

Figure 1 - Mexico Crude Oil (Energy Information Administration) and Liquids (International Energy Agency) production January 2002 to May 2010

The Oilwatch Monthly is a newsletter that is available free of charge with the latest data on oil supply, demand, oil stocks, spare capacity and exports.

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Latest Developments:

1) Conventional crude production - Latest figures from the Energy Information Administration (EIA) show that crude oil production including lease condensates decreased by 107,000 b/d from February to March 2010, resulting in total production of crude oil including lease condensates of 73.41 million b/d.

2) Total liquid fuels production - In May 2010 world production of all liquid fuels decreased by 570,000 b/d from April according to the latest fgures of the International Energy Agency (IEA), resulting in total world liquid fuels production of 86.31 million b/d. Liquids production (that is crude oil production, plus production of various other liquid fuels, such as natural gas liquids and ethanol) for April 2010 was revised upwards in the IEA Oil Market Report of June from 86.62 to 86.88 million b/d. Average global liquid fuels production in 2009 was 84.94 versus 86.6 and 85.32 million b/d in 2008 and 2007.

3) World oil production capacity - Total oil production capacity in May 2010 decreased by 590,000 b/d compared to April 2010, from 90.29 to 89.69 million b/d. World production capacity is measured here as the sum of world liquids production excluding biofuels plus total OPEC spare capacity excluding Iraq, Venezuela and Nigeria.

4) OPEC Production - Total liquid fuels production in OPEC countries decreased by 30,000 b/d from April to May 2010 to a level of 34.23 million b/d. Liquids production for April 2010 was revised upwards in the IEA Oil Market Report of June from 34.24 to 34.26 million b/d. Average liquid fuels production in 2009 was 33.7 million b/d, versus 36.09 and 35.02 million b/d in 2008 and 2007 respectively. All time high production of OPEC liquid fuels stands at 36.4 million b/d reached in July 2008 -- the month oil prices were highest.

Total crude oil production excluding lease condensates of the OPEC cartel decreased by 30,000 b/d to a level of 29.02 million b/d, from April to May 2010, according to the latest available estimate of the IEA. Average crude oil production in 2009 was 28.7 million b/d, versus 31.43 and 30.37 million b/d in 2008 and 2007 respectively.

OPEC natural gas liquids remained stable from April to May 2010 at a level of 5.21 million b/d. Average OPEC natural gas liquids production in 2009 was 4.67 million b/d, versus 4.47 and 4.55 million b/d in 2008 and 2007 respectively.

5) Non-OPEC Production - Total liquid fuels production excluding biofuels in Non-OPEC countries decreased by 580,000 b/d from April to May 2010, resulting in a production level of 50.05 million b/d according to the International Energy Agency. Liquids production for April 2010 was revised downwards in the IEA Oil Market Report of June from 50.63 to 50.45 million b/d. Average liquid fuels production in 2009 was 49.67 million b/d, versus 49.32 and 49.34 million b/d in 2008 and 2007 respectively.

Total Non-OPEC crude oil production including lease condensates decreased by 18,000 b/d to a level of 42.34 million b/d, from February to March 2010, according to the latest available estimate of the EIA. Crude oil production for February 2010 was revised downwards in the EIA International Petroleum Monthly of June from 42.43 to 42.36 million b/d. Average crude oil production in 2009 was 41.61 million b/d, versus 41.32 and 41.80 million b/d in 2008 and 2007 respectively.

Non-OPEC natural gas liquids production decreased by 30,000 b/d from February to March 2010 to a level of 3.43 million b/d. Average Non-OPEC natural gas liquids production in 2009 was 3.34 million b/d, versus 3.65 and 3.79 million b/d in 2008 and 2007 respectively.

6) OPEC spare capacity - According to the International Energy Agency total effective spare capacity (excluding Iraq, Venezuela and Nigeria) decreased from April to May 2010 by 50,000 b/d to a level of 6.06 million b/d. Of total effective spare capacity, an additional 3.75 million b/d is estimated to be producible by Saudi Arabia within 90 days, the United Arab Emirates 0.30 million b/d, Angola 0.21 million b/d, Iran 0.28 million b/d, Libya 0.15 million b/d, Qatar 0.14 million b/d, and the other remaining countries 0.5 million b/d.

Total OPEC spare production capacity in May 2010 dereased by 50,000 b/d to a level of 5.25 million b/d from 5.30 million b/d in April according to the Energy Information Administration. Of total effective spare capacity an additional 4.0 million b/d is estimated to be producible by Saudi Arabia, the United Arab Emirates 0.30 million b/d, Angola 0.15 million b/d, Iran 0.10 million b/d, Libya 0.15 million b/d, Qatar 0.25 million b/d, and the other remaining countries 0.15 million b/d.

7) OECD Oil Consumption - Oil consumption in OECD countries decreased by 168,000 b/d from February to March 2010, resulting in a consumption level of 44.52 million b/d. Average OECD oil consumption in 2009 was 43.92 million b/d, versus 46.10 and 47.68 million b/d in 2008 and 2007 respectively.

8) Chinese liquids demand - Oil consumption in China decreased by 13,000 b/d from February to March 2010. Resulting in a consumption level of 8.73 million b/d according to JODI statistics. Average oil consumption in China in 2009 was 8.05 million b/d, versus 6.92 and 7.29 million b/d in 2008 and 2007 respectively.

9) OECD oil stocks - Industrial inventories of crude oil in the OECD in April 2010 increased to 1023 million from 1002 million barrels in March according to the latest IEA statistics. Current OECD crude oil stocks are 55 million barrels higher than the five year average of 968 million barrels. In the May Oil Market Report of the IEA, a total stock level of 1022 million barrels was tabulated for March, but this has been revised downward to 1002 million barrels in the June edition.

Industrial product stocks in the OECD in April 2010 increased to 1424 million from 1400 million barrels in March according to the latest IEA Statistics. Current OECD product stocks are 16 million barrels higher than the five year average of 1408 million barrels. In the May Oil Market Report of the IEA a total stock level of 1412 million barrels was tabulated for March which has been revised downward to 1400 million barrels in the June edition.

Figure 2 - World liquids production January 2002 to May 2010, IEA statistics in purple, EIA statistics in red.

Figure 3 - World Crude Oil Production January 2002 to March 2010, statistics from the Energy Information Administration.

Figure 4 - IEA OPEC Crude Oil production & Spare Capacity January 2003 to May 2010, Spare Capacity statistics in purple, Production statistics in red.

Figure 5 - EIA OPEC Crude Oil production & Spare Capacity January 2003 to May 2010, Spare Capacity statistics in purple, Production statistics in red.

Figure 6 - OECD Crude Oil Stocks January 2002 to April 2010.

Figure 7 - OECD Oil Product Stocks January 2002 to April 2010.

Figure 8 - Angola Crude Oil production January 2002 to March 2010.

Figure 9 - Indonesia Oil & Liquids production January 2002 to May 2010, IEA statistics in purple, EIA statistics in red.

Thanks, Rembrandt!

A few things I would point out to new readers:

1. World fuel production, whether defined as "crude oil" shown in Figure 3, or more broadly, as Liquids (including natural gas liquids, biofuels, and other crude-oil extenders), shown in Figure 2, has been on a bumpy plateau since 2005.

2. Economic activity tends to follow crude oil production, even with respect to the small ups and downs seen recently. For example, the depths of the recession was in the early part of 2009, when oil production/ consumption was lowest. The highest production ever was in July 2008, when oil prices were highest, before the credit contraction started to fully kick in.

3. Oil production / consumption is still at a level which is down from the July 2008 peak. This would tend to correlate with many people's perception that the economy is still not back to where one would expect it to be.

Can anyone think of a test for causality?

Are extraction rates controlling economies or are economies controlling demand?

Intuitively I feel that we are in a transition.
The dog used to wag the tail, soon the tail will wag the dog.

Very good question. As long as we continue to use heuristics then we will have problems with evaluating causality.
Heuristics do not actually describe anything but the way in which way the data is currently trending -- it will always flop in the wind.
So you can't even begin to tell if the dog is wagging its tail or the tail is wagging the dog without some sort of model to aid in our understanding.

And when someone does try to model something, they have this idealized view that we have some sort of deterministic outcome based on everyone behaving the same way. Well, it never happens that way, and disorder, randomness, uncertainty, and entropy decide how things will actually play out. Yesterday, JoulesBurn wrote a TOD post that described a model to predict the likelihood of relief well success. That was a good post because it gives an idea of how we should think about things -- probabilistically and not within the constraints of a predetermined outcome (and I am not talking stock market crap). I specifically mention this because the Oil Shock Model also works completely in terms of probability and you can tune the average rates to ask these kinds of questions concerning plateauing of peak or perturbations in the extraction rate.

As another example, I found some interesting data yesterday from the MMS web site concerning oil reservoir size distributions in response to a question someone had. Well we do have a probability model which describes the rate of formation of reservoirs, leading to the characteristic shape, of very few large reservoirs and very few small reservoirs. This shape also mimics the Species Abundance Relationship that I posted on TOD: http://wwww.theoildrum.com/node/6255

So yesterday, I had finally noticed that the MMS analysts had plotted the reservoir size distribution in exactly the same way that evolutionary ecologists have been doing it. This graph shows how well a simple model of entropy-driven dispersion results in exactly the characteristics we observe.

This is pure causality because the model describes the relentless forces of nature. We don't wag nature's tail, it wags us. That is how we need to think about these questions.

We also need to shift to a systems thinking model with mutual-causality or circular thinking.

The oil production and oil demand systems are large, interconnected, and have quite a bit of storage. For this reason they tend to oscillate.

Instead of thinking causal (oil -> economy), think of two bumper cars with one car towing the other by bungee cords.

What I feel is shifting is the net energy available to society. As that drops, we will see the non-oil economy contract, and the oil economy grow (just look at Texas vs the US GDP numbers) to be a larger percentage of the overall economy. But the elastic band ties them together. Texas tries to speed up, the car it is pulling slows down. Texas gets dragged backwards, the rest of the economy will get boosted a bit. And the cycle will continue. But overall, the energy side of the economy must become a larger part of the overall economy to follow the net energy curve down.

Plus, if the net per unit energy is dropping faster than the energy supply is growing (or faster than the energy usage is becoming efficient) then the whole economy must contract. Graphed, I expect it will end up looking like a Spiro graph toy drawing. Orbits within orbits, with the overall pattern following a net energy curve.

What you describe is still determinsitic causality. Instead what I suggest is aset of bungee cords all at different resonant frequencies (bungee chords?).
The set of chords will follow some distribution defined by entropy considerations. That turns it into probabilistic causality which is the way the world actually works, and the only approach to making reasonable predictions.

But is probabilistic causality a real world "thing"? or is it something that is useful in modelling the real world (when it is aggregated in a certain fashion for a model)?

I can understand deterministic causality in the real world, and I can see what probabilistic causality might mean in a model, but I can't understand what it would mean in the real world (excepting quantum mechanics, and I can't understand that either),

Peter.

All causality implies is that one thing causes another. Even in terms of mutual causality something has to trigger it. In some ways using the word causality doesn't really add anything to the discussion unless we are trying to describe how we analyze a problem. So if you were trying to solve the equation, x^2+y^2 = 1, it would in a sense be non-causal because you solve for x and y at the same time, as one term doesn't "cause" the other.

So yesterday, I had finally noticed that the MMS analysts had plotted the reservoir size distribution in exactly the same way that evolutionary ecologists have been doing it. This graph shows how well a simple model of entropy-driven dispersion results in exactly the characteristics we observe.

This is pure causality because the model describes the relentless forces of nature. We don't wag nature's tail, it wags us. That is how we need to think about these questions.

Oh brother....this is really getting out of hand Web.

Take a gander again at that curve. It essentially maps out the probability distribution of reservoirs over 5 orders of magnitude and it works everywhere that the statistics of reservoir sizes are sufficiently large in count.

Here is how it works for the UK North Sea

http://mobjectivist.blogspot.com/2008/10/dispersive-discovery-field-size...

Scoff if you may but I will keep pushing this as an elegant analysis as long as we see all these other crazy people posting junk science and hack engineering solutions.

Scoff if you may but I will keep pushing this as an elegant analysis as long as we see all these other crazy people posting junk science and hack engineering solutions.

Scoff is the wrong word. But your comments on the value of some of the models you post and use has me concerned, because I have never heard you mention where you publish these things. Do they make it into peer reviewed journals on a regular basis?

No way will these findings ever get into any journal. There is really no such thing as a multi-cross-disciplinary journal that would suit the topic. I can barely even find anyone else that wants to get out of their own discipline's comfort zone. People occasionally ask me this, and I posted a stock response a couple of weeks ago:

Which brings up a valid point I have heard directed my way. From my postings on TheOilDrum.com, commenters occasionally ask me why I don't publish these results in an academic setting, such as a journal article. To answer that, journals have evidently failed in this case, as I never find any serious discussion of dispersion unification. So consider that even if I submitted these ideas to a journal, it may just sit there and no one would ever apply the analysis in any future topics. This makes it an utterly useless and ultimately futile exercise. I will risk putting the results out on a blog and take my chances. A blog easily has as much archival strength, much more rapid turnaround, the potential for critiquing, and has searchability (believe it or not, googling the term "dispersive transport" yields this blog as the #3 result, out of 16,200,000). The general concepts do not apply to any specific academic discipline apart perhaps applied math, and I certainly won't consider publishing the results in that arena with out risking it disappear without a trace. Eventually, I want to place this information in a Wikipedia entry and see how that plays out. I would call it an experiment in Open Source science.

This is really an experiment I am trying out with the internet. We will see how it goes.

BTW, not to say I don't publish in other areas, but this topic is pure moonlighting and an adrenaline rush because the breakthroughs are huge. Just look at the time of this posting if you don't think I am jazzed about these concepts.

No way will these findings ever get into any journal. There is really no such thing as a multi-cross-disciplinary journal that would suit the topic.

Exactly the sort of stuff you do shows up in Mathematical Geology all the time. Not using your favorite curve fitting routine, but spot on to the type of stuff you have been doing.

If economies are restricting demand, then the price of crude oil would be low. If a limited rate of extraction is controlling economies, then the price would be high (oil price shock). Under some circumstances, a swing producer can intentionally reduce production to force the price up which OPEC is currently doing.

My hobby is history, especially 20th century military history. Do you foresee rationing in the future? I suppose higher prices and less supply are a form of rationing, but then the poor/middle class folks would eventually vote for a different system IMHO. I just wanted to talk about the WWII stuff. I have a snippet from one Cecil Adams that makes much sense. He was responding on a website much like here. Rubber from the Indies was in short supply and synthetics were in their infancy. We had Texas oil. Maybe near peak Texas oil?

"Dear Bob:

Poorly. Actually, gas wasn't what they were rationing at all. The main purpose of the restrictions on gas purchasing was to conserve tires. (And you thought those bureaucrats were stupid.) Japanese armies in the Far East, you see, had cut the U.S. off from its chief supply of rubber.

There were four rationing classifications. An "A" classification, which could be had by almost anyone, entitled the holder to four gallons a week. A "B" classification was worth about eight gallons a week. "C" was reserved for important folk, like doctors, and the magic "X" went to people whose very survival required that they be able to purchase gasoline in unlimited quantities--rich people and politicians, for example.

Rationing was handled through the federal Office of Price Administration. To get a classification and rationing stamps, citizens appeared at the OPA office in person and swore to the high heavens that they (1) needed gas desperately and (2) owned no more than five automobile tires (any in excess of five were confiscated by the government). Each driver was given a windshield sticker that proclaimed his classification for all the world to see. Theoretically, each gallon of gasoline sold was accounted for. The buyer surrendered his stamp at the point of purchase, and the vendor forwarded the records to the OPA.

Gas rationing began on a nationwide basis on December 1, 1942. It ended on August 15, 1945. Speed limits were 35 MPH for the duration. For a short time in 1943, rations were reduced further and all pleasure driving was outlawed.

— Cecil Adams"

Rembrandt still follows blindly the EIA numbers for spare capacity: about 6mbd from OPEC from which almost 4 mbd from KSA.
Saudi Aramco is looking for oil deep under the Red Sea, just to increase their production capacity in the future. Not necessarily signs of desperation in his opinion.

Can anyone else see a problem with deep sea drilling,or is it just me?
Han, if I saw wooden derricks in the desert I would be reassured that there is plenty of easy oil.

Rembrandt still follows blindly the EIA numbers for spare capacity:

I am not sure Rembrandt believes those numbers any more than you or I do. He quotes them simply because that is what the EIA and IEA quote. Those are all the numbers we have. There are no other "official" numbers. But I would like to hear his true opinion.

I believe there is some spare capacity in OPEC but I am not sure how much. I think that a as of February 2009 OPEC had over 3 million barrels per day of spare capacity. They have increased production by about 1.2 mb/d since then and they have also had some decline.

My guess would be that OPEC has about one million barrels per day of spare capacity right now.

I would love to hear other guesses from anyone who has an opinion.

Ron P.

I find the OPEC numbers quite questionable as well. If you look at chart 68 it shows that SA has decreased production ~1.5 MBPD since the peak in the summer of 2008. However chart 58 shows that they have increased spare capacity by 3 MBPD. This would indicate that SA has increased total production capacity by 1.5 MBPD during a period of relatively low oil prices and while they were maintaining a low quota to prop up prices. I'm not saying it couldn't have happened, but it doesn't seem likely to me. I know they had some investments in the pipeline, but I don't buy the argument that they are currently mothballing over 30% of their total capacity unless this is very heavy and low value oil.

Specifically, KSA peaked in Jul 08 at 11227.17 kb/d, and were at 9872.41 kb/d in Feb 10, for a full shut-in figure of 1354.77 kb/d. Add to that the Khurais megaproject, with its 1.2 mb/d of added production, and Bob's Your Uncle as they say. Here's an article by Gregor MacDonald on Khurais. Matt Simmons says the last reported production number for the field from previous decades was ca. 150 kb/d, in the early 80s. Armaco have done an "extreme makeover" on it with millions of gallons of seawater being piped across the desert to inject into the field. Whether that is working out for them no one knows.

There have been other Saudi megaprojects as well, the Nuayyim Expansion for one, bringing on a further 100 kb/d.

There have been other Saudi megaprojects as well, the Nuayyim Expansion for one, bringing on a further 100 kb/d.

KLR, that's not much if they really lose 0,5-1 mbd yearly from mature fields, as one SA official have said.
Moreover, a lot of people doubt that Khurais will ever produce 1.2 mbd. More realistic seems 600-800 kbd.

That is their natural decline rate, which they temper down to 2% with field management. The supposition about Khurais is just that. Who knows? I was just explaining where these numbers are derived from.

But I would like to hear his true opinion.

Ron, a few months ago I had send Rembrandt
an e-mail with some remarks/questions.
He tries to defend EIA numbers. Replied that 70-80 $ oilprices are probably needed for OPEC's statebudget. Doesn't answer on my remark that that has changed quickly since 2004-2005. And he wrote that Saudi Aramco looking for oil in the Red Sea doesn't have to mean that they are desperate.

Some net export/import charts to go with the production charts for Mexico & Indonesia. Net Oil Exports are calculated in terms of Total Petroleum Liquids and are equal to domestic production less domestic consumption. A positive number makes a country a net exporter, a negative number makes them a net importer. The US has been a net oil importer since 1948.

Regarding Mexico, as David Shields predicted, their production decline and net export decline actually slowed down in 2009.

Mexico’s Net Oil Exports (EIA, through 2008):

Indonesia’s Net Oil Exports/Imports (EIA, through 2008):

As tensions around Gaza are mounting, it is worthwhile looking at net oil imports of some of the countries there including Egypt with a population of 80 million.

More here - I am building up a library:

Net oil imports
http://www.crudeoilpeak.com/?page_id=1571

Similar plots are available from the Energy Export Databrowser which allows users to quickly peruse the latest BP Statistical review country by country and resource by resource. It is important to have easy access to this information as it helps one put the situation in countries like Egypt into perspective.

Yes, Egyptian oil exports have followed the classic Export Land curve where rising consumption eventually overtakes falling production, turning an exporting nation into an importing one. But sometimes, as in the case of Egypt, this shortfall is made up by access to another fuel like natural gas. Using the controls on the Databrowser you can generate plots using common units of 'million tonnes of oil equivalent' (mtoe) and compare the historical trends in oil and gas.

This is not to say that Egypt doesn't have liquid fuels supply problems -- it does. I just think it's important to point out that oil is not the only energy story out there. Measured in mtoe, Egypt currently produces and consumes more gas than oil. It's current gas exports are almost as high as their peak in oil exports and gas production and exports are set to climb further. The interesting energy headlines in Egypt these days have more to do with natural gas than with oil:

Egypt eyes doubled exports by 2013, Jordan deal agreed

CAIRO (Reuters) - Egypt aims to boost its exports to Jordan and some Gulf countries as one step towards a goal of doubling its global exports by 2013, the country's minister of trade and industry said on Tuesday.

Middle East and North Africa - Meeting Gas demand

While not on Qatar’s giant scale, Egypt has emerged as a significant LNG exporter, as well as a supplier of gas to other parts of the Middle East. Three LNG trains are currently in operation: the 5 million t/y Damietta plant, built by Spain’s Union Fenosa, and two 3.6 million t/y trains operated by the UK’s BG Group.

Although the oil story is compelling, we need to pay attention to the total energy picture.

Happy Exploring!

Jon

Although the oil story is compelling, we need to pay attention to the total energy picture.

BP production figures don't include biofuels, nor do they include details for separate product streams, except in their regional consumption section. Chief appeal of Stat Review for me is the span of time it covers, but EIA AER data expands in many instances on what is available from the main body of data - why historic data is in the AER but not elsewhere is a bit baffling, but I've built up my own spreadsheet of EIA International Stats to work with, and mean to expand its data with that from the AER.

Cantarell has ceased crashing; Mexican production is slightly up since Nov. Mexico's May Crude Numbers Show Output Stabilizing - WSJ.com. Mexican consumption contracted 50 kb/d in 2009, too, mostly resid and LPG - industrial applications.

http://www.energybulletin.net/node/51953
Interview with David Shields—update on Mexico and oil
Mar 15 2010

SA: Your oil minister Georgina Kessel has been quoted as saying that Mexican oil production will level off this year. Do you agree with that?

Shields: I don’t agree. Production may level off momentarily, either now or at different times in coming years, but I think the trend will continue to be downward. I basically agree with the analysis in the very good article by Roger Blanchard in your publication. He thinks Mexican oil production will fall by about 5% annually over the coming years. I think that is basically correct and what I would expect. It may be less or more than that in some years; it is not necessarily a linear thing.

I think the biggest problem Mexico has is that this is a country with some giant oil fields that are now either all mature or declining, with the exception of Ku-Maloob-Zapp. And KMZ is basically at its highest level right now, producing over 800,000 barrels a day. It’s not clear how long it will be able to keep up that production—maybe two years, and at best 5 or 6 years.—so there is a field that will soon join the decliners. And we have not had any major discoveries for a quarter of a century. Some of us believe that it could be feasible to find other major oil fields in Mexico, if you drill much further down or if you go further out into the Gulf of Mexico, but that hasn’t happened yet.

A quick way to guesstimate the point at which a net exporter slips into net importer status is to simply extrapolate the rate of change in consumption as a percentage of production. Mexico was at 52% in 2004 and at 67% in 2008. Extrapolated out, this method suggests that Mexico approaches net importer status around 2015, which is a little later than a lot of us were thinking, and it is closer to the time frame that David is talking about.

If we look at Indonesia, their consumption as a percentage of production was at 52% in 1996 (appears to be final production peak) and at 70% four years later, in 2000. Extrapolated out, this suggests net importer status in 2005; they became a net importer in 2004.

If we take the 2005 to 2008 data for Saudi Arabia, (18% to 22%), it suggests that they approach net importer status around 2031, which is consistent with Sam Foucher's work.

David Shields has also pointed out that development of the Chicontepec field is, well, to summarize, not worth the effort. However appears committed to spending a great deal of money to get a marginal amount of new oil.

May 10, 2010

FEATURE: The Chicontepec show will go on

Mexico's state oil company Pemex is continuing to maintain the importance of the Chicontepec field, even in the wake of a new report from upstream regulator CNH that said Pemex should step back from full-scale drilling at Chicontepec.

Whether Pemex finds itself at odds with suddenly having to answer to an authority, however, the two are at least fundamentally in agreement about Chicontepec. The show must go on.

"The Chicontepec project will move forward until a new government takes up the topic and asks whether it is prepared to continue. Pemex is being allowed to move ahead with this even though different people may have reasons to be unhappy," Mexican energy expert David Shields told BNamericas.

http://www.bnamericas.com/features.jsp?idioma=I&sector=9&documento=1087294

ok the last step up puzzles me - are these mega projects comming online . the tip upwards from 2009 needs explaining to me sorry becasue I thought we'd be on our way down now the other side of the peak oil slope ......

Forbin

In September or October 2008 OPEC began restricting production to force the price of crude oil up to their chosen range, ~$70 / barrel. OPEC has some spare capacity remaining, but the spare capacity is probably less than the amounts claimed by the IEA and EIA. The reduction in production beginning in August 2008 and continuing to the present is a reduction in demand. The spare capacity of Iraq, Nigera and Venezuela is ignored. Therefore production can rise by some unknown amount. Global crude oil production is still on a plateau and has not started down the falling edge yet.

It will be interesting to see how crude oil production in 2010 follows the 2005 path, including hurricanes etc. Both 2005 and 2010 were black swan years (Katrina and Deepwater Horizon)

For Australian readers and all those who are fighting against new toll-ways:

10/6/2010
Brisbane Motorists bypass the Bypass Tunnel
http://www.crudeoilpeak.com/?p=1482

It seems to dawn on some people that something is wrong with oil. When I showed the US peak oil graph with the GOM oil sitting on the backside as shown here:

30/5/2010
GOM oil after the US peak
http://www.crudeoilpeak.com/?p=1508

to a car mechanic at a workshop a lady waiting at the counter saw it and exclaimed: "Oh, shit". Never happened before.

Rembrandt,

Does your report still contain a chart of oil exports? I scanned through it but I don't see one. (I must admit I have not looked for several months). I am curious if exporters are using less oil during the recession, or if they dipped, but not as low as the importers. (which is my expectation).

Thank you,
-Jon

Biggest gains in consumption for 2009:

		
China		369
Iraq		71.21
Iran		68.43
Saudi Arabia		54
Hong Kong		52.52
Korea, South		41.58
Algeria		32.65
Middle East		32.34
Argentina		28.1
Vietnam		20.88
Qatar		19.13
India		18
Turkmenistan		16.68
Azerbaijan		15.22

Producing nations who are primarily dependent on oil revenues wholly ignore recessions, oil shocks, etc. Don't change their tune at all. Other parts of the world in the 80s quickly curtailed using fuel oil, and had dips of varying length in other streams as they switched to more fuel efficient vehicles etc. But the Middle East just blithely went along. You can see this quite easily by charting the Regional Consumption data in the Stat Review.

Disclosure: Mexico/FSU/UAE all contracted, -50.59/-66/-89.52 kb/d respectively. But these are all rather diversified economically, compared to the producing nations who gained for '09.

I've started to alter my view in respect to this plateau, from the idea it would last until 2012 then oil production would drop off, to thinking this plateau will last much longer than many here anticipate.

The reason why, is because for all the conjecture on SA descent from their peak they continue to produce at a high level. If the Saudi's have been pumping oil since 1948 or is it 1951 and there still has been no appreciable drop off, then why should we presume there will be in the near future? Sure, it will happen at some point, but just like Mexico which has now stabilized their production with new wells, why wouldn't the Saudi's also be able to do the same thing? By the same token I don't see any concrete data to show a drop off of Russian oil in the near term - just assertive projections.

Oil production seems to be churning along quite easily under current demand. Brazil's sub-salt hasn't even come on line yet, let alone starting tar sand operations in the Orinoco should demand spur that need, increasing Alberta tar sands production and increasing ethanol. As long as the economic machine to supply demand with (all) oil is in tact, I think the plateau will be held for many more years past 2012, up to a max. of about 2020.

You have what I call a "dead reckoning" mindset. A kind of heuristic that says the data will track according to a recent set of values. That one is built into our conscience. However, if done incorrectly, errors build up and it no longer works.

A model exposes everything that you do not see.

People wonder where the Dead of Dead Reckoning comes from. The true origin is unknown, but one reference said that Dead is what happens when you use it at sea and you end up plowing into something and sinking the ship.

See my comment at the top of the thread, because this is the entire point of modeling, trying to come up with some better way of navigating uncertain waters.
bean counting in your head as you are trying to do just does not cut it.

bean counting in your head as you are trying to do just does not cut it.

What proof do we have that SA or Russian oil production will suddenly fall off in the near term? Sure, there are all sorts of graphs based on educated guesses, but where the rubber meets the road they keep pumping at high levels.

Even Gail suggests the possibility that Brazil sub-salt could have 1/2 a trillion barrels. Could Alberta production be increased? Could the Orinoco be utilized?

I don't think it's just plain dead reckoning like shooting an arrow at a target, but rather the consistent manner in which oil is making it to the marketplace. The big elephant oil fields are still pumping hard.

It may turn out I'm wrong. 2012 could arrive with some bad news attached, but its really not that far off at this point. Just a year and a half until it begins and we are so certain the descent from peak plateau will begin in earnest? That to me seems like dead reckoning, like dead on arrival.

The observance of diminishing returns over time covering all previous discoveries statistically guarantee that we will not see any kind of rebound. This is the law of dispersive discovery which I contend is every bit as valid as something like Ohm's law or the 2nd law of thermodynamics. The problem is that geologists and engineers in this field have never shown any interest in pursuing this kind of research. Granted, dedicating a life of research to studying constraints may not be the best career move and good for maintaining a sunny outlook, but you would think somebody would do something more substantial than hand-waving, dead-reckoning, or a similar kind of heuristic.

If we start bringing in other sources of oil like tar (Orinoco) and sands (Alberta), then we ought to separate those sources from crude and come up with additional data sets in which we can apply the model. Just like Ohm's Law has the principle of superposition, no doubt that we can apply it to alternate sources; and then we can apply EROEI, etc as needed. The goal is to be systematic and treat the problem analytically.

Oil production seems to be churning along quite easily under current demand.

Reported oil production. As far as real production levels we don't have a good handle on what the numbers might be.

For storage levels for example the EIA is a running total systematic error can introduce large discrepancies over time.
If the storage number are wrong then its fairly obvious the production numbers are probably wrong.

Let me give you and example.

9) OECD oil stocks - Industrial inventories of crude oil in the OECD in April 2010 increased to 1023 million from 1002 million barrels in March according to the latest IEA statistics. Current OECD crude oil stocks are 55 million barrels higher than the five year average of 968 million barrels. In the May Oil Market Report of the IEA, a total stock level of 1022 million barrels was tabulated for March, but this has been revised downward to 1002 million barrels in the June edition.

Here we see the claim of 1023 million barrels and 55 million above the five year average in storage. Yet the revision for march was 20 million barrels or about 50% of the excess.

Assuming that stocks have a 5% error then you get error bars of about 50 million barrels.

If there is systematic error towards the upside which seems to be the case since revisions are almost always downwards then you could be off by as much as 100 million barrels.

That would suggest a market thats not well supplied but not yet in the danger zone and suggests that there is real pressure on oil prices i.e the market is getting oil just bids are competitive. This fits fairly well with the price action with it seems a robust floor.

Thats storage who knows for sure what demand really is since if storage might be off then it percolates back through both the demand side and the supply side. How much each is off is open to question. Its non trivial to try and figure. On the demand side US VMT can be used as a proxy for demand and at least in the US demand is now fairly healthy. For China and Asia its a good assumption that in general demand has not fallen dramatically. Overall demand seems to be fairly flat globally. Its absolute level is difficult to know.

Next through most of the year we have had claims of massive quantities of oil stored offshore in floating storage with a wall of oil going to show up any minute and smash prices. Well certainly some was stored offshore exactly how much is anyones guess. 150-400 million barrels. Well guess what the pundits have disappeared no wall of oil and no one is talking about floating storage anymore.

Any oil offloaded from floating storage was coming from previous production which means daily production was lower than imports indicate.

And of course you have export land and the potential for inflated consumption claims to hide falling production.

If you get the feeling that we probably don't have a good handle on exactly where we are vs oil supply then your finally on the right track. Absolute production levels are even worse globally a negative 5mbd error in absolute levels is not unreasonable it could well be higher. A positive error is probably unrealistic as it would have lead to a price crash for sure.

Thus in the end the real situation for oil is almost certainly less rosy then whats reported the situation is more strained and the fairly robust price floor for oil supports this. How strained is almost impossible to know for sure. Given that oil storage levels are probably overstated and that ELM is probably working to reduce exports and outright declines might be playing a role then in the end we won't know until someone somewhere starts having problems getting oil.

Our oil gauge is almost certainly broken and stuck to the high side but how broken is very difficult to determine and as with a car everything will run along just fine until it does not. You just have to watch for signs that problems are increasing.

This is a fantastic site to get a feel for what the real situation might be.

http://www.energyshortage.org/

You have to go there regularly to get a feel for the global situation Pakistan always has problems for example. Same to some extent for Africa but it seems to have gotten worse lately. My take is that supplies are now somewhat problematic again in the third world.
You really have to read it on a daily basis as there are always problems in the third world however after a bit you can start to notice trends with reported supply problems doing a fairly good job of tracking price changes. They basically move from crisis to crisis but you notice that as once country solves a crisis another one enters. My model is whack a mole for third world supply. We have had a persistent supply problem in the third world for some time now and it seems to be getting steadily worse.

We are not at 2008 levels yet but it seems to be heading in that direction fairly quickly.

So my final conclusion from looking at a variety of data is that oil supplies are problematic just not yet bad enough to cause obvious price strains but this changes fairly quickly you can go from ok to in bad shape over a matter of weeks. It all depends on what the real numbers are.

Interesting line of thought and thanks for the link, memmel.

"Our oil gauge is almost certainly broken"

This is my strong suspicion, too.

On the other hand, to the extent that it has some relation to reality, fig. 3 (which should be fig. 1, since, as explained many times "Total Liquids" is a sham, intended to mislead) shows that we are now six years into plateau, since it was this time in '04 that we first reached the level we are now at.

I certainly never thought the plateau would last this long. Did others?

The bigger point is that even a plateau poses serious problems for a world economic system dependent on ever larger quantities of fuel. For a while, natural gas and some other alternatives can take up some of the slack, especially in areas where oil has been used for regular or back up electricity production.

Once those low-hanging-fruit adjustments are made, harder changes confront us. We could rapidly reduce domestic use of gasoline with a variety of speed laws, carbon taxes, other fees for car use, carpool programs, encouragement of transit, bike and walking. But very little is being done in most of the country in this direction that is commensurate to what the situation calls for (both the PO and the GW situations).

No, instead, it will be reduction through more brutal means--"demand destruction" which really means destruction and disruption of lives, communities, cities, countries...

The bigger point is that even a plateau poses serious problems for a world economic system dependent on ever larger quantities of fuel.

I agree with the economic implications of peak plateau and with those regarding post plateau descent. I just don't think the descent from plateau will occur in 2012, but many years later. Sure, I understand the plateau has been ongoing since late 04, but keep in mind the whole system to bring oil to the marketplace took many decades to reach the point it is today. So I just think it's premature to be so certain of an exact year like 2012. Seems like it will be much later.

Keep in mind Matthew Simmons who made his bet for this year of 200 dollar a barrel oil, and will now almost certainly lose face and pay up. So betting on the future is a tenuous business.

It seems like the concensus on TOD is 2012 for the descent and I'm questioning that year. It's only 18 months away. Seems like a short time for the descent to start and I wouldn't want to see TOD lose face like Simmons. It might be better to speculate on a longer time frame.

Good points. Exact timing is always tricky. Too much static in the system. As has been pointed out, statistical probabilities are the best way to couch these things anyway--say, a 50% prob. that descent will begin in 2012, 20% for before, 30% after? (These not based on anything but WAGs, mind you.)

say, a 50% prob. that descent will begin in 2012, 20% for before, 30% after?

Now probabilities I can go with. 20% before? Wow!

How about 5% before, 25% in 2012 and 70% after.

That's not the best way to think about it. You run a model and it will generate the most probable estimate. The real value may be on either side of that but the variance of that estimate is not as important as getting the likely value out there for people to chew on. The variances don't help too much for planning purposes.

You can go overboard with this stuff as well. I have heard weather forecasters who predict a 50% chance of rain tomorrow, but then say that forecast is only 70% accurate. That doesn't help you at all for planning because the 70% accuracy is meaningless.

That's not the best way to think about it.

...forecasters who predict a 50% chance of rain tomorrow, but then say that forecast is only 70% accurate

You used an example of compounding percentages, however my post did not, and is very easy to understand.

It's ok Web if we have different viewpoints. If you are certain 2012 is the year world oil production drops from plateau, that's fine. I admire your willingness to stand by that conviction, albeit a small window for such a momentous event. I just don't see it that way. But we can agree to disagree.

I think it is just a matter of hedging your bets. If you are doing something by an intuitive feel, it is OK to put percentages on different outcomes. That is just what I would call a "mental model".

If you actually have a real model, the variances on the result have more to do with either the statistics (the number of measurements contributing) or to uncertainty in the parameters. These will get filtered through the model and you will get some result describing the most likely outcome and perhaps a spread around this if you care.

I did the statistical study for Dispersive Discovery a few months ago.
http://mobjectivist.blogspot.com/2009/12/monte-carlo-of-dispersive-disco...

For one set of input parameters and Monte Carlo sampling contributing to varying amounts of discovery, the exact peak date turned out best described by this Normal-like distribution:

Notice the most likely outcome, and a large spread around that value.

But that is a distribution of hypothetical discoveries. We already know that the majority of discoveries have already occurred, and so we can use Bayesian approaches to update our model and reduce our uncertainty quite a bit. This is what I said in the post:

Even though a substantial spread exists in potential outcomes, we have to consider that most of these have occurred in the past and we should discount negative results in any future projection. In other words, since nearly half of those that show large variance in peak date have occurred in the past, we can eliminate the possibility that an alternate history will put the actual peak much beyond the next decade. One can justify this argument by simply considering adding Bayesian priors and running the Monte Carlo from the current date. I believe that this spread in outcomes has probably contributed (along with unanticipated reserve growth) to the usual problem of jumping the gun at predicting a peak date.

Note that doing this kind of exercise explains why all those analysts have always jumped the gun in their predictions. It really comes down to a case of updating Bayesian priors. New data always hold the possibility for pushing things into the future, yet the best estimate is always based on the information you have on hand. In other words, you will only be right one time, but you can be wrong multiple times. The idiotic cornucopians have never figured this quite obvious fact out!

This is a pretty interesting topic, but I thought I would contribute because I actually went through some fairly significant analysis in quantifying this uncertainty. I came to the conclusion that the hedging of uncertainty is not quite worth the effort in comparison to the strength of the model itself. Cripes, no one has even done anything like dispersive discovery.

As a caveat, if we started looking at a new resource constrained energy source, we would definitely have to start with lots more leeway for uncertainty.

If you are doing something by an intuitive feel, it is OK to put percentages on different outcomes.

Yes, it is intuitive, and it was arrived in that manner due to the numerous variables relating to when such an event like post peak plateau descent might occur. My experience in life has been that you can use every technical source of information available, but if there are a number of variables, and some of those are unknown, then analysis alone will not produce an accurate projection. At some point you get a sense of what is right and what is probably wrong.

Once the presumption seemed to reach a point of the 100th monkey on TOD it was easy to presume the truth of 2012 as the year of descent. However, joining the group doesn't make it any easier when the answer turns out to be different.

For example I was under a different moniker when there was the hundredth monkey bit going on with how high the price of oil would go. I had an opposing viewpoint which was discounted, ignored and rejected, which was that the economy could not handle a price for oil of 200 dollars. Yet at the time there were many that thought it was possible the price could go as high as between 500 & 2000 a barrel. So my position seemed odd, yet the position that the economy could not handle a 200 price per barrel was borne out when it plummeted from 147 to 30 something.

Simmons bet a bunch on 200 a barrel price in 2010. At the time of the bet it seemed like a distinct possibility, but he will in all likelihood lose that bet. So what seems so certain one day can turn out to be very much different a year or two later.

Goodnight one and all.

It doesn't seem all that useless. 50% chance of rain + or - 30% gives you a range on the probability of rain. If you work outside bring both rain gear and sunscreen...like just about every other day where I live in the summer ?- ) The forecast pretty much tells you to expect anything which is a lot than saying it will dump on you all day or that the drought will continue to parch you.

The predictions for the length of the liquids production plateau looks a lot like your hypothetical weather forecast at the moment. If people don't understand the variance the models results can yield they will discount the model as worthless if it the time frame it picks comes and goes without a the downturn expected.

Well if you assume that production numbers are highly political then peak oil could have started any time after the first obvious increase in oil prices. It makes sense that if oil production is increasing that the peak oil price rise would be after peak.

That does not preclude demand induced price rises if potential demand grows faster than supply but the probability of a peak oil even grows after prices start increasing.

http://inflationdata.com/inflation/inflation_rate/historical_oil_prices_...

http://inflationdata.com/inflation/images/charts/Oil/Inflation_Adj_Oil_P...

Thus the first year of potential peak production would be the last year before we saw a significant and sustained price increase.

Thus we could have hit peak production in the 1999-2003 time frame.

The probability of peak production would then be from lets say 2000 onwards to make the math easy.

Now given that how wide can peak be ? Can we go 20 years on a plateau ? I doubt it peak is peak intrinsic decline will eventually ensure falling oil supplies.

If you agree that price increases are then a reasonable indicator that peak production was in the past its been ten years since we had cheap oil and a growing economy.

If one includes the upslope pre peak i.e look at before peak one should see cheap oil and oil supplies still growing well before you hit peak. Lets put that at 5 years pre peak oil supplies are still bountiful with reasonable growth.

If you assume peak at 2000 and a pre peak well supplied market of five years thats 15 years in the past.

If you put peak at say 2012 or 2015 with a post peak decline that would give you till 2020 or a 25 year peak event.

I'd argue that thats pretty ridiculous peak oil takes almost as long as half the oil age itself. Thats 1980 to 2005 to give you and idea.

I seriously doubt peak oil is a 25 year event. The cheap oil pre peak ramp period if fixed easily the length around peak has to be less than 25 years.

Assuming that pre peak is well pinned then it makes more sense for "peak oil" to be a five year event or so. With say two years of cheap oil on one side of peak meduim priced oil on the other and rising prices post peak.

The latest reasonable date for peak is say 2005 which means now five years later we should be looking in our rear view mirrors at peak oil it should already be obvious.

Yet according to published numbers its not.

Using price data alone to locate peak we should be basically 10 years post peak and in obvious decline.

If one assumes that extreme drilling managed to offset declines well fine but your entering serious depletion after a while assuming that extreme drilling really took off say by 2004 then thats almost six years keeping production up with ever greater depletion.
Again it becomes increasingly untenable.

So what is the probability that published numbers are correct ?

I'd argue pretty dang low and rapidly approaching zero.

If the numbers are wrong then they probably have been wrong for a while.

If they are right and we are "pre peak" then again we can still do a decent job of pinning the start of the peak period back in 1995 with several years of obvious growth left and assuming symmetry and no signs of decline yet we have 15 years. Given the public number its reasonable to assume even longer at this flat level so lets say 18 years with symmetry the peak period would then be 36 years or
2028 before we reach 1995 production levels.

Given whats happened is 2028 before peak oil is obvious really believable ?

I don't believe it.

So determining when we had not reached peak oil is pretty easy with prices as long as they where low then we where either pre at or slightly post peak at worst prices would have started increasing once noticeable decline had taken place. Spare capacity and some efficiency gains say in refining and usage could have easily kept prices at least flat for some time. Expanding from that period till now and claiming peak is still in the future is simply in my opinion impossible way to much time has past.

Thus not only are people lying about oil production by now they are lying their asses off. Indeed by now whats published and the truth would have diverged so much that its impossible to tell the truth. The divergence would simply be too large.

So we are either in the midst of the lie of the century or the peaking of world oil production is such a slow drawn out affair that its practically a non-event taking almost forty years before its even a real issue. To much time has passed for any other answer its now one or the other.

I realize that you have problems with dyslexia, Memmel, but have you ever considered reducing the size of your comments? Making it longer just makes the problem worse. Every sentence you write has a 50/50 chance of being correctly interpretable. So when you have 100 of these sentences, the probability of me making it through without getting stumped is
(1/2)^100 = 0.0000000000000000000000000000001

which is very low odds.

Just saying .. as this is how probabilities work.

Its mathematically impossible for the published oil production numbers to be correct. Can't happen.

First off, everything involves reasoning under uncertainty, since we can't rely on any one set of numbers for crude oil data. By definition, the best you will ever get is a most likely value.
Second, you approach it from as many different angles as possible and come up with a consistent set of results. You look at discovery curves, you look at reserve curves and then production curves -- these all have to convolve together and make consistent sense. Throw in reservoir size distributions and you get more substantiation. At some point we have no holes left in our model and the extrapolation will turn out plenty accurate.

And I am not sure what point you are trying to get across, so I filled in the blanks.

Work it backwards take the claimed production profile and figure out the reserves/production required to get it.
No way it works. Its impossible now.

As usual you have no analysis to back that up. Your BlogSpot has one post and that is on on CO2.

LOL I should have known you where baiting me :)

No I just figured it out in this thread indeed in the post.

How much math does it take to figure out a 20-30 year symmetric plateau peak does not make sense ?

You would have had to have had at least a double peak discovery profile.

It seems to me that the "real" data is making a mockery of your model indeed all peak models.

So either your model is rubbish or the data is rubbish.

The political data reported here has the plateau with a new potential peak in production several years into the future.
This is with Non-OPEC rising and OPEC sitting on substantial spare capacity depending on demand any peak simply is still not close.
I'd argue with the short term data the earliest for a low peak close to today is 2015. Or we are not even close to the real peak and its even farther out and higher. Symmetry requires force you to mirror the past into the future so the longer we remain near the current level the longer the plateau will extend into the future. For all intents and purposes your now looking at at least a 30 year peak event.

No matter what the fit with the various peak oil models based on reserve estimates your included has obviously failed.

Thus your the one with the problem not me :)

How much math does it take to figure out a 20-30 year symmetric plateau peak does not make sense ?

You would have had to have had at least a double peak discovery profile.

That makes sense. There is only one discovery peak. The most important model must be the one with the giant fields production as a base. The other one by the way gives the same result: world oilproduction starting to decline somewhere between 2012 and 2018.

There is only one discovery peak.

True. The problem is, it was in 1935. And isn't even included in the discovery graphs most often used in the peaker community.

The problem is, it was in 1935. And isn't even included in the discovery graphs most often used in the peaker community.

It was in 1965, the only one used in literature about 'Peak oil'. 1930 was the peak discovery year of the lower-48 with peak production 40 years later. 1965+40=2005.

It was in 1965, the only one used in literature about 'Peak oil'.

Just because one peaker or another says it, does not make it true. Look at all the nonsense about the bell shaped curve being the production profile for an individual well. Not even junk science, just incoherence.

But I do know when global discoveries peaked. 1935. Standard Oil made the discovery, with the Le-Canada-1.

According to Rise University anyway. If I find a better source, I will update the date. But as of now, it stands at 1935. I checked once, and I'm pretty sure it agree's with the IHS database, so I'm happy with the year.

Just because one peaker or another says it, does not make it true.

Googling 'oil peak of discovery' gives almost nothing else than 1965 for the world. I shouldn't have gone in debate with an idiot, as also your comment about EROEI proves.

Googling 'oil peak of discovery' gives almost nothing else than 1965 for the world. I shouldn't have gone in debate with an idiot, as also your comment about EROEI proves.

It is unfortunate that google has replaced thinking for oneself and some basic fact finding in the modern world. If google can't find it, obviously it must not exist.

How TPTB must love google, you don't even need to make things disappear, you just have to make sure that some half baked google search can't find it.

Perhaps you would like a real journal reference as a clue?

It seems like the concensus on TOD is 2012 for the descent and I'm questioning that year.

If there is concensus on 2012 it must be based on the fact that 'deep offshore production' is projected to decline steeply from that year on. Recent 'big discoveries' like offshore Brazil coming too late to the rescue. Remains the uncertainty what happens in Iraq and what a few other countries like Russia can do.

Broken oil gauge:

Usually, production should be different from month to month. But following countries very often report unchanged production levels over many months, suggesting that just previous data are repeated:

Algeria, Angola, Iran, Kuwait, Libya, Saudi Arabia, UAE, Venezuela

I certainly never thought the plateau would last this long. Did others?

dohboi, I did. There are still a lot of megaprojects, though from small fields compared to the giant fields, coming on stream every year. In the model based upon giant field production, the decline starts somewhere between 2012 and 2018. Best case scenario is 2018, if undeveloped supergiants (most in Iraq) start to come on stream in the coming years and if total production from mature (super)giant fields doesn't fall of a cliff soon. Worst case is 2012, moreover because 'peak deep offshore production' is projected at 2012.

Well put.

There is also another additional factor that I have recently realized is becoming a problem again. By reviewing various tanker shipping reports, it appears that oil tankers recently have been taking longer to get to their destination. There are multiple reasons for this - but mainly it is because (1) tanker routes are being lengthened mostly to the Far East, and some even further to the West coast of the US and (2) the cost of tanker fuel. In case TOD members have missed my other posts today, apparently more tankers are being forced to use higher quality fuel - which is of course more expensive. This results in tankers operating at a slower speed to save fuel costs. They also operate slower as the price of fuel in general rises, thereby creating a kind of positive feedback loop.

Although inventories are generally counted from tankers when they offload or get into port, if all tankers slowed just one day that may result on shipments of very roughly 50 million barrels being delayed. So before long the end result is that land inventories will be drained by 50 million barrels just by shipping changes.

Of course my estimate is somewhat wild, but my point is that so called excess inventories can disappear rather quickly with just a minor change in supply.

By reviewing various tanker shipping reports, it appears that oil tankers recently have been taking longer to get to their destination.

Another point for declining EROEI.

Another point for declining EROEI.

Good thing that EROEI doesn't matter than, eh?

Mexican production has stabilized because Cantarell is no longer in a nosedive. This was easily foreseen, rare is the field that completely crashes down to zero, rather more likely it would follow a pattern akin to other big offshore fields.

The Orinoco is in Venezuela, not Brazil, as you seem to imply. Ca. 500 kb/d is being produced out of the Orinoco already. Others have speculated about crash programs for heavy oil - Hirsch et al wrote one about the Canadian resource. Even foregoing any environmental constraints they see a limit on its production, and as it is less and less money heads up there. That would be the flipside of demand destruction - with reduced prices there is no longer any impetus to invest in these expensive resources, and to make up for their absence demand must continue to contract - also investment in existing production will dry up - remember the IEA's conclusions about decline rates.

The Orinoco is in Venezuela, not Brazil, as you seem to imply.

Actually I was referring to the Orinoco as a potential tar sands site (which from your post appears to be in productions) and Brazil as a sub-salt deepwater site that is yet to come on line.

However, my biggest question is still out there on this, and that is how can we be certain of Saudi oil or Russian oil as to when it might descend? Fact is, we really don't know.

They've been producing the Orinoco for about 15 years now. This very detailed doc, published I'm not sure when - about 2000? - forecast about 660 kb/d by now: The Orinoco Heavy Oil Belt in Venezuela (or Heavy Oil to the Rescue).

How's that working out in reality, Hugo style? UPDATE 1-Venezuela Orinoco upgrader output rises to 82 pct | Reuters

MATURIN, Venezuela, June 2 (Reuters) - The four oil
upgraders in Venezuela's Orinoco heavy crude belt are running
at about 513,000 barrels per day (bpd) or 82 percent of
capacity, up from 70 percent a month ago, an official said on
Wednesday.

The upgraders convert tar-like oil from fields adjoining
the northern edge of the Orinoco River into exportable crude.
Three of the facilities had to be stopped last year due to
faults,

"The situation is normal. Production at the four upgraders
is some 513,000 bpd," Pedro Leon, a director at state oil
company PDVSA, told reporters on the sidelines of a heavy crude
conference in the OPEC country's eastern city of Maturin.

625 kb/d for max output. Hey, socialism/nationalism works! Hugo's 6 hour long improvised TV appearances must've bored people so much they did some infill drilling to escape the tedium.
Heavy oil isn't quite the same thing as tar sands, either. California oil is awfully heavy stuff, for instance. I'd like to chart what Canada and Venezuela's output would be sans oil that isn't heavily degraded and/or embedded in a matrix of powdered rock, as both nations rebounded from previous peaks with these uncoventional assets.

Russian megaprojects 2009-2015, kb/d:

570
250
585
150
60
120
15