The Oil Drum: Europe

(New readers, click "there's more" below for the whole article...)

Global Total Liquids production and oil price, January 2002 to present. Production data from the IEA, data files supplied by Rembrandt Koppelaar. Monthly average WTI oil prices from Economagic.

With oil reaching $135 / barrel, Oil Drum readership exceeding 30,000 unique visitors per day and many wild stories circulating in the MSM as to why oil prices are so high this post strives to explain why oil prices are rising exponentially:

• Supply and demand
• Decline of older fields
• Declining net energy and energy density
• New mega-projects
• OPEC spare capacity
• Peak exports

[ED by PG] Hit reddit/digg and send this to the other linkfarms fresh today, let's get Luis some more eyes for this re-post.

As a sequel to CERA’s report Why the "Peak Oil" Theory Falls Down -- Myths, Legends, and the Future of Oil Resources, Dr. Peter Jackson was given a guest editorial in this month’s edition of the Journal of Petroleum Technology, entitled Peak Oil Theory Could Distort Energy Policy and Debate. This article ends with this sentence:

We invite others to join in a considered dialogue that now seems too easily lost in the rancor.

Compelled by these words some reflections follow regarding Dr. Jackson’s arguments and understanding of the Hubbert’s Peak.

ED by PG: This article was originally posted November 16th, 2006. Note that it has been resubmitted to reddit and digg this morning, so do help spread the word and give Dave some more readers if you are so inclined. Send the link to someone today.

With the release of Why the "Peak Oil" Theory Falls Down — Myths, Legends and the Future of Oil Resources by Peter M. Jackson, Cambridge Energy Research Associates (CERA) attempts to cast doubt on the credibility of those with imminent, empirically-based concerns about our future oil supply.

CERA's "Decision Brief" requires a response because since 1870, the health of the world's economies have hinged on a secure, dependable and growing flow of "conventional" oil. Their forecast, shown in Figure 1, predicts that the oil supply will continue to grow and sustain economic growth.

Figure 1 — Click to Enlarge

We shall have much more to say about CERA's forecast later. For now, it is sufficient to note that CERA's analysis is lacking. The world's oil supply will not continue to grow to meet ever-rising global demand, and worse, the consequences could irrevocably damage global economies. Such an outcome would have harmful effects on people's lives. So, this debate is not "academic" — much depends on a correct analysis of the future oil supply.

Central to the Peak Oil debate, is the ability of individuals to forecast the future, based upon information that is available to them today. Different people and organisations come up with different forecasts based on the same data. So how does anyone know who to believe?

Cambridge Energy Research Associates (CERA) in March 2006 presented a model for UK oil production capacity showing around 2,350,000 bpd for the UK in 2006. That's around 700,000 bpd higher than the actual production figure.

Where does the truth lie? A full review of CERA's and other UK oil production forecasts are dicussed under the fold.

[Update by Dave Cohen on 08/28/06 at 4:04 PM EDT] Ken Chew of IHS Energy contacted me and told me in part the origin of the 175 Gb number cited below with regard to Esser's testimony. It is not the tar sands. When I know more details, I will revise the text of this article.

[editor's note, by Dave Cohen] This is Part 1 of what I hope will be a 2 part series. The second installment is tentatively titled Getting to Know Daniel Yergin. Enjoy and remember what's at stake.

Yet another recent CERA press release World Oil & Liquids Production Capacity to Grow Significantly through At Least 2015 denies that peak oil is a concern.

Based on the report's extensive field-by-field analysis, [Peter] Jackson and [Robert] Esser conclude that the data reinforce CERA's view that the specter of "peak oil" is not imminent, nor is the start of an "undulating plateau" pattern of supply capacity.

This latest cornucopian summary has been commented upon here at TOD and criticized directly by Kjell Aleklett, President of ASPO in CERA's report is over-optimistic courtesy of the Energy Bulletin.

This story's aim is to investigate the CERA method, provide background for these latest statements and round out Aleklett's critique. The view here is that CERA, which is wholly owned by IHS Energy, is misleading the public and our elected representatives. These two organizations are managing perceptions as they cast aspersions on the peak oil view of reality and present misleading or incomplete analysis to the media.

These half-truths have gone on long enough. A bit more in-depth analysis is required to reveal this charade for what it is. Our future energy need is put in ever greater jeopardy the longer the world waits to mitigate the crisis. One step toward changing perceptions to create a call to action is to refute deceptions, whether they are intentional or not.