A New Peak Looms
The bandwagon of those who insist that world oil production has peaked has really filled up in the past six months. Even big names like Matt Simmons threw caution to the wind and declared that May 2005 was the all-time world peak in oil production. His logic (besides two years of flat production data)?
If you look at the numbers and you follow what’s going on starting with Mexico’s giant Cantarell field which is now in a very serious state of decline and then you look at the North Sea and you see just the UK and Norway, it’s pretty obvious to me that those three areas alone could actually decline by between 800,000 and 1 million barrels a day in 2007.
That pretty well wipes out almost all the production gains coming onstream and in implicit in that it assumes that everyone else is flat.
So I think basically too many of our oil fields are too old. Too many now are in decline. The Middle East is basically out of capacity. they’re some projects that are being worked upon, but most don’t hit the market until 2008, 2009 and we’re running out of time.
… I am firmly of the belief that over the course of the next year or two, this issue of peak oil will replace global warming as an issue that we’re all worrying, debating and talking about.
I actually agree with him on that last bit (though I think the time frame will be more like 5 years), but that’s another story. Briefly, I think the vast majority of people will be ready to take their chances with global warming and scream for tar sands, CTL, and anything else that can prevent them from paying > $5/gal for gasoline. But that’s a digression I won’t get into now.
T. Boone Pickens has also said that we have peaked, but he has a history of being wrong on the issue. But during the last half of 2007, I heard a great many people go out on a limb and go on record as saying that world oil production peaked in 2005. But you know what can happen when you go out on a limb? Sometimes the limb breaks. (Actually, among the true Doomers, it seems that these episodes of limb-breaking have no long-lasting effects, as people who continue to be wrong on this issue never seem to lose credibility).
So, on to the point. I reported previously that October of 2007 saw the IEA declare a new peak in all-liquids production that shattered the previous peak by over a million barrels per day. The EIA has now confirmed the shattering of the previous all-liquids peak.
So, what does “all-liquids” mean? It basically covers all of the liquid sources of energy, which include ethanol and various other liquid energy sources. Therefore, it still gives the “post-peakers” a fig leaf when you suggest that a new peak has been set:
Wrong! We may or may not have a new peak month for Global Liquids Production. But Oil peaked in May of 2005 at 74,298,000 barrels per day. October 2007 oil production will come nowhere close to that figure.
However twenty years from now, no one will ask what month we peaked. They will ask what year we peaked. That peak year will be 2005. If they say “but what if you throw in natural gas liquids, ethanol, biodiesel and refinery process gain”? Then that year will probably be 2006. But it sure as hell will not be 2007.
The phrase “oil production” generally refers to the production of crude oil plus condensate. And in fact, the all-time production high for this to date is May of 2005 at 74,298,000 barrels per day. But yesterday, the EIA released the latest figures for world production, and October 2007 certainly did get close to that figure. The number for October was 74,124,000 barrels per day, only 0.2% below the previous peak. Of course, “close to the record” is different from breaking the record. However, the indications are that the record has already fallen, but we don’t yet have the data in.
In November, OPEC reportedly increased production by 40,000 barrels per day, and then by an additional 370,000 barrels per day in December. If those numbers hold (and they certainly might not) then we already have a new all-time production record that even Doomers can’t deny.
So, if that happens will they forget that the bandwagon for May 2005 peak was ever full? Or will they step up, admit to being wrong, and try to understand the reasons for being wrong? After all, it’s OK to be wrong, but it’s not OK to be consistently wrong and never learn from the mistakes.
I will make my own position on peak oil clear in my next essay, which will definitely be unpopular in some circles: Debunking Matt Simmons. (Note that I actually think Matt has done a great deal of good, but he is sometimes being taken seriously on issues that he doesn’t really understand. That is the purpose of the debunking essay.)