Petroleum Exec: World is Very Close to Peak Oil Production
The CEO of Europe’s third-largest energy company said that the world is currently very close to its peak oil production capacity, and warned that the supply may not be able to keep up with demand in the years ahead.
“The capacity that the oil industry has to go to 93-95 million barrels per day is already over,” Christophe de Margerie, chief executive of Total, the French oil and gas company, said.
Global crude supplies were 86.4 million barrels per day in 2008.
Three years ago, The International Energy Agency forecasted consumption and production to hit 130 million barrels per day by 2025. It has since dropped its projection to a little more than 100 million barrels per day by the year 2030.
But Mr. de Margerie is pessimistic that even the reformed projection can be met.
The recent drop in oil prices are causing delays in heavy oil projects in Canada and Venezuela, and the likely failure of Iraq and Iran to increase output as much as hoped, due to political difficulties, were to blame, he said.
This year is expected to be the first when oil consumption fails to rise.
Crude oil prices have collapsed after reaching a high above $147 a barrel in July, to currently trade at around $35 due to the economic recession which has forced back demand for energy.
Mr. de Margerie also said that he now expects a faster decline in production at older fields, such as those in the North Sea. At lower price levels, companies will find it harder to justify the greater cost of keeping such fields pumping.
Not all energy companies agree with Total’s pessimistic outlook for the oil industry’s ability to ratchet up demand.
BP Chief Executive Tony Hayward believes that suggestions that the world is already running out of hydrocarbon reserves are premature, considering that the world has produced about 1 trillion barrels of oil to date, but that another 1 trillion barrels of proven reserves are still in the ground, and another trillion barrels exist but are not yet commercially viable.
But Mr. de Margerie is adamant in his belief that the world will be facing an energy crisis in the near future. “There will be a shortage of energy in the medium to long term,” he said.