Monday, December 13, 2010

Prospects for a New Peak in Crude & Condensate

I pointed out on Friday that there provisionally appeared to be a new peak in global liquid fuel production, at least based on reports from OPEC and the IEA, and subject to confirmation by the third agency (the EIA) and the inevitable revisions to the series.

Predictably, this led to a chorus of comments that the full liquid fuel series includes various things that aren't really oil, such as biofuels, and natural gas liquids (things like butane and propane).  A more conservative definition of oil would still show a peak in the past, some suggested.  There are decent arguments on both sides of what exact definition of oil one should use.  If we look at one more conservative but reasonable definition - crude plus lease condensate (C&C) - we see the picture above (according to the EIA).  I have shown the full liquid fuel series in blue, and only the C&C component in red.

Now, the EIA is only up to September as of today, whereas OPEC and the IEA have just released November numbers.  So the big leap up in October/November is not apparent in the graph above.  However, if these two EIA series behave like the ones that have been released, they will jump up by over a million barrels/day between September and November.  As of September, the EIA all liquids series is 0.5mbd below it's all time peak, so it will very likely exceed it as the next couple of month's numbers come out.  However, the EIA C&C number is 1.1mbd below it's all time peak, so it will be a near thing when the November numbers are out.

Still, if demand stays strong and prices up, it seems likely that supply will increase further in the next six months.  If so, then it's likely that the July 2008 crude+condensate peak will also be exceeded.

The bottom line is this: those people running around saying that the all-time peak in monthly oil production was definitely in 2005 or 2008 are running a considerable risk of having events make fools of them.  Appropriate caveats should be used.


KLR said...

Here is my graph. Annual production 1980-2009, all liquids vs C+C and the YOY change of each. The growth in the gap between the two was actually at its highest in the early 90s; it has been on a definite uptick since 2006, after three years of near zero growth. The % difference between the two only contracts twice in this series - .32% in 1986 and .11% in 1989, suggesting price or USSR collapse problems, perhaps.

All of which is just meant to illuminate one facet of this. Heading Out's recent entry on oil fungibility illuminates another. Would be very interesting to see total numbers for that issue.

I have no qualms that we may be at "only" 95% of the absolute peak. Helps to take the long view in these matters. There's still overwhelming evidence that something is hampering growth in oil production.

Stuart Staniford said...

There's still overwhelming evidence that something is hampering growth in oil production.


Jose said...

Whether we are pre-peak of post-peak in 2010 is less relevant than the fact the oil production is asintotic since 2005, despite the surges in price. Demand grows and shrinks but similar amounts are delivered, only with a higher/lower price! Looks like supply is constraint!

KLR said...

OPEC Cheats Most Since 2004 as $100 Oil Heralds Supply - Bloomberg

OPEC is breaching its production limits the most in six years, signaling the world’s biggest suppliers are ready to pump more crude next year as oil rallies toward $100 a barrel.

The Organization of Petroleum Exporting Countries excluding Iraq pumped 26.78 million barrels a day this year, exceeding the quotas by an average of 1.934 million a day, the highest level since 2004, according to data compiled by Bloomberg.

Bad OPEC! Bad producing nations!

How does that stand against your assertion that none of these guys have whipped their pistols out of their holsters, Stuart?

KLR said...

Huh: OPEC : OPEC Production Allocations. Hasn't been updated since Nov '07. ;) Still not sure where Bloomberg is coming from, OPEC minus Iraq hasn't pumped <24 mb/d since May 2004. OPEC say they were at 29.20 mb/d in Nov right in their report.

Had to put together an OPEC field from EIA data. Curious thing: shut in All Liquids from the July '08 local peak was 1201.39 kb/d in Aug. For C+C it was, drumroll please: 1470.14 kb/d. This make since since NGLs etc aren't subject to quota, and these guys have an inordinate fondness for money.

Benno said...

The claim is that conventional crude oil has peaked. i.e. C & C minus tar sands.

OPEC would really have to open the sluices to blow that one away.

Stuart Staniford said...


Recent tar sands production graph is here. The increase of the syncrude component since 2008 is less than 200kbd, and since 2005 is maybe 400kbd. That is not large compared to any reasonable estimate of OPEC spare capacity.

Benno said...

Agreed. They can top it if they want to. But with the EIA projecting a decline of almost 300K of non-OPEC crude in 2011, it's not small either.

Going by the latest STEO, the EIA is not projecting a new peak in conventional crude next year.

Looks like more plateau....

Steve From Virginia said...

This is why I never refer to peaks in physical production because the numbers are too easy to fudge, there are too many 'revisions' and additions.

I strictly stick to dollars and cents: peak oil in dollar terms took place in 1998 when a barrel of oil cost $12 and certain grades cost as little as $6.50 per barrel.

Six dollar- plus oil is now $88 and whatever 'peaks' are safely in the past.

The physical peakers can indeed be made fools of but $12 oil -- should it ever arrive again -- will do so in a far poorer world than today's.

Which is the EFFECT of peak oil, to make us all poorer.

Bill James said...

Economic growth depends on energy growth. Oil supply stopped growing in 2005.

Account for Net Energy and competition for oil from China and India, Peak affordable oil was 1995.

It seems foolish to worry about minor spikes when fundamental assumptions of the oil powered economy are failing:
- Growing oil supply for growth.
- Net Energy of at least 10:1.
- Affordable oil, less than $40.
- Expanding access to debt.