Washington Monthly discovers Peak Oil
PEAK OIL....Praktike draws our attention to the chart below, an excerpt from last year's "Outlook for Energy" from the good folks at ExxonMobil. What does it all mean?
Basically, it's Exxon's view of how much oil the world can produce on a daily basis. In particular, the green area at the bottom shows how much oil the non-OPEC world can produce: about 44 million barrels per day right now, peaking in a few years at 47 million bpd and then declining after that.
The interesting thing about this is not the prediction that non-OPEC oil production will peak shortly. That's fairly common knowledge. The interesting thing is that ExxonMobil is saying it. This is an indication that the idea of a world production peak is no longer the province of a small band of "peak oil" cranks. It's gone mainstream.
Now look at the rest of the chart: if Exxon is right, it means that practically all future production increases have to come from OPEC countries. That includes crude oil, NGLs (natural gas liquids, which can be refined into stuff like butane and propane), and condensates (gas-based liquids that are similar to crude oil). If you count everything, by 2010 OPEC production needs to increase by 4 million bpd and by 2015 it needs to increase by about 11 million bpd.
But that's actually pretty optimistic. Not only does it assume that non-OPEC production hasn't already peaked, it's also based on the notion that future growth in oil consumption will slow to 1.5% per year (compared to about 2% per year right now), partly due to the use of more energy efficient cars. If, instead, oil use continues to rise at its current rate, OPEC production will need to increase by more like 8 million bpd in 2010 and 19 million bpd in 2015.
Which leaves us with a disturbing question: can OPEC do it? If we accept the fact that the rest of the world has reached (or very nearly reached) its production peak, it would be nice to know if OPEC is up to the job of continuing to pump out ever increasing amounts of crude. And since Saudi Arabia is where most of this extra OPEC oil is supposed to come from, it would be really nice to know if Saudi Arabia can increase its production by 5 or 10 million bpd in the next decade or so. Because if it turns out they've peaked too, we're screwed.
Oddly enough, nobody can answer this, because Saudi Arabia and the rest of the OPEC countries are extremely secretive about their operations. So even though they say they can increase production for the next decade or two, there are reasons to be skeptical about this.
That's it for now. I just want to pique your interest in this question, not try to answer it. I'll have more to say about this later.