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Long-term crude oil supply and prices
ICF Consulting for California Energy Commission

Crude Oil Production – Selected Model Results

…For the low resources case, conventional oil production peaks around 2010 and total crude oil production peaks around 2030. With high conventional oil resources, conventional oil production does not peak until 2040.

Figure 4 assesses the effects of alternate assumptions of conventional oil resources on crude oil production in 2050. In the low conventional resource case, the production of non-conventional oil increases (e.g., heavy oil, oil sands, and shale oil). Expected higher prices also lead to lower overall demand for oil. As the estimated size of the conventional resource base increases, total oil production and conventional oil production also increase. Note that the CCRAF model does not fully capture potential
constraints to future production of non-conventional oil such as restrictions on water, natural gas, and land use; therefore the model output represents an optimistic view of the future availability of non-conventional oil.

While the timing and volume of peak oil production are sensitive to the size of the resource base, Figure 5 shows that the most optimistic assessment of conventional crude oil resources does not extend the timing of peak oil production by more than thirty years past the oil production peak estimated for low resource cases. The size of the resource base, however, has a significant impact on the estimated volume of oil produced at peak production. This in turn has a substantial impact on the outlook for crude oil production at year 2050. ….

Implications for California

The Reference Case presents a world in which the average demand for fossil fuels is high, and meeting this demand requires increasing production of non-conventional oil resources. The greenhouse gas policy cases present a world in which average demand for fossil fuels slowly declines as a function of the stringency of the greenhouse gas emission controls.

The two cases are extreme: either no greenhouse gas emission controls or global greenhouse gas emission controls. A more likely case would be some mix of the two. Actual long term equilibrium oil prices are likely to be less than forecast in the Reference Case but somewhat higher than prices under the global greenhouse gas control cases.

The model analysis assumes that resources exist to support the Reference Case. In fact, the level of investment necessary to meet the requirements of the Reference Case may not be made, either by the international oil companies (IOCs) or by the OPEC countries because of major geopolitical barriers and the price volatility of the market. Both of these factors are examined in Chapter 4. This is not to say that demand could not be met, but it would be difficult and probably at a higher price.

(September 2005)
Detailed 133-page report covering peak oil and effects of greenhouse gas regulations on energy supply. It’s not clear from a cursory skim what the takeaway points are. -BA

UPDATE: Submitter Jason Bradford adds:

The analysis assumes a steady GDP and population growth, i.e., these are the independent variables instead of making them variables dependent upon available energy. Is totally backward in my opinion, but a lot of economic analyses do this. For example, when I attended the California Climate Change Conference a couple of years ago, the economic analysts started with GDP and population growth assumptions as givens. The climatologists went on to assess the wreckage this caused without ever questioning the starting assumptions. A whole room full of PhDs and they all apparently sat there accepting this, or were at least afraid to pipe up.

Addicted to crude

Nicolas Sarkis, Le Monde Diplomatique (English ed.)
‘The price of oil is rising, and may never fall’
…Is everybody over-reacting? The US dominates the oil-producing regions of the Middle East, Central Asia and Africa, and oil-exporting countries have readily opened the taps to ensure that supply meets soaring demand.

This sudden general feeling of insecurity is the opposite of what many expected when, in March 2003, the US attacked and occupied Iraq, the country with the largest oil reserves after Saudi Arabia. It is also difficult to reconcile with the certainties that prevailed after the Gulf war of 1990-91 and the liberation of Kuwait by the US and its allies.

In September 1992 James Schlesinger, secretary of defence and director of the CIA during the Nixon administration, then energy secretary under President Jimmy Carter, made a speech to the 15th World Energy Congress in Madrid in which he reported leading officials in the administration of President George Bush Sr as believing: “What the American people learned from the Gulf war is that it’s a helluva lot easier and a helluva lot more fun to kick ass in the Middle East than it is to make any sacrifices to limit America’s dependency on imported crude.”

…Beside the slowdown in discoveries and the slow but inexorable fall in the ratio of global reserves to production, another more immediate danger threatens the market. Production in a significant number of countries is falling and there is insufficient investment to develop the new capacity vital for meeting demand.

Falling production and increasing demand have turned several countries that used to be net exporters – Indonesia, Egypt and Tunisia, as well as the US – into net importers.

…The main threat comes from the mismatch between supply and demand and from competition and the risk of conflict between the main consumer countries. This explains why the US, Europe, China, Japan and India are all jostling for a foothold in countries sitting on oil reserves and for control of land and sea routes between production centres and the major areas of consumption. The Iraq war of March 2003, which enabled the US to supplant France, Russia and Italy; the new Baku-Tblissi-Ceyhan oil pipeline; and the recent agreement between Germany and Russia to construct the north-European gas pipeline beneath the Baltic Sea are all examples of major undertakings designed to secure the energy needs of the countries concerned.

…Despite an absurd and dangerous belief to the contrary, a genuine shared interest unites importing and exporting countries. The perfectly legitimate desire of the former to secure sources of imported oil is matched by the no less legitimate and vital concern of the latter to guarantee markets and safeguard the incomes that they need to develop their economies. There are fewer disagreements over prices, whose recent increase reflects the colossal investments required to develop production capacities for oil and other more expensive sources of energy.

With oil becoming rarer and dearer, the problem of energy security requires a radically different political approach from that of 30 years ago. Rivalries and potential conflicts exist less between producers and importers than among the major consumer countries where rising demand and the decline of domestic production are inexorably bringing about an increased dependence upon exporting countries, particularly those in the Middle East.

Nicolas Sarkis is director of the Arab Petroleum Research Centre and editor of the review Le pétrole et le gaz arabes (Paris)
(May 2006)
The article may be behind a paywall. If you access the article via Yahoo News, you apparently do not encounter the paywall. (??)

Letters to the Editor: The Readers Write in Again [about peak oil]

Byron W. King, Whiskey & Gunpowder
IN MY FIRST “letters to the editor” article, I used one very short e-mail from one reader as a basis for writing about 3,300 words on Planning, Policy, Strategy, and Energy. Today, I turn the tables. This is your column, dear readers, offering a representative sampling of some of the many e-mails you sent to Greg and me. I am editing the e-mails only for the sake of fitting as much of your content as possible into this space. I will, of course, make some very short comments, because your e-mails tend to be well written and thought provoking. Thank you all for writing.
(14 May 2006)
The letters that Byron receives about his peak oil articles come from an entirely different audience than most of the peak oil website.

CEO Shell: ‘World is not running out of oil’

Shell Oil via peakoil-dot-com
THE HAGUE – CEO of Royal Dutch Shell, Jeroen van der Veer, emphasized that the world is not running out of oil and gas supplies in the near future. However, extracting fossil fuels is becoming increasingly more difficult, he told the shareholders of the Anglo-Dutch oil company.

‘The majority of the easy to produce sources is in production already’, Van der Veer told his audience on the annual shoreholders’ meeting.

For years, Shell is working on methods to extract oil and gas from the Canadian tarsands. The high oil price makes it affordable to pump oil up from sources in inhospitable places, such as the East-Russian project of Sachalin-II shows. “This will ask for big investments.’ In the beginning of May, Shell announced it will pump 19 billion US Dollars in oil field development.

Van der Veer indicated that the Sachalin-II project, in which Shell is a majority shareholder, is now completed for 70 percent. The oil company expects to start pumping oil and gas in 2008. Sachalin has suffered from many setbacks which resulted in an increase of estimated costs from an initial 10 billion to a current 20 billion Dollar.

After being criticized by environment protection groups, the oil company had to relocate oil pipes to prevent disturbing the habitat of the rare gray whale. Van der Veer acknowledged that Shell underestimated the harsh working conditions in Sachalin. ‘But the project remains an attractive investment.’

Prior to and during the shareholders’ meeting, loud protests were held against the oil company. ‘Environment Defense’ and ‘Friends of the Earth’ pointed shareholders to the environmental damage that accompanies the production of oil in Nigeria, according to these groups.
(16 May 2006)
A “guest” at peakoil-com apparently translated coverage of the Shell shareholders meeting. Go to the original article for links to the Dutch articles.

Ian Cohen Speech on Peak Oil & Biofuels in NSW Parliament

Ian Cohen, Hansard via

In November last year I made a speech on peak oil. I wish to return to this issue. Honourable members should be well aware of the concept. Peak oil refers to the point at which 50 per cent of any given oil reserve has been depleted… [summary of PO]

The issue of oil supply is out of our control: the issue of demand is not. This requires our most urgent attention. There is conjecture as to exactly when the world’s oil supply will have reached the peak oil point, but most analysts predict that it will be in the next five to 10 years, if it has not happened already. It is not a point at which a great announcement will be made, or trumpets will sound. Its effects will slowly and increasingly take hold. By the time they become dire, it will be too late to do anything about it. We should realistically have been looking at alternative sources of transport and energy at least a decade or so ago. Some areas of government have made small attempts to address this issue, but what we have done so far amounts to little more than rearranging the proverbial deckchairs on the Titanic. We have had plenty of warning and failure to act would be reprehensible.

Obviously, transport is responsible for much of society’s oil consumption, but oil is far more pervasive than that. It is used in many manufacturing processes and as a raw material in many items, including pesticides and herbicides. All families will suffer financial hardship, but farming families will suffer more than most, and I would especially encourage members representing rural electorates to carefully consider their response to this issue. To that end, it is crucial that the solutions we come up with are effective and long term. We must reject fossil fuels outright. We must also reject stopgap options such as ethanol. We must be wary of ethanol as a fuel in its own right. It is less energy efficient than petroleum. Also, crops that are grown to produce it could otherwise be producing food.

By being primarily useful only as an additive, ethanol effectively exacerbates the problem by prolonging our dependence on oil. In addition, ethanol also has a number of negative environmental impacts in its own right. Research by Tad Patzek of the University of California clearly shows that the fossil fuel input to ethanol exceeds by a wide margin its energy content. It is false to call ethanol a renewable fuel. The crops from which it is derived are energy intensive and erode soil much faster than they can rejuvenate it. The same research shows that even inefficient solar cells produce more than 100 times the electricity produced by ethanol. We need to be looking at renewable sources of energy.
(9 May 2006)