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Oil production has peaked – al-Huseini

David Strahan, Last Oil Shock
Sadad al-Huseini says that global production has reached its maximum sustainable plateau and that output will start to fall within 15 years, by which time the world’s oil resources will be “very severely depleted”.

In an exclusive interview with, the former head of exploration and production at Saudi Aramco, said that oil production had reached a structural ceiling determined by geology rather than geopolitics, and that the technical floor for the oil price will rise by $12 annually for the next 4 to 5 years as new fields become increasingly costly to exploit.

According to al-Huseini the technical floor – the basic cost of producing oil excluding factors such as geopolitical risk and hedge fund speculation – is currently about $70 per barrel, meaning the minimum oil price could hit $106 in 2010 and $130 by 2012. Actual crude prices, including financial market factors, could be be as much as $125 by as early as 2010.

Al-Huseini said that Saudi Arabia’s plans to raise production capacity to 12 million barrels per day by 2012 represented “an achievable number”, as the country had announced oil investments of $55 billion between 2003 and 2011. But he cautioned that since some of the new production will come from entirely new fields “how the reservoirs will respond will be determined as they start producing”.

However, al-Huseini disparaged Western expectations that the Kingdom would produce significantly more than 12 mb/d. It was unfair, he said, to expect Saudi to “pull everybody’s chestnuts out of the fire”.

Listen to the interview with Sadad al-Huseini.

Some listeners have reported problems with this recording using Quicktime, but it seems to play perfectly well on Windows Media Player.
(29 October 2007)
UPDATE (Oct 30): Updated the text with David Strahan’s new improved version.

The audio only seems to work with RealPlayer and Windows Media. It does not seem to work with at least some versions of QuickTime (only the first 16 seconds of the 12:37 minute interview is played). -BA

UPDATE (Oct 30) The article and audio files are also posted at Global Public Media. If you are having trouble with the recording at Last Oil Shock, you might try GPM’s version. -BA

China to reach peak oil production as early as 2015 – leading scholar

Jing Yang, Interfax-China
Beijing – China will see domestic oil production peak as early as 2015 with an annual output of 190 million tons, while gas production is expected to peak sometime around 2035 with an annual output of 120 billion cubic meters, a leading energy scholar said at an industry forum held in Beijing over the weekend.

Such a prediction is accepted by most domestic scholars working with peak theory, Pang Xiongqi, the vice president of the China University of Petroleum, said at the 2nd International Forum on China’s Energy Security. Peak theory maintains that globally, as well as on a country-by-country basis, there is a peak production rate for exhaustible resources such as oil and gas, and that after this peak has been reached output will start to decline and gradually near depletion.

According to Pang, Chinese scholars predict that global peak oil production will occur in 2027 with a peak annual output of 4.03 billion tons. Pang argued that theories predicting that the country’s oil and gas output will decline after reaching a peak level in the near future have won significant support from the Chinese government, and that this is reflected in the government’s recent push for the development of renewable energy.

To date, as many as 63 countries have already passed their peak oil production rate, Pang said.

If China retains its strong dependence on oil and gas resources after it passes such peaks, it will face many challenges, including oil and gas supply shortfalls, a rising dependency on imports as well as soaring consumption of environmentally polluting coal, Pang said.

However, a representative for the Ministry of Land and Resources, who wished to remain anonymous, disagreed with such predictions by saying that oil exploration in China is just entering a mature phase. The country currently has proven around 34 percent of its total reserves, and will have an annual discovery rate of more than 900 million tons by 2020. This rate will remain above 700 million tons after 2030, according to the official.

The official added that some 22 billion to 23 billion tons are likely be added to the country’s proven reserve figures over the next 25 years.

In the meantime, gas exploration within China is still in the early stages, with only 14 percent of the country’s total reserves already proven. As much as 400 billion to 500 billion cubic meters of gas are expected to be added to China’s proven gas reserves annually between now and 2030.

Peak theory has been the subject of much dispute amongst international scholars, with some arguing that there is no such thing as an absolute peak production period. The chief criticism used is that the economic models used by peak theory cannot take into account future technological advances.

© Interfax-China 2007. For more intelligence on Chinese metals and mining, contact David Harman in Hong Kong at [email protected] or (852) 2537-2262.
(29 October 2007)
Also posted at Resource Investor

The Music of the Gears

J.R. Brandstrader, New York Times
FOR sanity’s sake, most New Yorkers try to keep the city’s cacophony at bay. But the composers Bruce Odland and Sam Auinger, who go professionally by the name O+A, insist that the time to listen is now, before it is too late. In their opinion, the bell tolls for the sounds generated by oil-fueled transportation because fossil fuels are running out.

Yet how do you say goodbye to fuel?

The composers offered an answer one recent Friday evening with a piece called “Requiem for Fossil Fuels.” A four-member choir, dressed in downtown black, sang ecclesiastic music in Latin while truck horns, the screech of brakes and other sounds emanated from elevated speakers encircling the main hall in Judson Memorial Church on Washington Square.
(28 October 2007)


James Howard Kunstler, Blog
When historians glance back at 2007 through the haze of their coal-fired stoves, they will mark this year as the onset of the Long Emergency – or whatever they choose to call the unraveling of industrial economies and the complex systems that constituted them.

And if they retain any sense of humor – which is very likely since, as wise Sam Beckett once averred, nothing is funnier than unhappiness – they will chuckle at the assumptions that drove the doings and mental operations of those in charge back then (i.e. now).
The price of oil is up 53 percent over a year ago, creeping up now toward the mid-$90-range.

The news media is still AWOL on the subject. (The New York Times has nothing about it on today’s front page.) The dollar is losing a penny a week against the Euro. In essence, the American standard of living is dropping like a sash weight.

So far, a stunned public is stumbling into impoverishment drunk on Britney Spears video clips. If they ever do sober up, and get to a “…hey, wait a minute…” moment when they recognize the gulf between reality and the story told by leaders in government, business, education, and the media, it is liable to be a very ugly moment in US history.

One of the stupidest assumptions made by the educated salient of adults these days is that we are guaranteed a smooth transition between the cancerous hypertrophy of our current economic environment and the harsher conditions that we are barreling toward.
(29 October 2007)

Another Inconvenient Truth – A presentation you can download

Gail Tverberg (“Gail the Actuary”), The Oil Drum
There are now several movies about peak oil that a person can show to audiences who are new to the subject. But sometimes it would be helpful to have a “canned” PowerPoint presentation, or a set of prepared PDF handouts that you can discuss with newcomers or use for your own talks. In this post, I link to a short PowerPoint presentation that is intended to be an introduction to newcomers. I also offer a two-per-page handout version, that may be helpful for one-on-one discussions.

I cannot really show what the presentation looks like in HTML, but I will give the flavor of the content in the post.

… SLIDE: Soon, world oil production will begin to decline

  • Date not yet certain

  • Association for the Study of Peak Oil-USA says “Before 2015”
  • Case Western Reserve survey of oil experts says “highly likely” by 2010
  • Several experts say 2005 or 2006
  • Data suggests peak may be past

… SLIDE: Is there an easy solution?

  • No, not really.

  • Conservation is a partial solution.
  • Alternative fuels (solar, wind, biofuels, geothermal) are likely to provide some help.
  • New technology like battery-operated cars is likely to be too little, too late.
  • We may need to unwind globalization; go back to simpler life-styles, technologies that worked before.

(29 October 2007) A good basic presentation, done with Gail Tverberg’s in usual reader-friendly style. The presentation is available in PDF and PowerPoint formats. -BA

Feedback Loops

Kenneth Deffeyes, Beyond Oil (blog)
Jeff Vail posted on a list of feedback loops that would diminish oil availability after the oil peak. Vail’s piece is thoughtful. I highly recommend reading it, preferably before reading my comments about it.

Vail identifies five feedbacks from a diminished oil supply that would make the problem even worse. I’ll take the risk of stating them briefly:

  1. Damage to oil supply facilities can be done cheaply, compared to the impact of the damage. (Apparently to make it easier for the terrorist, the US E.I.A. posts a rank-ordered list of US oil refineries at

  2. If high international oil “prices are insane,” then oil producing countries would reserve their own production for domestic use.
  3. High oil prices can raise national incomes in oil-exporting nations, thereby increasing domestic oil consumption.

  4. Oil-producing regions within nations would try to secede in order for a smaller population to enjoy the wealth.
  5. Privateering: Profit-motivated gangs replace politically-motivated terrorists.

In the opposite direction are the classical feedback loops from Econ 101: …
(28 October 2007)

ODAC News – Monday 29 Oct

Douglas Low, Oil Depletion Analysis Centre
Economics – UK and USA
1a/ The sky has already fallen (The Telegraph, Thu 25 Oct)
1b/ A catastrophe foretold (International Herald Tribune [NY Times], Fri 26 Oct)

Oil Prices in Various Currencies
2/ Oil Prices around the World: Do Exchange Rates Matter? (The Oil Drum: Europe, Mon 22 Oct)

Big Oil
3a/ Shell and BP struggle to dig up returns (Financial Times, Thu 25 Oct)
3b/ Oil prices driven by speculation and political tension, says Shell (Financial Times, Fri 26 Oct)

Fertiliser Prices
4/ Fertiliser prices jump as planting grows (Financial Times, Fri 26 Oct)

Albertan Oil and Gas
5/ Alberta to raise oil sector royalties (Financial Times, Fri 26 Oct)

French Government Policies
6a/ France goes green with switch from air to rail (The independent, Fri 26 Oct)
6b/ Sarkozy Promises a Green Revolution for France (Reuters, Fri 26 Oct)
6c/ French Green Congress Proposes Motorway Freeze (Planet Ark [Reuters], Thu 25 Oct)

Gas Production – Norway
7a/ Plans to Speed Up Troll Output Canceled (Energy Intelligence [International Oil Daily], Mon 22 Oct)
7b/ Europe Faces Potentially Flatter Norwegian Gas Profile (Energy Intelligence [World Gas Intelligence], Wed 24 Oct)

Dubai / UAE
8a/ Palm island dredgers running out of sand (Arabian Business, Thu 11 Oct)
8b/ Dubai Megaprojects (Gulf News, Ongoing)
8c/ UAE to court private power investors (Arabian Business, Wed 24 Oct)
8d/ Shanghai owner aims to buy ‘China’ on The World (Arabian Business, Sat 20 Oct)

Quality of Crude Oil Supply
9/ ‘Quality’ crude oil supply declining [podcast] (Platts, Thu 25 Oct)

Food Prices (Beer) / Biofuels / Inflation
10a/ Beer drinkers beware: Shortage to boost costs (MSNBC, Fri 26 Oct)
10b/ Corn For Ethanol: An Inflation Crop (CIBC World Markets, Mon 22 Oct)

Nuclear Power
11/ Nuclear Power Output Could Double by 2030 – IAEA (Planet Ark [Reuters], Thu 25 Oct)

Car Sales – Russia
12/ Future of Russia’s Auto Industry Assured (FC Novosti, Mon 29 Oct)
(29 October 2007)