The world’s energy ministers are currently discussing a forecast of global oil supplies “peaking between 2020-2025.”
The International Energy Forum is the world’s largest gathering of Energy Ministers, who collectively represent “more than 90 per cent of global oil and gas supply and demand.” It is meeting March 29 –31 at the Mexican resort of Cancun.
It will be considering peak oil with a document titled Unpacking Uncertainty: Investment Issues in the Petroleum Sector, written by “strategic advisors” PFC Energy, chosen to give an impartial overview of the various oil supply claims.
In the publication, PFC Energy reviews three oil supply projections: the International Energy Agency (IEA) view of “total oil demand reaching 111 mmb/d in 2030,” those of Opec, at “a slightly higher 113 mmb/d,” and its own scenario that, irrespective of demand, “global crude oil output is likely to be constrained just below 100 mmb/d.”
The divergences in supply forecasts among the three studies are stark and significant. The IEA and OPEC forecasts both see total liquids production rising from 83.2 mmb/d in 2007 to 108.6 mmb/d (IEA) or 110.8 mmb/d (OPEC) by 2030. In contrast, PFC Energy sees liquids output at 89.8 mmb/d in 2030, after peaking between 2020-2025 around 95.0 mmb/d.
The sharply lower PFC Energy forecast is based on a view of declining non-OPEC supplies not reflected in the assessments completed by Opec and the IEA.
Unpacking Uncertainty presents a diagram to show the “eventual flattening of conventional oil production and eventual decline.” Note that it’s titled Potential, Not Inevitability of a Supply Crunch.
This model shows oil peaking sometime around 2020, with demand – if it continues at 1.5 per cent – outstripping supply slightly ahead of this date.
The report states the subsequent decline in oil production will be:
. . . rapid enough to produce a world energy picture that differs vastly from previous long-range energy assessments.
This is not a world of “peak oil” where global hydrocarbon potential is exhausted, but rather of peak production, where the petroleum industry’s ability to continue to increase—or even maintain—production of conventional oil (and eventually gas) is constrained. Exploitation of unconventional oil will provide additional liquids,but in all probability only at increasingly higher costs, and it will depend on significant investments to develop appropriate technologies to convert today’s resources into tomorrow’s reserves.
There will still be a lot of oil remaining in the ground, of course – and no serious peak oil commentator has said otherwise. The report estimates proven reserves currently at between 1.1 and 1.3 trillion barrels, “with OPEC member countries’ share around 75 per cent of the total.” The problem, of course, will be the difference between supply and demand.
The social and economic fallout of diminishing oil is referred to as “potential dislocations,” and we are told not to put faith in technology as providing the “proverbial silver bullet” (investment could increase output, but the industry places “greatest emphasis on technologies where the most direct impact has been on reducing costs”). The report also laments that there is no standard procedures for reporting reserves, and that the true picture is hidden.
This forum comes on the heels of a behind-closed-doors ministerial meeting held by the British Department of Energy on Monday, March 22. This followed the February news conferrence by business leaders calling themselves the UK Industry Taskforce on Peak Oil and Energy Security. Their publication The Oil Crunch: a Wake-up Call for the UK Economy, states that “oil price shocks [that] have the potential to destabilise economic, political and social activity” will happen within five years.
While The Oil Crunch is written in more direct language than Unpacking Uncertainty, the only real difference is in the estimated timescale: the former suggests five years and the latter nine. A gathering of senior politicians is – probably right now – discussing the implications of oil supply falling below demand sometime ahead of 2020.