Commentaries on the IEA WEO 2012 - peak postponed? - Nov 14
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IEA Oil Forecast Unrealistically High; Misses Diminishing Returns
Gail Tverberg, Our Finite World
The International Energy Agency (IEA) provides unrealistically high oil forecasts in its new 2012 World Energy Outlook (WEO). It claims, among other things, that the United States will become the world’s largest oil producer by 2020, and will become a net oil exporter by 2030.
Figure 1 shows that this increase comes solely from the expected rise in tight oil production and natural gas liquids. The idea that we will become an exporter in later years occurs despite falling production, because “demand” will drop so much... One reason the WEO 2012 estimates are unreasonable is because the oil prices shown are unrealistically low relative to the production amounts forecast in the report. This seems to occur because the IEA misses the problem of diminishing returns. As the easy-to-produce oil becomes more depleted, and we need to move to more difficult reservoirs, the cost of extraction increases.
In fact, there is evidence that the “tight” oil referenced in Exhibit 1 is already starting to reach production limits, at current prices. The only way these production limits might be reasonably overcome is with higher oil prices–much higher than the IEA is assuming in any of its forecasts... The statements about rising oil production in the US are just a distraction. Diminishing returns mean that US oil production will never increase very much. Oil costs will remain high, and this will be the real issue disturbing economies around the world.
(13 November 2012)
2012 World Energy Outlook from the International Energy Agency
James Hamilton, Econbrowser
On Monday the IEA released its World Energy Outlook 2012. This includes an optimistic assessment of the situation in the United States:
The United States is projected to become the largest global oil producer before 2020, exceeding Saudi Arabia until the mid-2020s. At the same time, new fuel-efficiency measures in transport begin to curb US oil demand. The result is a continued fall in US oil imports, to the extent that North America becomes a net oil exporter around 2030.
Stuart Staniford makes an interesting observation on the above reported numbers. The graph suggests that the U.S. will be producing a little over 10 mb/d in 2020. If that's enough to overtake Saudi Arabia, it means that Saudi production is never going to get anywhere near the 15.4 mb/d that the kingdom had been predicted to reach in 2020 according to the IEA's World Energy Outlook 2005 released seven years ago...
Another interesting number to compare to this 10 mb/d production anticipated for the U.S. in 2020 is the 18.9 mb/d of crude oil and petroleum products currently being consumed by the United States. If the U.S. is indeed to approach energy independence, it mostly must be due to a significant drop in U.S. demand for oil, perhaps resulting in part from increased use of natural gas for transportation. And conservation of this impressive magnitude is hardly the outcome one would associate with a scenario of falling oil prices over the next decade...
Finally, another item from the WEO summary bears noting: Iraq accounts for 45% of the growth in total world production that IEA is forecasting between now and 2035. I commented on the potential for future production from Iraq earlier. Here I will only repeat that one assumption of any such forecast is that Iraq is going to be a substantially more stable place over the next decade than it has been over the last three...
(13 November 2012)
IEA report reminds us peak oil idea has gone up in flames
Damian Carrington, The Guardian
Given the bubbling cauldron of violence that the middle East so frequently and regrettably is, the prospect of the US outstripping Saudi Arabia as the world's biggest oil producer in the next decade is deeply striking. The redrawing of the geopolitical map may cool some tensions and perhaps spark others.
But the truly global implications of the International Energy Agency's flagship report for 2012 lie elsewhere, in the quietly devastating statement that no more than one-third of already proven reserves of fossil fuels can be burned by 2050 if the world is to prevent global warming exceeding the danger point of 2C. This means nothing less than leaving most of the world's coal, oil and gas in the ground or facing a destabilised climate, with its supercharged heatwaves, floods and storms...
(12 November 2012)
US to overtake Saudi Arabia in oil as China's water runs dry
Ambrose Evans-Pritchard, The Daily Telegraph
It is official. The US will overtake Saudi Arabia to become the world's top oil producer by 2017.
This is entirely due to the shale and gas revolution. North America as a whole will become a significant net exporter...
If it all goes well, output will jump from around 2 million barrels a day (b/d) to 8 million by 2035. It if goes really well, output could reach 10 million.
If all this turns out to be wishful thinking, the world is stuffed. The biggest "new supply" over the next quarter century is energy efficiency. That is worth a Saudi Arabia and a half. Allegedly...
A few things struck me:
* Total oil output will be less than 100 million b/d by 2035. This is not that much higher than this year at 87 million.
This is Plateau Oil in all but name, yet the industrial revolutions of China and India will continue apace, and the nuclear industry has just taken a huge blow. More coal I guess, and windmills...
The clearest message is that water shortages in large parts of the world are the chief constraint on energy and power. Cooling a coal power plant without water is not easy, and solar parks are very thirsty...
Water-adjusted GDP may yet become a vogue term.
(14 November 2012)
Did Peak Oil Doomers Fixate On a False Scenario?
Sami Grover, Treehugger
Some time back I wrote that activism beats prophecy when it comes to peak oil. It was, in part, a reaction to doomers like the sexy, yet depressing, Oily Cassandra who seemed convinced, even gleeful, that the impending threat of peak oil would bring down capitalism as we know it...
There may have been some pretty solid reasons for doing so back then. There was certainly a convincing case being made by major players that peak oil was a serious threat, including the IEA's chief economist warning that no Government was prepared for peak oil. A few short years later, however, we see a boom in fracking and US oil production, leading some to argue the energy landscape has fundamentally shifted yet again...
I am no oil geologist. I can't say whether peak oil is around the corner or centuries away. I can't tell you whether world oil reserves have been overestimated, or whether we are sitting on centuries worth of new power. What I can say is that the world keeps changing, and our technological abilities to harvest fossil fuels, and to harness renewable energy for that matter, keep changing too. We can't afford to make predictions about the future and then hope they come to pass...
(13 November 2012)
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