On Friday president of ASPO Kjell Aleklett was invited to write a comment to the article “The market sets high oil prices to tell us what to do” in Financial Times by Martin Wolf
”Global supplies of crude oil will peak as early as 2010 and then start to decline, ushering in an era of soaring energy prices and economic upheaval – or so said an international group of petroleum specialists meeting Friday”.
This quote was a result of the first meeting of the Association for the Study of Peak Oil and Gas (ASPO) in May 2002 in Uppsala, Sweden. In response to press inquiries ASPO claimed:
“The world oil depletion curve is based on all available information on oil reserves and estimates of the amounts yet-to-find, and indicates that world oil production will reach a peak (87 million barrels per day) around 2010 and decline thereafter.”
Remarkably, this forecast seems today to still be on target. At the 2007 ASPO conference former US Secretary of Energy James Schlesinger said:
”…and therefore to the peakists I say, you can declare victory. You are no longer the beleaguered small minority of voices crying in the wilderness. You are now the mainstream. You must learn to take yes for an answer and be gracious in victory.”
But the concept of peak oil relates to the fact that oil is a finite resource and that at some point, world oil production will reach a maximum and go into decline. Because oil is a life-blood of economies worldwide, the decline of world oil production is certain to result in severe negative consequences, particularly for oil importers.
The world can be divided into those countries that import oil and those countries that are oil exporters. Current daily export volumes are around 50 million barrels per day, Mbpd, with the rest of the 85 million barrels produced every day consumed by the oil producing nations. The top five oil importers are USA, Japan, China, Germany and South Korea, who rely on exports from the top five exporters of oil, Saudi Arabia, Russia, Norway, Nigeria and Venezuela.
The US Energy Information Administration (EIA) forecasts that the US will need an additional 7 Mbpd by 2030. By that time production within the US will have declined by around 2 Mbpd, requiring an increase in imports of 9 Mbpd. Production within China appears to be near a maximum now and will also decline in the near future. With a strong increase in consumption, China will want to increase imports by the same order as the US. Summing import expectations from all of the importing countries an increase in import demand of the order of 30 million barrels per day seems to be required by 2030, but that cannot happen if world oil production soon peaks and then goes into decline.
By 2030 it is virtually certain that there will be no more oil exporting nations than we have today. So what will likely happen to the top five exporters during the next 20 years?
Venezuela produces heavy oil from the Oronoco belt and the Global Energy Systems group at Uppsala University, UGES, estimates a possible production increase of 2 Mbpd by 2030. This number was recently confirmed as realistic by experts in Venezuela. Conventional crude production from Venezuela will decline and consumption within the country will almost certainly increase so an optimistic forecast would be that Venezuela might increase its export by 1 Mbpd by 2030.
Over the next 20 years Nigerian deep water production will likely increase, reach a peak, and go into decline. By 2030 there will likely be a lower export volume from Nigeria than at present.
Norway has a serious problem with their oil industry today. They now receive so large revenues from their oil exports that they do not know what to do with it. In the future it looks like this problem will disappear as their oil production declines. A field by field analysis of Norwegian production shows that small fields are declining by 20 percent per year and their giant fields are declining somewhat more slowly. Without new significant discoveries in the coming years, exports from Norway will have dried up by 2030, and the world will have lost 3 Mbpd of exports.
During the Soviet era of the 1980s, Russia reached a production rate of 12 Mbpd after which it dropped dramatically during the collapse of the Soviet Union. Since then, the Republic of Russia worked hard to bring production back to its current level of roughly 10 Mbpd. To keep this level of production they would need to find another “North Sea” somewhere in Russia. If not, they can expect to see no exports of oil by 2030. Because Russia will not wish to import oil from other countries, they may well reduce their exports in the near future.
President Bush has asked King Abdulla of Saudi Arabia to increase oil production but the answer was a clear no. In recent forecasts, the International Energy Agency (IEA) had hoped for Saudi Arabia to produce 17.5 Mbpd by 2030. In a recent UGES analysis, we estimated that this level of production would require 6.6 billion barrels of possible reserves per year to be brought into production. If the development trend that we have witnessed for the last 20 years continues, production will more likely be 8 Mbpd by 2030. The consumption within Saudi is expected to increase to be 2 Mbpd by 2030, and this leaves 6 Mbpd for export.
Some believe that “the light at the end of the tunnel” is Kazakhstan, Libya, Canada and Iraq. The first three might compensate for the decline in Norwegian production. The big hope for the future is Iraq. They have seven giant oil fields to develop and might reasonably expect output from these fields to reach 3 Mbpd. The investment required would be enormous, and a big question is who is going to provide this level of investment?
When it comes to the future the world seems to be walking into twilight, and we need a “renewable torch” to light the path. In recent words of King Abdulla of Saudi Arabia, this is said in a different way: “The oil boom is over and will not return. All of us must get used to a different lifestyle.”
The world will not collapse due to peak oil. We are a sturdy lot and we will find ways to mitigate this terrible problem. But it won’t be easy nor quick. But working together, making compromises, and mobilizing like never before, we will work our way through these problems and prevail, but we need to start today.
Kjell Aleklett, professor at Uppsala University, Sweden, and President of ASPO – International.
Uppsala University, Global Energy Systems, Box 535, 751 21 Uppsala, Sweden
E-mail: [email protected]
Blog: aleklett.wordpress.com
UGES: www.fysast.uu.se/ges
ASPO: www.peakoil.net
