Diapositive 1

1

Peaking of world oil production misconceptions,
signals and impacts Patrick Brocorens Laborato
ire de Chimie des Matériaux Nouveaux University
of Mons-Hainaut
Committee of the Regions EPP
2
Oil production reaches a peak and declines well
before the exhaustion of reserves
BRENT
BRAE EAST
www.og.berr.gov.uk/pprs/full_production.htm
Expected Demand
Supply does not satisfy demand
History
? shortage ? price rise ? price volatility
Production (millions barrels/d)
Production
3
Reserve Estimations
World Remaining Reserves (Gb)
Tar sands (175 Gb)
Uncertainty Range of 3 values

Technical data backdated (less extra heavy oil)

? Minimum Proven reserves 90-95
probability ? Expected Value Proven
probable reserves 50 probability
? Maximum Proven probable possible
reserves 5-10 probability
OPEC quota war (300 Gb)
 Offical Numbers 
Official
 Technical Numbers
Until 1990, reserve underestimation After
1990, reserve overestimation
Undisclosed by oil producing countries and
companies
Technical data show that since 1980, oil
discoveries are lower than oil consumption
official data lead to the opposite conclusion
4
Non-conventional Oil (difficult and expensive to
extract)
Resources are abundant but
Production rate (slow to scale up)
Production constrained mainly by economical
factors (while for conventional oil, it is
mainly by the amount of reserves)
Production costs rise with the price of oil
Distinction between reserves and resources (many
oil resources are not energy sources or are poor
energy sources)
5
Result of the OPEC quota war Kuwait
(1)
(3)
Proven data
(2)
www.peakoil.net/Kuwait.html

• 1) Until 1970, reserve underestimation
• (official data lower than technical data)
• Between 1970 and 1980, official data are equal to
  technical data
• In 1984, jump of official data to 100 Gb (this
  number actually corresponds to the cumulative oil
  discoveries) the technical data continue
  decreasing due to oil extraction and no
  significant discoveries

6
The proven reserves are useless to predict the
peaking of oil production
Proven reserves expressed in production years (in
red) Evolution of oil production (in black)
Proven reserves are not proven!!
Years
Mb/j
Years
Mb/j
United States
Peak 1970
Peak 1983
Tunisia
Peak 1985
Peak 1995
Cameroon
Syria
Data from EIA crude oil only
7
The oil production peak appears as an undulating
plateau
Undulating plateau

• International oil companies already in decline
• More than two thirds of oil producing countries
  already in decline
• Production decline of the existing fields
  globally estimated to be 4,5/y
• Contribution of new oil projects insufficient
  after 2012

Statfjord
8
Difficult to recognize the peaking of world oil
production
Characteristics of a tight market
Price volatility
Triggering factors political, natural, social,
economical
Difficulty to recognize that Peak Oil is the main
cause of the problems
Inaction or inappropriate actions
Shock
Counter-Shock
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Price/production scenario when oil production
peaks
Phase 2 Decline 2/y
Phase 1 Plateau
Price volatility
Difficulty to recognize that we have reached peak
oil
Spot price (/barrel)
Production ceiling reached
Production (millions barrels/d)
Economic crisis
Production capacity Reported production
10
Peak Oil and the financial crisis
Housing prices decline greatest at the suburban
fringe (long commute, few alternatives)
J. Cortright, CEOs for cities, Driven to the
Brink How the Gas Price Spike Popped the Housing
Bubble and Devalued the Suburbs, may 2008
11
A problem not yet on the radar screen the
peaking and decline of world oil exports

Relative evolution of oil production and exports
since Peak Exports
from EIA data

• Oil exports decline faster than production does
• Once oil exports disappear, the oil producing
  countries lose earnings, start importing oil, and
  have to drop fuel subsidies.

Egypt becomes oil importer
Sudden rise of fuel prices Destabilization
(cf Indonesia 2005) Additional tightness on the
international oil markets
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ASPO International www.peakoil.net