Thursday, March 19, 2009

Did oil production peak in 2008?

Tony Eriksen at The Oil Drum predicts that global oil production peaked in 2008.
World oil production peaked in 2008 at 81.73 million barrels/day (mbd) shown in the chart below. This oil definition includes crude oil, lease condensate, oil sands and natural gas plant liquids. If natural gas plant liquids are excluded, then the production peak remains in 2008 but at 73.79 mbd. However, if oil sands are also excluded then crude oil and lease condensate production peaked in 2005 at 72.75 mbd.
From there he proceeds to make his case. It should be noted that the IEA and ExxonMobile both predict the production peak to occur in 2030, at over 100 mbd. The IEA's chart looks like this:

You'll notice that the IEA expects a lot of crude that has yet to be found or developed to start coming online right around 2008, or they would in fact show a very similar chart to Eriksen. They do admit that 64 mbd needs to come online (6 times the capacity of Saudi Arabia) in order to meet future demands. Their outlook appears to be pretty optimistic. In 2008 we saw a great deal of volatility in oil prices and we were only "saved" by the current economic crisis. Low oil prices and demand will likely lead to less investment in exploration and development of resources, which may very well lead to increased volatility when the global economy begins to recovery and demand increases. It could be a very vicious cycle.

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