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VK2AAB > FUEL 05.01.10 03:33l 93 Lines 5764 Bytes #999 (0) @ WW
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Subj: New Year Msg ASPO
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To : FUEL@WW
A New year review of last year and next by Prof Alekett of ASPO
and the Global Energy unit at Upsalla University.
The Peak Oil Year 2009
by Kjell Aleklett, President of ASPO International
We stand at the doorway to a new year but also to a new decade and it is time
to make a short summary. At the start of the 21st century Peak Oil was not an
issue. During the 1990s the oil price fluctuated around $20 per barrel and
that the price would increase was unthinkable. The International Energy Agency
(IEA), the US Energy Information Agency (EIA), the World Bank and others all
had prognoses showing that the price would be around $20 per barrel in 2020.
When in 1998 Colin Campbell and Jean Laherrhre wrote their now famous article
The End of Cheap Oil in Scientific American predicting that production of
cheap oil would reach a maximum around 2005 there was no one that took them
seriously. Instead, in March 1999 The Economist advanced the opinion that the
world would be Drowning in Oil. Personally I took the warning signals serious
and started to learn as much as possible about oil depletion.
Using King Hubberts mathematical description of future oil production one
could easily calculate that a production maximum would occur within 20 years.
By using a refined methodology based on expected production from individual
nations Colin Campbell was able to make a more precise estimate and, in 2003,
he and I published the first peer reviewed article where we showed that the
worlds oil production would reach a maximum around 2010 at a level of around
87 million barrels per day (Mb/d). It is interesting to note that, so far, we
have been fairly accurate (The Peak and Decline of World Oil and Gas
Production, K. Aleklett and C.J. Campbell, Minerals and Energy Raw Materials
Report, Volume 18, Number 1, 2003). Now when I re-read the article I see to my
amazement that, in fact, we do not use the term Peak Oil. The article was
written during the fall of 2002 and that was when ASPO and Peak Oil had not
yet become accepted internationally.
For most people it is not the production of oil that is of interest but,
rather, the price. During the entire 1990s decade the price had fluctuated
around $20 per barrel despite OPEC attempting to force up the price into their
desired price band of between $22 and $28 per barrel. However, during the
first years of the 21st century the price fluctuated around $25 per barrel and
OPECs oil ministers were quite pleased. Everything changed in 2004 when Chinas
economy expanded at record pace. From 2003 to 2006 the global demand for oil
increased by 10% from approximately 77 to 85 Mb/d. In spite of the global
economy continuing to grow, the increase in oil production slowed and,
instead, it was the price that increased from $25 per barrel to the record
level of $147 per barrel in July 2008. For me, this was a clear sign that we
had reached a production plateau of around 85 Mb/d and the question is how
long global production can be maintained at this level.
For 2009 we can note that the oil market crashed one year ago and that prices
were down at $40 per barrel. Many certainly believed that, just as in the
1990s, we would return to a long period with low crude oil prices. When,
during autumn, the oil storages were filled to cover winters needs the crude
oil price passed $80 per barrel to then fall to a level around $75 per barrel.
If this is the new average level for the oil price we can expect a price of
over $80 per barrel in April which will then, during summer, once again fall
to a level some dollars lower.
During 2010 the world economy is estimated to grow and, with it, demand for
oil. A new increase of 10% would place us at a demand level of around 92 Mb/d.
The problem is that we during recent years have seen a dramatic decrease in
oil production in many of the worlds largest oilfields. There are rumors that
the worlds greatest oilfield, Ghawar, with a production of 5 Mb/d is now in
decline. At the same time there are new projects in Saudi Arabia that will
give increased production in other fields and it will be interesting to follow
developments there. To find a production of 92 Mb/d the next years will
probably be impossible.
During 2009 new oil fields have been found and the volume follows, in
principle, our curve that predicts 125 billion barrels of new discoveries by
2030. It will be very interesting to follow developments in, primarily,
Brazil. These new discoveries will, nevertheless, be of limited significance
compared with the auction conducted in Iraq during the years last month when
production rights for over 30 billion barrels went under the hammer. The
future level of world oil production will now be dependent on peace in Iraq.
To conclude I would like to mention the climate meeting in Copenhagen. There
most of the worlds leaders noted that production of fossil fuels must decrease
at the same time as those responsible for energy in the same nations displayed
prognoses of increases. It is completely clear that the left and right hands
are not coordinated. If the first decade of this century became the decade
when Peak Oil was introduced I am completely convinced that the coming decade
will be the one that feels the effects of Peak Oil.
Personally I am interested to see what the price of oil is in 2018 when the
bet between me and BPs managing director Tony Hayward will be decided. If
production is under 86 Mb/d Tony Hayward will be the one to pay and I am
completely convinced that I am going to win. There is much, much more to
discuss but these reflections can stand as my little years chronicle.
HAPPY NEW YEAR!
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