Has The World Reached Economic Peak Oil

The peak oil world seems to have (thankfully) mostly moved from viewing the defining aspect of the peak of oil production as a function of oil in the ground to being a function of the price it takes to produce new oil - David Strahan has a good example of this at his blog - HAS THE WORLD REACHED ECONOMIC PEAK OIL? .

Whisper it. Oil production in the US is increasing. The country where output peaked in 1970 and then shrank by 40 per cent over four decades, has turned some kind of corner. Between 2008 and 2010, production rebounded by 800,000 barrels per day to 7.5 million barrels per day, and analysts forecast more growth to come. Goldman Sachs predicts that by 2017 production in the US could reach almost 11 mb/d, just shy of its all-time high, restoring the country to its former glory as the world’s biggest producer. ...

Indeed, if the world is suddenly awash with oil, somebody forgot to tell the oil market. Oil remains stubbornly above $100 per barrel of Brent crude, the main international benchmark. Most analysts agree this is because supply is struggling to keep pace with demand, despite weakening western economies. But if all this extra oil is coming on-stream, how come?

Part of the reason is down to short-term unforeseen disruptions, such as the Deepwater Horizon disaster in theGulf of Mexico last year which delayed many drilling projects, and the Libyan revolution which cut global supply by almost 1.6 mb/d. The impact of these events should fade in time but there are clearly deeper forces at work. Producing oil is getting harder.

Not that it was ever easy. The amount of oil produced by existing fields is always in decline because as oil is extracted, pressure in the reservoir falls and the oil comes out more slowly. As a result, every year the industry must drill new wells capable of supplying around 3 mb/d – or 30 per cent of Saudi Arabia’s production – just to stand still. Satisfying the growth in global demand, at least when the economy is expanding, requires roughly another 1.5 mb/d annually.

Filling these holes gets more difficult as the “easy oil” gets scarcer. Companies are now exploring to the ends of the earth – from the Falklands to the Arctic– and are drilling reservoirs that are deeper, hotter and higher pressure than ever, all of which raise new engineering challenges. That has pushed costs up massively, with effects that have yet to be widely understood.

Offshore, companies are working at ever greater depths. During the 1980s and 1990s, for instance, Petrobras, Brazil’s state oil company, made most of its offshore discoveries beneath about 3 kilometres of sea and rock. In 2007, it found the Lula field, about 7 km down. Drilling Lula needed 4 km more specialist steel pipe at a time when steel prices were soaring because of higher energy costs.

Even onshore, costs are rising. Shale-oil fracking wells typically run horizontally and need four times as much steel as a vertical well. According to analysts at JPMorgan, such inflation is rampant throughout the industry. Exxon’s production investments, for instance, soared from $15 billion per quarter in the 1990s to more than $100 billion in the second quarter of 2008 – while the amount of oil and gas it produced scarcely changed.

Some of the most costly oil comes from the tar sands of Canada, with its vast open-cast mines and energy-intensive production processes. According to investment bank Barclays Capital, new projects here need to earn as much as $90 a barrel just to break even. Saudi Arabia, the only country with meaningful spare production capacity, could have produced oil more cheaply a few years ago, but not now. It has increased public spending following the Arab Spring, and now needs $95 per barrel to balance its budget. These pressures, says Paul Horsnell, director of commodities research at Barclays, mean that oil prices are unlikely to fall below these levels unless the economy collapses. He forecasts $137 per barrel in 2015, and $185 in 2020.

So if there is lots of oil down there but it is much more costly to produce, can we have as much as we want if we are prepared to pay for it? Well, that depends on what you judge to be enough and who you mean by “we”, says Steven Kopits, US managing director of energy consultants Douglas Westwood.

The trouble is, high oil prices don’t just encourage oil companies to innovate, they also damage national economies – although some countries are more resilient than others. A penetrating analysis by Kopits found that historically theUSgoes into recession whenever it spends more than about 4.5 per cent of its GDP on oil. Today, that would equate to $90 a barrel. That level also holds for others in the OECD club of wealthy nations, says Kopits. But the evidence suggests thatChinais willing to pay more; it only cuts back on oil purchases when they account for more than 6 per cent of its GDP, equivalent to about $110 per barrel.

The disparity, says Kopits, arises because Chinese society assigns more value to a barrel of oil. Gaining a barrel can transform the lives of Chinese people – allowing them to travel by car for the first time, for example. In the west, losing a barrel merely means trading in a gas-guzzler for a more fuel efficient model.

But oil is so useful that nobody cuts back voluntarily, meaning prices must rise to excruciating levels to force rich western consumers to economise. The first “peak oil recession” started in 2009, says Kopits. It took oil at $147 a barrel and the deepest recession since the 1930s to prise oil from the grip of consumers in OECD countries. Since early 2008, OECD oil consumption has fallen by 4 mb/d, while non-OECD consumption – mainly inChina– has gained 6 mb/d. Global oil production rose 2 mb/d during that period, so developing countries have consumed all the additional supply plus that given up by industrialised economies. “China is bidding away the OECD oil supply,” says Kopits, “and recessions are the mechanism by which that oil is being transferred from weaker economies to faster growing economies.”

With China embarking on rapid “motorisation” – car sales in China leapfrogged those in the US in 2010 – the outlook is for repeated oil price spikes and recessions. We appear now to be entering the second peak oil recession, says Kopits, and others will follow. For the time being this is a problem for the west, but prices could rise to levels that are unsupportable even for China. On this view, peak oil is as much an economic construct as a geological one.

Analysts at Deutsche Bank are more optimistic, and predict that a final oil price spike to $175 in 2015 will lead to rapid electrification of transport and relieve pressure on the oil supply. But Kopits is doubtful that we can escape so easily. “Buckle up,” he concludes, “we’re in for a bumpy ride.”

{ Read More }

A Long Bet on Peak Travel

The Long Now has a post on a bet on the advent of "peak travel" - Long Bet on Peak Travel.

One of the miracles of the modern world is our capacity for getting around – hop on a plane, nap a few hours, and you’re on the other side of a continent! Technologically enabled, we’ve embraced this ability with gusto and are currently more mobile a species than ever before. But, according to a pair of Stanford researchers, the industrialized world is mellowing on this trend a bit. They claim that travel in several countries may have peaked earlier this decade:

A study of eight industrialized countries, including the United States, shows that seemingly inexorable trends — ever more people, more cars and more driving — came to a halt in the early years of the 21st century, well before the recent escalation in fuel prices. It could be a sign, researchers said, that the demand for travel and the demand for car ownership in those countries has reached a saturation point.

-Miller-McCune

A Long Bet placed in 02005 hinted at this potential, though it imagined a more dire mechanism: peak oil. While the necessary statistics to certify Long Bet 197 won’t be published for some time yet, they’ll come from the U.S. Bureau of Transportation Statistics and tell us whether highway vehicle miles traveled in the U.S. for 02010 exceeded those of 02005. The Bet is that they’ll actually be lower – essentially that Americans collectively drove less in 02010 than in 02005.

The scenario imagined by predictor Daniel Simon in 02005 was that an energy crisis brought on by peak oil production would push up the cost of personal motor vehicle travel enough to halt or reverse its growth. Glen Raphael was doubtful enough to put up the money for a Bet and explained he expected growth to continue. Read their full arguments at Long Bets.

According to the BTS table they provided as a reference for adjudication, total vehicle miles travelled in 02005 were 2,989,430. The most recent year published on that table is 02008 and it checks in at 2,973,509 – almost 20,000 miles fewer. So, we can’t finalize the Bet as of yet, but the data we’ve got is in line with the Stanford study as well as Simon’s prediction, despite a seemingly more mundane overall picture.

Check back in a year or two for the exciting conclusion! (Also, if you or someone you know works at BTS, let us know if we’ve missed more recent numbers.)

{ Read More }

Kjell Aleklett Phil Hart Peak Oil Presentation Videos

TOD ANZ has a post including some videos of peak oil talks delivered in Australia recently - Kjell Aleklett & Phil Hart - Peak Oil Presentation Videos.

On 24th November last year, Beyond Zero Emissions and GAMUT (Australasian Centre for the Governance and Management of Urban Transport) held a peak oil evening with the visiting Professor and ASPO President Kjell Aleklett. I also spoke following Kjell, concentrating more on Australian factors and cultural aspects of peak oil since Prof Aleklett had already overwhelmed the audience with the technical aspects!

{ Read More }

Peak Coal Will the US Run Out of Coal in 20 Years or 200 Years

Greentech Media has an article arguing "peak coal" is occurring in the US as cheap to extract resources run out - Peak Coal: Will the US Run Out of Coal in 20 Years or 200 Years?. My understanding has been that coal use in the US has declined as natural gas has taken market share away from it, so Im not so sure I buy this (most early peak arguments seem to be more wishful thinking than reality based) but I havent looked at the data so maybe the two events are coinciding...

U.S. coal production has peaked, and the miscalculations that have led to estimates of a 200-year supply could create a serious electricity deficit for the nation, according to a new report from advocacy group Clean Energy Action.

“The belief that the U.S. has a ‘200-year’ supply of coal is based on faulty reporting by the EIA,” concludes the report, Warning: Faulty Reporting of U.S. Coal Reserves. “Most U.S. coal is buried too deeply to be mined at a profit and should not be categorized as reserves, but rather as ‘resources.’” “The U.S. Energy Information Administration’s estimate of the nation’s coal is ‘a faulty fuel gauge’ because the U.S. is rapidly approaching the end of economically recoverable coal,” explained report co-author Leslie Glustrom of Clean Energy Action. “We’re acting like we have a full tank. No one knows exactly when empty will come, but we should be prepared.”

The economic viability of the U.S. coal resource is compromised because “it is buried too deeply and costs too much to mine it,” Glustrom said. Peabody Coal CEO Greg Boyce’s Q3 2013 earnings report call remarks about reduced capital expenditures in Wyoming’s Powder River Basin seem to confirm that coal is becoming “too expensive to mine,” according to Glustrom. “Nationally, coal production appears to have peaked in 2008 at 1.171 billion tons,” the report states. “U.S. coal production in 2012 had fallen by about 155 million tons to 1.016 billion tons.”

EIA data puts production for the first half of 2013 at 488 million tons, Glustrom added. “We are not even on track to get to a billion tons. That would be back to 1993 levels.”

Think Progress has a post highlighting one of the drivers behind the "peak coal consumption in China argument, new restrictions on coal use in Shanghai and Beijing - Shanghai To Forbid Coal Burning As China Decides To Monitor Smog’s Effects.

On Friday, Shanghai released its Clean Air Action Plan in an effort to rapidly and substantially improve the air quality in China’s most populous city of nearly 24 million residents. The primary focus is to reduce the concentration of PM2.5 (particulate matter of 2.5 microns or less) by around 20 percent from 2012 levels by 2017.

The plan, which broadly targets six areas — energy, industry, transportation, construction, agriculture, and social life — will completely ban coal burning in 2017. This entails closing down more than 2,500 boilers and 300 industrial furnaces that use coal, or shifting them to clean energy by 2015. ...

Earlier this year a study found that severe pollution has slashed an average of five-and-a-half years from the life expectancy in northern China as toxic air has led to higher rates of stroke, heart disease, and cancer.

China has been making a very public push to confront growing concern over air pollution, including publishing a list of its 10 worst — and best — cities for air pollution each month.

China also released a new $817 billion plan to fight air pollution in September, with a strong focus on Beijing. According to a Greenpeace analysis, up to seventy percent of Beijing’s pollution comes from coal-burning factories and power plants surrounding the city.

China is also currently in the early stages of testing pilot carbon markets in seven cities, including Shanghai and Beijing. The pilot programs will help the government make a decision about setting up a national carbon market in the near future.

the Guardian reports that Al Gore and David Blood are warning about stranded investments in fossil fuel assets in coming years - Al Gore: world is on brink of carbon bubble.

The world is on the brink of the "largest bubble ever" in finance, because of the undisclosed value of high-carbon assets on companies balance sheets, and investment managers who fail to take account of the risks are failing in their fiduciary duty to shareholders and investors, Al Gore and his investment partner, David Blood, have said.

"Stranded carbon assets" such as coal mines, fossil fuel power stations and petrol-fuelled vehicle plants represent at least $7tn on the books of publicly listed companies, and about twice as much again is owned by private companies, state governments and sovereign wealth funds.

As the danger from climate change intensifies, and as rules on carbon and the introduction of carbon pricing in many parts of the world start to bite, these assets are expected to come under threat, from regulation and from the need to transform the economy on to a low-carbon footing. The "carbon bubble" has been identified by leading thinkers on climate change in recent years, but so far the findings have had little real effect on investor behaviour.

The SMH reports Australias largest coal mine / stranded asset is to be built in Queenslands Galilee Basin - Largest coal mine approved in Queensland.

The federal government has approved a massive coal mining project in central Queensland that will be the largest in the country. Environment Minister Greg Hunt approved the 37,380 hectare Kevins Corner project on Friday.

The mine, to be operated by a joint India-Australia consortium, GVK-Hancock, is the first to be approved since the introduction of a new water trigger rule by the previous federal government. Greenpeace claims Kevins Corner will use more than nine billion litres of water a year and the Lock the Gate Alliance says more information on its impact on Galilee Basin groundwater is needed.

{ Read More }

Peak oil can fuel a change for the better

The SMH has a rare mainstream media opinion piece on peak oil (albeit of the doomy circa-2005 variety) - Peak oil can fuel a change for the better.

The advent of peak oil means we should prepare for a downscaling of our highly energy and resource-intensive lifestyles.

What is peak oil and why does it matter? And what effect will it have on the Western lifestyles we take for granted? These are not questions that many people are asking themselves yet, but this decade is going to change everything. Peak oil is upon us.

Peak oil does not mean that the world is about it run out of oil. It refers to the point at which the supply of oil can no longer increase. There is lots of the stuff left; its just getting much more difficult to find and extract, which means it is getting very hard, and perhaps impossible, to increase the overall flow of oil out of the ground. When the flow can no longer increase, that is peak oil. Supply will then plateau for a time and eventually enter terminal decline. This is the future that awaits us, because oil is a finite, non-renewable resource.

The prospect of peak oil is no longer a fringe theory held only by a few scaremongers. It is a geological reality that has been acknowledged even by conservative, mainstream institutions such as the International Energy Agency, the UK Industry Task Force and the United States military. Even the chief executive of one of the worlds largest oil companies, Total, said recently he expected demand to outstrip supply as early as 2014 or 2015. Given how fundamental oil is to our economies, this signifies the dawn of a new era in the human story.

While the supply of oil is stagnating, demand is still growing considerably. China and India are industrialising at an extraordinary pace, requiring huge amounts of oil, and even in the Middle East and Russia – the main oil exporting regions – oil consumption is growing fast. What this means is that competition is escalating over access to the limited supply, and basic economic principles dictate that when supply stagnates and demand increases, oil is going to get much more expensive – a situation that is already playing out.

The problem of peak oil, therefore, is not that we are running out of oil, but that we have already run out of cheap oil. Currently the world consumes about 89 million barrels a day, or 32 billion barrels a year. Those mind-boggling figures are why oil is called the lifeblood of industrial civilisation. It should be clear enough, then, that when oil gets more expensive, all things dependent on oil get more expensive. Since almost all products today are dependent on oil for transport (among other things, such as plastic), the age of expensive oil will eventually price much global trade out of the market. Peak oil probably means peak globalisation.

{ Read More }

Peak oil not climate change worries most Britons

Reuters has an interesting column on some polling done in Britain - Peak oil, not climate change worries most Britons.

Most people in Britain want to reduce reliance on fossil fuels, but due more to fears of shortages and rising prices than to fears about climate change, according to a poll developed by researchers at Cardiff University and funded by the UK Energy Research Centre.

Nearly 2,500 people were surveyed across England, Scotland and Wales in August 2012. The results, published on Tuesday in a report on "Transforming the UK energy system: public values, attitudes and acceptability," provide a trove of information about public opinion on climate and energy policy.

By a large majority, respondents were either very concerned (24 percent) or fairly concerned (50 percent) about climate change and thought it was partly (48 percent) or mainly (28 percent) caused by human activity. Only a minority thought fears about climate change have been exaggerated (30 percent), though more expressed uncertainty about what the effects will really be (59 percent).

Nearly everyone agreed with the statement that Britain needs "to radically change how we produce and use energy by 2050". ...

By overwhelming majorities, those polled were fairly or very concerned gas and electricity would become unaffordable (83 percent); Britain will become too dependent on energy from other countries (83 percent); the country will have no alternatives if fossil fuels are no longer available (83 percent); and petrol will become unaffordable (78 percent).

Nearly four out of five respondents agreed the country should reduce its reliance on fossil fuels (79 percent). When asked for their reasons, respondents cited concerns about fossil fuels running out, being unsustainable or non-renewable (48 percent), costly (7 percent) and implied dependence on other countries (5 percent), compared with worries they are harmful to the environment and polluting (19 percent) or contribute to climate change (17 percent).

{ Read More }

Peak cheap oil is an incontrovertible fact

Im always a little dubious about Ambrose Evans-Pritchard but this column (wondering about the hype over Maugeris mistaken analysis of peak oil) is worth a read - Peak cheap oil is an incontrovertible fact.

Brent crude jumped to $115 a barrel last week. Petrol costs in Germany and across much of Europe are now at record levels in local currencies. Diesel is above the political pain threshold of $4 a gallon in the US, hence reports circulating last week that the International Energy Agency (IEA) is preparing to release strategic reserves.

Barclays Capital expects a “monster” effect this quarter as the crude market tightens by 2.4m barrels a day (bpd), with little extra supply in sight. Goldman Sachs said the industry is chronically incapable of meeting global needs. “It is only a matter of time before inventories and OPEC spare capacity become effectively exhausted, requiring higher oil prices to restrain demand,” said its oil guru David Greely.

This is a remarkable state of affairs given the world economy is close to a double-dip slump right now, the latest relapse in our contained global depression. ...

So we face a world where Brent crude trades at over $100 even in recession. Fears of an Israeli strike on Iran may have spiked the price a bit, though Intrade’s contract for an attack is well below levels earlier this year. Iranian sanctions may have cut supply by more than the extra 900,000 bpd pumped by Saudi Arabia. Japan’s increased reliance on oil since switching off most of its nuclear reactors has played its part.

Yet the deeper force at work is the relentless fall in output from the North Sea and the Gulf of Mexico, endless disappointment in Russia because of Kremlin pricing policies, and the escalating cost of extraction from deep sea fields.

Nothing has really changed since the IEA warned four years ago that the world must invest $20 trillion in energy projects over the next 25 years to feed the industrial revolutions of Asia and head off an almighty crunch. The urgency has merely been disguised by the Long Slump.

We learned in the 2006-2008 blow-off that China is now the key driver of global oil prices, with consumption rising each year by 0.5m bpd -- now a total 9.2m bpd in a world market of 90m bpd. Demand is broadly flat in Europe and America.

So what will happen when China latest spending blitz gains traction? The regions have unveiled a colossal new spree on airports, roads, aeronautics, and industrial parks: a purported $240bn each for Tianjin and Chongqing, $160bn for Guangdong, $130bn for Changsha, and so forth. Sleepy Guizhou has trumped them all with $470bn. Your mind goes numb.

What will happen too when car sales in China surpass 20m next year, as expected by the China Association of Automobile Manufacturers? ...

World opinion has swung a little too cavalierly from the Peak Oil panic four years ago to a new consensus that America’s shale revolution -- and what it promises for China, Argentina, and Europe -- has largely solved the problem.

Much has been made of “Oil: The Next Revolution” by Harvard’s Leonardo Maugeri, who forecasts an era of bountiful supply and cheap oil as global output capacity rises by almost 18m bpd to 110m bpd by 2020.

Sadad al-Huseini, former vice-president of Saudi Aramco, has a written a testy rebuttal, arguing that Dr Maugeri assumes a global decline rate of 2pc a year from oil fields compared to the IEA’s estimate of 6.7pc. There alone lies the gap between crunch and glut. ...

The shale revolution has profound implications for America’s role in the world and the global balance of power, but let us not get carried away. Oil experts noticed how many crews in the Bakken field were told to stand down when crude prices dipped earlier this summer. “Supposedly cheap shale turned out to be rather expensive shale in that, as soon as Brent fell to $90 per barrel, a large proportion of US shale oil in key regions seemed to lose all its rent,” said Paul Horsnell from Barclays Capital.

Prichards column points to this article by Sadad al-Huseini - Dont Count on Revolution in Oil Supply.

Leonardo Maugeris recent paper Oil: The Next Revolution on the presumed future abundance of oil supplies rejects the pessimistic outlook of limited increases in oil capacity over the next decade. It suggests global oil capacity will exceed 110 million barrels per day by the end of the decade, putting an immediate end to concerns regarding constrained long-term oil supplies. This conclusion is based on an assessment of new projects with a reported capacity of 49 million b/d before a downward adjustment to 29 million b/d to allow for completion risks and reserves depletion. Maugeri holds two PhDs, one in Political Science and one in Economics, and has extensive executive experience with ENI in strategies and developments and in petrochemicals.

In putting forth this optimistic thesis, Maugeri apparently sets aside a variety of technical realities, including the difference between natural gas liquids (NGLs) and conventional oil, reserves depletion versus capacity declines, and proven reserves as opposed to speculative resources.

The report mixes NGLs, which feed petrochemicals and domestic or industrial fuel applications, with conventional oil, which is the main source for transportation fuels. When fractionated, NGLs yield propane, butane and light naphtha. These products cannot replace oil distillates such as gasoline, diesel or jet fuel.

For example, NGLs grew from 7 million b/d in 2003 to an estimated 12 million b/d in 2011 but provided no relief to the demand for transportation fuels, which was surging across those years. The growth in NGLs is now forecast by the IEA to reach an ambitious 20 million b/d by 2030. Impressive as this may be, NGLs will remain at best marginally relevant to transportation applications until widespread changes occur in the technology and infrastructure of the auto and trucking industries. Given cost and complexities, there is no evidence that this is likely to happen within this decade.

In regard to capacity declines, the report appears to confuse oil reserves depletion with capacity declines. In the world of petroleum engineering, depletion quantifies residual reserves in the ground, while declines define a reservoirs ability to sustain a given level of production over time. Incremental reserves in modern discoveries are added early in a discoverys life while production declines are a subsequent development related to reservoir factors including changing fluid compositions and diminishing reservoir energy. Maugeris suggestion that incremental reserves may offset capacity declines mixes up speculative exploration variables with reservoir engineering realities.

The report takes exception to the IEAs 2008 estimate of an average 6.7% global oil capacity decline and offers an equivalent estimate of less than 2% per year. This low estimate is apparently based on the observation of historical production rates from major oil producing countries. It is not clear how the author extracted the convoluted effects of offsetting market volatility, spare capacity utilization, natural production declines, and ongoing new capacity investments from such historical trends.

The IEA’s 2008 study, on the other hand, applies well-established petroleum engineering principles to 800 post-peak fields that make up the majority of global oil supplies. The natural decline rates of these fields were reported to average 3.4% for 54 supergiant fields, 6.5% for scores of giant fields and the 10.4% decline rate for hundreds of large fields. At the IEAs 6.7% level of capacity declines, the current 74 million b/d of conventional oil supplies (which exclude NGLs, biofuels, nonconventionals and various other liquids) would require 5 million b/d of supplemental new capacity annually just to maintain a flat level of supply. Based on these assessments, Maugeri’s 29 million b/d of "risked" new capacity would only replace declines through 2017. Even the full 49 million b/d of new projects would only extend current liquids production on a flat trajectory to 2021.

{ Read More }

Has Peak Oil Come To The Non Opec World Maybe

Forbes has a look at peak oil production in the non OPEC world - Has Peak Oil Come To The Non-Opec World? Maybe..

The world’s biggest oil companies put in a pretty pathetic performance in the second quarter of 2011. Not in terms of earnings — those were great, with Exxon posting $10.7 billion and Royal Dutch Shell doing $8 billion. Just what you’d expect with Brent crude at a lofty $120 a barrel.



Where the results were disappointing was in the barrels. Of the 16 big U.S. and European oil companies studied by Deutsche Bank analyst Paul Sankey, 14 of them saw their production of petroleum decline in the quarter. Collectively, the drop amounted to 12% of total liquids volumes, or 1.2 million bpd. Their average output for the quarter totalled, 14.67 million bpd. Even excluding the effect of Libya’s issues, the decline was 8%.



Only Exxon and Shell managed 1% volume gains in liquids.



The situation didn’t get much better when Sankey looked at other big non-OPEC producers. Brazil’s supposed growth engine Petrobras was down a touch, as were Russia’s Lukoil and TNK-BP and China’s Sinopec. Rosneft (2.2 million bpd) and PetroChina (2.4 million bpd) did eke out gains of 2% and 4%.



Overall, the producers of 31 million bpd (out of a worldwide total of roughly 86 million bpd) saw their output fall 4%. No wonder Sankey titled his report “The Death of Non-OPEC.”



OPEC volumes, by contrast, were up 2% in the quarter, figures Sankey.



So what’s going on? Is Peak Oil here, at least in the non-OPEC part of the world? Maybe so. “In identifying mega-themes, we have argued that the shift from the 20th to 21st century represents the end of the oil age and the beginning of the global electricity age,” writes Sankey. “The concentration of remaining (abundant) oil reserves into OPEC hands derives an obvious corollary: the end of growth from non-OPEC supply.”



The supermajors are finding it harder and harder to pry away the remaining megaprojects from state-run oil companies. Of the biggest OPEC members like Saudi Arabia, Iran, Venezuela and Iraq, only the latter is eager to bring in the majors to help develop reserves.



Add in the fact that natural decline rates on big fields average 5% a year, and it will become ever harder for Big Oil to stay big. Christophe de Margerie, the pragmatic chief executive of French giant Total, believes that global peak oil will hit within five years (see my story on Total: “High Friends In Low Places”).

{ Read More }