Oil Supply 1996-2020
Assuming a Lower Estimate of Conventional Oil Reserves - 2.3 trillion barrels

Prospects for oil production have been analysed by region, paying particular attention to the distinction between OPEC Middle East and all other producers. Account has been taken of estimates of conventional oil reserves and the production profiles for oil in each region.

Oil reserve estimates are inevitably uncertain and studies normally report oil reserve estimates as ranges, rather than as point estimates. For example the United States Geological Survey in 1993 reported a range of 2.1 to 2.8 trillion (10¹²) barrels for worldwide recoverable reserves of conventional oil. Experts differ on these figures; some take a static view, emphasizing geological and statistical issues that lead to a low reserve estimate, and some take a dynamic view, arguing that rapidly advancing technology will help discover more reserves and make a wider range of already known deposits economically recoverable. Experience in mature oil regions indicates that production builds to a peak when approximately half of the ultimately recoverable reserves has been produced, and then falls away. The application of new technologies, such as horizontal drilling and 3D seismic analysis, determines the ultimate size of recoverable reserves. It can extend the peak and delay or slow the decline in production. But eventually production falls, given a fixed oil resource. This has been the experience, for example, in the United States.

This approach has been applied on a regional basis. It indicates that a peaking of conventional oil production could occur between years 2010 and 2020, depending on assumptions for the level of reserves. Oil production outside OPEC Middle East would peak before OPEC Middle East production implying a greater reliance on OPEC Middle East supply between the two peaks. A plateau in oil production for OPEC Middle East of 47.9mbd has been assumed, rather than a sharp peak, following an IEA study.

BAU projections for oil production profiles for the world, OPEC Middle East and all other areas are shown in Figure9, assuming ultimate recoverable reserves of conventional oil of 2.3 trillion barrels. In this figure, world demand for liquid fuels has been extended to 2030 at the average growth rate of 1995-2020 in order to illuminate the longer-term oil supply picture. Table 1 gives details of supplies for conventional and non-conventional oil. The transition from conventional to non-conventional oil as the marginal supply in 2015 is assumed to raise the oil price from $17-25 (1990 money values) over the period 2010 to 2015. The use of non-conventional oil expands rapidly after 2015 as it meets the increase in demand for liquid fuels and compensates for the decline in conventional oil production.

The extent of the rise in the world oil price is in some doubt. To produce large and increasing volumes of oil from non-conventional sources will require many major multi-billion dollar projects. Some unevenness in supply availability is possible because of the long lead times required for these big projects and the difficulties in matching supply to demand in what promises to be a highly competitive market. It is necessary to distinguish fluctuations in the world oil price from its longer term average level. Some short-term price movements could well arise from supply-demand mismatches, as non-conventional oil sources take over the marginal supplier role. But opinion on the effect of this changeover on the longer-run oil price is mixed. Some observers expect long run supply costs from major non-conventional oil production projects to be higher than current long run supply costs from non-OPEC sources, lifting the world oil price to a new long-run level of $25-$30 per barrel. Others suggest there will be no upward pressure on the world oil price. An upward ramp from $17/bbl to $25/bbl has been assumed from 2010 to 2015 as a response to the transition to non-conventional oil, with the oil price remaining at $25/bbl after 2015. All prices are quoted in the money values of 1990.

Table 1
Oil Supply 1996-2020
Assuming a Lower Estimate of Conventional Oil Reserves - 2.3 trillion barrels

Oil Supply Profiles 1996-2030

Natural gas prices are increased along with oil prices because the two products are close competitors. The coal price has been adjusted upwards to account for the transport cost element.

A higher view of oil reserves would assume an ultimate stock of recoverable conventional oil of 3 trillion barrels, compared with the lower assumption of 2.3 trillion barrels (see Table1). This view postpones the production peak of conventional oil and the associated rise in world oil price to 2020. The effect of the lower oil price on world oil demand is estimated to be small.

Which Third World country will be the next to disintegrate into anarchy? Never published anywhere before! See future oil production curves for 42 Countries at
http://dieoff.com/42Countries/42Countries.htm

For example, once Mexico's petroleum production "peaks" (est. 2001) and starts to decline, foreign capital will flee the country and Mexico will once again descend into anarchy -- this time forever. Ultimately, the US will be forced to build a modern version of the Berlin Wall to keep the Mexicans out. See, for example, MEXICO'S PETROLEUM EXPORTS: Safe Collateral for a $50 Billion Loan? at http://www.hubbertpeak.com/duncan/mexoil.htm

Here is the complete list in order of production "peak":
USA 1970, Libya 1970, Iran 1974, Romania 1976, Indonesia 1977, Trinidad 1977, Brunei 1979, Peru 1982, Cameroon 1985, FSU 1987, PNG 1993, Egypt 1993, Syria 1995, UK 1995, Norway 2000, Gabon 2000, Malaysia 2001, Argentina 2001, Mexico 2001, Ecuador 2002, China 2002, Australia 2002, Algeria 2002, Oman 2002, Denmark 2002, Italy 2003, Congo 2003, Angola 2003, India 2003, Nigeria 2004, Yemen 2004, Vietnam 2005, Venezuela 2005, Brazil 2007, Canada 2008, Tunisia 2008, Qatar 2009, Colombia 2009, Iraq 2010, Saudi Arabia 2011, UAE 2017, Kuwait 2018.

Campbell at Parliament
There is an excellent piece that explains the oil situation quite well. Dr. Colin Campbell made a presentation to the British Parliament on July 7, 1999. After providing extensive background material, he presented future scenarios. Here are a couple of samples:

"For example, they might read an official report showing that Norway's production is set to halve by 2006. Norway is the world's second largest exporter."

"I think that a price shock around 2001, if not before, from Middle East control is inevitable and will probably trigger a stockmarket crash."

"I think it is absurd that the management of the depletion of the world's supply of its most important fuel should be left to a few feudal families controlling the Middle East. The consuming governments should recognize where their interests lie."

Go to http://www.hubbertpeak.com/ and you will find a link to
A PRESENTATION TO THE BRITISH PARLAMENT, by Dr. Colin Campbell, July 7, 1999.

Energy Synopsis Petroleum geologists have known for 50 years that global oil production would "peak" and begin its inevitable decline within a decade of the year 2000.Moreover, no renewable energy systems have the potential to generate more than a tiny fraction of the power now being generated by fossil fuels.In short, the end of oil signals the end of civilization, as we know it.See the latest energy synopsis at http://dieoff.com/synopsis.htm

The Last Oil Shock
Britain faces the prospect of closed filling stations and empty supermarket shelves as the fuel protesters once again threaten blockades. Last time the problem went away within a week or two. The hope is that this time too, the crisis will quickly evaporate. But there are scientists who believe that the recent problems are just a foretaste of what is to come - all the time and very soon. They predict that from 2005, the world will face a permanent and deepening shortage of petrol and diesel.
/news.bbc.co.uk/hi/english/events/the_money_programme/newsid_1014000/1014236.stm

After Oil"The weightless economy still has dirty old oil pumping through its veins, as the recent fuel blockades demonstrated," says David Fleming. In the next ten years, the growing demand for oil will permanently overtake a shrinking supply -- playing havoc with price. Why are western governments doing nothing to prepare?
prospect-magazine.co.uk/highlights/essay_fleming/

Research Firm: Canadian Reserves May Not Fill US Demand Gap
Coad said: "Most forecasts show Canadian gas consumption rising at a steady 1.5% to 3%/year and show exports of Canadian gas rising from approximately 3 tcf a year today to something at or above 4 tcf a year by 2010. In order to meet these requirements, Canadian gas production would need to increase by 3 bcf/day over the 10-year period.
"Although not beyond the realm of possibility, recent supply trends suggest that this is clearly a stretch target for supply. This is particularly true when we consider recent trends in well productivity and decline rates. Although the WCSB [Western Canadian sedimentary basin] resource base is far from depleted, the challenge of increasing production is more significant than in past years. "Such figures bode ill for those who had looked to Canada for major increases," he said.
ogj.pennnet.com/Content/cd_anchor_article/1,1052,OGJ_7_NEWS_SUB_85916_1,00.html

Natural Gas Is No Refuge from Oil
There won't be any relief from reduced or slower demand growth either. Essentially all new electricity capacity coming online in the foreseeable future will be fired by natural gas. Of all new homes being constructed, 70% are heated by natural gas. Also, a full 52% of current housing stock is fueled by natural gas. By virtue of the clean burning attributes of the fuel, any new environmental regulation of greenhouse emissions will only encourage even greater demand. Over the next five years, Energy Ventures Analysis expects growth of natural gas demand to outstrip production growth by 0.7% per year, resulting in an increasingly tight market.
All-in-all, slower investment in production capacity in past years is now accelerating the impact of a long-term structural supply constraints that given time, would have become increasingly noticeable regardless. Growing U.S. dependence upon natural gas has not been met with improved production capacity, and years will be needed to ameliorate the shortage. So the upshot is that, unlike oil, there is not much hope of seeing natural gas retreat back to its pre-2000 prices any time soon. An annual average price of around $2 or less for natural gas at the wellhead is a thing of the past.
http://www.dismal.com/todays_econ/te_112100.asp

CIBC Report

Canadian Imperial Bank of Commerce (CIBC) is the second largest bank in Canada and one of the 10 largest in North America with assets of US$182 billion and a market capitalization of US$10.5 billion.
http://www.cibcwm.com/About/
CIBC relies on Petroconsultants' analysis for its energy research.
http://research.cibcwm.com/economic_public/download/Or28.pdf
On Oct. 6, 2000, CIBC released a new report that concluded "After rising for 140 years, world oil production is about to peak!"
http://www.ottawacitizen.com/business/001006/4643011.html

Jay Hanson

Whatta Hero!