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April 09, 2006

World Oil Production Cannot Grow Fast Enough Peak Oil

The reason peak oil — the point at which world production peaks and begins to decline — matters is that it is self-evidently a point at which world production will no longer satisfy global demand. But there is no reason we cannot reach a point of insufficient production prior to peak: i.e., with production still growing, just not growing fast enough. Times Online:

The world lacks the means to produce enough oil to meet rising projections of demand for fuel over the next decade, according to Christophe de Margerie, head of exploration for Total and heir presumptive to the leadership of the French energy multinational.

The world is mistakenly focusing on oil reserves when the problem is capacity to produce oil, M de Margerie said in an interview with The Times. Forecasters, such as the International Energy Agency (IEA), have failed to consider the speed at which new resources can be brought into production, he believes.

"Numbers like 120 million barrels per day will never be reached, never," he said.

The IEA predicted in its World Energy Outlook that global demand for crude oil would reach 121 million barrels per day by 2030, of which more than half would be supplied by Opec. The agency predicted that more than $3 trillion (£1.72 trillion) of investment in wells, pipelines and refineries would be needed to raise output to such levels.

However, Total’s exploration chief reckons the output rise is impossible, given available resources and geopolitical constraints on gaining access to reserves in Opec countries.

M de Margerie argued that the resources were simply not available. He said: "Take Qatar. How many projects can you have at the same time? You have more than 100,000 people working on sites. It's a big city of contractors. Now they have the problem of having to build a new power plant to supply a city of contractors."

The IEA was mistaken in using recovery factors that failed to consider the timing of new resources coming on stream. M De Margerie said. The world was confusing the issue of reserves with the scale of the problem in producing those reserves. He said: "The oil reserves are there, that is the good news, but what we can bring on today to meet demand is limited by factors other than what scientists see in a lab or think-tanks." [Emphasis added]

As reserves dwindle, it will take more wells to produce a given amount of oil, but all existing rigs are already in use. It will take time and a lot of money to add more. And then there's the problem of refining capacity. It's not just a question of money; building the infrastructure takes time. But world production is already maxed out. There's no slack left in the system, no breathing room, which means the needed time just isn't available.

Posted by Jonathan at April 9, 2006 10:04 PM  del.icio.us digg NewsVine Reddit YahooMyWeb

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