The Imminent Peak in US Oil Production

Ron Patterson 204 Comments

This is a guest post by David Archibald

The Imminent Peak in US Oil Production

The seven years of production of tight oil in the US has produced enough data to
enable estimation of the amount of oil that will be recovered from these systems and
the timing of peak production. Based on data to May 2014, the four main tight oil
basins will produce a total of 7.7 billion barrels with a peak production rate of 3.9
million barrels per day in mid-2015. Following that peak, production is predicted to
decline as rapidly as it rose. That in turn is expected to cause a re-assessment of the
ability to produce sufficient transport fuels based on current policies.

The Bakken in North Dakota

Jean Laherrere has plotted monthly oil production from the Bakken Fm in North
Dakota using Hubbert linearization:

Laherrere 2014

FIG. 1

Also called a logistic decline plot, Hubbert linearization plots annual production divided by cumulative production to that date on the y axis against cumulative production on the x axis. This is the method that M. King Hubbert famously used in 1956 to predict the peak of US oil production in 1970. He was also largely correct in predicting the rate of decline from that peak. This methodology is based on the theory of the rate of extraction from a finite resource originally developed by the early nineteenth-century Belgian mathematician Pierre Francois Verhulst (1804–1849). The fact that Bakken production from 2012 has plotted as a straight line on this graph reflects depletion of a resource close to 2,500 million barrels.

Nearly 90% of Bakken production in North Dakota comes from four counties:Williams, Dunn, Mountrail and McKenzie. Figure 2 shows the monthly production history of these counties from 2005:

Big Four Data

FIG. 2
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Global Financial System: On Life Support

Ron Patterson 171 Comments

Yesterday I watched a short web video that blew me away: Global Financial System: On Life Support. Then I watched it again, and again… It is only 12 minutes long. The crux of the presentation was not only that the global financial system is on life support but also that the financial system is dependent on energy flows into the economy and energy flows are dependent on a healthy financial system. That is they are co-dependent upon each other.

About two centuries ago, a new financial system was required:

To concentrate and direct the vast amounts of capital needed to exploit fossil fuel resources. 

To fund the exponential growth that these energy resources facilitated.

Life Support 6

 

The crux is a vast amount of capital is needed to fund the fossil fuel industry and…

Vast amounts of fossil fuels are needed to feed economic growth of the economy.

Price vs. Production

Economic growth is driven by cheap fossil fuel, primarily cheap crude oil. If the price gets too high the economy suffers. Less oil is consumed at this price so the price collapses. When the price collapses a production decline inevitably follows. And when the price rises again, a production increase will follow… if there is more oil to produce at that price.
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EIA Petroleum Supply Monthly

Ron Patterson 136 Comments

The EIA has released its Petroleum Supply Monthly with C+C production numbers through May 2014. Of all the EIA data releases this seems to be the most accurate. However in some cases it is only as good as a few EIA employees guesses. And the more state data they have to work with, the better their guess.

The data in this report goes back to 1920 for total US production and to 1981 for individual states and offshore production. However I have chosen to shorten the time frame for my charts in order to better show what has happened recently.

USA

US production was down 36,000 bp/d in May to 8,357,000 barrels per day. US production took off in mid 2011 when Shale production took off and has risen some 3,300,000 since. Of course there was shale production prior to this but it was only keeping US production on a relatively flat plateau.

ND and Montana

Everyone is interested in the Bakken so I have combined the two Bakken states. Of course there is production in these two states outside the Bakken but this is the best I could do. Note that when the Bakken has one bad month as they had in December, it takes several months to get back to their prior production level.

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World Crude Oil Exports

Ron Patterson 334 Comments

OPEC has released their Annual Statistial Bulletin 2014. Under the heading of “Oil and Gas Data” there are several tables you can download. I was excited to find one labeled “Table 3.21: World Exports of Crude Oil and Petroleum Products by Country”. It turned out to be useless however as it includes a lot of exports of imported products. And they have no table of “Net Imports”. However their their table labeled “Table 3.18: World Crude Oil Exports by Country” turned out to be very useful as it seems to measure the same thing as the EIA does in their International Energy Statistics, Crude Oil Exports which also includes lease condensate.

The OPEC export data goes back to 1960 but I have only plotted it from 1990. The EIA data only goes back to 1993. The OPEC data is through 2013 while the EIA data only goes through 2010 except for Canada, Mexico and Norway which goes through 2012. All data is in thousand barrels per day.

World Exports

World crude oil exports peaked in 2007 and now stand 42,297,000 bp/d and in 2013 stood 2,467,000 bp/d below that point. World crude oil exports in 2013 were 2,467,000 barrels per day below peak and at the lowest point in 10 years.

OPEC Exports

OPEC exports peaked, so far, in 2012 at 25,068,000 barrels per day. Their exports fell by just over 1,000,000 barrels per day last year and I am betting they will fall further this year.

Non OPEC Exports

Non-OPEC exports have taken a hit in the last few years, peaking in 2004 and are down just under three million barrels per day since then.

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Anticipating the Peak of World Oil Production

Ron Patterson 207 Comments

These are indeed good times to be a Peak Oiler. All the  peak oil deniers are dancing with wild exuberance, pointing to that spike of US shale oil production that they believe drives the final nail in the “Peak Oil Theory” coffin. And it is all happening right before reality slaps them in the face.

There is no doubt that world Crude + Condensate production, without that tight oil spike, has been on a ten year bumpy plateau.

World Less USA A

But, you may ask, when the shale bubble burst, won’t that only mean we will still stay on that bumpy plateau? No for several reasons. First the bursting of the shale bubble will likely cause a decline in US production of perhaps half a million barrels per day per year for three to four years. Second Russia, whose production increase of over 1.5 million barrels per day over the past ten years has kept us on this bumpy plateau, is now in decline.

And third, five nations that have shown considerable increase over the past few years now seem to have peaked.

China et al

These five nations, who’s 2 million barrel per day increase since mid 2004, have also kept us on that plateau. Their combined production plateaued a year and a half ago. I don’t expect them to decline very fast but they will not add anything to world production in the next few years.

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