The EIA recently released its International Energy Outlook and it is quite optimistic. In the chart below I compare their estimate for World Crude plus Condensate (C+C) output with an oil shock model with a URR of about 3100 Gb.
Tag: Peak Oil
Arguments over RCP8.5
The climate change scientific consensus is summarized via the annual IPCC documents. In one of the IPCC sections, projections of CO2 emissions from fossil fuel usage are made in the context of several scenarios, which are referred to as Representation Concentration Pathways (RCP). Historically, the “business-as-usual” pathway was declared to be RCP8.5.
That has worked out as describing an extreme emission scenario IF society did not take corrective action in reducing emissions. In other words, RCP8.5 tracks a growth path in fossil fuels that is extrapolated from the current economic growth rate and largely dead-reckoned FF production increases.
Recently an energy analyst named Michael Liebreich challenged this assumption in the context of the possibility of greater fossil fuel depletion than is currently mapped out in the IPCC, calling the RCP8.5 estimate “bollox” in a tweet. When challenged on this assertion, he rationalized his claim as follows:
“Here’s why I reject scare stories based on RCP 8.5 and SSP5. They assume a vast increase in coal use in the absence of more international cooperation on climate. But the reality is that it coal power is peaking already. Climate change is scary enough, we don’t need ghost stories.”
— Michael Liebreich (@MLiebreich) August 4, 2019
US Tight Oil Scenario based on BNP Paribas Study
An interesting analysis was recently published by BNP Paribas (one of the top 10 banks in the World by assets) entitled Wells, Wires, and Wheels… . In that analysis they argue that long term oil prices will fall to $20/b or less in order for oil used for personal land transport to compete with EVs powered by wind and solar at current cost levels.
I reworked my oil price assumptions, first with a simple scenario that follows the EIA’s AEO 2018 reference oil price scenario up to $70/b in 2017$ and then remains at that level long term. Second I noticed that a scenario with such an oil price assumption sees tight oil output fall in 2022 so the scenario was revised with oil prices rising from 70 to 80 per barrel from 2022 to 2024 and then remaining at that level until 2028. The BNP Paribus analysis suggests that EVs will have cut significantly into oil demand by 2022 to 2025 so I assume oil prices fall to $20/b over the next 10 years.
Scenarios below.
World Oil Production as of March 2019
The data for the charts below were taken from the EIA’s Monthly Energy Review. It is crude plus condensate through March 2019 and is in thousand barrels per day.
World C+C was down 281,000 barrels per day in March.
Non-OPEC was up 218,000 barrels per day in March.
OPEC May Production Data
The below charts, unless otherwise noted, were taken from the OPEC Monthly Oil Market Report. The data is through May, 2019 and is in thousand barrels per day.
OPEC crude only production was down 236,000 barrels per day in May but that was after April production had been revised upward by 82,000 bpd.
Iranian April production was revised upward by 43,000 bpd and Saudi Arabia April production was revised upward by 24,000 bpd.