Peak oil?

Ok being an oil blog you all knew it was just a matter of time before I would have a crack at this one and give my 2 cents worth. This is a subject that has coursed wide spread debate and now it has come to All Oil and I am looking forward to seeing what sort of comments I get left with.
For me it’s all about fundamentals and breaks them right down to see where oil is heading. Firstly looking at known world reserves

World Proved1 Reserves of Oil and Natural Gas, Most Recent Estimates January 1, 2008 Region (Billion Barrels)
North America . 211.214
Central & South America. 109.857
Europe . 14.268Eurasia 98.886
Middle East . 748.286
Africa . 114.838
Asia & Oceania . 34.350
World Total . 1,331.698

Total world expected oil consumption per day 2009
Africa = 3.2 million barrels a day
Americas =29.7 million barrels a day
Asia/Pacific =25.2 million barrels a day
Europe = 15.6 million barrels a day
FSU = 4.3
Middle East = 7.2
Total world consumption is currently estimate at 85.2million barrels a day for 2009

But because the IEA keeps revising world oil demand down for 2009 let’s look at it as 80 million barrels a day average for now. World reserves= 1,317.447 billion barrels World Oil Consumers per day= 80 million barrels of oil per day1,317.447Billion divided by 80m = 16,468.09 days divided 16,468.09 by 365=45 years of consumption left at the current rate of use.
This is using the presumption that the world supply can produce 80million barrels a day in time to come. As it is common knowledge in the oil industry that once a well starts to run out it can go into a step decline and flow rates can drop away to nothing very quickly.
Mexico would be the prime example of this with its Cantarell field, Cantarell’s production peaked in 2004 at 2.113 million barrels per day. Cantarell, fell from 1.99 million b/d in January 2006 to 1.44 million b/d in December 2006. By December 2008, oil production at Cantarell had fallen to 811,000 barrels per day. Cantarell was the world’s second largest producing well and only one of 5 that was producing over a million barrels a day in 2004.
It’s this step decline that has grabbed the world attention with a whopping drop of 66% in 4 short years and will this set the precedent for things to come as other giant oil fields start to decline?
Well yes, we are seeing this happen elsewhere like Iran for example
In the late 1970’s, Iran produced a peak of six million barrels a day. Its production now
averages around 3.5 to 3.7 million barrels per day. Iran’s offshore production accounts
for over 600,000 barrels per day of its production. The balance of about 3 million
barrels a day comes from a group of old, mature fields, most in the Khuzestan region
near the Iraq border. Many of its key giant fields are now reported to be in serious
states of decline as highlighted by the South Pars gas reinjection programs.
Iran has 41 producing fields. Five or six of fields, including Ahwaz-Bangestan, Agha
Jari, Bibi Hakimeh, Marun and Gachsaran once produced close to one million barrels
per day each. Today, these five fields collectively account for approximately 1.1 million
barrels per day.

Some more examples
Indonesia- they are almost consuming as much as they produce
Russia - who's flow rates have drop according to the IEA by almost a million barrels a day in 2008
UK North Sea fields- The all time high of 2.9 million bpd was reached in 1999. Decline that began in 2000 is caused by resource depletion and exhaustion of reservoir energy. It is no longer possible to bring on new small fields fast enough to compensate for natural decline and the trend that has now existed for 8 years will likely continue down
and the list goes on

To stimulate these wells to try and maintain flow rates costs hundreds of millions and exploration and field development costs billions. Brazil’s per-salt fields the only major oil discovery in 20 years will cost $400 billion to bring on line according to Petrobras.
So is peak oil here?
Who knows as new technologies become available and secondary recovery rates improve maybe we will be able to add another 20 years to our known oil reserves but one thing is for sure and that is that cheap oil has gone forever and we will all have to pay the piper sooner or later.


Research links
Please see
http://www.eia.doe.gov/emeu/international/reserves.html
http://www.iea.org/index.asp
researcher and author
ciggys