Can oil production keep up?

“We Appear To Be Very Close To Peak Global Oil Production, And That Has Enormous Implications For The Entire Global Economy”

" Production has struggled to keep up with demand, and now it appears that we will soon reach a point where we are simply not able to produce enough for everyone."

https://peakoil.com/consumption/we-appear-to-be-very-close-t…

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Ah, Peak Oil. Now that takes me back…

If I remember correctly, certain folks thought that Saudi Arabia had peaked back in 2011 back at 9 million bpd - and would have consumed all of its own oil by now:

https://discussion.fool.com/saudi-hits-peak-oil-29252788.aspx?so…
https://discussion.fool.com/one-definition-of-peak-oil-and-it-mi…

You’d have to be a real cornucopian to predict that a decade later Saudi Arabia would still be producing about 10.7 mpbd (give or take), have years left of production and room to grow another 3 mbpd on top of that. To say nothing of U.S. oil production basically doubling - and staying doubled from around that time frame.

A lot of the old ASPO and Peak Oilers have long gone (Deffeyes and Campbell have passed on, Matt Savinar is now an astrologer, etc.). Daniel Yergin long ago took his victory lap. And the Red Queen still hasn’t run out of steam…

Albaby

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<Ah, Peak Oil. Now that takes me back…

If I remember correctly, certain folks thought that Saudi Arabia had peaked back in 2011>

I remember the Peak Oil story in 2007-8, when the price of oil soared to $190/ barrel in June 2008. Subsequently fell to $40/ barrel during the Great Recession in 2016.

https://www.macrotrends.net/1369/crude-oil-price-history-cha…

Wendy

albaby:"If I remember correctly, certain folks thought that Saudi Arabia had peaked back in 2011 back at 9 million bpd - and would have consumed all of its own oil by now:

You’d have to be a real cornucopian to predict that a decade later Saudi Arabia would still be producing about 10.7 mpbd (give or take), have years left of production and room to grow another 3 mbpd on top of that. To say nothing of U.S. oil production basically doubling - and staying doubled from around that time frame.

Well, it seems that 10.7 mbpd isn’t all that far from 9 mbpd is it? It was fracking and horizontal drilling technology that got it to 10.7 (up 15%) but Saudi now saying it’s max capacity is 13 mbpd.

It takes a lot of investment (half a trillion) to go from a steady 10.7 mbpd to more than 13 mbpd and it may not be worth that investment if the world is set on reduced carbon footprint. Which it really isn’t, but once Russia is back on line, why produce more and drop the price of oil - meaning less overall revenue.

Saudi is attempting to up it’s value chain - refining and selling products and chemicals rather than just crude oil. Spending their billions that way.

Meanwhile, most of the rest of the world is declining.

look to CHina…produces under 5 mbpd…uses over 12 mbpd… mass imports of oil - and if they use their reserves (not possible) it would all be gone in five years. Same for NG -

https://www.worldometers.info/oil/china-oil/

Europe? joke joke…totally dependent upon others for energy.

After the pandemic reduction is over, fossil fuels , especially NG, will be ever more important.

The Saudis indicate their max production is limited by field geology, pressure issues, complicated reservoir geology. THey are tapping harder and harder to get oil as time goes on…

The Bakken and Haynesville oil/gas fields are already maxed out and declining. The same will be true for most fracked wells.

We’ll see…

Meanwhile, other countries have their issues. Nigeria…Libya… and not a whole lot of new production to replace normally declining production due to field depletion are coming on line.

t.

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Well, it seems that 10.7 mbpd isn’t all that far from 9 mbpd is it?

Yes, it is. It’s 20% higher, and more than eleven years later.

At the risk of rehashing about 15 years of discussion over on Peak Oil Party, the discussion of Peak Oil has never been between whether oil production can increase forever or not. It obviously can’t. Oil is a finite resource - by definition, the amount of oil extracted per year must one day reach a maximum volume. The debate was whether oil production was going to peak in the near term (and more specifically, whether Hubbert’s analysis was at all accurate in making those predictions).

IIRC, back in the early 2000’s the EIA projection was that global oil production would reach a peak in around 2030. The ASPO folks (Simmons, Campbell, Deffeyes, LaHerrere, etc.) claimed that was pollyannish and that oil would be peaking in the next five years or so, if not sooner (Deffeyes claimed it had peaked in 2005). It’s pretty clear that EIA had it right. The Red Queen notwithstanding, the U.S. still producing more than double the amount of oil that it did prior to the fracking boom - more than a decade later.

Every time oil output flattens for a little bit, you start to see think pieces on websites devoted to resource scarcity proclaiming that this time we’re actually at the peak. That’s been happening since 1991 - folks have been claiming that we’re within 3-5 years of the peak pretty consistently for the last thirty years, though the utter failure of their models to anticipate that yes, shale oil is real oil, did push them back a bit. One of these days they’ll be right, but it’s not because they have any real insight into when the peak will happen.

Albaby

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To say nothing of U.S. oil production basically doubling - and staying doubled from around that time frame.

To be fair, that’s only due to enormous ongoing subsidization by Wall Street. How much is the total loss of the fracking sector by now? I remember when it was 350 billion dollars, but that was several years ago.

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To be fair, that’s only due to enormous ongoing subsidization by Wall Street. How much is the total loss of the fracking sector by now? I remember when it was 350 billion dollars, but that was several years ago.

Don’t know. But industries (as opposed to individual companies) can survive that way for a very long time. As I mentioned in the other thread, Warren Buffett has observed that the airline industry has been destroying capital for nearly 100 years:

"If a capitalist had been present at Kitty Hawk back in the early 1900s, he should have shot Orville Wright. He would have saved his progeny money. But seriously, the airline business has been extraordinary. It has eaten up capital over the past century like almost no other business because people seem to keep coming back to it and putting fresh money in."

https://www.forbes.com/sites/tedreed/2013/05/13/buffett-decr…

With current high oil prices and newfound restraint in fracking expansion, the industry seems to have shifted focus away from breakneck growth and towards a more profitable equilibrium. But we’ll see what happens over time. In the meanwhile, it’s highly unlikely that U.S. crude production is dropping back below 10 mbpd any time soon - which means even more time spent at double the pre-fracking levels…

Albaby

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interesting chart of USA oil production.

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&…

Hubbert predicted the USA ‘conventional’ oil would peak in 1973. It did. that allowed the USA to be vulnerable to the Arab embargo (we were energy independent prior to 1973).

It was only ‘deep sea’ and shale oil (fracking) that boosted us back up…but as we’ve seen, the fracking fields tend to poop out rather quick. A conventional field might produce for 30-40 years other than the very few super giant fields like Ghawar in Saudi…

Saudi is unlikely to increase production much

https://www.reuters.com/business/energy/how-much-extra-oil-c…

Even worse, every year Saudi itself consumes more and more of it’s own oil, leaving less for exports. Look at export numbers - Saudi exports 2/3rds of production, uses the 1/3rd to run all the cars/trucks/buses in the country, plus industry plus electricity generation, use in oil fields for production equipment, etc. the population is growing there by leaps and bounds with ‘free’ everything from marriage bonuses to free schools and health care. Same is true for much of Middle East.

It’s not like other ‘oil rich’ countries that have gone down that path.

As to the US, we use ALL our oil production and import another 7-8 million a day, too…not a whole lot these days to share with anyone else. Back in the 1940s, we supplied all of Europe with US oil - to keep the war machine WW2 moving…and had enough for home

Interesting chart of the Bakken - note the production per well is dropping the last 10 years…and of course, the sweet spots were drilled first…so you keep drilling like crazy to keep up production…and next year 10% more drilling and the year after another 10% more drilling on top of that

https://www.dmr.nd.gov/oilgas/stats/historicalbakkenoilstats…

Who is going to keep throwing money at this? The shale oil companies burned through billions bucks of investor money. Most went BK over the years.

t

According to the EIA, petroleum and other liquids production peaked in 2018. You can change the range of dates to show more years, but it peaked in 2018:

https://www.eia.gov/international/data/world/petroleum-and-o…

According to the analysts at PeakOilBarrel, peak production occurred in November, 2018, and has not been higher in any month since.

Here is a new detailed study on the subject of remaining oil reserves. I have not read it yet.

https://www.sciencedirect.com/science/article/pii/S266604902…

“One of these days they’ll be right, but it’s not because they have any real insight into when the peak will happen.”

I disagree with that. My opinion is that people in the industry have a great deal of insight into their business. I also think the people at Peak Oil Barrel are very dedicated in their efforts to understand the energy world. Two of the contributors gather existing data each month, careful adjusting their models for the future. They offer slightly different conclusions, though the most optimistic is peak oil (petroleum and other liquids) occurs in the mid- to late-2020s.

Here is a typical discussion from last month at PeakOilBarrel. The comments section is at least as interesting as the presentation:

https://peakoilbarrel.com/opec-update-july-2022/#more-38087

A concern is the role of debt in the system. Borrowing money to accelerate growth may result in a steeper decline once the peak has been reached.

Even to a casual observer with a rudimentary understanding of a bell curve or a sine curve, it’s obvious that oil production growth has dropped from several MB/s increases per year in the mid-20th century to 1-2 per year in this century, and to do that the U.S. started fracking shale fields. And now we’re down a few Mb/s lower than the peak in 2018, though the pandemic appears to be a significant factor.

Like climate change, it’s almost certainly going to be worse that the experts predict. That’s because scientists are careful not to exaggerate.

Finally, we’re experiencing high inflation and low if any growth. People are having trouble acquiring the goods and services they want or need, and nobody seems to think that a resource crunch is a factor. While I agree that a big part of the problem is that corporations have immense pricing power, oil production is down 5% from four years ago, and contrary to contemporary wisdom, oil demand never wanes. There’s always something valuable that can be done with it.

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Figure 7 on that link says it all…

https://peakoilbarrel.com/opec-update-july-2022/#more-38087

peak around now - down significantly by 2040…

good reading

t.

Hubbert predicted the USA ‘conventional’ oil would peak in 1973.

No, he didn’t. He predicted that oil would peak by then - he expressly discussed what we now considered to be “unconventional” oil and included it in his analysis. We talked about this back on PoP. I wish TMF’s search function wasn’t completely bollixed, so I could find that discussion.

Even worse, every year Saudi itself consumes more and more of it’s own oil, leaving less for exports. Look at export numbers - Saudi exports 2/3rds of production, uses the 1/3rd to run all the cars/trucks/buses in the country, plus industry plus electricity generation, use in oil fields for production equipment, etc. the population is growing there by leaps and bounds with ‘free’ everything from marriage bonuses to free schools and health care.

I know - that’s the same argument you were making back in 2011, when you predicted that Saudi’s own use was growing so much and so fast that by 2021 they were going to be consuming all of their oil, with none to export. Yet here we are, in 2022, and they’re still exporting the overwhelming majority of their oil - as are most of the countries that the “Export Land Model” predicted would have started completely eating all their own supply.

As to the US, we use ALL our oil production and import another 7-8 million a day, too…not a whole lot these days to share with anyone else.

No, we don’t. We’re actually a net exporter of petroleum products. Again, that’s why I liked to tweak the idea of an “Export Land Model” with the “Import Land Model.” The U.S. went from importing about 13 million bpd back in 2006 to exporting about a million bpd - a swing of about 14 million bpd out into the oil markets, completely dwarfing all effects of the “Export Land Model”:

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&…

The reason we still import crude oil is not because we need it to meet our own needs. Partially we’re exporting our refining capacity (we import oil from Mexico and send it right back as gasoline), partially we’re a through-way for Canadian oil (which heads down to the Gulf and is exported as finished product), and partially it’s often easier logistically to import oil by ship to the coastal areas than to move domestic oil to the northeast.

Albaby

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“The reason we still import crude oil is not because we need it to meet our own needs. Partially we’re exporting our refining capacity (we import oil from Mexico and send it right back as gasoline), partially we’re a through-way for Canadian oil (which heads down to the Gulf and is exported as finished product), and partially it’s often easier logistically to import oil by ship to the coastal areas than to move domestic oil to the northeast.”

Much of New England ‘imports’ oil and same for other places simply because of US shipping rules (Jones Act) that require anything shipped from US port to US port must be manned by high cost US labor. So it doesn’t happen. Nearly all oil transport is by ships registered in a half dozen favorite low tax haven nations and manned by crews mostly of foreigners.

At current growth rates, Saudi WILL consume more and more of it’s own oil.

– As to the US

“In 2021, the United States imported about 8.47 million barrels per day (b/d) of petroleum from 73 countries. Petroleum includes crude oil, hydrocarbon gas liquids (HGLs), refined petroleum products such as gasoline and diesel fuel, and biofuels.”

https://www.google.com/search?q=US+oil+imports+2021&clie…

If we export a measly 1 million, that means we are IMPORTING AND USING 7.47 million barrels a DAY of imported oil for our own needs.

t.

At current growth rates, Saudi WILL consume more and more of it’s own oil.

Which is why I remind you that when you did a straight-line projection of then “current growth rates,” you concluded that Saudi would be consuming all of its own oil by now. Projecting current growth rates forward isn’t necessarily going to be accurate.

If we export a measly 1 million, that means we are IMPORTING AND USING 7.47 million barrels a DAY of imported oil for our own needs.

No it doesn’t.

The one million bpd is net exports. Total exports minus total imports. We went from a net importer of 13 million bpd to a net exporter of about a million bpd.

Albaby

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“In 2021, the United States imported about 8.47 million barrels per day (b/d) of petroleum from 73 countries. Petroleum includes crude oil, hydrocarbon gas liquids (HGLs), refined petroleum products such as gasoline and diesel fuel, and biofuels.”

https://www.google.com/search?q=US+oil+imports+2021&clie…

If we export a measly 1 million, that means we are IMPORTING AND USING 7.47 million barrels a DAY of imported oil for our own needs.

We don’t though. We export 8.63 MBD, which means the US is a net exporter.

https://www.eia.gov/tools/faqs/faq.php?id=727&t=6#

As an aside, there is an odd custom on this board to link to Google searches instead of to web pages with the actual information. I don’t understand the point.

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Albaby

a solid corrective accurate post. Thank you.

david fb

That math doesn’t work

“In 2021, the United States consumed an average of about 19.78 million barrels of petroleum per day, or a total of about 7.22 billion barrels of petroleum. This was an increase in consumption of about 1.6 million barrels per day over consumption in 2020. The increase was largely the result of the economy recovering from the coronavirus (COVID-19) pandemic.”

"In 2021, U.S. crude oil production equaled about 11.19 million barrels per day (b/d), crude oil imports equaled 6.11 million b/d, and crude oil exports equaled 2.98 million b/d, with net crude oil imports equaling 3.13 million b/d.

In 2021, U.S. total petroleum imports equaled about 8.47 million b/d and total petroleum exports were 8.63 million b/d, with net total petroleum exports equaling about 0.16 million b/d. This was the second year (along with 2020) since at least 1949 that annual total petroleum exports were greater than total petroleum imports."

https://www.eia.gov/tools/faqs/faq.php?id=32&t=6

If it weren’t for the pandemic and high oil prices, and reduced US consumption, we’d still be a net importer.

t

That math doesn’t work.

It’s laid out in more detail here:

https://www.eia.gov/totalenergy/data/monthly/pdf/sec3_3.pdf

Math works out fine. We’re averaging about 0.9 mbpd in net exports for 2022.I rounded that up to a million for convenience - close enough for government work.

If it weren’t for the pandemic and high oil prices, and reduced US consumption, we’d still be a net importer.

We became a net exporter before the pandemic, and before high oil prices. Imports first fell below exports in October of 2019, and remained consistently below until the pandemic downturn began in earnest:

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&…

We became a net exporter because total U.S. domestic production nearly tripled, skyrocketing from a near-term low of 6.8 mbpd in 2006 to the current levels of about 17.4 mbpd. That’s an avalanche of oil production - we basically added a Saudi Arabia to U.S. production, just through technology and vast unconventional resources. Not bad for a country that Peak Oil folks claimed had peaked in the seventies and was only going to experience perpetual decline…

Albaby

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If it weren’t for the pandemic and high oil prices, and reduced US consumption, we’d still be a net importer.

And if we weren’t importing crude oil that we refine into immediately-useful products and then export, we would be importing a lot less crude oil.

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