Oil Will Decline Shortly After 2015, Says Former Oil Expert Of
International Energy Agency
By Matthieu Auzanneau
23 February, 2012
Oil Man Blog
Olivier Rech developed petroleum scenarios for the International Energy Agency over a three year period, up until 2009. This French economist now advises large investment funds on behalf of La Française AM, a Parisian assets management firm.
His forecasts for future petroleum production are now much more pessimistic than those published by the IEA. He expects stronger tensions as of 2013, and an inevitable overall decline of oil production "somewhere between 2015 and 2020", in the following exclusive interview.
Rech’s outlook serves as another significant contribution to the expanding list of leading sources portraying the threat of an imminent decline in global extraction of crude oil.
What do you foresee? Let’s begin with the non-OPEC producers (which represent 58% of production and 23% of global reserves).
Outside OPEC, things are clear: of 40 million barrels per day (mb/d) of conventional petroleum extracted from existing fields, we face an annual decline on the order of 1 to 2 mb/d.
In your view, are we therefore close to the 5% decline per year from existing production mentionned by Royal Dutch Shell?
Yes, that’s about it.
And for OPEC production (42% of production and 77% of global reserves) ?
It’s more difficult to say; the data are still opaque. We are stuck in a haze. Nevertheless, I note that Barclays and Goldman Sachs banks estimate that the spare production capacity of OPEC, more particularly that of Saudi Arabia, is significantly lower than what is officially claimed.
Many new production projects are presently under development all around the world. What should we expect of them?
There are new projects off the coasts of Brazil, Ghana and Guyana. The Gulf of Mexico is far from being depleted. The Arctic is far less certain, but there is real potential for natural gas there. Nevertheless, we must still expect a decade before seeing eventual and significant production of petroleum.
In that case, what is your view on the timing of the global peak and decline of total world oil and alternative liquid fuels output?
It is always delicate to project a precise date. The recovery rate of existing fields is increasing. The US on-shore production is declining very slowly (and one must add that they are drilling in a frenzy over there). It is an error to underestimate the know-how of drilling engineers.
Taking account of all these factors capable of slowing a decline, what conclusion do you draw?
We will certainly remain below 95 mb/d for the combined totals of conventional and non-conventional oil.
Therefore, you are clearly more alarmist than the IEA and Total, the most pessimistic of petroleum companies. Total evokes the possibility of maintaining production on a plateau of about 95 mb/d until 2030.
It's true. The production of oil has already been on a plateau since 2005 at around 82 mb/d. [NB: with biofuels and coal-to-liquid, we approximate 88 mb/d for all liquid fuels.] It appears to me impossible to go much higher. Since demand is still on an increasing trajectory (unless, possibly, the economic crisis engulfs the emerging economies), I expect to see the first tensions arising between 2013 and 2015.
Matthieu Auzanneau is a French journalist who has been aggressively covering the peak oil story. He posts in French and (some) English at his blog at Le Monde: Oil Man. Reading or linking to the article at his site increases the payments he receives from Le Monde and helps him finance his good work.
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