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This a guest post by Jean Laherrère, a long-time guest contributor to TheOilDrum.

Defining deepwater oil as the offshore resource found in water depths over 500 m, the data available as of October of 2010 was pointing to an ultimate around 150 Gb. This is the result of an extrapolation made last year:

Figure 1: world deepwater (>500 m) creaming curve 1971-Oct 2010

The previous ultimate estimate in 2008 was 100 Gb, missing the third cycle in subsalt plays.

Figure 2: world deepwater (>500 m) creaming curve 1971-2007

The cumulative discovery versus time with the data up to October of 2010 implied that most discoveries would be made before 2025.

Figure 3: world deepwater (>500 m) cumulative discovery versus time 1971-2009

Applying the Hubbert linearisation method to oil discovery confirmed an ulitmate of about 150 Gb.

Figure 4: world deepwater (>500 m) oil discovery Hubbert linearisation

The average oil field size has been around 100 Mb the last 20 years and a little less for gas in Mboe. At the same time there is a sharp change in the number of fields since 1995: it was less than 10 before that date and has been over 50 since!

Figure 5: world deepwater (>500 m) annual oil & gas size

The plot of cumulative discovery versus field elevation shows that the break for water depth is more about 200 m rather than 500 m.

Figure 6: cumulative 2P discovery versus field elevation per continent (mid 2009)

An update of this forecast was made with the data available up to October of 2011, this time with deepwater defined as the resource lying under 200 m of water or more.

The IHS claims that deepwater is for depths over 400 m, but the database indicates that in the terrain deepwater is for over 200 m deep. In the US Gulf of Mexico the deepwater royalty relief act of 1995 refers to depths over 200 m (656 ft), but the MMS (now BOEMRE) reports depths from 1000 ft onwards. There is little consensus on the definition of deepwater, just as for ultra deep.

The annual crude less extra heavy oil discovery is shown here since 1900, with both definitions of deepwater (>200 m and >500 m).

Figure 7: world annual crude less extra-heavy oil discovery and deepwater (>200 & 500 m)

The same data, now plotted as cumulative discovery.

Figure 8: world cumulative crude less extra-heavy oil discovery and deepwater

The creaming curve for world deepwater oil, this time defined as over 200 m deep, is here extrapolated with two cycles towards 200 Gb, meaning about 50 Gb for the water column interval 200-500 m. There is enough uncertainty to allow a third cycle, with a possible increase in the ultimate, but another new subsalt play is needed!

Figure 9: world deepwater (>200 m) creaming curve 1969-Oct 2011

Combining oil and gas yields a simpler creaming curve, except for the last 200 fields.

Figure 10: world deepwater (>200 m) oil plus gas creaming curve 1969-Oct 2011

The cumulative discovery versus time plot displays a sharp increase in the last 15 years, cause by the subsalt plays.

Figure 11: world deepwater (>200 m) cumulative discovery

The plot for oil discovery per continent shows that Latin America has the sharpest increase, due to Brasil. In the past there were jumps in the North Sea with Gullfalks, Troll and Snore in 1978, and in the Caspian with Azeri-Chirag-Guneshli in 1985.

Figure 12: world deepwater (>200 m) cumulative oil discovery per continent

The plot for gas discoveries per continent shows the large jump in 1988 with Shtokman, and the recent increase in Asia since 2000.

Figure 13: world deepwater (>200 m) cumulative natural gas discovery per continent

The creaming curve for oil per continent shows that Brasil with the subsalt discoveries has the largest increase and that North America still has some potential, though the average size here is quite less than in Brasil.

Figure 14: world deepwater (>200 m) oil creaming curve per continent 1969-Oct 2011

The creaming curve for gas shows that the best result is for the CIS (Former Soviet Union) with the Barentz and Caspian 9 discoveries. In second comes Asia and the least efficient is North America. The Middle East with 20 Tcf, mainly from Israel, is at a good start.

Figure 15: world deepwater (>200 m) gas creaming curve per continent 1969-Oct 2011

The average field size is about 100 Mb for oil and 400 Gcf for gas.

Figure 16: world deepwater (>200 m) oil & gas average field size

Conclusion

Subsalt discoveries are now well taken into account in the deepwater oil ultimate and have increased it by around 50 Gb since 2008. It is a significant increase, but very small compared to the uncertainty of past world oil discovery, with the 300 Gb of speculative resources (confirmed by Sadad Al-Huseini) in OPEC reserves and with the 150 Gb correction from ABC1 reserves (used in scout databases) to 2P reserves. For more than ten years I corrected the ABC1 reserves data for the FSU by 30% to reduce them to 2P. This is based on the comparison of ABC1 field data with ultimates obtained from oil decline profiles in some Russian fields. Now Gazprom publishes in their annual report both the ABC1 and 2P reserves, the latter from audits, showing that this 30% correction is correct for oil and gas (ratio 2P/ABC1 = 70 %); nevertheless this figure seems higher for condensate.

Figure 17: Gazprom reserves ratio 2P/ABC1 2003-2010 from annual reports

Furthermore, I have some doubt on the reliability of some deepwater oil reserves figures. My paper entitled ?Deepwater GOM reserves versus production? (part I, part II and part III) shows that the oil estimate of deepwater fields reserves seem optimistic for the Gulf of Mexico, and in particular, Thunder Horse.

The Brasilian subsalt reservoirs are complex and there is little historical production, with only a pilot project online since October of 2010 in Tupi, now called Lula (with 14 wells already drilled) with 6 Gb of 2P reserves. The BG Group, which holds a 25% stake at Lula, has reported on the first production test with a FPSO, three producing wells and one gas injector. While it was expected to reach maximum production at 100 000 b/d, it actually peaked at 70 000 b/d in December of 2011, and has registered a decline of 5 000 b/d in the following two months.

Figure 18: Lula first production: Oct 2010-Jan 2012 from BP Group

In its 2012 annual report, the BG Group forecasts gross production capacity in this play to reach 2.3 Mboe/d in 2017, with a total of 13 FPSO in the Lula, Cernambi (formerly Iracema) and Guara fields.

Deepwater oil production will help reduce the decline in world oil production from aging fields. The IEA claims that four Saudi Arabias need to be discovered by 2030 to replace the present decline in production (about 5 %/a). The deepwater ultimate is likely to represent less than half of Saudi Arabia?s oil ultimate. It is not enough!

During the past seven years, TheOilDrum.com has hosted analysis and discussion surrounding the possibility and implications of a near term peak in global oil production and importance of energy to society in general. Out of the ~8,500 articles posted here (all searchable by keyword in upper left), the list below comprises what each author considered some of their most relevant content.

The list is in alphabetical order, by last name of Oil Drum contributor. Click on the author's name to go to their list of selected articles. At the end of each section, a link is given to the complete list of all articles by that author.

List of Authors

Gail the Actuary

Ugo Bardi

Art Berman

Jason Bradford

Joules Burn

François Cellier

David Clarke

Samuel Foucher

Nicole Foss

Big Gav

Prof. Goose

Nate Hagens

Phil Hart

Rembrandt Koppelaar

Rune Likvern

Euan Mearns

David Murphy

Heading Out

Jérôme à Paris

Engineer-Poet

Robert Rapier

Luis de Sousa

Stuart Staniford

Jeff Vail

Chris Vernon

List of Articles

Gail the Actuary

Oil Limits, Recession, and Bumping Up Against the Growth Ceiling.
Write up of an introductory presentation, explaining our how limited oil supply is causing recession and lower economic growth.
Are We Reaching Limits to Growth?
Looks at our current financial and other problems, in relationship to Limits to Growth (from the 1972 book by that name).
IEO 2011: A Misleadingly Optimistic Energy Forecast by the EIA
Explains why the latest official forecast of the US Energy Information Administration appears optimistic.
Kidding Ourselves About Middle East/North Africa Oil Production.
Why claims about future high oil production from Middle East/North Africa are likely overstated.
The Link Between Peak Oil and Peak Debt - Part 1
Why limited oil supply is likely to be associated with declining debt availability.
What's Behind Egypt's Problems?
Explains the connection between declining oil exports and Egypt's "Arab Spring."
Is It Really Possible to Decouple Energy Growth from GDP Growth?
Explores why growth in energy efficiency seems to have stopped after 2000. Also see Thoughts on Why Energy Use and CO2 Emissions are Rising as Fast as GDP
The US Electric Grid: Will it be Our Undoing? ? Revisited
Why the US electrical transmission system has so many challenges, and the many obstacles to improving it.
Social Security and Medicare Funding Issues: Even Worse when One Considers Resource Constraint
Why Social Security and Medicare funding issues are even worse, when Peak Oil is considered.
What Can We Learn from Gift Economies?
Campfire post relating to a system where individuals gain status not by what they have, but by what they give away.
There is plenty of oil but . . .
There is a huge amount of oil that theoretically can be extracted, but the question is whether the cost will be cheap enough for us to be able to afford to extract it. If the oil is too expensive to extract, the shortage of oil seems to cause a recession, similar to what we are having now.
Scientific American's Path to Sustainability: Let's Think about the Details
Scientific American presents "A Path to Sustainable Energy by 2030" in its November 2010 issue. I explain why it wouldn't work.
Some Cautionary Thoughts about Wind
Offers ten reasons why wind is not as an attractive an option as many think it is.
Delusions of Finance: Where We are Headed
Explanation of why my financial forecasts at the beginning of 2008 turned out to be correct.
Peak Oil and the Financial Markets: A Forecast for 2008
A financial forecast for 2008 that in retrospect has proven accurate.
Our World Is Finite: Is This a Problem?
Post written before I became an Oil Drum staff member that lays out may of the major issues that I continue to write about.
Read more posts by Gail the Actuary. (Real name, Gail Tverberg)
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Ugo Bardi

"Peak Civilization": The Fall of the Roman Empire
A post attempting to apply system dynamics to the fall of the Roman Empire which - as far as I know - has not been done, so far.
Cassandra's curse: how "The Limits to Growth" was demonized
With its scenarios of civilization collapse, the book shocked the world perhaps more than Cassandra had shocked her fellow Trojan citizens when she had predicted the fall of their city to the Achaeans. Just as Cassandra was not believed, so it was for the "Limits to Growth" which, today, is still widely seen as a thoroughly flawed study, wrong all along.
The Universal Mining Machine
Why can?t we build a universal mining machine here, on Earth, and stop worrying about running out of mineral resources?
Mind-sized Hubbert
What is it, exactly, that causes production peaks for oil and for other non renewable resources?
The dark side of coal - some historical insights on energy and the economy
In this post, I start to tell the story of coal in Italy and how the fortunes of the country went in parallel with those of coal well until mid 20th century.
The church, the peak, and my old watch
A post about leaving something that lasts a long time and that doesn't need precious resources that can't be replaced.
The post-peak car
A fantastic account of how a 1970s Fiat 500 has been retrofitted with batteries and an electric motor to create the Post Peak Car.
How to Drive your Elephant - Dealing with Complex Problems
How elephant driving may be seen as as a metaphor for controlling complex systems.
Peak Minerals
A post taken from a report co-authored with Marco Pagani which examines the world production of 57 minerals reported in the database of the United States Geological Survey (USGS) and makes the case for the peak and decline of many of these minerals in the near future.
Peak Caviar
"Peak Caviar" is another confirmation of how common the "Hubbert" behavior is. It doesn't matter if a resource is theoretically renewable, as sturgeons and whales are. If sturgeons or whales are killed much faster than they can reproduce, then they behave as a non renewable resource; just as crude oil.
Read more posts by Ugo Bardi
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Arthur E. Berman

Arthur Berman talks about Shale Gas
McMoRan Davy Jones Gas Discovery
Co-written with Joshua H. Rosenfeld, this post looks at a significant discovery in the U.S. Gulf of Mexico by the McMoRan Exploration Company that may contain 2-6 trillion cubic feet (Tcf) of natural gas reserves.
Shale Gas?Abundance or Mirage? Why The Marcellus Shale Will Disappoint Expectations
Shale gas plays in the United States are commercial failures and shareholders in public exploration and production (E&P) companies are the losers. This conclusion falls out of a detailed evaluation of shale-dominated company financial statements and individual well decline curve analyses.
BP Macondo Blowout - Static Top Kill vs. Bottom Kill: Weighing the Risks
A post co-written with William Semple.
Is the Drilling Moratorium Long Enough? No, Not Really
The key issues around the drilling moratorium as I see them.
What caused the Deepwater Horizon disaster?
The blowout and oil spill on the Deepwater Horizon in the Gulf of Mexico was caused by a flawed well plan that did not include enough cement between the 7-inch production casing and the 9 7/8-inch protection casing. The presumed blowout preventer (BOP) failure is an important but secondary issue.
ExxonMobil?s Acquisition of XTO Energy: The Fallacy of the Manufacturing Model in Shale Plays
Most analysts believe that the ExxonMobil acquisition of XTO Energy (XTO) represents a dramatic shift in strategy by the premier exploration and production (E&P) company, and a validation of shale plays. It is neither. The move represents a considered and deliberate choice that acknowledges diminished opportunities for the oil giant to add and replace reserves.
Read more posts by Arthur Berman
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Jason Bradford

The Thermodynamics of Local Foods
I wrote this in response to a slew of media attention that argued against local foods. However, based on thermodynamics, only a predominantly local food system will be sustainable in the long run.
Ecological Economics and the Food System
This is a summary of energy use in the U.S. food system placed in the context of ecological economics. Our current food system is structured inappropriately for long-term viability, and the kinds of shifts required to make it more enduring are discussed.
Save it for the Combine
Few people understand how critical certain technologies are to their survival and way of life. The combine allows one person to harvest the food for hundreds, saving enormous labor while using liquid fuels. I argue that any rationing of liquid fuels or use of biofuels be prioritized for the combine.
The Food System and Public Policy
Many in the U.S. like to think we live in a free market economy. But when it comes to development of the food system public policy explains much of what we see.
The Food System and Resilience
Resilience is a concept from ecology that can be applied to any complex system. When the current food system is examined using a resilience framework it is found to be very fragile. The essay concludes by outlining the possible emergence of more resilient food systems given new economic and energetic realities.
Energy Descent and Agricultural Population
This article includes a graph that combines data on energy use and percent rural population, showing that more energy in a society lowers the proportion engaged in farming. Given the shape of this relationship, can we make some educated speculations about shifting labor demographics in highly industrialized nations during energy descent?
Scenario 2020: The Future of Food in Mendocino County
I believe there?s the possibility of a near-term collapse of complex societies given a financial shock, perhaps precipitated or exacerbated by political and energy crises. This photo essay conveys this potential from an imagined future, with an emphasis on the food system.
I have an interest in economics, in the broad sense, of how and why people and societies chose to invest and consume, and what this means for resources and the environment. The following three essays share a common theme: resources are only constrained in a world with exponentially growing demand for more stuff. Reducing demand is more important than increasing supply, and ultimately we have no choice. However, conscientious curtailment comes up against both engrained pyscho-social reward systems, which are largely explored in the first two essays, and the structure of our financial system, which is touched upon in the third.
Finding Healthy Addictions
Dopamine Returned on Energy Invested (DREI)?
Advice to Pres. Obama( #6): Beware the Hungry Ghosts
Read more posts by Jason Bradford
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Joules Burn

Khurais Me A River
An early look at the development of the Khurais oilfield in Saudi Arabia using satellite imagery, reviewing past efforts to produce from the field.
Ghawar Numerology: Drilling in Uthmaniyah
An animated history of the drilling sequence in one part of the Ghawar oil field in Saudi Arabia.
Saudi Arabia's Ghawar Isn't Sinking (but has apparently moved)
A critical look at satellite imagery analysis which reached some faulty conclusions regarding the behavior of the Ghawar field upon depletion.
Abqaiq and Eat It Too
A look at recent developments in the giant Abqaiq field in Saudi Arabia using satellite imagery combined with published reports.
Local Scientist Splits Water, Saves World, Gets On TV
A skeptical look at recent claims of a breakthrough in water electrolysis to produce hydrogen.
Five Easy Leases: Ghawar's Discovery Wells
An in-depth look at the first wells drilled in the five operational areas for the Ghawar field, including their current status.
Who Killed the Electric Gas Tank?
A look at claims of a breakthrough in ultracapacitors for energy storage in electric vehicles.
Saudi Aramco Loses Count, Drills Too Many Wells In Ghawar
An satellite imagery analysis of Saudi drilling activity in the southern-most part of the Ghawar field, showing that more has been going on than publicly revealed.
Lessons Left Unlearnt From 2003 Gulf of Mexico Near-Spill
A look in the US Materials Management Service datafiles revealing a number of accidents and near misses which preceded the massive BP spill in the Gulf of Mexico.
Crude Confessions: Massive Saudi Oil Spill in 1993?
A look at how Saudi oil is transported out of the country in the context of claims of a secret oil spill.
Read more posts by Joules Burn
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François Cellier

Ecological Footprint, Energy Consumption, and the Looming Collapse
This article explores dynamic relations governing population growth, resource depletion, and world economics by means of a few simple modeling and simulation exercises.
Is the 2000 Watt Society Sustainable in Switzerland?
In this presentation, we discuss whether the 2000 Watt Society is at all sustainable, and if so, what it will take to keep energy supply at that level after the end of ample and cheap fossil fuels.
The Slavery of Oil
A review of a proposed methodology that would allow me to quantify the price level of crude oil at which our economies will stall.
Read more posts by François Cellier
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David Clarke

The Failure of Networked Systems: The Repercussions of Systematic Risk Revisited
Cascading collapse and why the corporate drive towards increasing efficiencies could be driving our interacting networked systems towards this mode of collapse.
The Networking of Resource Production: Do the Networks Give us Warnings when They are About to Fail?
The flaw in the techno-cornucopian dream: Modeling why and how a networked resource-extraction system fails.
Read more posts by David Clarke
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Samuel Foucher

Analysis of Decline Rates
This post offers a kind of reverse engineering of what numbers could be behind the long and detailed IEA decline analysis in their last report (2008 IEA WEO). A tentative decline structure for the post-peak Super-Giant and Giants oilfields is offered as well as a possible scenario for future production.
Peak Demand or Peak Consumption? A Look at OECD Oil Demand
In this post I show that the key driver behind the oil price increase since 2002 has been excess demand combined with unresponsive supply.
Peak Oil Update - July 2009: Production Forecasts and EIA Oil Production Numbers
An update on the latest production numbers from the EIA along with graphs/charts of different oil production forecasts.
Estimating the World Production Decline Rates from the Megaproject Forecasts
Having a good estimate of the decline rate of the resource base (most estimates are ranging between 2 and 6%/year) is fundamental for the precision of supply forecasts derived from megaproject database.
Saudi Arabia: An Attempt to Link Oil Discoveries, Proven Reserves and Production Data
This article is an attempt to apply the Hybrid Shock Model (HSM) on Saudi Arabia's oil production. In a nutshell, the HSM is trying to model the observed production profile from the discovery curve by simulating the different phases involved in the development of oilfields (initial discovery, planning, build, maturity).
Why We (Really) May Have Entered an Oil Production Plateau
We know that some countries (around 56) have seen their production peaked (also called type III depletion). The remaining group consists of 17 countries that have the potential to grow or maintain their current production (the type II group). I propose to apply the HL technique only on the total production from the the type III group and try to assess the future production decline coming from that group.
An Update on Mexico's Oil Production--The Rapid Collapse of Cantarell by the Numbers
Last year, I expressed my concerns about the eventual impact of a rapid collapse of Cantarell on Mexico's oil production. The last production numbers from PEMEX seems to confirm the rapid decline of Cantarell as well as the inability of the Mexican to rapidly bring new production online.
The Loglet Analysis
Most peakoilers on this site have been introduced to the logistic curve through the famous prediction of King Hubbert on the Lower-48 production. Fewer maybe knows that curve fitting techniques have been extensively applied by people that we may qualify as cornucopians. Ironically, the logistic curve is also used as a prediction tool for market share and technology substitution.
A Different Way to Perform the Hubbert Linearization
A quick post about a different manipulation of the logistic differential equation. By using the first derivative, we get a new way to perform the Hubbert linearization. Some results are given on Norway and the US oil production.
Norway and the Parabolic Fractal Law
Norway can be considered as the poster child of the Hubbert curve modeling approach with a production profile that is remarkably close to the logistic curve.
Read more posts by Samuel Foucher
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Nicole Foss

Entropy and Empire This article is a discussion of the rise and fall of empire (in thermodynamic terms) and the process of imperial succession.
The Resurgence of Risk Resurgence of Risk is a description of the developing credit crunch from its inception - an explanation of how we arrived at this financial crisis and where we are headed.
Smart Metering and Smarter Metering Electricity metering is a significant means of addressing excess demand, but the high-tech metering solutions being proposed miss many opportunities because they pay no attention to psychological drivers.
A MacKenzie Valley Pipedream? This piece assesses the prospects for the construction of a MacKenzie Valley pipeline through the Canadian north.
Anaerobic Digestion in Ontario - A Regulatory Obstacle Course Renewable energy technologies wishing to connect to the grid face significant regulatory obstacles that add so much to project costs that project viability is threatened.
Read more posts by Nicole Foss
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Big Gav

Concentrating On The Important Things - Solar Thermal Power
While we spend a lot of time talking about traditional energy sources based on depleting resources that are extracted from the ground, I think its important to remember that the fastest growing sources of energy are solar and wind, and that these will never run out.
Tapping The Source: The Power Of The Oceans
A post examining the use of artificial islands to collect wind, wave, ocean current and solar power in the tropics, along with a more unusual energy source - harnessing the difference in water temperatures between the warm surface and the cold depths using a technique called OTEC (Ocean Thermal Energy Conversion).
Geothermal Energy: Geothermia
Crossposted from my blog Peak Energy as the subject of geothermal power has cropped up in the comments a few times lately.
Floating Offshore Wind Power
An update on a post I did last year on the potential for floating offshore wind power, which looked at a number of different prototypes at various stages of development.
The Limits To Scenario Planning
A review of some common misconceptions about the Limits to Growth book.
Iraq's Oil: The Greatest Prize Of All
In this post I'll outline why I believe that Iraq probably has the world's largest oil reserves - or, as Daniel Yergin once said of the middle east, it is "the greatest single prize in all history".
Natural Gas In Australia - How Long Will It Last?
In this post I have a look at how much gas Australia has and how long it will last under a variety of scenarios.
Coal Seam Gas In Australia
In this post I look at recent events in the gas industry and what they mean for Australian gas production in future.
The Hydrogen Economy and Peak Platinum
A comprehensive review of the issues involved in the "hydrogen economy".
Hubbert: King Of The Technocrats
In this post I explore the Technocracy movement and Hubbert's role in it.
Locabucks: Are local currencies a way to escape the liquidity trap?
I look at the concept of local currencies (or "locabucks" as I'm now dubbing them), an idea which has its roots in the Great Depression as a mechanism for escaping the liquidity trap - and thus might be relevant again in the not-too distant future if present trends continue.
Terra Preta: Biochar and the MEGO Effect
In this post I have a look at modern day techniques to produce terra preta (often called biochar or agrichar) which have the potential to increase soil fertility, generate energy and sequester carbon all at the same time.
Buckminster Fuller's Critical Path
A review of Buckminster Fuller's last work, Critical Path.
Is It Time For a 4 Day Working Week?
In this post I look at various proposals to reduce the amount of time we spend at work, as a way of addressing energy, environmental and other issues facing us.
Peak Oil And The Tea Party Movement
In this post I have a look at the boost this (peak oil) is likely to give to populist politics and some of the possibilities for addressing this.
Read more posts by Big Gav
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Prof. Goose

A Pretty Stunning Graph of World Cement Production (and China is Certainly Using It)
This post updates Stuart's post about this two years ago (and yes, it's still a graph that will blow you away!) with two more years of USGS cement data, 2006 and 2007.
From the Editor's Desk: Peak Oil, Heretical Thought, Complexity, and the Future of The Oil Drum
Lately, I have been thinking a lot about the direction of The Oil Drum. Much of my thinking on this set of ideas has been brought about by some soul-searching, trying to understand the problems we face as a community, and then figuring out how to "positively push the future."
Peak Oil, Persuasion, and the World Meme
What insights can we claim from psychology to get those we care about, and even those we don't, to dig deeper to get to an understanding of the pillars of the problems we face, instead of trying to buy aluminum siding for a house slowly falling in on itself?
Will Canada Fuel Fortress America?
Will Canada complacently allow the US to pillage her resources as energy supplies become more scarce?
Why the US Political System Is Unable to React to Peak Oil: Institutions
I thought I would bring some pieces of the political puzzle together into a post on why I believe the US, at least at the federal level, will be overly slow to react to the problems of peak oil in both the short and long term.
Was That Really Five Years?
A summary and some thoughts about the fifth year of the Oil Drum's existence.
The Oil Drum Celebrates Its First Year Today
Read more posts by Prof. Goose (Real name, Kyle Saunders)
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Nate Hagens

The Psychological and Evolutionary Roots of Resource Consumption A (longish) exploration of how our evolved neural wetware predisposes us to compete for status and also allows us to be hijacked by novelty items/activities, many of which use alot of energy.
A Net Energy Parable: Why is ERoEI Important? A story about how energy return on investment impacts an imaginary society of Sasquatches - highlighting the importance of biohpysical metrics for a civilization.
Peak Oil: A View from Planet Talos An alien perspective on the resource depletion/human nature intersection.
Living for the Moment While Devaluing the Future An examination of why we have evolved mechanisms to steeply favor the present over the future and why this is relevant to questions of resource depletion and environmental problems.
Peak Oil - Whom to Believe CERAiously-Part 1 Highlights of the main differences between the energy cornucopians and those predicting a near term peak in oil production.
Peak Oil - Why Smart Folks Disagree Part 2 More detail on the above post on supply side differences between energy optimists and realists.
Peak Oil - Believe it or Not - Part 3 An overview of human cognitive biases that contribute to disagreement on resource depletion/climate change.
Can We Be Happy Using Less Energy? Uhh Yes! An look at decreasing returns to more consumtion.
Old Sunlight vs Ancient Sunlight - An Analysis of Home Heating and Wood Measuring the scale of US standing forest relative to US fossil fuel use for heat.
".......Dammit - We Wasted a Day of Sunlight"
Peak Oil, IHS Data and The Broken Clock
Peak Oil and Reflexivity and Peak Oil Soros theory of reflexivity, in light of oil depletion.
Hedge Funds, Hurricanes and Energy Markets An overview of volatility and the small size of energy markets relative to financial capital.
The 2008 IEA WEO Review (#1 in a Series) The first in a series examining the claims of the IEA annual energy report.
Advice to Obama (#2) Yes We Can But Will We? A letter to the new President, outlining biophysical (supply) and evolutionary (demand) type thinking.
Campfire
What Do We Tell Our Children A letter I wrote to an 8 year old boy who asked about oil running out.
I Don't Know A short piece looking at why we are so confident, even when we know very little.
I Dream of GINI - Wealth Inequality During Resource Depletion
Peak Oil, Peak Credit and Investments - So What the Hell Does One Do? An initial pass at rewriting the Capital Asset Pricing Model assumptions
Whither The Oil Drum? An introspection on the purpose of sites like this, when the meme of peak oil has been generally accepted.
Enter the Elephant A look at why facts matter very little in changing peoples behavior.
2010: The Year for Making ContactNew Years resolutions for myself, in light of current conditions.
Dear Candidate-What Will You Do if Growth is Over?
Read more posts by Nate Hagens
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Phil Hart

Meet Trev: A two-seater renewable energy vehicle
I believe there is instead a bright future for a spectrum of 'micro' electric vehicles, from battery powered bicycles up to compact size cars, including this new concept car named Trev (Two-seater Renewable Energy Vehicle).
International Energy Agency calls 'Peak' on OECD Oil Demand
In World Energy Outlook 2009, the International Energy Agency seems to have dropped a bombshell that has been quietly (and politely) ignored.
The Economics of Volatile Oil Prices
Considering the fundamental nature of oil supply and demand provides a coherent explanation not just for the rapid rise in oil prices, but also the dramatic fall.
The 2008 IEA WEO - Oil Reserves and Resources
Despite significant changes, the 2008 IEA report still relies on inflated estimates of reserves from OPEC countries, overplays the contribution of reserves growth due to technology and predicts the reversal of a decades long trend of declining oil discoveries.
Oil, House Prices, Credit? Three parts of the same story
The long forgotten 'oil crisis' of just a few months ago has been replaced by a full blown 'credit crisis' - related events that represent the unravelling of half a century of unsustainable trends in oil consumption and debt.
High-Tech Hitchhiking
Could a hitchhiking scheme for the iPhone era work in practice and change attitudes to hitching a ride?
How Technology Increases Oil Production
How can you double something and still have ten times less than you started with? The answer to this question will help us reassess claims that advances in oil field technology will postpone the peak in global oil production.
Oil Reserves: Where Ghawar goes, the rest of OPEC follows
In May 2007, the work of Stuart Staniford and Euan Mearns culminated in a new and unprecedented assessment of oil reserves in Ghawar, the world's largest oil field. This article combines their assessment with additional information sources, to produce a revised estimate of reserves in Saudi Arabia and the other OPEC countries.
Read more posts by Phil Hart
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Rembrandt Koppelaar

Carbon Capture and Storage: Economic Costs Revisited
The effects on coal power plant economics of CO2 emissions capture.
Carbon Capture and Storage: Energy Costs Revisited
The effects on coal power plant economics of CO2 emissions capture.
A primer on reserve growth part 1
What is reserve growth and why it is so difficult to measure?
A primer on reserve growth part 2
A summary of various reserve growth studies.
A primer on reserve growth part 3
A discussion on the reserve growth figures in the USGS World Petroleum Assessment 2000.
Are Reserves of the Largest US Coal Field Overstated by 50%?
A summary of the USGS 2009 reserve assessment of the largest U.S. coal field, Gilette in Wyoming.
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Rune Likvern

Europe and Natural Gas - Are Tough Choices Ahead?
In this post, I present some graphs showing European historical natural gas consumption and supply, along with my estimates of future consumption and supply.
Trends in World Oil Supply/Consumption and Net Exports/Imports
In this post I briefly present the results from my analysis of absolute and relative trends in world oil (all liquids) supply, consumption, net exports and net imports between 1980 and 2009.
Has OECD oil consumption peaked?
I examine similarities and differences in oil consumption patterns of OECD and Non-OECD countries and offer my view as to what the future may hold.
IEA WEO 2008 - NGLs to the Rescue?
In this post, I will document that there is good reason to believe that the IEA WEO 2008 projections in the reference scenario overshoots the likely world production of NGLs by as much as 35 - 50 % by 2030.
Has Fossil Fuel Consumption Within EU Peaked?
As this post will show the likelihood that the EU?s fossil fuel consumption has peaked, back in 1979, is now very real. It will also compare the degree of net fossil fuel self-sufficiency between the EU and the USA as of 2007.
Why UK Natural Gas Prices Will Move North of 100p/Therm This Winter
This post presents the development of the energy mix for the UK, and how the UK in less than a decade went from being a substantial energy exporter to a substantial net energy importer.
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Euan Mearns

Lies, Damned Lies and Government Oil Production Forecasts?
Back in 2005 the Norwegian Petroleum Directorate (NPD) forecast 2.84 mbpd oil production in Norway during 2009. I pointed out their forecast was rather optimistic. 2.3 mbpd was what actually came to pass. The NPD were 23% too high.
The architecture of UK offshore oil production in relation to future production models
This post, written in November 2006 provided a forecast for UK oil production employing bottom up and top down methodology. My forecast for UK oil production in 2009 was 1.53 mbpd. 1.45 mbpd was what actually came to pass. I was 6% too high.
Flesh on the bones of Mexican oil production
With Cantarell in free fall, this post tried to take a more holistic view of Mexican oil production, pointing out that nitrogen once destined for Cantarell would now be diverted and injected into neighboring Ku-Maloob-Zaap complex.
Saudi production laid bare
This post was written to counter Stuart Staniford who claimed "Oil production peaked in Saudi Arabia in 2005. Recent sharp declines in production are involuntary and Saudi Arabia has switched from swing producer to supply constrained producer."
GHAWAR: an estimate of remaining oil reserves and production decline (Part 1 - background and methodology)
GHAWAR: an estimate of remaining oil reserves and production decline (Part 2 - results)
Ghawar reserves update and revisions (1)
Estimates of the remaining reserves and future production in Ghawar, the worlds largest oil field, based on data gleaned from the internet by a host of eager bloggers.
Crisis, what energy crisis?
An overview of the best posts from the 12 months preceding July 2007.
UK Energy Security
A look at possible impacts of UK oil and gas production decline together with a range of appropriate energy policy responses.
Saudi Arabia - production forecasts and reserves estimates
An oil production forecast for Saudi Arabia using both bottom up and top down (Hubbert linearisation) techniques. Peak was forecast to be 2011.
The European Gas Market
A comprehensive look at where Europe gets its natural gas from (34 charts and maps) including forecasts that incorporate peak Norwegian gas production and decline of the supergiant gas field at Groningen in Holland.
Daddy, will the lights be on at Christmas?
A follow up to the European Gas market incorporating a forecast for Norwegian gas production produced by Rune Likvern.
Why oil costs over $120 per barrel
An examination of some of the fundamental causes of the run in oil prices that took place in 2008.
Why oil costs over $130 per barrel: the decline of North Sea Oil
An overview of North Sea oil production decline and its role in the oil price run of 2008.
A State of Emergency
An examination of the plunge in UK oil and gas production and its impact on the UK economy ahead of the 2008 crash.
The Global Energy Crisis and its Role in the Pending Collapse of the Global Economy
The slides I presented at a talk to the Royal Society of Chemists in Aberdeen, November 2008.
The energy efficiency of energy procurement systems
An overview of the energy return on a number of energy procurement systems together with a look at contradictory policies being pursued by OECD governments.
The energy efficiency of cars
A simple look at the energy efficiency of various vehicle propulsion systems including all electric, internal combustion, fuel cells and bio fuel.
The financial return on energy invested
An experimental examination of links between energy production, consumption, prices and GDP.
The Chinese Coal Monster
An examination of the phenomenal growth in Chinese coal production and consumption. How long can this go on?
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David Murphy

EROI, Insidious Feedbacks, and the End of Economic Growth
In this post I attempt to answer the following question: Is a return to long term economic growth possible?
The True Value of Energy is the Net Energy
"The true value of energy to society is the net energy, which is that after the energy costs of getting and concentrating that energy are subtracted.? - H.T. Odum (1973)
Energy Transitions and the Next Paradigmatic Image of the World
The most important question is ?what is the next paradigmatic image of the world??
The Net Hubbert Curve, what does it mean?
Cutler Cleveland of Boston University has reported that the EROI of oil and gas extraction in the U.S. has decreased from 100:1 in the 1930?s to 30:1 in the 1970?s to roughly 11:1 as of 2000. What does this mean?
Further Evidence of the Influence of Energy on the US economy
Gail, Jeff Rubin, and now James Hamilton of the University of California ? San Diego have produced literature correlating either this financial collapse or recessions more generally with peak oil and oil prices. The take-away message of their work is that oil prices played a fundamental role in causing the current recession and many previous recessions.
The Energy Return on Investment Threshold Due to the asymptotic nature of the curve at high EROIs, extraction/conversion processes with EROIs below 8 result in vastly different flows of net energy than those with higher EROIs.
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Heading Out

Heading Out has written a long series of articles under the title of Tech Talks, running on Sundays. These recently deal with oil and gas resource availability in various parts of the world. Earlier, the articles dealt with techniques for extraction of oil and gas. After the Deepwater Horizon blow out, he wrote a series of articles dealing with the approaches to sealing the well.
Link to a listing of posts by Heading Out. (Real name, Dave Summers)
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Jérôme à Paris

Ukraine vs Russia: Tales of pipelines and dependence
I wrote the text below in late December 2005, i.e. just before the Russian-Ukrainian gas conflict, which had been simmering for a few weeks, blew open into the consciousness of the West.
New Iraqi oil law: some facts on PSAs
A post refuting some assertions about the new Iraqi oil law, which will allow foreign companies to invest in the oil sector via PSAs (production sharing agreements).
A review of the underlying fundamentals of nuclear energy
A review of the pros and cons of the nuclear industry.
How To Get A Pipeline Built
A primer on why and how pipelines get built - which essentially means how they get financed.
Countdown to $200 oil meets Anglo Disease
Oil has played a fascinating side role in my Anglo Disease series, allowing the debt bubble to go on for much longer than expected. But now, instead, it is accelerating the crash. Let me take you through the whole cycle.
Fierce pride - yes it works! (or, first ever bank-financed offshore wind farm inaugurated!)
A post about the windfarm which I helped finance two years ago which is now up and running.
Countdown to $200 oil: $140 oil and speculation
There are A LOT of good reasons why oil prices are going up. Let me show you just a few.
The cost of wind, the price of wind, the value of wind
In this post I try to clear some of the confusion that surrounds the economics of wind power, as this is an issue that is often used by the opponents of wind to dismiss it.
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Engineer-Poet

Sustainability, Energy Independence and Agricultural Policy.
If we are going to use biofuels, we need to re-think everything involved with them; the results may not look like anything we've ever seen.
One engineer's advice for energy policy.
An open letter to Obama on the path the country should take.
H2CAR: Another blind alley
We can make enough biofuel to replace oil, but at a price we cannot pay; this is NOT a solution.
The Cogeneration Stopgap
Generating electricity along with heat can stretch fuel supplies and bridge to the future.
Energetics of cultivation: draft animals vs. combustion engines and the Haber process
Tractors are more efficient than horses, and we don't have to breed or train them.
Analysis of the Hon. John Dingell's carbon-tax proposal
Talking back to a Washington insider who kept Detroit in the gas-guzzler business, who I voted against when my city became part of his district, yet who is making some sense.
EPA economy ratings vs. the GM Volt: A square peg in a round hole
Ruminations on why MPG loses its relevance in a world of watt-hours per mile.
Photovoltaics: From Waste to Energy-maker
How the dumps of phosphate mining can yield the material to power much of the world.
Weathering the storm: making it through a natural-gas crisis.
Lifestyle changes which may slash fuel demand by changing habits.
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Robert Rapier

We Won't Stop Global Warming
I lay out the case that there isn?t really much we will do to stop the accumulation of CO2 in the atmosphere.
Does the Hubbert Linearization Ever Work?
Debunking the use of the Hubbert Linearization as a tool for the prediction of peak oil.
Peak Oil Interview: Misconceptions, Replacing Oil, and False Solutions
An interview I did at that 2010 Global Footprint Network conference that discusses peak oil.
What If Gas Cost $100 a Gallon?
A thought experiment to see what people might really do in cases of extreme gasoline constraints.
A Critical Examination of Matt Simmons? Claims on the Deepwater Spill
Debunking hyperbolic comments related to the deepwater spill.
The Switch to Winter Gasoline and a Primer on Gasoline Blends
Every year in late summer, you will start hearing references in the media about the conversion to winter gasoline. So what does this mean, and why does it make gasoline less expensive?
The Price of Energy
Just looking at the cost per BTU of many different energy sources. Sparking some interesting discussion.
The Case for Higher Gas Taxes (and Lower Income Taxes)
I make my case for why it would make sense to shift taxes from income to consumption of fossil fuels.
Ethanol Blend E85 Case Study: Iowa
Examines the question of why Iowa should use their own ethanol instead of exporting it.
The Next Five Years: Peak Lite and the Current Oil Picture
Seeking to explain why I think peak oil consequences would start to happen before peak oil.
Refining 201: The Assay Essay
Explaining what products are produced from crude oil, and how that relates to the assay of the crude.
Why Not Nuclear Power?
Exploring the case for expanded nuclear power.
The Future is Solar
Why I think solar power has to play a more important role in the future.
Cellulosic Ethanol vs. Biomass Gasification
Just explaining the difference in the two technologies that have seen the borderlines between them blurred.
German Military Study Warns of Potential Energy Crisis
A translation of major points from the Bundeswehr report.
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Luis de Sousa

World Oil Exports: A Comprehensive Projection
This article is a first simplistic (but comprehensive) assessment of World Oil Exports, here defined as the total amount of liquid hydrocarbons that are surpluses in producing countries.
World Oil Exports [00] Introduction
A 2008 update on the original 2006 assessment.
World Oil Exports [01] Angola
The next post in the series focussing specifically on Angola's oil reserves.
World Oil Exports [02] Libya
Same as above except Libya this time.
A New Energy Policy for Europe
Wednesday the European Commission released a series of Communications proposing a new revolutionary Energy Policy attempting to address EU?s energy challenges for the XXI century. This is a set of first comments to such proposals.
Dialoguing with Dr. Peter Jackson of CERA: Is the Future of Oil Resources Secure?
Some reflections follow regarding Dr. Jackson?s arguments and understanding of the Hubbert?s Peak.
From sweet on the table to fuel in the tank: the millenary history of Sugar Cane
A dive into the fascinating history of a plant that shaped the World.
Marchetti's Curves
This is a brief account of the Energy Substitution Model developed by Cesare Marchetti in the 1970s at IIASA.
A few more thoughts on Saudi and HL
There has been some discussion about how to apply the Hubbert Linearization (HL) to Saudi historical production in recent weeks at TOD. Trying not to fall into redundancy, let me have some loose thoughts on these models.
Olduvai revisited 2008
This work tries to assess how the decline of Conventional Fossil Fuels may unfold and how can Mankind avoid the Road that may take us back to the Olduvai Gorge.
IEA WEO 2008 - Fossil Fuel Ultimates and CO2 Emissions Scenarios
An assessment of the WEO climate change statistics, co-authored with Euan Mearns.
Energy Policy: SER-2
This log entry is the first of a series that will try to build a critical but constructive review of this crucial element of future Energy Policy in Europe.
SER-2 [02] Memo on the Security and Solidarity Action Plan
In the second installment of this series analysing the Second Strategic Energy Review (SER-2) by the European Commission, the focus is on to the Memo entitled ?EU Energy Security and Solidarity Action Plan?.
SER-2 [03] Communication of the Security and Solidarity Action Plan
This post tries to highlight important aspects that aren't referenced in the Memo and presents the implementation steps proposed by the Commission to put the Plan into practice.
Planning for Europe's Energy Future: My Submission to the Commission's 2010 Consultation on Energy
This document is a response to the Energy Consultation launched by the European Commission in the first half of 2010. This consultation is part of a process that shall take the Commission to a new Energy Policy Programme a few years from now.
Interview with Jean Laherrère
Some comments on the general Fossil Fuels depletion picture and our future beyond them.
Read more posts by Luis de Sousa
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Stuart Staniford

4%, 11%, Who the Hell Cares? A very early piece pointing out that the post-peak decline rate is really the critical variable in assessing the seriousness of peak oil - much more important than the date or height of peak, or the degree of warning of peak. This piece still seems pretty good to me.
Hubbert Theory says Peak is Slow Squeeze. The first piece I wrote looking at the evidence that the post peak decline rate will probably be slow, rather than rapid.
The Auto Efficiency Wedge A piece looking at the fact that at slow decline rates, it's reasonably forseeable that peak oil can be handled by ongoing efficiency improvements (not painlessly, but without complete disaster)
Depletion Levels in Ghawar A major forensic analysis of the state of oil depletion in the Ghawar field of Saudi Arabia, suggesting that Saudi official oil reserve figures are over-optimistic.
US Peak Oil Adaptation: Prognosis in a Credit Crunch Rather prescient piece from 2007 discussing the possibility that the credit crunch could collapse oil prices and slow adaptation to peak oil. This turned out to be pretty much what happened.
Fermenting the Food Supply An argument against continued growth in biofuel consumption as an alternative to oil, on the grounds that the implications for food prices are likely to be very problematic.
The Fallacy of Reversibility This piece argued that there is no evidence for the idea that peak oil will lead to a revival of local non-industrial agriculture. The reverse seems more likely - that industrial agriculture is being and will be strengthened by high oil prices.
Powering Civilization to 2050 The first of three posts laying out a scenario for how we could get to a fairly close to carbon neutral civilization by 2050, without major collapse or disaster (if I was in charge in of the world). This post looked at energy, and argued that extrapolating the learning curve of solar power, it was possible to see energy becoming cheap again by 2050, based primarily on solar.
Four Billion Cars in 2050? Second of the "2050" series: Guesstimates on how many cars there might be by 2050, and how they might be powered.
Food to 2050 The third in the "2050" series: Whether there are likely to be limitations on feeding the world's population to 2050 in a cautiously optimistic scenario.
Read more posts by Stuart Staniford
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Jeff Vail

Theory of Geopolitical Disruptions to Oil Supply
Discusses several non-geological feedback loops that may have a dramatic impact on the course of resource depletion.
Mexico, A Nation-State Dissolves
Addresses the geopolitical instability in Mexico as a potential bellwether for the Nation-State structure generally, and its potential impact on oil production and exports.
The Problem of Growth
How the fundamental structure of our civilization demands perpetual growth and is therefore inherently unsustainable, as well as potential structural solutions.
Oil Demand Destruction and Brittle Systems
Argues that demand destruction tends to make remaining demand less elastic, and therefore makes systems more brittle and vulnerable to future supply shocks.
Predator-Prey Dynamics in Oil Prices
Argues that oil demand, supply, and prices can be modeled similar to predator-prey systems in nature.
A series of posts on the potential for suburbia post-peak.
A Resilient Suburbia? 1: Sunk Cost & Credit Markets
A Resilient Suburbia? 2: Cost of Commuting
A Resilient Suburbia? 3: Weighing the Potential for Self-Sufficiency
A Resilient Suburbia 4: Accounting for the Value of Decentralization
The Renewables Gap
Discussion of the challenges of a societal transition to renewable sources of energy, and especially the "gap" between the beginning of massive investment and the beginning of significant levels of renewable energy generation.
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Chris Vernon

Will Wartime Mobilisation Address Peak Oil?
A look at Lester Brown's call for wartime mobilisation.
Nuclear Britain
Reviews the history and future of civilian nuclear power in Britain.
Climate Change ? an alternative approach
Rather than attempting to reduce emissions be reducing demand, can the same be achieved by limiting fossil fuel production?
Jonathon Porritt: Peak Oil and Climate Change
Prominent environmentalist brings together these two issues.
Goodbye Helium, Goodbye Brainscans
Non-Renewable resource scarcity, the case of Helium.
Read more posts by Chris Vernon
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Some Notable Guest Posts

Cutler Cleveland - Energy Transitions Past and Future
Herman Daly: Towards a Steady State Economy
Herman Daly on the Credit Crisis, Financial Assets, and Real Wealth
Jay Hanson: America 2.0
Walter Youngquist: Unique Times -- and the Future
Christopher Smith: Aviation and Oil Depletion
Nick Rouse: Will Nuclear Fusion Fill the Gap Left by Peak Oil?
Dave Pollard: It's Our Turn to Eat: How Politics Works and Why Activism is So Important
Lester R. Brown: The Oil Intensity of Food
Alan Drake: Multiple Birds ? One Silver BB: A synergistic set of solutions to multiple issues focused on Electrified Railroads
Debbie Cook: How Will Local Governments Respond to Large Increases in Energy Bills?
Aaron Newton: The Four Day Work Week: Sixteen Reasons Why This Might Be an Idea Whose Time Has Come
Glenn Morton: Holding Daniel Yergin and CERA Accountable
Michael Vickerman: A federal energy policy: can it happen here?
Brad Lancaster - Eight Principles of Successful Rainwater Harvesting
Dave Rutledge: The Coal Question and Climate Change
Jeffrey J. Brown: The ELP Plan: Economize; Localize & Produce
Jean Laherrère: Arctic Oil and Gas Ultimates
Jean Laherrère: Hydrates updated
Jean Laherrère: Forecasts on Saudi Arabia liquids production
Jean Laherrère: Update on US GOM from MMS, EIA and Scout Data
Sterling Smith: Energy Vision 2050
Douglas B. Reynolds: Peak oil and the Fall of the Soviet Union: Lessons on the 20th Anniversary of the Collapse
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This list isn't exhaustive nor final but what the authors sent in (and we are still missing a few authors).

U.S. energy independence is no longer just a pipe dream

Every president since Richard Nixon has called for the U.S. to wean itself from needing oil from unstable or unsavory countries. The nation's new-found energy riches are likely to bring that ambition closer to reality in the next two decades, according to many forecasters.

It's no pipe dream. The U.S. is already the world's fastest-growing oil and natural gas producer. Counting the output from Canada and Mexico, North America is "the new Middle East," Citigroup analysts declare in a recent report.

The U.S. Energy Information Agency says U.S. oil imports will drop 20% by 2025. Oil giant BP projects the U.S. will get 94% of its energy domestically by 2030, up from 77% now, as oil imports fall by half. Energy billionaire T. Boone Pickens, a major investor in oil and natural-gas companies, said the U.S. can at least end oil imports from Organization of Petroleum Exporting Countries, about half its total, through new drilling and by shifting diesel-swilling trucks to natural gas. Any other oil needs should be from politically stable allies such as Canada, Pickens said.

Most enticing, a team of analysts and economists at Citigroup argues that the U.S., or at least North America, can achieve energy independence by 2020, as more domestic production and doubling down on conservation produce a virtuous cycle. The U.S. can make itself a net exporter of crude oil, refined products and natural gas ? says Citigroup energy strategist Seth Kleinman.

Oil Drops to Six-Month Low on Rising Stockpiles, Greek Crisis

Oil dropped to the lowest price in more than six months in New York after U.S. crude stockpiles increased and talks to form a coalition government in Greece collapsed, raising concern the region?s debt crisis will worsen.

Budget-minded consumers skimping on summer travel

Gas was averaging around $3.85 per gallon when AAA spoke with 315 would-be travelers from April 20 to 24. The survey showed that those making under $50,000 a year will make up about a quarter of all Memorial Day travelers, down from nearly a third a year ago. Higher gas prices eat up a larger share of lower-income families' household budgets.

AAA says the 66 cent increase in the average gas price from January through early April made many people skittish about taking long road trips. The average trip will be 642 miles this Memorial Day, compared with 792 miles. Half of those surveyed said they'll travel less than 400 miles.

Petrobras Quarterly Profit Beats Estimates on Oil Export Growth

Petroleo Brasileiro SA, the world?s biggest oil producer in deep waters, said first-quarter profit topped analysts? expectations because of increased revenue from crude exports and higher fuel prices.

North Dakota passes Alaska in oil production

BISMARCK, N.D. (AP) ? North Dakota has passed Alaska to become the second-leading oil-producing state in the nation, trailing only Texas, state officials said Tuesday.

North Dakota oil drillers pumped 17.8 million barrels in March, with a daily average of 575,490 barrels, Assistant State Mineral Resources Director Bruce Hicks. That compares to 17.5 million barrels in Alaska, though still far behind Texas.

North Sea oil output at 2012 low, supporting Brent

LONDON (Reuters) - Crude oil output from the North Sea will fall by 2.8 percent in June to its lowest this year due to oilfield glitches and natural declines, helping support the price of global benchmark Brent crude.

Supply from 12 North Sea crudes will average 2.11 million barrels per day (bpd), compared with 2.17 million bpd in May, Reuters calculations based on shipping schedules showed on Wednesday.

Gas prices fall as main Norway supply restarts

(Reuters) - British prompt gas prices fell on Wednesday morning ahead of the scheduled return from maintenance of Norway's Ormen Lange gas processing plant, which is expected to boost supplies.

Tom Murphy: Time to Be Honest With Ourselves About Our Looming Energy Risks

What we are really missing is the liquid fuel. It is very difficult to transition from solar, nuclear, whatever you want into the liquid fuels that allow us to move ourselves around, it is very important in agriculture. And it is, I think...that is where the pinch point will come. There are certainly sources that can be labeled as abundant. The gulf is really one of practicality more than one of the sheer energy scale. That is a little bit harder to quantify. So you can quantify the abundance and how much you might get out of a certain source. But it is very hard to quantify things like public acceptance or how difficult it will be to pull off things like intermittency, how to deal with the storage, practical storage solutions. All of these are very tricky.

And one perspective is that we have known since 1970 roughly that fossil fuel peak was coming at some point. We knew that we needed alternatives in the 70s. We had lots of discussion of alternative energies. Forty years later we really aren?t that much further along. We sort of don?t have any new players, and it feels to me that if the liquid fuels decline in the next few decades, which I think is likely, we have already got the players on the stage right now.

Acknowledging the Arrival of Peak Government

The twin peaks of oil and government are causally linked: central government's great era of expansion has been fueled by abundant, cheap liquid fuels. As economies powered by abundant cheap energy expanded, so did tax revenues.

Peeking at Peak Oil: book review

The leader of the world's foremost Peak Oil research group is Kjell Aleklett, Professor of Physics at the University of Uppsala in Sweden. He has just published a book on Peak Oil that summarises a decade of scientific research.

Kjell's book is truly remarkable but not only as an unparalleled analysis of the reality and implications of Peak Oil. The book is also a unique example of how art can be used to assist the understanding of science. For these reasons I believe Kjell's book will soon be recognised both as the definitive work on Peak Oil and also as a unique scientific text. I simply do not see how it can be surpassed ? unless there is another person who is willing to devote a decade of their life to building up a research enterprise that has now published over 30 peer-reviewed scientific papers on Peak Oil and related issues. Of course, there is no other person than Kjell.

How high priced oil is changing our lives: Fewer cars and commuters, but also lower emissions

TORONTO Only rich people will be able to afford cars. Everyone else will be taking public transit.

Commuters will move into Toronto and other urban centres, leaving the suburbs to revert to their former status as farmland.

The only provinces creating jobs will be those with oil. The poorest regions may resort to job-sharing.

Such is the controversial/bleak/contrarian view in Jeff Rubin?s latest book The End of Growth, published by Random House Canada.

Book Review: The End of Growth

What would happen if world economic growth, on a real, aggregate and average basis, stopped? Would houses be built? Would cars be purchased? Would people still work gainfully and consume? Richard Heinberg?s The End of Growth argues we?re nearing a watershed moment??transitioning us from decades of economic growth to decades of economic contraction.?

UAE to merge with 'Gas OPEC'

The UAE has won cabinet approval to join the Gas Exporting Countries Forum (GECF), an intergovernmental organization of the world's leading gas exporters, said a report.

Moody?s maintains negative outlook on Chesapeake Energy

Moody?s is maintaining its negative outlook on Chesapeake Energy, despite an announcement late Friday of a $3 billion unsecured loan that the company will use to pay down its $4 billion revolving credit facility.

Chesapeake Energy Said to Increase Term Loan to $4 Billion

Chesapeake Energy Corp. (CHK), the second- largest U.S. gas producer, increased the size of a term loan it?s seeking to pay off a revolving credit line to $4 billion from $3 billion, according to data compiled by Bloomberg.

?That level of demand is an encouraging sign of the market?s demand for Chesapeake debt at these price levels,? Brian Gibbons, an analyst at CreditSights Inc. in New York, wrote in an e-mail.

Chesapeake's Rapidly Declining Stock Is Putting Employees' Retirement Savings At Risk

NEW YORK (Reuters) - The woes of Chesapeake Energy Corp are hitting shareholders hard, including its employees.

Thousands of Chesapeake workers have retirement portfolios that are heavily invested in Chesapeake stock, which has declined sharply following revelations about Chief Executive Aubrey K. McClendon's business dealings.

But while retail and institutional investors have sold the stock, employees don't always have that option.

China Doubling Gas Use Makes Ex-Clothing Retailer Target

China Gas Holdings Ltd., the utility that began life as an online retailer, has become the industry?s hottest property as China plans to double use of natural gas and replace coal in the biggest-polluting nation.

Naftogaz Ukrainy forecasts average annual imported Russian gas price at $440 for 2012

Each month, Ukraine shells out around $1 billion for imported Russian gas, which greatly surpasses the price of the acquired modern SEFDR, with the help of which Naftogaz counts on significantly expanding Ukrainian gas production, Bakulin said.

"Ukraine pays around $1 billion each month for imported natural gas. For the year, that ends up being an amount equal to the cost of 28 drilling rigs like Petro Hodovanets. Therefore, at the current natural gas price of $425, the first billion cubic meters produced with the help of this rig will compensate for its cost," he said.

Genel Energy takes chance with another stake in Kurdistan

Genel Energy, the company headed by the former BP chief executive Tony Hayward, is expanding its operations in Kurdistan.

The move comes despite a renewed bar on exports from the autonomous region and an unresolved payments dispute between Baghdad and Erbil.

Korea Gas, Shell Start Discussions on Canada LNG Project

Royal Dutch Shell Plc and three Asian partners will jointly develop a liquefied natural gas export project in Canada?s British Columbia province and are in talks with local communities to win their support.

Trafigura, Mercuria Said to Rent Vopak Singapore Fuel Storage

Trafigura Beheer BV, the world?s third-biggest independent oil trader, and Mercuria Energy Group Ltd. rented fuel-oil storage in Singapore from Royal Vopak NV after Westport Petroleum Inc. ended its contract for the space, according to four people with knowledge of the deals.

Keystone isn't the only pipeline

NEW YORK (CNNMoney) -- At least a dozen new oil pipeline projects are slated to move forward in the United States over the next few years, bringing controversial sources of new crude to market despite the holdup of a portion of the Keystone pipeline expansion.

Some of the projects reverse the flow of existing pipelines.

Angola's crude exports set to fall in July

LONDON (Reuters) - Angola's crude oil exports are expected to fall in July from June, marking a drop in volume for the third consecutive month, a provisional loading schedule showed on Wednesday.

Traders attributed the fall in overall volume, which they said was significant, to the reduced exports of Angola's key Girassol crude due to maintenance at the oil field.

Shell seeks to cut targets in Iraq

Royal Dutch Shell is in talks with Iraq to cut its output target for the giant Majnoon oilfield, a move that could prompt other companies to seek similar revisions.

The European oil major won the rights to develop the giant oilfield in 2009, and is contractually obliged to increase production to 1.8 million barrels per day (bpd). But in a meeting held with government officials last month, the company proposed to cut the target to 1 million bpd, reduce spending, and extend the period under which peak production will be sustained, documents seen by Reuters show.

Experts differ in assessing Iran's oil and gas opportunities in Caspian Sea

Azerbaijan, Baku / Trend / Iran has stated about launching the oil and gas extraction operations in Iran's sector of the Caspian Sea.

Iran's oil minister Rostam Qasemi said earlier that the first "oil" torch will be sparked on the "Amir Kabir" platform (Alborz).

Iran seen losing 500,000 barrels of oil shipments daily

Iran's oil exports have the potential to fall another 300,000 to 500,000 barrels a day or more when the European Union's embargo takes effect in July, Reuters reported referring to Barclays Plc.

The decline will extend existing losses of 500,000 barrels a day, Barclays analysts led by Helima Croft in London said in an e-mailed report yesterday.

Iranians feel the pain of sanctions: 'Everything has doubled in price'

TEHRAN ? The economy here is in shambles, according to Iranians, whether the government will admit it or not.

The United States, the European Union and the U.N. have imposed tough economic sanctions against Iran ?- blocking access to the international banking system and hurting sales of Iranian crude oil -? as a way to persuade Tehran to abandon its nuclear program.

Will have more talks with India on Iran oil import: US

Tweet WASHINGTON: The US has said that it will have more consultations with India on New Delhi reducing dependence on Iranian crude.

"There is more progress to be made and that's what Carlos is talking about and we will have more on his consultations after they are complete," US State Department spokesperson Victoria Nuland said on Tuesday.

Libya currently producing nearly 1.5 mil b/d crude: NTC official

Dubai (Platts) - Libya is currently pumping nearly 1.5 million b/d of crude and expects to achieve "normal" pre-war production levels of 1.6 million b/d by mid-2012, Abdulbaset Abadi, a member of the oil committee at the National Transitional Council, said Wednesday.

EU carries out strikes on Somali pirates

BRUSSELS (AP) ? The European Union naval force patrolling the Indian Ocean on Tuesday carried out its first air strikes against pirate targets on shore, with a pirate reporting that the raid destroyed speed boats, fuel depots and an arms store.

Do we know enough to ensure safe Arctic drilling?

FOR the oil and gas industry, the Arctic Ocean is the final frontier. Beneath the ocean floor lies an estimated 90 billion barrels of recoverable oil - about 13 per cent of the global total. As the sea ice retreats and traditional sources of hydrocarbons dwindle, the pressure to drill is becoming irresistible.

It now seems inevitable that this harsh environment will be opened up to oil and gas production, which poses a big question: how much scientific research is "enough" to ensure safe drilling in the Arctic Ocean?

Total stops gas leak at N.Sea Elgin platform

(Reuters) - Total has succeeded in plugging a well at its North Sea Elgin platform that has been leaking gas for more than seven weeks, the French oil group said on Wednesday.

Ukraine sees 2017 for commercial shale gas output

(Reuters) - Royal Dutch Shell and Chevron Corp, Ukraine's partners for exploring and developing shale gas, will start commercial gas production in 2017, a government minister said on Wednesday.

"Drilling is likely to start next year," Environment and Natural Resources Minister Eduard Stavitsky told a news conference of plans which focus on two potentially large shale gas fields.

Taxpayers Pay as Fracking Trucks Overwhelm Rural Cow Paths

A surge in hydraulic fracturing to get gas and oil trapped in rock means drillers need to haul hundreds of truckloads of sand, water and equipment for a single well. Drilling that added jobs and tax revenue for many states also has increased traffic on roads too flimsy to handle the 80,000-pound (36,300 kilogram) trucks that serve well sites.

The resulting road damage will cost tens of millions of dollars to fix and is catching officials from Pennsylvania to Texas off guard. Measures to ensure that roads are repaired don?t capture the full cost of damage, potentially leaving taxpayers with the bill, according to Lynne Irwin, director of Cornell University?s local roads program in Ithaca, New York.

Some attack plans bolstered, others eased at nukes

The U.S. government has adopted the first set of comprehensive changes in the emergency planning program for communities near nuclear power plants since its creation after the Three Mile Island accident in 1979.

Sustainable energy for all focus of summit

Nearly two billion people, about one-third of the world?s population, don't have access to energy, according to the United Nations.

So the leading goal for the upcoming 2012 United Nations Earth Summit is ?energy for all? by the year 2030, mostly from renewable and sustainable resources.

Britain is rising to the challenge of greening our economy

It's clear that with unprecedented pressure on our natural resources and our climate, the world economy needs to "green up". I want UK businesses to be in the vanguard of that move. On Wednesday, I'll take my seat alongside British business leaders at the Aldersgate Rio +20 Business Summit where we'll debate the opportunities ? and the challenges ? of transforming our whole economy to one geared towards long-term green growth.

Can we please just declare the end of 'peak oil' and start worrying about something important?

Apparently something terrible happens when we get to peak oil. I've never really quite understood the argument myself, but when we've used half of all the oil then civilisation collapses or something. I'm not sure why this should happen: we don't start starving when there's only half a loaf of bread left. But I am assured that something awful does happen.

Small Wind Farms to Grow as U.S. Tax Incentives Expand

Installations of wind farms with less than 20 megawatts of capacity may rise to a record this year if lawmakers expand a federal tax credit.

At least 44 wind farms were built last year to serve individual U.S. communities, often with financial support from local residents. They made up 6.7 percent of the total capacity installed, up from 5.6 percent in 2010 and the most to date, according to data compiled by the American Wind Energy Association.

Surprise! SUVs are more popular than ever

NEW YORK (CNNMoney) -- If you thought the "SUV craze" was over, you're wrong. Very wrong. Market share for SUVs in recent months is the largest it has ever been.

During the height of the so-called "SUV craze" in the late 1990s and early 2000s, about one in five vehicles sold in America was an SUV. Today, in an era of near $4 gasoline and heightened environmental awareness, nearly one in three vehicles sold is an SUV.

Ferrari goes green

The Italian firm, one of the most elite names in motoring, indicated that one of its glitziest products, the Enzo, will be released in a hybrid version.

Economic growth sows unhappiness in China: study

"There are many who believe that well-being is increased by economic growth, and that the faster the growth, the happier people are. There could hardly be a better country than China to test these expectations," said lead author Richard Easterlin, professor of economics at the University of Southern California.

"But there is no evidence of a marked increase in life satisfaction in China of the magnitude that might have been expected due to the enormous multiplication in per capita consumption," said Easterlin, who is known for his work in the 1970s on how happiness is often not linked to wealth, coined the Easterlin Paradox.

"Indeed people are slightly less happy overall, and China has gone from being one of the most egalitarian countries in the world in terms of life satisfaction to one of the least."

Grads, pursue a realistic dream

Finding cheap housing is the best thing you can do to improve your balance sheet ? freeing up far more cash than cutting out those lattes. The trick for young grads is to keep that same mindset through life, as the huge house that will eat up a third of your income starts beckoning. Rethink what's sold as the American Dream? ownership of a house you have to stretch to afford ? and you might discover the real American Dream. That is, the freedom to pursue happiness.

Stocks-to-Use Ratio Updates for Corn, Wheat, Rice, Soybeans, Cotton and Sugar

Twice a year, I try to update my ongoing stocks-to-use ratio charts using the latest available data on U.S. and global crop supplies. The stocks-to-use ratio reflects the excess of supply against demand. It is calculated by dividing the ending stocks of a commodity by the total demand of that commodity and is one of the most useful statistics that we have for measuring supply and demand of food commodities. Of course, these ratios are only as good as the data that goes into the calculations, but in our electronic information age these numbers are hopefully improving all of the time.

Q. and A.: The Most Endangered Rivers

Q. Of these 10 rivers, there seem to be some patterns. Several are threatened by the same types of activities: energy development or dam- and reservoir-building.

A. There?s a threat from natural gas development and fracking in the Grand River in Ohio and the Hoback in Wyoming. There?s a threat to water quality as chemicals are injected into groundwater and the disposal of the fluids is not regulated, and also a threat to water quantity because massive amounts of water are used.

Your Heart on Air Pollution: An Olympic Case Study

Although the period of blue skies in Beijing may have been fleeting, researchers from the University of Southern California (USC) and colleagues have found that even such a small window of cleaner air may have proved useful for residents' cardiovascular health. That's according to a new study published yesterday in the Journal of the American Medical Association.

Dam Project Threatens a Way of Life in Peru

BOCA SANIBENI, Peru ? Along the murky waters of the Ene River, in a remote jungle valley on the verdant eastern slopes of the Andes, the rhythmic humming of an outboard motor draws the stares of curious Ashaninka children.

With encroachment from settlers and speculators, and after a devastating war against Shining Path rebels a decade ago, the indigenous Ashaninkas? hold is precarious. And they are now facing a new peril, the proposed 2,200-megawatt Pakitzapango hydroelectric dam, which would flood much of the Ene River valley.

Pondering That Green Label

Recently I stopped at an upmarket cafeteria near Rockefeller Center in Manhattan where plaques and posters proclaimed that it had been certified by the Green Restaurant Association, a nonprofit group that is endorsed by the Environmental Defense Fund, the National Resources Defense Council and the New York State Restaurant Association. After buying a sandwich, I asked for tap water. They informed me that the cafe only offered bottled water.

How can a restaurant with a green rating not offer tap water?! I was floored.

Only biofuels will cut plane emissions

We need something that can deliver emission reductions from existing fleets of planes ? and the solution already exists.

UK climate experiment cancelled on patent concern

LONDON (Reuters) - British scientists have abandoned an experiment to test the possibility of spraying particles into the upper atmosphere to stem global warming, largely due to concerns over a patent for some of the technology, the project's leader said.

UN to Help Give World?s Poor Fairer Share of Carbon Credits

Efforts by the United Nations to ease rules for carbon-cutting projects may encourage investments in small-scale projects in solar water heaters and efficient cookstoves in Africa and Asia.

The UN Clean Development Mechanism?s Executive Board, regulator of the world?s second-biggest carbon market by traded volume, agreed last week to consider ways to quicken the approval procedure for some emission-reduction activities. The new process would help ease difficulties facing projects that produce fewer emission reductions than others, including those that create usable fuel from animal dung and renewable energy initiatives small enough to power a light-bulb.

Bangladesh seeks $10 billion grant to tackle effects of climate change

Bangladesh asks donors and development partners for a $10 billion grant as financial assisstance to tackle the adverse effects of climate change and to protect the country's existing infrastructure.

Hawaii?s Beaches Are in Retreat, and Its Way of Life May Follow

Little by little, Hawaii?s iconic beaches are disappearing.

Most beaches on the state?s three largest islands are eroding, and the erosion is likely to accelerate as sea levels rise, the United States Geological Survey is reporting.

'Nobody is exempt from climate responsibility' (interview with Christiana Figueres)

To keep below this 2 °C target, the science says we have to peak our greenhouse gas emissions before 2020. But we won't have an agreement until 2015, or global binding targets until 2020. Doesn't that make keeping below the 2 °C target impossible?

That very much depends on what effort is made now by governments. They must move forward with their negotiations for legal agreement by 2015. But they mustn't wait until 2015 to start their mitigation efforts, but rather accelerate mitigation efforts right now. They must also adopt the policies that give the right signals and incentives for the private sector to come on board.

The International Monetary Fund (IMF) recently issued a new working paper called “The Future of Oil: Geology versus Technology” (free PDF), which should be of interest to people who are following “peak oil” issues. This is a research paper that is being published to elicit comments and debate; it does not necessarily represent IMF views or policy.

The paper considers two different approaches for modeling future oil supply:

1. The economic/technological approach, used by the US Energy Information Administration (EIA) and others, and
2. The geological view, used in peak oil forecasts, such as forecasts made by Colin Campbell and forecasts made using Hubbert Linearization.

The analysis in the IMF Working Paper shows that neither approach has worked perfectly, but in recent years, forecasts of oil supply using the geological view have tended to be closer than those using the economic/technological approach. Since neither model works perfectly, the new paper takes a middle ground: it sets up a model of oil supply where the amount of oil produced is influenced by a combination of (1) geological depletion and (2) price levels.

This blended model fits recent production amounts and recent price trends far better than traditional models. The forecasts it gives are concerning though. The new model indicates that (1) oil supply in the future will not rise nearly as rapidly as in the pre-2005 period and (2) oil prices are likely to nearly double in “real” (inflation-adjusted) terms by 2020. The world economy will be in uncharted territory if this happens.

It seems to me that this new model is a real step forward in looking at oil supply and the economy. The model, as it is today, points out a definite problem area (namely, the likelihood of oil high prices, if growth in oil production continues to be constrained below pre-2005 rates of increase). The researchers also raise good questions for further analysis.

At the same time, I am doubtful that the world GDP forecast of the new model is really right–it seems too high. The questions the authors raise point in this direction as well. Below the fold, I discuss the model, its indications, and some shortcomings I see.

The Two Models

Economic /Technological Approach. With the economic/ technological approach, the assumption is made that high oil prices will encourage substitution and/or new oil production. Because of this, high oil prices are not expected to persist. Instead, the most important consideration in determining future oil supply is the level of future demand. The level of future demand, in turn, is primarily driven by anticipated GDP growth, since world GDP growth and world oil production growth tend to be highly correlated.

In effect, models of this type assume that whatever oil supply is needed will be available; they don’t consider the possibility that geological considerations may limit oil supply over the long term. As an example of how well these models have worked for prediction, the paper shows a graph of historical EIA forecasts (Figure 1, below).

Each year, EIA’s forecasts have been adjusted downward, because actual oil supply growth was lower than forecast.

Models Based on the Geological View. The paper considers forecasts of oil supply such as those of Colin Campbell (shown in ASPO-Ireland Newsletters) and forecasts based on Hubbert Linearization to be models based on the Geological View. The paper observes that forecasts of oil supply based on geological view have tended to be too low, but not by as big a margin as those made using the economic/technological approach. As an example, it gives the following graph of changes in forecasts by Colin Campbell.

A review of the two methods by the IMF group indicates that neither works precisely as hoped, but each has some validity. While oil production did not rise as fast as the economic/technological view would predict, higher oil prices have allowed oil production to stay on more or less a plateau after 2005, rather than declining as predicted by geological methods. The new model in the IMF Working Paper combines indications from both points of view, using an approach that allows them to estimate the relative contribution of geological impacts vs higher prices.

How the Two Methods are Combined

The oil supply equation in the new model is set up so that there are two different ways that the forecast oil supply can change. There is a downward tug from oil depletion at the same time that there is an upward tug from oil prices. It is expected that in the short run, high prices will get producers to utilize spare capacity, and over a longer period (estimated at 4 to 6 years), it will get producers to add new capacity. I will not try to explain all the variables and coefficients, but the blended supply equation is

In the above equation, q_t is the quantity of oil produced in year t and Q_t is the cumulative quantity produced in year t, so the ratio q_t / Q_t produces the familiar downward-sloping line one sees in charts used for Hubbert Linearization. The first two terms to the right of the equal sign are the ones based on the geological approach to depletion. The later terms depend on p_t, which is price of oil at the time “t”. Adding the p_t terms tends to raise the line at later periods so it does not slope downward as quickly as if depletion were the only factor affecting the relationship.

Growth Rate of GDP

In the model, high oil prices have some impact on GDP, but as we will see in Figure 5, below, not very much. There are two places in modeling GDP where high oil prices come into play. The first is in the Potential Growth Rate of GDP. According to the paper,

The growth rate of potential world GDP is specified as fluctuating around an exogenous long-run trend, with oil price changes making the fluctuations more severe. Oil prices are allowed to have persistent but not permanent effects on the growth rate of GDP. . . The estimated steady state world potential growth rate of potential GDP equals four percent. The average annual growth rate of real oil prices, which is the growth in oil prices at which the model assumes zero effect of oil prices on output growth, is seven percent. The results indicate that an oil price growth that is higher than that historical average has a small but significant negative effect on the growth rate of potential. [emphasis added]

Interesting–the model assumes real oil price growth of 7% per year has no impact growth rate of GDP. Perhaps this is supposed to be picked up by the second place where high oil prices come into forecasting GDP, called Output Gap. This is an excerpt from what the paper says about Output Gap:

Apart from allowing for an effect of higher oil prices on the growth rate of potential output, the model also allows for the possibility that higher oil prices can cause fluctuations in the amount of excess demand in the economy. . . . Similar to the equation for potential, the coefficient estimates show that high oil prices have a small but significant negative effect on excess demand, and that this effect is highly persistent.

Model Output

When all is said and done, what does the IMF model forecast?

The forecast for future world oil supply, shown in Figure 4 above, is similar to EIA’s most recent forecast of world oil supply (but lower than earlier EIA estimates). Oil supply is expected to rise a 0.9% per year. An alternate tighter oil supply forecast is given as well.

The forecast for world GDP growth (shown in Figure 5 below) is not too much different from standard estimates, either. The point forecast is about four percent per year.

The thing that is different in this analysis is oil prices (in inflation adjusted dollars). Forecast oil prices are expected to be much higher that what the EIA is estimating.

The report points out that these high oil prices are a real concern. The report says:

The predicted average annual growth rates of oil output are well below the historical forecasts of EIA, but above the forecasts of proponents of the geological view. . . . However, this projected positive trend in oil production comes at a steep cost, because the model finds that it requires a large increase in the real price of oil, which would have to nearly double over the coming decade to maintain an output expansion that is modest in historical terms. Such prices would far exceed even the highest prices seen in 2008, which according to Hamilton (2009) may have played an important roll in driving the world economy into a deep recession.

Need for Enhancements /Areas of Concern Pointed Out by Authors of Paper

The authors raise of the IMF Working Paper raise the following issues:

1. Impact of high oil prices on GDP growth. The expected impact of a continued rise in oil prices on forecast GDP is small, according to the model as constructed. Perhaps the relationship should be non-linear (convex) instead of linear. More generally, what is the importance of the availability of oil inputs for continued overall GDP growth? The report mentions studies showing the close connection between energy growth and GDP growth, such as by Ayers and Warr.

2. Substitutability for oil. What is the substitutability between oil and other factors of production? Is it reasonable to assume that elasticities of substitution will become greater over time? Or is there a possibility that there are limits to the extent of substitutability of machines and labor for energy?

3. Is there a pain barrier? At some point, does the effect of high oil prices on the economy change, and become much worse?

4. Independence of Technology from Fossil Fuel Availability. Perhaps a reduction in fossil fuel availability will negatively affect the availability of future technology improvements since, for example, it takes fossil fuels to make new more efficient cars. This has not been reflected in the model.

5. Smaller Amounts of “Spare” Oil Capacity Available in the Future. The model reflects amounts of OPEC spare oil production capacity available in the past. In the future, less spare production capacity seems likely.

My Comments on the Paper

The IMF is to be commended on putting together this analysis. To me, the big step forward is that questions about the impact of geological depletion of oil on the economy are starting to be addressed. The fact that the paper also points out the level to which oil prices will need to rise, if oil production is to rise at 0.9% a year between now and 2020, is important as well.

Some of the issues I see that aren’t addressed in the paper:

1. Factors underlying world long term growth rate, other than energy. It would seem to me that there are a number of factors which have permitted long term world economic growth, over and above the economic growth enabled by fossil fuels. Some of the following seem to be diminishing in importance, so perhaps the forecast of a 4% world GDP growth rate going forward is too high, apart from oil supply issues:

a. Trend Toward Globalization. The trend toward globalization has allowed greater synergies to occur, and thus has contributed to world GDP growth. The trend toward globalization started over 4,000 years ago, with trade from northwest India to the Mediterranean region (Chew). In recent years, we seem to be approaching a maximum level of world globalization. In fact, higher price of oil has been raised as an issue cutting back on trade of bulky, low valued items (Rubin). Higher cost of oil may also have an adverse impact of commercial airline flights for international companies to oversee their distant operations, because the costs of these flights is now supported by a large number of international tourists, and this international tourist trade may dry up. Thus, the trend toward globalization that has been supporting world GDP growth in the past may not persist, and may even reverse.

b. Growth in Education. Part of what has supported world GDP growth is likely growth in education, since literate workers are better able to use technology. There is evidence that the advanced economies are now plateauing in terms of educational level of new workers, relative to the existing work force. Even less advanced economies, such as China, are showing much higher levels of literacy. (See this post). To the extent that educational levels are reaching a plateau, the “boost” to historical GDP rates that came from this factor can be expected to be lessened.

c. Growth in Debt. GDP growth is enabled by debt growth. Consumers are able to purchase more goods and services, with increased levels of debt; businesses are able to increase their investment in new plants and equipment through more debt; and governments are able to undertake the development of new construction, roads, and other development, through the addition of more debt. But we seem to be reaching limits on debt growth. Theory also suggests that higher levels of debt are enabled by higher economic growth rates (Tverberg). Governments have been aware that increased borrowing can be used to pump up economic growth, but limits are being reached on the amount of debt that can be added. To the extent that debt fails to grow as quickly in the future as it has in the past, this can be expected to have an adverse impact on world GDP growth rates.

d. Quantitative Easing and Extraordinarily Low Interest Rates. An argument can be made that GDP growth of advanced economies in recent years has been held up by quantitative easing and extraordinarily low interest rates. These would seem to be a temporary fixes that cannot be continued long-term. If this is the case, world GDP rates can be expected to be lower in the future, regardless of oil supply growth.

2. Limits on Substitutability of Other Fossil Fuels for Oil. The paper does not address the issue of whether there are limits of substitutability of other fossil fuels for oil. Stationary (as opposed to transportation) uses of oil have been substituting away from oil for years. There are millions of vehicles and other machines that use oil currently in operation. There will be a high cost in replacing these before the end of their normal lifetimes. Also, significant fossil fuels will be required for making vehicles and supporting infrastructure that use another fossil fuel source.

3. Limits on Capital Available for New Investment in Substitutes for Oil, and in New Oil Production. In recent years, we have made heavy use of debt financing for new investment. Government subsidies have also been used. To the extent that debt financing and government subsidies are less available, less investment can be expected in the future.

4. Impact of High Oil Prices on Diverse Parts of the Economy, Not Reflected in the Model. For example, prices of homes may be affected by high oil prices. People with less discretionary income are less likely to “trade up” to a more expensive homes, so high oil prices seem to be one of the reasons for the decline in home prices (Tverberg). Lower home prices affect ability of homeowners to borrow against the value of their homes for new purchases, so affect GDP, apart from oil price’s direct impact on the number of new homes built.

5. Which comes first: Oil Growth or Economic Growth? The assumption in the model is that GDP growth drives oil growth. While this is true, it is to some extent a “chicken” and “egg” situation. Perhaps the availability of inexpensive oil and other fossil fuels is one of the main drivers of economic growth (in addition to the other drivers I mention in the subparts of Item 1 above). Perhaps the cycle is started by the availability of cheap fossil fuels for industrial use and continued by the increased demand to which this growth gives rise.

* * *

I appreciate the work that has been done by the IMF in putting together this model and look forward to seeing further enhancements to the model. The work that has been done and the questions that are being raised are important ones.

I expect that commenters to this post will be able to point out other plusses and minuses of the model. The report itself is very interesting. Again, it can be found at The Future of Oil: Geology versus Technology.

This article originally appeared on Our Finite World.

In this post I present an updated view on Norwegian crude oil exploration, sanctioned developments, discoveries, production, reserves and what these now suggest for the future of Norwegian crude oil production.

The content for this post was originally published in Norwegian here and here.

After oil prices moved upwards and settled at a higher level starting around 2005, a new wave of exploration resulted in sanctions for developments of several new and known discoveries that previously had been on hold due to lack of profitability.

These new developments are expected to add up to 350 kb/d of additional oil production, reaching a peak in 2016. This is by itself impressive given the location of the discoveries (offshore, water depth), their size and the total efforts required to bring these to fruition. These 21 developments have been estimated to hold total recoverable reserves of 1 Gb crude oil, 140 Gcm (Gcm = Bcm: Billion cubic meters) of natural gas, around 23 Mb condensates and around 164 Mb NGLs.

These 21 new developments are "small fields". What characterize ?small fields? are rapid buildup and a short plateau followed by aggressive (high) decline rates. Total investments for these 21 developments are now estimated to be around 225 billion NOK (2011) or US$40 billion. Most of the developments shown in Figure 1 have been estimated to be profitable for crude oil prices ranging from US$40 - US$90/bbl.

HISTORY OF NORWEGIAN CRUDE OIL DISCOVERIES

Figure 2 shows that:

• The bulk of discoveries on NCS was made in the early years of exploration (see also Figure 3 where total discoveries are sorted by decade) and these presently heavily depleted fields still contribute a major part of total Norwegian crude oil production (see also Figures 6 and 7).
• 1979 stands out as the year with most total crude oil discoveries on NCS including amongst others: Oseberg, Troll and Snorre.
• Until 1987 more oil was annually discovered than what was extracted. Then, with the exceptions of 1991, 1992 and 2010 (Johan Sverdrup) more crude oil was extracted than was discovered. The depletion of the oil reserves is also illustrated in Figures 4 and 5.
• The number of and total amounts of discovered oil grew after oil prices moved above US$50/bbl in 2005. This suggests that oil companies have had several prospects in the drawer that became economically attractive to explore with the increase in oil prices and the income growth that allowed for drilling them.

The discovery in 2010 of Johan Sverdrup (formerly Aldous Major South/Avaldsnes), which saw its reserves number soar following an appraisal well in the fall of 2011, is very much an "outlier" relative to the size of the discoveries in the last two decades. Figure 2 also shows that new discoveries that are found to be profitable are fast tracked for production development.

The growth in oil prices in recent years has resulted in a positive economic climate for exploration, allowing more prospects to be drilled and thus establishing more reliable estimates of recoverable volumes from these discoveries.

Based upon data in the public domain from the operators and the authorities (NPD), it has been estimated that the recent discovery of Skrugard will be profitable at an oil price around US$60/bbl (340 NOK/bbl) at a discount rate of 7%. Skrugard is now estimated to hold 250 - 280 Mb of recoverable oil and the field is located at 72 degrees North at a water depth of 390 meters (1,300 feet) and 200 kilometers (125 miles) offshore.
One way to look at these recent developments is that Norway in general is about to run out of discoveries that are profitable in the US$40 ? US$60/bbl range.
Could a new wave of exploration and developments be set off at an even higher oil price, say US$150/bbl?

Food for thought is that future discoveries and developments are likely to be smaller than those that set off the past and present waves. If new discoveries are smaller, we are likely to need both a higher price and a larger number of field developments to combat depletion and decline from a growing number of ageing fields.

If this is viewed together with the extraction costs for oil from shale (tight oil) mainly in the U.S. and oil sands in Canada which both require an oil price in the range of US$60 - US$90/bbl, this very much documents that the price for the marginal barrel has now moved higher.

There is a catch here. Buyers of oil do not care about the development costs (or required breakeven prices). Instead the market sets the price as primarily based on the supply/demand balance. If the crude oil price were to temporarily retreat this would threaten the economics of some developments and also defer investments in new capacities.

The figure shows that most of Norwegian crude oil was discovered in the seventies and that total discoveries slowed until the discovery of Johan Sverdrup, Skrugard and Havis, and there are still some years left of this decade.

The discoveries from the 70s presently yield more than 28% of total Norwegian oil production, (refer also to Figures 6 and 7), and these will continue to make a significant contribution to the total Norwegian oil production.

Figure 4 shows that discovered Norwegian oil reserves are now around 75% depleted.
Figures 4 and 5 below should be useful for understanding the time horizon and level of future Norwegian crude oil production.

ACTUAL AND A FORECAST OF NORWEGIAN CRUDE OIL PRODUCTION

The parameter that will most influence future Norwegian crude oil production is and will continue to be the oil price. Figure 5 also illustrates that the biggest discoveries are made early, rapidly put into production. Then, with time, as prices rise to a high enough level, the smaller discoveries are developed. Figure 5 shows that the decline in Norwegian crude oil production continues to defy the strong price growth in recent years. The growth in crude oil prices has helped offset the fall in Norwegian crude oil production and stimulated increased exploration activity and made some past discoveries profitable.

In discussions about the time horizon and levels for the Norwegian crude oil production there seems to be a deficit of realistic and unbiased understandings about future production levels relative to what is now publicly known about estimates of remaining recoverable reserves, discoveries and yet to find.

Norwegian crude oil production peaked in 2001 and as of 2012 it has declined about 50% from the peak. This fact has been overshadowed by the oil price growth in recent years. This increase in prices has more than compensated for the decline in the amount of crude sold and delivered (and natural gas volumes), and has helped to maintain and grow annual Norwegian gross income.

Norwegian Petroleum Directorate's (NPD) has forecast that crude oil production for 2012 will decline to 1.61 Mb/d from 1.68 Mb/d in 2011. Norway also produced 0.08 Mb/d of condensates and 0.28 Mb/d of NGLs in 2011. Norwegian domestic oil consumption is now around 0.2 Mb/d and present expectations are that Norway will continue to be a net exporter of crude oil, albeit at a diminishing rate, for the next 25 to 30 years.

OIL PRICE AND GROSS INCOME

A production level that only meets Norway?s domestic needs will not leave anything for exports. Norway presently has an annual trade deficit, excluding income from the petroleum sector, of around US$20 ? US$25 billion.

To run a balanced trade and cover domestic consumption Norway needs to produce 0.7 ? 0.8 Mb/d at current prices. This level is presently expected to be reached within 15 years.

(Admittedly, income from Norwegian natural gas sales needs to be included, but in 15 years these sales are also forecast to have substantially declined.)

The figure above illustrates the effects from discoveries by decade and that the major discoveries in a new oil province are made early.

The chart could also leave the impression that oil prices really took off as Norwegian oil production started to decline.

As the oil price moved strongly upwards, it also pulled gross incomes from crude oil sales up. What is often overlooked with this increasing revenue is the decline in volume. The price increase for oil in 1979 gave a boost to the gross income from the Norwegian crude oil sales. Later, the increase in gross income was driven primarily by volume. A tighter global supply/demand balance in 2004 ushered in a sharp rise in prices of oil which more than compensated for the decline in oil production and thus sent the gross income from the Norwegian crude oil production to new heights.

Average crude oil price was around US$97/bbl in 2008 and in 2011 US$111/bbl. In 2008 the Norwegian crude oil production was 2.11 Mb/d and by 2011 it had declined to 1.68 Mb/d.

Predicting near term developments of the oil price with any precision is difficult. The growth in total debt in the last three decades caused aggregate demand (also for oil) to be pulled forward, and debt growth also provided price support. A wide spread deleveraging and introduction of austerity measures, which now seems to be in its infancy, could be expected to affect oil demand in the near term and perhaps reduce oil prices.