November 5, 2008

Whopper from IEA: Output Declining 9% a year

A big development in the fall of 2008 was the publication of new estimates by the International Energy Agency that output is declining by 9.1% from existing oil fields. The report, due in November, was leaked to the Financial Times. This year's World Energy Outlook has been highly anticipated because the IEA promised to conduct an in-depth investigation that submitted official claims to scrutiny. So it's like the first big attempt by an official organ to build up a picture of the production situation from the bottom up. Its new estimates are much lower than previous ones. According to the FT:

"Output from the world’s oilfields is declining faster than previously thought, the first authoritative public study of the biggest fields shows.
Without extra investment to raise production, the natural annual rate of output decline is 9.1 per cent." The findings suggest the world will struggle to produce enough oil to make up for steep declines in existing fields, such as those in the North Sea, Russia and Alaska, and meet long-term de­mand. The effort will become even more acute as prices fall and investment decisions are delayed."

Heinburg comments: "This is a stunning figure. Considering regular crude oil only, this means that 6.825 million barrels a day of new production capacity must come on line each year just to keep up with the aggregate natural decline rate in existing oilfields. That's a new Saudi Arabia every 18 months."

Simmons, in 2007, noted that CERA (Cambridge Energy Research Associates) had based its analysis on a 4.5% decline. The IEA report is big news for energy and peak oil.

No comments: