World Energy Outlook 2012 – NYT article focusing on the USA

Posted on November 13, 2012

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Today the IEA’s World Energy Outlook for 2012 was released. I will comment on the report when I have had an opportunity to read it. At the moment numerous newspaper articles have misunderstood the contents of WEO2012. For example, an article in the New York Times has been published under the headline: U.S. to Be World’s Top Oil Producer in 5 Years, Report Says. The errors in the article were so serious that the NYT was forced to publish the following correction.

Correction: November 12, 2012

“An earlier version of this article misstated the International Energy Agency’s prediction of American self-sufficiency in energy production. The agency said 55 percent of the improvement would come from more oil production and 45 percent from improvements in energy efficiency. It did not say that domestic oil production would rise 55 percent. Also, an earlier version of a photo caption with this article misidentified the equipment shown in use in an oil field in Greensburg, Kan. It is a pump jack, not an oil rig.”

The IEA published the prognosis for future US oil production shown above before WEO2012 was released. Conventional oil production will continue to decline while unconventional oil is estimated to grow to around 5 million barrels per day between 2020 and 2025 before declining. The IEA’s estimate for increased unconventional oil production is greater than those presented by experts in the oil industry. At a conference in China at the end of September Laura Atkins presented a prognosis that could, instead, see maximal production of unconventional oil in the USA at 4 Mb/d, i.e. 20% lower than the IEA’s estimate.

She made the following comments regarding the prognosis (Source: Hart Energy and Rystad Energy):
* Shale production volumes can increase rapidly
* But, it takes a massive drilling program
* And, not all wells are economic
* Continuous learning is essential

The first area where shale oil began to be produced was Montana’s section of the Bakken field. As shown in the figure above, this area already reached maximal production of shale oil in 2006 at 9 million barrels per quarter, i.e. 100,000 barrels per day. We do not know at which level the falling production rate will level off but it could be 50,000 barrels per day. If this production profile is characteristic for the Bakken field then production in North Dakota will also reach a maximum within a few years and then decline to a level of about half the peak rate. This means that a plateau of US shale oil production lasting 15-20 years from around 2020 until 2035 or later that Laura Atkins presents probably is unrealistic. All together, this means that the prognosis made by the IEA for the maximal rate of shale oil production in the USA may be an overestimate by around 2 Mb/d.


(The figure is Figure 14.4 from the book “Peeking at Peak Oil”, Aleklett, Lardelli, Qvennerstedt)

Production of 3 Mb/d of shale oil will not transform the USA into a net oil exporter but will mean that the USA’s need to import oil will be reduced. In the report that the US EIA presented in February they showed a current production of 1 Mb/dof shale oil and an import dependence of 41%. An increase to 3 Mb/d of shale oil production will reduce imports to 7 Mb/d and import dependence to 32%. The USA will not surpass Saudi Arabia in terms of total crude oil production.

(Swedish)
Idag släpps World Energy Outlook 2012. Jag kommer att kommentera rapporten då jag fått möjlighet att läsa den. Just nu fluktuerar tidningsartiklar som har missuppfattat vad som står i WEO2012. Låt oss titta på den artikel som New York Times har publicerat med rubriken: U.S. to Be World’s Top Oil Producer in 5 Years, Report Says. Felaktigheterna i artikeln var så stora så NYT tvingades göra följande tillägg:

Correction: November 12, 2012
“An earlier version of this article misstated the International Energy Agency’s prediction of American self-sufficiency in energy production. The agency said 55 percent of the improvement would come from more oil production and 45 percent from improvements in energy efficiency. It did not say that domestic oil production would rise 55 percent. Also, an earlier version of a photo caption with this article misidentified the equipment shown in use in an oil field in Greensburg, Kan. It is a pump jack, not an oil rig.”

Vad det gäller framtida oljeproduktion i USA har IEA innan WEO2012 släppts lämnat den prognos som visas här ovan. Konventionell oljeproduktion fortsätter att minska medan okonventionell olja beräknas öka till cirka 5 miljoner fat om dagen mellan 2020 och 2025 för att sedan börja minska. Denna ökning av okonventionell är större än vad experter inom oljeindustrin presenterat. På en konferens i Kina i slutet av september presenterade Laura Atkins en prognos som kunde ge 4 Mb/d, dvs 20% lägre än IEA.

Hon gör följande kommentar till prognosen (Source: Hart Energy and Rystad Energy):
* Shale production volumes can increase rapidly
* But, it takes a massive drilling program
* And, not all wells are economic
* Continuous learning is essential

Det första området där Shale oil börjades produceras var Montanas del av Bakkenfältet. Som visas i figuren här ovan har området redan nått maximal produktion med 9 miljoner fat i kvartalet, dvs 100.000 fat om dagen. Vi vet inte vid vilken nivå som produktionen kommer att plana ut men det kan bli 50.000 fat om dagen. Om denna produktionsprofil är karakteristisk för Bakken så kommer även produktionen i North Dakota att nå ett maximum under några år för att sedan minska till cirka hälften av topproduktionen. Det betyder att en platåproduktion under 15-20 år förmodligen är för optimistisk. Om det samma gäller för övriga områden så är även den prognos som Laura Atkins gör för övriga områden för optimistisk. Sammantaget visar detta att den prognos som IEA gjort för USA kan vara överskattad med cirka 2 miljoner fat om dagen vad det gäller topproduktionen frå shale oil.


(Bilden är från boken Peeking at Peak Oil, figur 14-4)

En shale oil produktion med 3 Mb/d kommer inte att göra USA till ett exportland av olja med prduktionen kommer att göra att importberoendet kommer att minska. I mars raporterade USA:s Energy Information Administration att beräknad import 2035 var 9 Mb/d och att man då skulle vara 41% beroende av import. En minskning till 7 Mb/d i import skulle redicera beroendet till ca 32%. USA kommer inte att slå Saudiarabien vad det gäller den total produktion.

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