The “Peak Oil” dinosaur
During the previous two weeks the oil price has hovered between $45 and $50 per barrel for American WTI crude oil and European Brent crude oil. It seems as though the downward slide experienced by the oil price during the last months of 2014 has braked. The question is whether this price is something that oil companies and oil producing nations (and also oil importing nations and industries such as aviation) can use as a guide when reviewing their budgets for 2015. The oversupply that existed during the northern autumn came from the increased production of shale oil in the USA and also from increases in production capacity in Saudi Arabia. But another important factor is that we consumers have begun to adapt to the previous higher oil prices by using less oil.
When the International Energy Agency (IEA) reports on world oil supply this is made up mostly of conventional oil and to a lesser extent by shale oil and other unconventional supplies of crude oil. It is this supply, 74 million barrels per day (Mb/d) that is used in refineries to produce gasoline, aviation fuel and diesel. As icing on the oil supply cake, the IEA tops this off with “natural gas liquids” (NGL, that are mainly used by the chemicals industry) and also with the increase in liquid volume that occurs when crude oil is processed in refineries (without an increase in total energy content = “processing gains”).
In 2005 the IEA predicted that the supply of oil would be 122 Mb/d in 2030. When one hears in the world media that there is a lot of oil currently available on the world oil market it is this volume of 72 Mb/d that is being described. The production of shale oil gives an over supply of 1.5-2.0 Mb/d, i.e. 2-3% of total supply and it is amazing that this small volume can influence the price of the greater bulk of remaining crude oil supply. The forms of oil production that are not profitable at the current price are mainly shale oil and the heavy oils from Canada and Venezuela. Some investment in development of new, already discovered oilfields will continue but estimates of future new oil production must now be reduced as well as estimates of future discoveries since oil companies are now reducing their budgets for exploration. Instead they need the money to maintain current production. All this shows clearly that this period of oversupply of oil will be limited. Many believe that the low price of oil shows that we are a long way from Peak Oil but the fact is that the low price means less investment and so less future production. Global Peak Oil (i.e. a maximum in the rate of oil production globally) will be reinforced by the current low oil price. The question is whether 74 Mb/d will be the highest rate of oil production we will ever observe.
(Swedish)
Under de senaste två veckorna har oljepriset pendlat mellan $45 och $50 för amerikanska WTI-oljan och den Europeiska Brent oljan. Det verkar som om den nerförsbacke som oljepriset hade under 2014 sisa månader bromsats upp. Frågan är om det är detta pris som oljebolag och oljeproducerande nationer, men även importländer och till exempel flygindustrin, skall ha som riktmärke då man reviderar sina budgetar för 2015. Det överskott som funnits under hösten är den omdiskuterade ökningen av skifferoljan i USA, men Saudiarabien har också färdigställt ny produktionskapacitet. Men, en viktig faktor är också att vi konsumenter började anpassa oss till det höga oljepriset och konsumerade mindre.
Då International Energy Agency rapporterar oljetillgångar har man dels den konventionella oljan, skifferoljan och okonventionell olja. Det är denna olja, ungefär 74 miljoner fat om dagen, som används i raffinaderier för att producera bensin, flygbränsle och diesel. Som grädde på moset plussar man på naturligt flytande gas som framförallt används inom den kemiska industrin och den volymökning so man får då alla produkter passerar raffinaderier. År 2005 sa IEA att denna stapel skulle vara 122 Mb/d år 2030. Då man diskuterar att det finns för mycket olja på marknaden är det just de 74 Mb/d som man diskuterar. Volymen som nämns är 1.5 till 2.0 Mb/d, dvs 2 till 3 procent. Det är fantastiskt att denna lilla volym sätter priset på den stora volymen. Den produktion som framförallt inte blir lönsam är skifferoljan och den tunga oljan från Kanada och Venezuela. Att investera för att utveckla nya hittade fält kommer delvis att fortsätta men volymen måste skrivas ner liksom vad man i framtiden kan förväntas hitta i nya fält då bolagen skär ner denna del. Man behöver inkomsterna för att få verksamheten att gå runt. Allt detta visar tydligt att det är en begränsad tid som vi kommer att ha ett överskott. Många tror att det låga priset på olja visar att vi är långt från Peak Oil, men faktum är att det låga priset medför färre investeringar och kommer att medföra lägre produktion i framtiden. Peak Oil, dvs maximal oljeproduktion, kommer att förstärkas av det låga oljepriset. Frågan är om 74 Mb/d blir toppnoteringen?
Aleklett's Energy Mix 
Thomas Westling
February 2, 2015
Som ny i diskussionen kring peak oil har jag fastnat i funderingar kring om peak oil kommer att uppstå pga en topp i produktionskapacitet i takt med att stora fält töms utan att kunna balanseras av nya fyndigheter av samma storlek eller om det är så att efterfrågan minskar pga besparingar och övergång till nya energikällor. Vi ser t ex nu att bilbränsleförbrukningen minskar i USA pga av effektivare bilmotorer trots att körsträckorna ökar.
Skillnaden kring skälet för peak oil är avgörande när man börjar fundera på prisutveckling. Är kapaciteten avgörande kommer priset stadigt att röra sig uppåt medan om efterfrågan är avgörande kommer vi att få se en betydligt dystrare prisutveckling.
fille
February 2, 2015
Något jag saknar i diskussionen om de fallande oljepriserna är det faktum att ALLT faller i pris. Järnmalm gick ner 50% under 2014, koppar, vete, alumineum… allt faller. Jag tror inte detta har så mycket att göra med oljemarknaden, som det har med de generella ekonomiska trenderna. Är en lågkonjunktur på väg? Åtminstone en ekonomisk avmattning, med minskad efterfrågan på allt.
Lars-Eric Bjerke
February 2, 2015
I USA har bil- och lastvagnsparkens bränsleförbrukning per modellår minskat med 25 % mellan 2005 och 2014, för Sverige gäller 30 %. Det blir intressant att se om laddhybriderna gör att trenden fortsätter eller om det låga oljepriset gör att hybridförsäljningen stannar upp.
http://www.epa.gov/otaq/fetrends.htm
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Dr. Joseph
February 3, 2015
Could it be that the reason for the low oil prices has to do with oil extraction being harder and so more expensive?
Could it be that the easy oil (to extract) is now nearing its end – its “peak”?
Maybe. I believe that oil will go to $160 or $180 and maybe even higher due to difficulty (and obviously the costs) in extracting the hard to get crude.
Westling talks of new energy sources and of cheaper iron ore and Bjerke about hybrid cars. Nothing matters as oil will finish in the near future. So let’s start…..
Westling talks about new energy sources: doesn’t matter as the problem will be of fuel shortage and NOT energy (one can use nuclear power, coal etc. for energy production). Over seven hundred million vehicles on the world’s roads plus between twenty and thirty thousand airplanes need energy in the form of fuel which will eventually be in very short supply. That is the problem.
Bjerke’s hybrid engines wont help much either. First of all. What hybrid?
Hydrogen vehicles? What is the amount needed to fuel all the above mentioned vehicles and planes? And what amount of energy is needed to split relevant molecules to get the hydrogen? And how long would it take to convert all these vehicles to accept hydrogen as a source of fuel? Hydrogen as replacement for conventional fuel is a joke. It takes that much energy to get that much energy, like shale oil i.e. put in a dollar to get half a dollar. Ethanol driven vehicles: sure enough if one wants to create conflict between land for fuel and land for food, water shortages and pollution with fertilizers. The world’s yearly crude oil usage is around one and a half cubic kilometres. (ca 35 billion barrels).That is asking for a lot of land to grow food for fuels. I find that disgusting as an option. And there are other fuel sorts that can be made like algae in a growth medium. This again gives concern to fertilizer pollution and the need for massive amounts of water.
All these alternative fuels are just a big joke. What alternatives?
Vehicle bodies made from solar cells that will drive a large sterling engine and will also charge batteries for night usage. Won’t be good for driving fast but will take you from A to B for almost free. Water driven engines. Air driven engines. But I believe we are too late for all these to be developed in time. We have waited far too long.
We have been dependant on oil as if it will never end. We were lazy all of these years. We did not innovate hard enough because oil was plenty and easy to get. So our craving for crude stayed insatiable.
We believed the scientist of the 50’s and 60’s who said that “there is so much of the stuff that it will last forever”.
The magnitude of converting and/or building new engines to accept a new type of fuel is mind blowing. There is not enough time.
If we found a replacement for oil 10 years ago it will still be too late today.
The little oil there is left should be taken up in small amounts and for the most important usages, like pharmaceuticals, greases, and special oils. It should not be wasted on school runs type of travel. Cycling and walking should be more frequent.
I know of families that has 6 cars. One each for the parents and 4 for their 4 teenage children. Absolutely disgusting. What a waste of fuel.