2014: New and Improved Peak Oil Forecast

Global Oil Production

While petroleum companies have announced record profits as of late, a new study published in Energy & Fuels has some startling news. Using an improved forecasting model, researchers from Kuwait University and Kuwaiti Oil Company predict that conventional crude oil production will peak in 2014.

“Peak oil” refers to the point at which oil production reaches a maximum output and then declines. Ibrahim Nashawi and colleagues have developed a new way  to calculate peak oil that builds upon the Hubbert model. The Hubbert forecast model is known for accurately predicting peak oil production in the United States in 1970.  However, this model relies upon a single production cycle within each country.

The new model includes several production cycles that reflect contemporary oil production. The additional production cycles are influenced by technology advances, government regulations, economic conditions, and political events.  According to the authors, “The model  is simple, accurate, and totally data driven, which allows a continuous updating once new data is available.”

To calculate peak oil using this new model, researchers first analyzed the production cycles in 47 oil-producing countries. They then combined the models found in each of the 47 countries to calculate global production. They provide estimates of ultimate recovery, remaining reserves, and future production of crude oil for each country. They also provide a separate model for OPEC countries to illustrate their combined impact.

In total, the study estimates that the world’s ultimate crude reserves will peak in 2014 with 2140 billion stock tank barrels (BSTB) (the graphic here shows consumption per day).  By then, the remaining recoverable oil will be 1161 BSTB. Based on 2005 conventional oil production, the world’s oil reserves are being depleted by a rate of 2.1% each year. (OPEC won’t see its supply peak until 2026.)

How much faith should we put in the results of this study?  The researchers state that their purpose is to predict crude oil production more accurately than before, using a model that is based on real world developments. They hope that their findings will encourage policymakers to take crude oil supply into account in their economic and strategic planning.

Based upon my review of the study,  I find their data and methods are valid and reliable. I would like to learn more about how the additional production cycles were calculated. Of course, I should also note that when doing any kind of modeling research, the empirical reality will most likely vary according to actual circumstances.

Nonetheless, the results of this study have definitely shifted my perspective in terms of the timescale we are looking at for clean technology in the transportation sector. For those of us in the clean tech field,  we must move in a strategic and timely manner to facilitate the transition to a post-petroleum economy.

Shannon Arvizu is a clean-tech strategist and educator at Columbia University. You can find out more at www.misselectric.com.

Shannon Arvizu, Ph.D., is a clean tech educator and cutting-edge consultant for the auto industry. You can follow her test drives in the cars of the future at www.misselectric.com.

15 responses

  1. Great job Shannon, just posted a tweet on your article. As an economist, the reality Peak Oil is higher prices and larger USA trade deficits. This is a huge tax on our economy we can no longer afford. What an opportunity for America to rejuvenate our economy by implementing the technology solutions to our dependence upon oil.

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  3. One of the benefits (silver lining) to the global recession has been a reduction in oil usage, but over the next three years, when we see demand increase again, we may find that adequate production is going to be a struggle.

  4. The US Energy Information Administration (EIA) and the International Energy Agency (IEA) should make official statements about declining world oil production now to renew the focus on oil conservation and alternative renewable energy sources.

  5. Any discussion about oil prices over the next decade must include an attempt to quantify emerging economy demand as an important driver at the margin. Here is a simple thought experiment using Chinese demand to give some idea of the magnitude of the supply issues we face:
    – China moves from 3 bbls/person/year to the South Korean per capita consumption level of 17 bbls/person/year
    – Transition takes 30 years
    – No peak in global production

    In next 10 years we must find 44 million BOPD. If you superimpose peak production on top of this demand profile using the following parameters oil prices would increase approximately 250% in real terms over next 10 years:
    – Oil demand elasticity of -0.3
    – Current production 84 million BOPD, current price US$ 80
    – Peak production 100 million BOPD
    – Post peak decline rate of 3-4%

    If you want to try the model for yourself using your own assumptions it can be found at: http://www.petrocapita.com/index.php?option=com_conten...

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