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Australian crude oil production to decline by 85% over the next 10 years

On 1st March 2010, the Federal Government published a new Australian Energy Resource Assessment (AERA)[1].  In chapter 3 on oil it contains a graph on future oil production on page 79.

fig_3_43_geoscience_australia

What we can see from this graph (note the inserted comment is by the author of this paper):

  • Crude oil production from known oil fields will dramatically decline by 85% over the next 10 years ( 1 – (105 + 0.14*152) / 890 = 0.85 )
  • This decline is offset by condensate from wet gas (mainly in LNG projects) but because of a lack of condensate splitters in Australian refineries 95% of this is exported.
  • The prospect for new oil discoveries is not very good. Geologically, Australia is better off with natural gas

Since global oil export volumes are shrinking at the same time (details below), Australia will slide into a huge oil import crisis. The government hopes coal-to-liquids, gas-to-liquids and 2nd generation bio fuels will come to the rescue but it is very uncertain whether that will materialize in the quantities required, at acceptable prices and the timeline dictated by events surrounding the global peaking of oil production.

These events in the next years include

  • an oil war or oil proxy war in the Middle East
  • social unrest in ME countries when declining OPEC oil production impacts on budgets and subsidies for the general population
  • oil hoarding and freezing of oil markets when the truth comes out about OPEC’s overstated reserves and confidence in all oil reserve data disappears

In any case, the energy profit ratios of  alternative  fuels will be very low:

6/1/2010
Diminishing Returns of Fossil Fuel Energy Invested
http://www.crudeoilpeak.com/?p=909

Let’s check how the above graph compares with previous government reports. This figure 6 is from Geoscience Australia’s 2005 submission 127 to the Senate Inquiry on Oil Supplies:[2]

figure6geoscienceaustralia

It shows 3 projections up to 2025: P10, P50 and P90. Each number denotes the probability in percent that this projection will actually occur. Strangely, the AERA report does not show different probabilities. So let’s superimpose the 2 graphs to see where we are:

fig_3_43_superimposed_ga_subm127_actual_au_petroleum_stats

We can see from the graph:

  • The actual crude production curve (black line 2006-2009) has just hit the P90 estimate from 2005. It remains to be seen whether it will follow the new projection (light blue columns)
  • A lot of condensate has been added and that assumes all LNG projects go ahead as planned.

Read more about:

  • Australian oil reserves and resources, how AERA omits Geoscience Australia’s conservative 2P reserves
  • AERA’s misldeading statement about “enough” oil for 42 years and a factually incorrect “balanced” oil supply
  • The problems with propane deficient LPG, propane imports on the East coast and butane exports from the West coast
  • Timelines about global net oil exports shrinking and Australia’s coming oil import crisis
  • Lack of a Strategic Oil Reserve
  • Need to save oil in a hurry
  • 3 examples of road projects which make no sense in a period of declining oil production: new Clem7  road tunnel in Brisbane, Hunter freeway and Western freeway in Melbourne

by downloading the full article of 10 pages as PDF file: [download id="28"]


[1] http://www.aph.gov.au/Senate/Committee/rrat_ctte/completed_inquiries/2004-07/oil_supply/submissions/sublist.htm

http://www.aph.gov.au/Senate/Committee/rrat_ctte/completed_inquiries/2004-07/oil_supply/submissions/sub127.pdf


[2] https://www.ga.gov.au/products/servlet/controller?event=GEOCAT_DETAILS&catno=70142

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