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Oil Price

“Key oil figures were distorted by US pressure, says whistleblower”

Now the “peak oil” theory is gaining support at the heart of the global energy establishment. “The IEA in 2005 was predicting oil supplies could rise as high as 120m barrels a day by 2030 although it was forced to reduce this gradually to 116m and then 105m last year,” said the IEA source, who was unwilling to be identified for fear of reprisals inside the industry. “The 120m figure always was nonsense but even today’s number is much higher than can be justified and the IEA knows this.

A second senior IEA source, who has now left but was also unwilling to give his name, said a key rule at the organisation was that it was “imperative not to anger the Americans” but the fact was that there was not as much oil in the world as had been admitted. “We have [already] entered the ‘peak oil’ zone. I think that the situation is really bad,” he added.

http://www.guardian.co.uk/environment/2009/nov/09/peak-oil-international-energy-agency

The World Energy Outlooks can be found here: http://www.worldenergyoutlook.org/

Let’s have a look at how the IEA projections changed over time:

Changes in IEA WEO world oil supply projections

WEO

version

Page in

report

Projections for

2015 in mb/d

Projections for

2020 in mb/d

Projections for

2030 in mb/d

Remarks
2000 77 na 114.7 na
2002 96 na 104.0 120.0 Lower demand

expected than in 2000

2004 106 na 106.7 121.3
2006 93 99.3 (107.8) 116.3 2020 interpolated
2008 108 94.4 (100.4) 106.4 Lower supply
iea_weo2008_production For example, what is the difference between the 2006 and 2008 projections?

<< The WEO 2008 found that 79% of proven reserves produced 70.2 mb/d of crude oil in 2007 in existing fields, declining at 4% pa. See “OPEC reserves revisited”, http://www.crudeoilpeak.com/?p=355

Even under the most optimistic assumptions, crude oil production -  the most important feedstock for refineries – will practically stay flat until 2030.

This is a totally different outlook than presented in 2006:

Changes in IEA WEO world crude oil supply projections 2006 – 2008

WEO

version

Page in

report

Projections for

2015 in mb/d

Projections for

2020 in mb/d

Projections for

2030 in mb/d

Remarks
2006 93 80.3 (84.7) 89.1 2020 interpolated
2008 251 73 (74.1) 75.2 Crude practically flat

iea_weo_1998_fig7_4_opec_reserves Short history of IEA WEO Outlooks:

The WEO 1998

http://www.iea.org/textbase/nppdf/free/1990/weo1998.pdf

mentions the peaking of oil production, shows the Hubbert curve and quotes the Irish oil-geologist Colin Campbell who had just written an article “The end of cheap oil” in the Scientific American

http://www.hubbertpeak.com/sciam983.htm.

The WEO 1998 also contains a graph showing the sudden increase in OPEC’s oil reserves in the mid 80s (quota war) >>

iea_weo_1998_fig7_8_peak_2010_2000gb 3 projections are shown for 2000 Gb, 2300 Gb and 3000 Gb ultimate conventional oil reserves.

<< The lowest estimate peaks around 2010, with crude oil at 80 mb/d, a figure which is 6 mb/d higher than what was actually achieved in 2005-2008. A huge, widening  gap is shown between demand and supply.

This gap suddenly disappears in the WEO 2000 in which supply exactly matches demand, for the year 2010 at 95.8 mb/d (we are 10 mb/d and 2 months away from that year) and for 2020 at 114.7 mb/d.

On page 74, the WEO 2000 says: “This Outlook incorporates more optimistic estimates of the world resource base than did the 1998 WEO. The change is based on recent findings, including the latest assessment of conventional world oil and gas resources by the US Geological Survey (USGS) — their first such study since 1994. The USGS estimates that ultimate recoverable resources” of oil and natural gas liquids, including oil already being produced, total 3 345 billion barrels. This revises upwards the figures given by the 1998 WEO. In addition to figures for identified reserves and undiscovered resources, the USGS has published for the first time world-level estimates of “reserve growth” in existing fields. World oil and NGL resources from reserve growth are almost as great as resources from undiscovered fields.”

More details about the USGS 2000 survey and EIA’s supply scenarios based on this assessment can be found in my submission #75 to the Productivity Commission (Energy Efficiency)

http://www.pc.gov.au/__data/assets/pdf_file/0004/45643/sub075attachment1.pdf

iea_weo_2000_figa1_5_structureoilsupplymodule The WEO 2000 also marks the introduction of this oil supply module>>

Step1: Estimate Non-OPEC supply

Step 2: If oil price is high enough, add unconventional oil production

Step 3: Estimate oil demand growth in % pa on the basis of GDP growth targets

Step 4: Calculate residual demand always to be supplied by OPEC

Step 5: Happy ending:  Supply=Demand

istheworldfacinga3rdoilshock Since the WEO 2000, all WEOs follow this methodology.

But in 2004, the then editor of the IEA Oil Market Report, http://omrpublic.iea.org/, Klaus Rehaag, does a workshop in Rio entitled: “is the world facing a 3rd oil shock?”

http://195.200.115.136/textbase/speech/2004/kr_rio.pdf

Amazing. There seem to be quite some different assessments within the IEA itself.

In the same year, the WEO team publishes projections which are higher than ever before (see above table)

.

iea_weo2004_embellished This is an extract from my critique of the BTRE working paper #61, highlighting the flaws in the WEO 2004>>

Back to the beginning of this article: let us compare the 2006 and 2008 WEOs with the estimate of the Energy Watch Group and we see a huge gap opening up between the IEA amd the EWG. That’s what these warnings are all about.

ewgoutlook2008
http://www.energywatchgroup.org/Oil-report.32+M5d637b1e38d.0.html

The IEA WEO team needs to go back to the drawing board.

iea_save_oil_in_a_hurry But before we wait too long for that to happen we need to prepare for declining oil production. After all, yet another department of the IEA prepared this report, already in 2005>>

Saving Oil in a Hurry

http://www.iea.org/publications/free_new_Desc.asp?PUBS_ID=1474

When will governments take this seriously:

In a stark warning to Britain and the other Western powers, Dr Birol said that the market power of the very few oil-producing countries that hold substantial reserves of oil – mostly in the Middle East – would increase rapidly as the oil crisis begins to grip after 2010.

http://www.independent.co.uk/news/science/warning-oil-supplies-are-running-out-fast-1766585.html

It seems Dr. Birol has a hard time to kill the perpetual oil growth ghosts which escaped the USGS 2000 bottle.

Download this article “Short History of IEA World Energy Outlooks” here:

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