Saturday, June 11, 2011
Peak Oil alert gaining momentum
Since 2006, the international oil company TOTAL has consistently voiced warnings about the future inability of the oil industry to meet continued oil demand growth. In 2006, then CEO Thierry Desmarest stated that maximum oil production lies between 100 to 110 million b/d, reached potentially by 2020. Only a year later the new CEO Christophe de Margerie announced that it would be difficult for the industry to produce beyond 100 million b/d.
To summarize, according to TOTAL the world can likely not produce over 95 million barrels per day due to constraints in producing more technically challenging oil fields such as deepwater, heavy oil, and fields located in the arctic. Furthermore, such a production level is only possible if the countries in the Middle-East, especially Saudi-Arabia, Iran, and Iraq, will be able and willing to increase their production.
Ad when it comes to Saudi Arabia being able to increase production well the latest news are not encouraging:
The electricity company of Saudi Arabia warns that oil in this country could be depleted by 2030 if left unchecked domestic consumption. According to a report of Saudi Electric, domestic consumption is estimated to be between 2.5 and 3.4 million barrels a day.
The report, published in the magazine Al Mashka says that the increase in domestic consumption of oil is one of the main challenges facing the country, mainly because oil accounts for 80% of national income.
Abdel Salam al-Yamani, head of the Saudi Electricity Company also warned of the consequences for citizens to ignore the calls to save electricity and water, and has advised that they depend more on solar energy.
It appears the Saudi governement is well aware of this issue since on the 1st of June announced its intention to build 16 nuclear power plants which is quite ironic for a country supposedly full of oil.
DUBAI, June 1 (Reuters) – Saudi Arabia plans to build 16 nuclear power reactors by 2030 which could costs more than $100 billion, a Saudi-based newspaper reported on Wednesday, citing a top official.
The world’s top crude exporter, Saudi is struggling to keep up with rapidly rising power demand. It has considered boosting its domestic energy capacity using nuclear reactors.
“After 10 years we will have the first two reactors,” Abdul Ghani bin Melaibari, coordinator of scientific collaboration at King Abdullah City for Atomic and Renewable Energy, told Arab News.
Many have backed away from atomic plans after the accident at Japan’s Fukushima Daiichi plant but oil-rich Gulf states are among the few countries looking to make major investments in nuclear power plants.
“After that, every year we will establish two, until we have 16 of them by 2030,” he said.
Also from The Economist: Oil production fails to keep up with demand
on for a year, global oil stocks would have had to drop by 1.825 billion barrels. If that did not happ
Long-term consumption cannot exceed production. Even in short time frames, consumption can only exceed production if there is sufficient production in storage.
To cover 5 million barrels per day of excess consumption for a year, global oil stocks would have had to drop by 1.825 billion barrels. If that did not happen, we need another explanation.
Cheating (under-reporting production) by OPEC
Poor consumption numbers from China or elsewhere
Another source of production not shown
Some combination of the above
Regardless, it simply is not possible for oil consumption to grow faster than production for years on end.
Links to this post