| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

News Main Page 
 
 News
 Irish
 European
 International
 Asia-Pacific Business Week
 
 Analysis/Comment

RSS FEED


How to use our RSS feed

 
Web Finfacts

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

We provide access to live business television and business related videos from: Bloomberg TV; The Wall Street Journal; CNBC and the Financial Times. Click image:

Links

Finfacts Homepage

Global News

Bloomberg News

CNN Money

Cnet Tech News

Newspapers

Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News

 

Feedback

 

Search

News : International Last Updated: Dec 19th, 2007 - 13:17:15


World Oil Production capacity to increase up to 25% by 2015; No peak seen for decades, US Congressional Committee told
By Finfacts Team
Dec 7, 2005, 23:04

Email this article
 Printer friendly page

A field-by-field analysis of global oil production and development shows the world is not running out of oil in the near- or medium-term, and a large increase in the availability of unconventional oils will expand global liquid hydrocarbons capacity by as much as one-fourth in the next ten years, Cambridge Energy Research Associates (CERA), an IHS company, testified to a U.S. House of Representatives subcommittee this morning.

Saudi Arabian oil refinery at Yanbu, on the Red Sea coast - CERA estimated that oil production capacity -- including crude oil, condensate, natural gas liquids, oil sands, gas-to-liquids -- could rise to 108 million barrels per day in 2015, up from 87 million barrels per day currently. 

CERA said that oil from non-conventional sources would widen to 35% of capacity in 2015 compared with 10% in 1990. The research points to growth in output from ultra deepwater drilling in the U.S. Gulf of Mexico, Brazil, Angola and Nigeria; 250% more heavy oil production capacity from Canada and Venezuela; and the expansion of condensate and natural gas liquids to 23 million barrels per day from 14 million barrels per day currently. 

“We see no evidence to suggest a peak before 2020, nor do we see a transparent and technically sound analysis from another source that justifies belief in an imminent peak,” CERA Senior Consultant and Director of Global Oil and Gas Resources Robert Esser testified before a House Energy and Air Quality Subcommittee hearing on Understanding the Peak Oil Theory.  “It will be a number of decades into this century before we get to an inflexion point that will herald the arrival of an ‘undulating plateau’ of global hydrocarbon production capacity,” Esser said.

Expanding Sources

CERA projects that world oil production capacity – including crude oil, condensate, natural gas liquids (NGLs), oil sands, gas-to-liquids (GTL), and other sources – has the potential to rise from 87 million barrels per day (mbd) in 2005 to as much as 108 mbd by 2015, with further growth in capacity continuing after that point.

“A detailed new audit of our own analysis and the enormous scale of reserve upgrades in existing fields, confirmed by the most extensive and complete databases on field production – the proprietary databases of IHS, of which CERA is now part – contradicts those who believe that peak oil is imminent,” Esser testified.

Between 2005 and 2010, production capacity expansion will be  split between OPEC and non-OPEC countries, according to the CERA analysis; over the coming ten years, OPEC countries will produce a net gain of 12.2 mbd, almost 60% of the total expected capacity increase, with non-OPEC capacity rising 8.2 mbd.  Regionally, the United States and North Sea capacity declines, while Canada, West and North Africa, Latin America, the Caspian and Middle East continue to increase.  After 2010, increases in capacity will shift more to OPEC countries.

The increases flow from a large number of major projects in both OPEC and non-OPEC countries, with the top 10 projects being brought onstream each year together adding a cumulative gross capacity of 2.0 to 2.5 mbd per year until 2010.  Many of these projects were approved under a much lower oil price regime, and will proceed even if the price of oil falls significantly, Esser observed.

To evaluate assertions by some that the failure of global exploration to replace production in recent years is evidence of a peak, CERA and IHS reviewed detailed field-by-field data which indicated that production has been more than replaced by exploration plus  upgrades of previous discoveries.  For the period from 1995 through 2003, according to IHS figures and CERA analysis, global production of 236 billion barrels was more than compensated for by exploration success of adding 144 billion barrels and field upgrades of 175 billion barrels.

Unconventional Liquids

In addition to crude oil from conventional sources, CERA’s analysis concludes that non-traditional sources will continue their dramatic rise -- expanding to about 35% of total capacity in 2015, compared with 10% in 1990.  Among the primary unconventional sources, many of which CERA expects to be considered traditional by 2015, are:

  • Continuing rapid expansion of ultra deepwater production from 3.4 mbd in 2005 to over 9 mbd by 2010, with growth in the “big four” deepwater areas: the U.S. Gulf of Mexico, Brazil, Angola and Nigeria.
  • Over 250% expansion of heavy oil production capacity from Canada and Venezuela from 1.8 mbd in 2005 to 4.9 mbd in 2015.
  • New condensate and natural gas liquids (NGL) capacity expansion from 14 mbd currently to 23 mbd by 2015, with notable add-ons occurring in Qatar’s liquified natural gas (LNG) business and in Norway, along with NGL growth in many OPEC countries, including Saudi Arabia, Qatar and Nigeria.
  • New gas-to-liquids (GTL) developments likely to produce 1 mbd by 2015, compared with 160,000 barrels per day presently.

Above-Ground Risks

While CERA’s outlook for capacity growth incorporates the uncertainties normally associated with exploration, development and production projects, it believes the major risks to this outlook are not below ground, but above ground.  In the immediate term, these include shortages of qualified people, rigs, yard space and raw materials, as will as rising operating costs.

Other above-ground risks include political turbulence, abrupt changes in contract terms, controversy over fiscal terms, weather and environmental effects, creeping nationalization and reconsolidation, and potential violence and insecurity.  All these factors can limit expansion of exploration and slow the rate at which new projects will be sanctioned, Esser stated.

Data Reliability

Esser observed that one reason for debate over peak oil is the reliance of different observers on different data sets, with the most visible being those published by exploration and production companies and filed with the U.S. Securities and Exchange Commission (SEC).  “These data are overly conservative as evidenced by the extent to which upward reserve revisions outweigh downward revisions.  This structural bias provides increasingly less useful information to investors and sets a confusing baseline for estimating future oil and natural gas supplies,” he testified.

A CERA report published earlier this year identified a key weakness of the SEC reporting rules as the fact that, having been developed in the 1970, the rules reflect the industry’s technologies and structures of that time, and therefore cause large portions of discovered oil fields to be excluded from disclosure until late in their producing lives. 

Updating and modernizing the SEC rules to conform with the most widely accepted definitions for oil and gas reserves, as developed by the Society of Petroleum Engineers, would lead to the creating of a globally consistent data set covering the vast majority of the world’s reserves.  “As the very definition of what is oil begins to change with the addition of non-traditional resources such as gas-related liquids, syncrudes, GTLs and even liquid fuels made from coal, a reliable dataset will be even more vital to inform the debate about when the world may face an undulating plateau of global oil production,” Esser said.

Mr. Esser, CERA’s Director of Oil and Gas Resources, has led the company’s work on global oil and gas production analysis and forecasting for the past 15 years.  He is the author with Peter Jackson, CERA’s Director of Oil Industry Activity, of the recent study, Worldwide Liquids Capacity Outlook to 2010: Tight Supply or Excess of Riches?, and of numerous CERA reports and analyses of global exploration and production for oil and gas, including The North American Gas Supply Challenge: The Role of the Gulf of Mexico.  Prior to joining CERA, Mr. Esser worked as an exploration geologist and was responsible for Mobil Oil’s corporate energy resource analysis and oil and gas supply projections to support supply forecasts and oil and gas exploration strategies.  He is a member of the American Association of Petroleum Geologists (AAPG) and a trustee of the AAPG Foundation, and holds degrees in geology from Yale University and Stanford University. 


© Copyright 2007 by Finfacts.com

Top of Page

International
Latest Headlines
Markets News Wednesday: Stocks deep in red ink across the globe: Asia-Pacific and Europe slump following grim day in New York
Apple launches MacBook Air - the world’s thinnest notebook
Europe suffered a slowdown in labour productivity in 2007; Rich countries face struggle to achieve rises in living standards
Wednesday Newspaper Review - Irish Business News and International Stories
Intel reports 51% rise in Q4 2007 net income but cautious outlook for 2008 sends shares plunging 14% in after-hours trading
Markets News Afternoon: Citi rains heavily on markets in Europe and US - Dublin plunges almost 4%
US retail sales fell in December signalling that consumer spending is under strain; Producer/Wholesale prices rose 6.3% in 2007 - the highest since 1981
Citigroup reported Q4 2007 loss of $9.83 billion; Write-downs and increased credit costs were a massive $22.2 billion
Markets News Tuesday: Citi bad news awaited; Markets fall in Asia-Pacific and Europe; Dollar up from near record low against Euro; Gold price over $900
Hong Kong and Singapore again head Index of Economic Freedom; Ireland gets third ranking
Tuesday Newspaper Review - Irish Business News and International Stories
US Hedge Fund Index shows return of 11.15% in 2007 - More than double the S&P 500 performance
Markets News Afternoon: Stocks rally in US and Europe boosted by positive fourth quarter data from IBM and SAP
IBM reports strong fourth quarter preliminary earnings boosted by Asia, Europe and Emerging Countries
Markets News Monday: Start of US fourth quarter earnings season has investors worried about how banks and brokerages have performed
Monday Newspaper Review - Irish Business News and International Stories
US study says Environmental Factors shaping New Global Economy
Markets News Afternoon: Report say Merrill Lynch will announce $15bn loss next week; Stocks down in US and Europe - Dublin market up; Gold tops $900
US trade deficit increased to $63.1 billion in November
OECD Composite Leading Indicators signal a downswing in all major OECD economies