The peak of oil production—Timings and market recognition

Energy is essential for present societies. In particular, transportation systems depend on petroleum-based fuels. That world oil production is set to pass a peak is now a reasonably accepted concept, although its date is far from consensual. In this work, we analyze the true expectations of the oil market participants about the future availability of this fundamental energy source. We study the evolution through time of the curves of crude oil futures prices, and we conclude that the market participants, among them the crude oil producers, already expect a near-term peak of oil production. This agrees with many technical predictions for the date of peak production, including our own, that point to peak dates around the end of the present decade. If this scenario is confirmed, it can cause serious social and economical problems because societies will have little time to perform the necessary adjustments.     

Net energy yield from production of conventional oil

Historic profitability of bringing oil to market was profound, but most easy oil has been developed. Higher cost resources, such as tar sands and deep off-shore, are considered the best prospects for the future. Economic modelling is currently used to explore future price scenarios commensurate with delivering fuel to market. Energy policy requires modelling scenarios capturing the complexity of resource and extraction aspects as well as the economic profitability of different resources. Energy-return-on-investment (EROI) expresses the profitability of bringing energy products to the market. Net energy yield (NEY) is related to the EROI. NEY is the amount of energy less expenditures necessary to deliver a fuel to the market. This paper proposes a pattern for EROI of oil production, based on historic oil development trends. Methodology and data for EROI is not agreed upon. The proposed EROI function is explored in relation to the available data and used to attenuate the International Energy Agency (IEA) world oil production scenarios to understand the implications of future declining EROI on net energy yield. The results suggest that strategies for management and mitigation of deleterious effects of a peak in oil production are more urgent than might be suggested by analyses focussing only on gross production.     

China's oil reserve forecast and analysis based on peak oil models

In order to forecast future oil production it is necessary to know the size of the reserves and use models. In this article, we use the typical Peak Oil models, the Hu–Chen–Zhang model usually called HCZ model and the Hubbert model, which have been used commonly for forecasting in China and the world, to forecast China's oil Ultimate Recovery (URR). The former appears to give more realistic results based on an URR for China of 15.64 billion tons. The study leads to some suggestions for new policies to meet the unfolding energy situation.     

Global energy crunch: How different parts of the world would react to a peak oil scenario

Peak oil theory predicts that oil production will soon start a terminal decline. Most authors imply that no adequate alternate resource and technology will be available to replace oil as the backbone resource of industrial society. This article uses historical cases from countries that have gone through a similar experience as the best available analytical strategy to understand what will happen if the predictions of peak oil theorists are right. The author is not committed to a particular version of peak oil theory, but deems the issue important enough to explore how various parts of the world should be expected to react. From the historical record he is able to identify predatory militarism, totalitarian retrenchment, and socioeconomic adaptation as three possible trajectories.     

Mitigation of maximum world oil production: Shortage scenarios

A framework is developed for planning the mitigation of the oil shortages that will be caused by world oil production reaching a maximum and going into decline. To estimate potential economic impacts, a reasonable relationship between percent decline in world oil supply and percent decline in world GDP was determined to be roughly 1:1. As a limiting case for decline rates, giant fields were examined. Actual oil production from Europe and North America indicated significant periods of relatively flat oil production (plateaus). However, before entering its plateau period, North American oil production went through a sharp peak and steep decline. Examination of a number of future world oil production forecasts showed multi-year rollover/roll-down periods, which represent pseudoplateaus. Consideration of resource nationalism posits an Oil Exporter Withholding Scenario, which could potentially overwhelm all other considerations. Three scenarios for mitigation planning resulted from this analysis: (1) A Best Case, where maximum world oil production is followed by a multi-year plateau before the onset of a monatomic decline rate of 2–5% per year; (2) A Middling Case, where world oil production reaches a maximum, after which it drops into a long-term, 2–5% monotonic annual decline; and finally (3) A Worst Case, where the sharp peak of the Middling Case is degraded by oil exporter withholding, leading to world oil shortages growing potentially more rapidly than 2–5% per year, creating the most dire world economic impacts.     

Views on peak oil and its relation to climate change policy

Definitions of fossil fuel reserves and resources and assessed stock data are reviewed and clarified. Semantics explain a large stake of conflict between advocate and critical voices on peak oil. From a holistic sources–sinks perspective, limited carrying capacity of atmospheric sinks, not absolute scarcity in oil resources, will impose tight constraints on oil use. Eventually observed peaks in oil production in nearby years will result from politically imposed limits on carbon emissions, and not be caused by physical lack of oil resources. Peak-oil belief induces passive climate policy attitudes when suggesting carbon dioxide emissions will peak naturally linked to dwindling oil supplies. Active policies for reducing emissions and use of fossil fuels will also encompass higher energy end-use prices. Revenues obtained from higher levies on oil use can support financing energy efficiency and renewable energy options. But when oil producers charge the higher prices they can pump new oil for many decades, postponing peak oil to occur while extending carbon lock-in.     

Future oil supply: The changing stance of the International Energy Agency

The IEA was established in 1974 with a mandate to promote energy security amongst its members, namely the states of the OECD, and to advise those members on sound energy policy. Its recent forecasts of the medium and long term prospects for oil supply, however, have wavered, alternating from optimistic to pessimistic and back again. For policy-makers, such inconsistency is difficult to deal with. Firstly we examine whether the changing outlooks seen in IEA forecasts made between 2007 and 2010 truly reflect a demonstrable, underlying change in the known facts, and we can find no such factual changes reported by the IEA. Secondly we examine whether the serious criticisms of the IEA's (2008) forecast made by other analysts have yet been addressed, and we conclude that they have not. Thirdly we consider the possible effects of the current economic downturn upon the IEA's assumptions and upon future oil supply. We conclude that all the forecasts made by the IEA appear to be too optimistic throughout this period.     

The end of cheap oil: Current status and prospects

This paper, analyses the factors impacting the price of crude oil in order to examine the likely evolution of the oil market and attempts to answer the question, whether cheap oil is already a thing of the past. Based on data made publicly available mostly by the major oil companies, it examines the effects of demand and supply, the evolution of world oil reserves, the trends in new discoveries of new oilfields, the evolution of world Gross Domestic Product (GDP), and the depletion of oil resources. The analysis concludes that the world peak in conventional oil production—the point beyond which oil production will irreversibly start declining—is approaching and will be reached, even according to the most optimistic scenarios, before 2040 and quite possibly much sooner. If the appropriate solutions for substituting crude oil and for conserving the use of energy are not implemented in time, then the current upward trend in oil prices is bound to continue.     

A study on the future of unconventional oil development under different oil price scenarios: A system dynamics approach

Fluctuations in the oil global market has been a critical topic for the world economy so that analyzing and forecasting the conventional oil production rate has been examined by many researchers thoroughly. However, the dynamics of the market has not been studied systematically with regard to the new emerging competitors, namely unconventional oil. In this paper, the future trend of conventional and unconventional oil production and capacity expansion rates are analyzed using system dynamics approach. To do so, a supply-side modeling approach is utilized while main effective loops are modeled mathematically as follows: technological learning and progress, long and short-term profitability of oil capacity expansion and production, and oil proved reserve limitations. The proposed model is used to analyze conventional and unconventional oil production shares, up to 2025, under different oil price scenarios. The results show that conventional oil production rate ranges from 79.995 to 87.044 MB/day, which is 75–80 percent of total oil production rate, while unconventional oil production rate ranges from 19.615 to 28.584 MB/day. Simulation results reveal that unconventional oil can gain a considerable market share in the short run, although conventional oil will remain as the major source for the market in the long run.     

Global oil risks in the early 21st century

The Deepwater Horizon incident demonstrated that most of the oil left is deep offshore or in other difficult to reach locations. Moreover, obtaining the oil remaining in currently producing reservoirs requires additional equipment and technology that comes at a higher price in both capital and energy. In this regard, the physical limitations on producing the ever-increasing quantities of oil are highlighted as well as the possibility of the peak of production occurring this decade. The economics of oil supply and demand are also briefly discussed showing why the available supply is basically fixed in the short to medium term. Also, an alarm bell for economic recessions is shown to be when energy takes a disproportionate amount of total consumer expenditures. In this context, risk mitigation practices in government and business are called for. As for the former, early education of the citizenry of the risk of economic contraction is a prudent policy to minimize potential future social discord. As for the latter, all business operations should be examined with the aim of building in resilience and preparing for a scenario in which capital and energy are much more expensive than in the business-as-usual one.     

Global oil depletion: A review of the evidence

Within the polarised and contentious debate over future oil supply a growing number of commentators are forecasting a near term peak and subsequent decline in production. But although liquid fuels form the foundation of modern industrial economies, the growing debate on ‘peak oil’ has relatively little influence on energy and climate policy. With this in mind, the UK Energy Research Centre (UKERC) has conducted an independent, thorough and systematic review of the evidence, with the aim of establishing the current state of knowledge, identifying key uncertainties and improving consensus. The study focuses upon the physical depletion of conventional oil in the period to 2030 and includes an in-depth literature review, analysis of industry databases and a detailed comparison of global supply forecasts. This Communication summarises the main findings of the UKERC study. A key conclusion is that a peak of conventional oil production before 2030 appears likely and there is a significant risk of a peak before 2020.     

A crash programme scenario for the Canadian oil sands industry

The report Peaking of World Oil Production: Impacts, Mitigation and Risk Management, by Robert L. Hirsch et al., concludes that Peak Oil is going to happen and that worldwide large-scale mitigation efforts are necessary to avoid its possible devastating effects for the world economy. These efforts include accelerated production, referred to as crash programme production, from Canada's oil sands. The objective of this article is to investigate and analyse what production levels that might be reasonable to expect from a crash programme for the Canadian oil sands industry, within the time frame 2006–2018 and 2006–2050. The implementation of a crash programme for the Canadian oil sands industry is associated with serious difficulties. There is not a large enough supply of natural gas to support a future Canadian oil sands industry with today's dependence on natural gas. It is possible to use bitumen as fuel and for upgrading, although it seems to be incompatible with Canada's obligations under the Kyoto treaty. For practical long-term high production, Canada must construct nuclear facilities to generate energy for the in situ projects. Even in a very optimistic scenario Canada's oil sands will not prevent Peak Oil. A short-term crash programme from the Canadian oil sands industry achieves about 3.6 mb/d by 2018. A long-term crash programme results in a production of approximately 5 mb/d by 2030.     

Peak oil: The four stages of a new idea

The present paper reviews the reactions and the path of acceptance of the theory known as “peak oil”. The theory was proposed for the first time by M.K. Hubbert in the 1950s as a way to describe the production pattern of crude oil. According to Hubbert, the production curve is “bell shaped” and approximately symmetric. Hubbert's theory was verified with good approximation for the case of oil production in the United States that peaked in 1971, and is now being applied to the worldwide oil production. It is generally believed that the global peak of oil production (“peak oil”) will take place during the first decade of the 21st century, and some analysts believe that it has already occurred in 2005 or 2006. The theory and its consequences have unpleasant social and economical implications. The present paper is not aimed at assessing the peak date but offers a discussion on the factors that affect the acceptance and the diffusion of the concept of “peak oil” with experts and with the general public. The discussion is based on a subdivision of “four stages of acceptance”, loosely patterned after a sentence by Thomas Huxley.     

A decline rate study of Norwegian oil production

Norway has been a very important oil exporter for the world and an important supplier for Europe. Oil was first discovered in the North Sea in late 1960s and the rapid expansion of Norwegian oil production lead to the low oil prices in the beginning of the 1990s. In 2001, Norway reached its peak production and began to decline.     

Effect of floating pricing policy: An application of system dynamics on oil market after liberalization

Upon the implementation of the floating price mechanism, Taiwan's gasoline and diesel prices returned to market mechanism, which terminated the phenomenon of the public paying for the losses of the state-owned oil company—Chinese Petroleum Corporation, Taiwan (CPC). Furthermore, the relatively low production costs of the privately owned Formosa Petrochemical Corporation (FPCC) disclosed the pricing mechanism of CPC, which inspired FPCC to adopt pricing strategy in order to increase the market share. This study aims to establish a system dynamics model to analyze the effects of the floating price mechanism on Taiwan's gasoline and diesel markets. This Model is divided into four sub-systems. The model of this study passed several validation tests, and hence, is able to provide a “virtual laboratory” for policy-makers to conduct simulation and scenario analysis. The simulation results indicate (a) feedback mechanism of expected revenues and pricing strategy could efficiently simulate the FPCC pricing mechanism, (b) price competition strategy could increase FPCC revenues, although the effect on market share is not remarkable, and (c) FPCC has a higher gas-station growth rate. Scenario analyses found (a) lowering oil security stockpile would not change FPCC's pricing strategy and (b) FPCC prefers to follow CPC pricing when it has more gas stations.     

Drilling,alternative fuels and efficiency: Can the United States wean itself from imported oil?

Perhaps the most daunting challenge the next generation of Americans will face is what President Bush called our “addiction to oil”. The challenge is to find the means to provide for our transportation needs in the face of declining world oil production. Perhaps the central question is whether we will export the great wealth of America to foreign countries in payment for oil before we tackle the grand challenge of creating a new transportation future that does not rely completely on oil.     

Analyzing the impact of the 5CP Ontario peak reduction program on large consumers

Peak reduction is an important problem in the context of the electricity grid and has led to conservation programs in various jurisdictions. For example, in Ontario, Canada, residential customers are charged higher prices during peak times, while large industrial and commercial customers pay heavy surcharges that depend on their load during Ontario’s five peak-demand days. Reducing these surcharges is a challenging problem for large consumers due to the difficulty of predicting peak days in advance.We study the impact of this peak reduction program, called 5 Coincident Peaks (5CP), on consumers by analyzing the difficulty of predicting peak-demand days and peak hours on those days. We find that even the state-of-the art peak-prediction algorithms require consumers to curtail load ten or more times, and even then, they may not identify all five peak-demand days. We also analyze alternative policies that cold help reduce peak demand in Ontario.     

基于海洋油气开采设施的海洋新能源一体化开发技术

提出了海洋传统油气和海洋新能源一体化开发构想,依托于海洋油气生产设施在进行传统油气开采的同时,对天然气水合物进行全面的开发利用;同时依托于海洋油气设施,充分利用波浪能、潮汐能、洋流及海洋温差能等海洋能进行发电。该一体化开发还能够实现二氧化碳温室气体以水合物的形式在大洋深处进行封存,降低全球温室效应,这将大大拓宽海洋石油工业的发展领域,实现对可再生能源的充分利用,保证了未来能源的可持续发展。     

The reliability of distributed solar in critical peak demand: A capital value assessment

Generation is most valuable when demand is highest. As electricity can't yet be cheaply stored, generation and transmission infrastructure must be built to meet the highest expected demand, plus a margin of error. Reliably producing power at times of critical demand not only offsets the need to use expensive liquid fuels such as diesel or condensate, but also removes the need to build backup power stations and transmission infrastructure that would only be used for a small fraction of the year. Under the most extreme demand conditions, solar has reduced the peak demand seen by retailers and wholesale energy markets. This study compares the capital cost of critical peak availability from gas turbines to the capital cost of critical peak availability from distributed solar in the Australian National Electricity Market (NEM). When compared on this basis, 10–22% of the cost of installing the solar system can be attributed to the capital value of critical peak generation. North–west and west facing PV is worth a further 3–6% of system installation costs when compared to generally north facing PV. Finally, southern states, with longer summer days and more sunshine in the afternoon are found to benefit more from peak supply of solar PV.     

Forecast of oil reserves and production in Daqing oilfield of China

As China’ largest oilfield, Daqing is of great importance to China, this paper analyzes the status of the Daqing oilfield and forecasts its ultimate recoverable reserves by use of the URR model. The forecast results are presented for three scenarios which show that the ultimate recoverable reserves in Daqing oilfield are 3574.0 million tons in the optimistic scenario, 3169.3 million in the base case scenario and 3033.3 million in the pessimistic scenario, respectively. A system dynamics model is established and the quantitative relationships between variables in the model are determined. Total oil production, remaining recoverable reserves, annual newly discovered reserves, and the degree of reserves recovery before 2060 are simulated under the three scenarios by use of the system dynamics model. The forecast results show that the future oil production in Daqing oilfield will continue declining, under the base case scenario, from 41.6 million tons in 2007 to 8.0 million tons in 2060. For Chinese policy-makers, it is worth paying attention to the problem of whether oil production in new oilfields can effectively make up for the decline in production of the large, old oilfields.