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.     

Petroleum taxes and optimal resource recovery

The objective of this paper is to quantify the incentive effects of petroleum taxes. This enables us to estimate individual petroleum reservoirs' supply functions before and after tax. Of central importance are the marginal reserves within the petroleum reservoir itself. The recovery factor of oil and gas reservoirs is influenced by economic considerations. Both the rate of return requirement and petroleum taxes play crucial roles. The conclusion is that the distorting effects observed in many petroleum taxation systems have serious resource recovery consequences and reduce the recovery factor for individual oil and gas reservoirs.     

我国石油产量峰值预测

本文对国内石油生产、需求、进口和石油资源开采的历史情况进行了简要概括,在此基础上对未来我国石油产量达到峰值(Hubbert Peak)的时间及我国石油资源的开采年限进行了预测,并探讨了影响我国石油产量峰值的因素。预测结果表明,我国石油生产很可能在2020～2030年达到Hubbert Peak,此后石油产量逐渐降低,直至资源采尽。     

Identification of key oil refining technologies for China National Petroleum Co. (CNPC)

This paper summarizes the results from the project “Vision of the Key Petroleum Refining Technologies for China National Petroleum Co. (CNPC) in the Early 21st Century” undertaken by the Department of R&D Administration, CNPC, and its affiliate key laboratory, The Key Laboratory of Catalysis operated by China University of Petroleum, Beijing. The objective of the project was to identify the challenges and opportunities of CNPC's petroleum refining business given increasing economy globalization and stricter environmental regulations. Using the modified Delphi method, four key technologies for CNPC's oil refining industry were identified. They are: integrated fluid catalytic cracking (FCC), hydroprocessing, residue hydrocracking, and high-grade lubricant production. The most significant technology will be the integrated FCC technology that can economically increase the yield of light fractions as well as upgrade transportation fuels. In China, FCC units produce about 80% and 30% commercial gasoline and diesel, respectively. To ensure compliance with future environmental legislation, hydroprocessing technologies, including those related to petroleum product hydrorefining and distillate hydrocracking, should be developed. By combining residue hydrocracking and FCC technologies, poorer quality residua can be processed. Supplying high-grade lube oils is one of the main tasks for CNPC's oil refining industry. Development of hydrodewaxing technologies to manufacture API group II/III base oil is the main direction for CNPC's lubricant production business.     

国际战略石油储备的层次分析

国家战略石油储备在石油安全体系中具有基础性作用。本文将战略石油储备的主体、管理和时间分层,以美、日、德、法等国家作为研究对象,指出不同层次的具体特点,找出其中的共同特点和各国特色。这对于找到适合我国石油储备的运作模式、管理流程和动用方式具有借鉴意义。     

Petroleum refining industry in China

The oil refining industry in China has faced rapid growth in oil imports of increasingly sour grades of crude with which to satisfy growing domestic demand for a slate of lighter and cleaner finished products sold at subsidized prices. At the same time, the world petroleum refining industry has been moving from one that serves primarily local and regional markets to one that serves global markets for finished products, as world refining capacity utilization has increased. Globally, refined product markets are likely to experience continued globalization until refining investments significantly expand capacity in key demand regions. We survey the oil refining industry in China in the context of the world market for heterogeneous crude oils and growing world trade in refined petroleum products.     

Transport constraints in Soviet petroleum

Crude petroleum flows in the USSR for 1980 are modelled using the out-of-kilter algorithm. Constraints in the petroleum distribution network are identified was well as future problem areas, allowing the rationality of Soviet plans and policies with regard to the system to be evaluated. The main contraints in 1980 were in the European USSR, particularly in the older oil-producing areas, indicating that subsequent additions to the network in these areas have been warranted. Overall, the actual Soviet distribution of petroleum appears to be relatively efficient.     

Communication on energy: The Norwegian taxation debate

A working group of the Norwegian Ministry of Finance has recently produced a report on possible structural changes to the fiscal system applied to petroleum exploitation. This report recommended that two types of changes be seriously examined and the oil companies have recently presented their views on these proposals. Here a comparison is made between the two proposed systems and the current one as applied to very marginal fields. The comparative effects on investors depend on the size of discount rate employed and the proportion of debt finance utilized. It is unlikely that the proposed changes will significantly improve incentives to develop marginal fields.     

Offshore decommissioning issues: Deductibility and transferability

Dealing with the decommissioning of petroleum installations is a relatively new challenge to most producer countries. It is natural to expect that industry's experience in building platforms is much greater than the one of dismantling them. Even if manifold and varied efforts are underway towards establishing international “best practices” standards in this sector, countries still enjoy rather extensive discretionary power as they practice a particular national style in the regulation of decommissioning activities in their state's jurisdiction. The present paper offers a broad panorama of this discussion, concentrating mainly on two controversial aspects. The first one analyses the ex-ante deductibility of decommissioning costs as they constitute an ex-post expense. The second discussion refers to the assignment of decommissioning responsibility in the case of transfer of exploration and production rights to new lessees during the project's life. Finally the paper applies concepts commonly used in project financing as well as structures generally used in organising pension funds to develop insights into these discussions.     

Price controls, price dispersion and the supply of refined petroleum products

This paper analyses the petroleum industry price and allocation controls which dominated US energy policy during the 1970s. It is emphasized that since controls on refined products tied maximum prices to costs of production, the market effects of this regulatory system were quite unusual. The paper shows that controls induced firms to price refined products below marginal costs. In addition, the regulations tended to increase the degree of dispersion in prices charged by firms in the industry. Finally, in the context of multiple product analysis, it is shown that the presence of effective ceiling prices for any of the products reduced the prices of all products below marginal costs.     

Decommissioning of petroleum installations—major policy issues

Following the Brent Spar controversy, the OSPAR countries reached a unanimous agreement in 1998 for the future rules for disposal of petroleum installations. The vast majority of existing offshore installations will be re-used or returned to shore for recycling or disposal. For installations where there is no generic solution, one should take a case-by-case approach. We provide a survey of international economic and regulatory issues pertaining to disposal of petroleum installations, and provide specific examples by analysing the Norwegian decommissioning policy. Implications of disposal decisions for the fishing industry, a central stakeholder, are analysed.     

Communications on energy: Petroleum futures trading

This note attempts to provide a simplified insight into the mechanisms of petroleum futures trading. The exact nature of the ‘social gain’ resulting from futures trading is specified, and particular attention is paid to the importance of speculation for increasing the amount of hedging (ie insurance against price risk) that can be accommodated.     

An aggregate petroleum consumption model

This paper presents an aggregative model of US consumption of petroleum and products, of a type which might potentially be used to derive short-term forecasts of US petroleum consumption and imports. The model attempts to separate income- and weather-related changes from those induced by changes in relative prices, with emphasis on the dynamic path of consumption responses to price changes. Estimation results suggest that there are still significant price effects six years after a change in the relative price of petroleum.     

Television peaks in electricity demand

This paper discusses the effect that breaks in television programmes have upon the demand for electricity. The results of a study which correlates the pattern of household electricity consumption with the timings of commercial and end-of-programme breaks are summarized. A theory of audience release is developed and various policy implications are explored.     

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.     

Causal responsibility and peak load pricing

This article clarifies the basis for peak load pricing when some customers have a steady demand and others have a specific peak period demand. Causal responsibility for peak capacity rests on both types of customers. Peles, in this journal, has proposed that electricity consumption beyond the off-peak period monthly average be priced at a higher rate than other consumption. Customers consuming only on the peak would face higher prices than those who consumed relatively less during the peak. However, such a price structure can discourage economic off-peak consumption and encourage uneconomic peak period consumption. Both steady and nonsteady demanders must face the same price signal during peak periods for the achievement of efficiency, so long as each group imposes the same costs on the system.     

Testing Hubbert

The Hubbert theory of oil depletion, which states that oil production in large regions follows a bell-shaped curve over time, has been cited as a method to predict the future of global oil production. However, the assumptions of the Hubbert method have never been rigorously tested with a large, publicly available data set. In this paper, three assumptions of the modern Hubbert theory are tested using data from 139 oil producing regions. These regions are sub-national (United States state-level, United States regional-level), national, and multi-national (subcontinental and continental) in scale. We test the assumption that oil production follows a bell-shaped curve by generating best-fitting curves for each region using six models and comparing the quality of fit across models. We also test the assumptions that production over time in a region tends to be symmetric, and that production is more bell-shaped in larger regions than in smaller regions.     

Petroleum exploration in the non-OPEC LDCs The effects of recent world developments

The recent decline in world petroleum prices and the uncertainty with respect to future oil prices is having an adverse effect on exploration in non-OPEC LDCs, particularly in the oil-importing developing countries. The fiscal regimes of LDCs, as applied to petroleum investment, have tended to limit incentives for foreign investment, especially in countries without high reserve potential. Recent developments have exacerbated these fiscal deterrents to petroleum investment, particularly in countries where there is little likelihood of discovering large oil fields. In addition, the external debt crisis in a number of LDCs where petroleum operations are largely in the hands of government oil enterprises is likely to reduce the availability of external financing for oil exploration and development.     

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.