Home Random Page


CATEGORIES:

BiologyChemistryConstructionCultureEcologyEconomyElectronicsFinanceGeographyHistoryInformaticsLawMathematicsMechanicsMedicineOtherPedagogyPhilosophyPhysicsPolicyPsychologySociologySportTourism






THE FUTURE OF GLOBAL OIL SUPPLY

 

Fears about “running out” of oil are recurrent. At their strongest, they coincide with periods

of high prices and tight supply-demand balance. The latest such period of “peak oil” concerns became very evident from 2004, when strong oil demand ran up against capacity constraints.

In contrast, IHS CERA’s reference case for global liquid productive capacity shows growth through 2030 to around 115 million barrels per day (mbd) and finds no evidence of a peak

in supply appearing before that time.

 

Hydrocarbon liquids—crude oil, condensate, extra heavy oil, and natural gas liquids—are a finite resource; but based on recent trends in exploration and appraisal activity, there should

be more than an adequate inventory of physical resources available to increase supply to meet anticipated levels of demand in this time frame. Post-2030 supply may well struggle

to meet demand, but an undulating plateau rather than a dramatic peak will likely unfold. Moreover, if the “peak demand” now evident in the OECD countries is a precursor of later developments in the emerging markets, world demand itself could eventually move on to

a different course.

 

In the short term the industry is at another crossroads following the precipitous fall in demand

in 2008–09 in response to the onset of the recession. The oil price has roughly halved from

its peak of $147 per barrel in July 2008, OPEC has recently cut production, OPEC spare capacity has nearly tripled to 6.4 mbd, and the industry has slowed its pace of expansion. Early in 2009 IHS CERA estimated that as much as 7.5 mbd of new productive capacity could be at risk by 2014 if costs remained high and oil prices hovered just below the cost of

the marginal barrel for two years.** Since then the oil price has recovered strongly to around

$70–$80 per barrel, and some confidence has returned. Even in these unpredictable times

the industry has continued to invest and to build new productive capacity; indeed, Saudi Arabia recently brought onstream the giant Khurais field, which at plateau is expected to produce 1.2 mbd. With sustained investment, a healthy cushion of spare capacity, and slow

to moderate post-recession economic growth, supply should not present major problems, at least in terms of availability, in the short term

of course looking further ahead, it is important to recognize that oil is a finite resource and that at some stage supply could fail to meet demand on a consistent basis. It is impossible to

be precise about the timing of this event, but given the pace at which demand has increased

in the past decade a pivot point may well be reached before the middle of this century. Much depends on key factors such as global economic growth, the capability of the upstream industry, costs, government policies on access and taxation, the evolution of renewable and

 

**The marginal barrel is the most expensive oil to find and produce globally; currently the oil sands in Canada are regarded as representing the marginal barrel.



 

alternative energy sources—particularly for transportation—and the effect of climate change issues on policies and regulations concerning the use of fossil fuels. However, there is time

to prepare and to make rational decisions to avoid being forced into short-term approaches that may not resolve longer-term problems.

Many studies of future oil supply examine subsurface issues and focus in particular on

the scale of the resource while giving limited consideration to technology, economics, and geopolitics.* Though belowground factors are critical, it is aboveground factors that will dictate the ultimate shape of the supply curve.

 

This IHS CERA Report presents the main points in our current productive capacity outlook to

2030 and discusses the architecture of future conventional and unconventional oil supply. In order to provide a framework, the methodology and foundations of the outlook are reviewed and the results of supporting studies on decline rates and giant fields are included.

 

In so doing, this report addresses the debate over “peak oil.” There is much emotion involved

in that debate. In our view much would be gained by lowering the emotional level and instead shifting to a more objective dialogue, based on a comparative view of data, methodology, and analyses. Our hope is that this paper can contribute to such a discussion and exchange. Our further hope is that out of such a dialogue will come a deeper understanding of the world’s oil supply in the decades ahead—a question crucial to the world’s overall future.

 

There are many areas of overlap between IHS CERA’s view of future oil supply and other outlooks. Oil is a finite resource, and at some stage supply will begin to fall short of meeting demand on a consistent basis if there is no break in the connection between economic growth and oil demand. The basic differences in opinion appear to center on when this will happen and on what happens after the inflection point.** The view that oil supply will plummet after the inflection point and oil will run out, like the gasoline in an automobile,

is misleading for the layperson.

 

IHS CERA believes that this inflection point will herald the beginning of an undulating plateau of supply that will last for perhaps two decades before a long, slow decline sets in (see Figure 3). It represents a transition period when traditional market forces and government policy will be unable to adjust supply to meet growing demand and limits are reached. Of course the path of demand will exert a controlling influence on the future supply curve. Peak demand is an equally important concept that may well be viewed in hindsight, from

the perspective of a half century from now, as the main driver of peak supply.

 

But one further important point: Though a peak of global oil production is not imminent, there are major hurdles aboveground to negotiate.

 

 


Date: 2015-02-03; view: 802


<== previous page | next page ==>
Task 2 – Working with the Select Operator | METHODOLOGY: DEFINING THE YARDSTICKS
doclecture.net - lectures - 2014-2024 year. Copyright infringement or personal data (0.007 sec.)