Understanding the Maximum of World Conventional Oil Production

1
Understanding the Maximum of World Conventional
Oil Production Robert L. Hirsch, SAIC Modeling
the Oil Transition. April 20-21, 2006
2
Some Realities
Oil is essential to world operations as they
now exist. Huge investments have been made
in long life equipment supporting
infrastructure. Cant afford / cant
manufacture / cant install a
major change in less than decades. In the long
term, we must phase into a more sustainable
energy system.
For the next 30-60 years, liquid fuels will be
essential to human existence.
3
Demand GDP

• Since 1971, world GDP grown at 3 while oil
  demand grew at 1.5.
• What happens when world oil supply declines?

4
World Conventional Oil Production Peak

• Forecast Source
• 2004 CIBC (Canada)
• December 2005 Deffeyes (U.S.)
• 2006-2007 Bakhitari (Iran)
• 2007-2009 Simmons (U.S.)
• After 2007 Skrebowski (U.K.)
• 2010 Campbell (Ireland)
• Before 2010 Goodstein (U.S.)
• After 2010 World Energy Council
• 2012 Weng (China)

Definitions of conventional oil vary.
Already
5 years
The timing is unknowable but its SOON measured
on the mitigation scale.
5-15 years
THE RISK OF BEING WRONG IS ENORMOUS!
gt 20 years
5
Oil Peaking in Unencumbered Regions

• Sudden
• Sharp
• Rapid Declines

6
Worldwide Crash Program Mitigation of
Conventional Oil Production Peaking A Study for
DOE NETL
Delay / Rapid growth. Roughly 35 MM bpd at year
20.
7
Two World Conventional Oil Decline Rates
Mitigation started when peaking occurs
120
120
100
100
80
PRODUCTION DEMAND (MM bpd)
80
60
60
8
2
40
40
20
20
0
0
-20
0
10
20
-10
-20
0
10
20
-10
YEARS BEFORE / AFTER OIL PEAK
Is equilibrium modeling valid in these situations?
8
Oil Shortages Will Induce Demand Destruction in
Ways That Are Difficult to Forecast
Demand Destruction
Supply
Easy
Recession
Depression
Supply Demand in Balance
9
Modeling Oil-Driven Economic Impacts
What happens when supply demand diverge?
Healthy world future demand
Supply Slacks
Supply Demand
Supply Plateaus (Oscillates?)
Supply Drops Sharply
Time
Economic modeling of various scenarios needed.