Published in Magazine

The high priest of “peak oil” thinks world oil output can now only decline

For a man who believes that the world as we know it is coming to an end, as least as far as energy is concerned, Matthew Simmons is remarkably cheerful. He magnanimously excuses The Economist’s poor record of predicting the price of oil: our suggestion in 1999 that oil would remain dirt cheap was conventional wisdom at the time, he says soothingly. He also shrugs off our more recent scepticism about his belief that the world’s production of oil has peaked: he, too, hopes that “peak oil” proves to be a myth, he says. But over a 40-year career in investment banking, Mr Simmons adds, he has learnt never to rely on wishful thinking. Most of the world’s oil analysts, he believes, are far too optimistic about how long existing fields will last, the prospects for new discoveries, technology’s ability to unlock new sources and to extend the life of existing ones, and so on. He prefers to rely on data rather than daydreams. And according to the American government’s own numbers, the world’s oil output has been more-or-less flat since 2005.

Published in: The Economist, Jul 10th 2008
Available from: The Economist online

The universe is made up of cycles. Everything that is born will die: stars, days, species, humans, and civilizations. A stone thrown into the air follows a parabolic trajectory. If its velocity is more than 11 km/sec it will leave the gravitational field of the earth but will become part of the solar system, returning on an elliptic orbit. What goes up must come down. The question is: when will it peak?

King Hubbert, in his famous paper of 1956, predicted that U.S. oil production (from the Lower 48) would peak in the 1970s at the top of a bell-curve. The area of the curve represented the total endowment of oil, which he estimated at 200 billion bbl. He was vilified at the time as being a pessimist but was amply vindicated when the country's production indeed did peak in 1970.

Published in: Oil & Gas Journal February 01, 1999, volume 97, issue 5
Available from: Oil & Gas Journal

On a visit to Calgary this April, I noticed a weather forecast in the newspaper that mentioned “pop. 30 percent.” Having lived in Calgary from 1966 to 1972, I knew that it could snow at any time, and I was not surprised to see some snowflakes in the afternoon. Had nothing changed in the past twenty years? In fact, there has been a big change: the use of probability, as “pop” is the probability of precipitation.

While the concept of probability evidently has entered the daily life of Calgarians, it has yet to enter the assessments of oil and gas reserves in the provinces of the Western Canadian Sedimentary Basin.1 In Alberta, Saskatchewan and British Columbia, oil and gas reserves are reported by the operators as “proved reserves”, following U.S. practice. In the U.S., the oil industry currently is obliged by Security and Exchange Commission (SEC) rules to report only proved reserves, ignoring probable and possible reserves. Proved reserves are those deemed to be recoverable, based on current and foreseeable economic and technological conditions, with “reasonable certainty”. The practice of ignoring probable reserves inevitably has led to large upward revisions, which mistakenly are attributed to advances in technology, when in reality they are an artifact of flawed reporting.

Published in: Geopolitics of Energy, Issue 22 no 4, p7-16, April 1999
Available from: Hubberpeak.com

Methane hydrates are well known to the oil industry as a material for clogging pipelines and casings. They are also present in permafrost areas and in the oceans. Oceanic hydrates are mainly biogenic and different from thermogenic hydrates.
Claims for widespread hydrate occurrence in thick oceanic deposits are unfounded. The thickest interval recovered from a total of 250,000 meters of core from 2,300 ODP/DSDP boreholes was one meter. Mostly, they occur as dispersed grains and laminae. Indirect evidence from BSR, seismic direct hydrocarbon indicators, logs, and free gas samples is unreliable and highly speculative.
Being a solid, methane in oceanic hydrates cannot migrate and accumulate in deposits sufficiently large to be commercially exploited. The published estimates of the size of the resource are highly unreliable and give flawed comparisons with conventional fossil fuels. There are other non-conventional sources of gas which are better known and more accessible than hydrates, yet remain uneconomic. The prospects for the commercial production of oceanic hydrates in the foreseeable future are negligible. The academic research dedicated to hydrates has produced more questions than answers at this stage.

Published in: Offshore, Volume 59 Issue 9 September 1999
Available from: Offshore Magazine

M. King Hubbert was a distinguished scientist published on many aspects of petroleum geology, but he is most remembered for his 1956 work on forecasting production in which he introduced a special bell curve that bears his name. Hubbert was also remarkable for his interest in the social implications of resource depletion.

In 1974,1 he presented several production curves for the world and the US but was somewhat reticent in explaining the mathematical basis of his work. He referred to a bell-shaped curve, of which the most commonly used are the normal or Gauss curve, and also to the derivative of the logistic curve,2 but he gave no equations. He based his study on ultimate recovery, taking 170 billion bbl for the US and low cases and high cases for the world of 1,350 billion bbl and 2,100 billion bbl, respectively.

His initial study concerned the US Lower 48 states, which had a single cycle of continuous exploration in a large number of basins. He referred also to the relationship between discovery and production. The discovery cycle peaked in the late 1930s and was followed by a corresponding production cycle peaking around 1970.

But as explained below not all countries are characterized by a single discovery cycle; other constraints to the Hubbert model need to be better understood. It is to be noted in particular that the model is a symmetrical curve, whereas the production curve of an individual field is generally asymmetrical. As discussed below, the Hubbert curve is in fact the derivative of a logistic curve.

Published in: Oil & Gas Journal April 17, 2000, volume 98, issue 16
Available from: Oil & Gas Journal

The oil revenues, on which most OPEC countries so heavily rely, depend on the interaction of price and volume, which have fluctuated widely. At times of low price, OPEC governments face the dilemma of cutting production to support price or of using volume to deliver their needed revenues.

The onset of recession in response to the high oil prices of 2000 underlines the fact that the World’s economy runs on energy and is vulnerable to price fluctuations. Oil price has been volatile, swinging from $10 to $30 a barrel over the past four years. OPEC did succeed briefly in providing much-needed stability under its declared policy of holding price in the 22-28 $/barrel range by the better enforcement of agreed quotas, but geopolitical pressures, following the 11th September, led it to allow the price of oil to fall.

A new element entered the equation when OPEC sought support from non-OPEC countries, especially Russia, which had its own agenda in its relations with the United States. Although Russia’s production costs are comparable with those of the US-48 in real terms, an adverse exchange means that its exports can undercut OPEC.

Published in: Petroleum Review 56 (April 2002), pp. 29-31, 35.
Available from: Hubbertpeak.com

Oil production is peaking and the world must rethink its energy-supply strategy, says Kjell Aleklett, president of the Association for the Study of Peak Oil and Gas. Interview by Tom Nicholls

Available from: Uppsala University - Global Energy Systems

Just a few months ago, oil economists were debating if the Organization of Petroleum Exporting Countries had the power to hold oil prices in the mid-$20/bbl range. There was talk of the increasing demands for oil from China's new economic prosperity, but generally the age-old perception that supply must always equal demand in a properly functioning open market remained in tact.

Admittedly, it was recognized that production in North America was in relentless decline, meaning that the need for growing imports was not about to abate. The growing dependence on oil from the Middle East did give rise to some concerns, with the countries in that region being commonly depicted as "politically unstable."

Published in: Oil & Gas Journal, April 04, 2005, volume 103, issue 13
Available from: Oil & Gas Journal Online

A new mathematical model can forecast when worldwide conventional oil production will peak with a minimal amount of information.

In recent years, many attempts to model conventional oil production have included poor assumptions that have resulted in a wide range of estimates for the peak production year. Peak year estimates have ranged from ~2004 to ~2040.

Published in: Oil & Gas Journal, May 07, 2007, volume 105, issue 17
Available from: Oil & Gas Journal Online

Peak oil models show a widening gap between China’s oil demand and production. The generalized Weng model predicts a peak oil production in China of 196 million tonnes in 2026 and the Hubbert model indicates a peak oil demand in 2034 of 633 million tonnes.

Because forecasts indicate a widening gap between production and demand, China’s government is undertaking various measures to reduce this gap and more measures will be needed in the future. In 2006, China imported 47% of the oil it consumed.

For predicting future oil production and demand in China, this article shows the results of three peak oil models: Hubbert, Generalized Weng, and HCZ.

Published in: Oil & Gas Journal, January 14, 2008, volume 106, issue 2
Available from: Oil & Gas Journal Online