The Oil Drum: Canada

In this analysis, Samuel Foucher (“Khebab”) and I (Tony Eriksen or “ace”) present an update of Wikipedia Megaprojects data. We also provide forecasts of future oil production, reflecting the Megaprojects data. The IEA uses megaprojects in its analysis and we reconcile our Megaprojects information to the data they provide in their report.

A wide variety of methods can be used to forecast future oil production. Each will provide different indications. Sam and I each make projections with megaprojects data, using somewhat different methods. Sam’s projections are shown in Figure 6. My forecasts are shown in Figures 8, 9, and 10. Despite our differing methods, the indications we produce are all substantially lower than the indications of the IEA.

Until quality data about production history, reserves and future development plans including capacities are obtained for fields in secretive OPEC countries, forecasts beyond 2012 are highly uncertain, regardless of the source. While quality data remain unavailable, the world's future energy security, in particular liquid fuels supply security, remains an extremely high risk.

This chart shows the IEA WEO 2008 forecast together with Sam's forecast derived from using Megaprojects sanctioned capacities and yet to be sanctioned capacities (including yet to find oil - YTF). By 2020, the IEA's forecast is significantly greater than Sam's forecast.

I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil - Alan Greenspan (2007)

The Guardian had an interesting article recently on discussions about exploiting 40 billion barrels of Iraqi oil reserves.

The biggest ever sale of oil assets will take place today, when the Iraqi government puts 40bn barrels of recoverable reserves up for offer in London. BP, Shell and ExxonMobil are all expected to attend a meeting at the Park Lane Hotel in Mayfair with the Iraqi oil minister, Hussein al-Shahristani.

Access is being given to eight fields, representing about 40% of the Middle Eastern nation's reserves, at a time when the country remains under occupation by US and British forces. Two smaller agreements have already been signed with Shell and the China National Petroleum Corporation, but today's sale will ignite arguments over whether the overthrow of Saddam Hussein was a "war for oil" that is now to be consummated by western multinationals seizing control of strategic Iraqi reserves.

The subject of Iraqi oil is one which has fascinated me for a number of years, so in this post I'll outline why I believe that Iraq probably has the world's largest oil reserves - or, as Daniel Yergin once said of the middle east, it is "the greatest single prize in all history" (echoing a similar statement by George Kennan at the end of world war 2).

"Now what is the message there? The message is that there are known "knowns." There are things we know that we know. There are known unknowns. That is to say there are things that we now know we don't know. But there are also unknown unknowns. There are things we don't know we don't know. So when we do the best we can and we pull all this information together, and we then say well that's basically what we see as the situation, that is really only the known knowns and the known unknowns. And each year, we discover a few more of those unknown unknowns."

In this post I summarize the climate policy scenarios of the World Energy Outlook 2008 in which coal usage is stabilized and ultimately phased out. A scenario that would render the question of coal availability useless if it becomes reality. According to the IEA a combination of energy saving policies, a large expansion of Nuclear and Renewable energy, as well as a large scale implementation of carbon capture and storage at coal and gas power plants are necessary to achieve stabilization of CO2 in the atmosphere between 450 and 550 parts per million, and the ultimate phase out of coal. The question of coal availability will be analyzed in a follow up post.

The November 2008 edition of Oilwatch Monthly can be downloaded at this weblink (PDF, 1.55 MB, 24 pp).

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A summary and latest graphics below the fold.

True to their word, the 2008 World Energy Outlook represents a significant development by the International Energy Agency (IEA) in the philosophy and methodology of their oil supply forecasts. The report attempts a bottom-up model of the world's oil production potential and even revises down estimates previously taken at face value from the United States Geological Survey (USGS). The tone of the report has also changed dramatically, with an urgent call for investment in additional oil projects to avoid production shortfalls by 2015.

Despite those significant changes, the report still relies on inflated estimates of reserves from OPEC countries, overplays the contribution of reserves growth due to technology and predicts the reversal of a decades long trend of declining oil discoveries. These are the real factors that will send oil production into decline, but at least now we have some numbers we can discuss and analyze instead of a decade of blind faith in oil market economics.

Given the central role Saudi Arabia will play in the world's energy future, the continued fuzziness regarding its oil prospects is cause for concern. According to the IEA 2008 World Energy Outlook, Saudi Arabia will remain the world’s largest producer through at least 2030 as its output climbs from 10.2 mb/d (million barrels per day) in 2007 to 14.4 mb/d in 2015 and 15.6 mb/d in 2030. The future totals include Natural Gas Liquids (NGL) production as well as additions from enhanced oil recovery efforts (EOR).

The 2008 WEO represents a step forward in that projections are purportedly based on a bottoms-up querying of a database containing reserves and past-production information for 800 of the world's largest oilfields, rather than just being extrapolated to what future demand will require. However, the results obtained from such a data mining effort are limited not only by the quality of the data therein, but also by the assumptions made when querying the database. A close look at the data and projections for Saudi Arabia in the WEO reveals a rather spotty effort, providing neither a clear picture of what is happening in this important region nor much confidence that the overall report for the world is accurate.

As the first gentle snowflakes of winter settled on the windscreen of my car I was reminded, yet again, of the turning of the seasons and our need for power to keep us warm through the coming months. Last week I commented on how jobs might be created as the pattern of power supply begins to change, particularly with the incentives that might be a part of a new initiative. Two factors often get understated, however, in the current anticipation of the changes that a new Administration may bring. The first of these is the time that it will take to get any decision implemented at a scale that can be meaningful, and the second is the scale itself of the problem that now faces us.

Today, the world's energy 'watchdog', the International Energy Agency (IEA) published their long awaited annual World Energy Outlook (WEO) for 2008. In stark contrast to bland-to-cornucopian supply commentary in past reports, the initial language in this years Executive Summary is of an urgent nature. This report is a step in the right direction for conveying our rapidly deteriorating energy situation to world policymakers - the IEA should be commended for making the turn and finally acknowledging: costs, investment limitations, new capacity requirements, steep decline rates of existing wells, and externalities (in this case GHGs). In effect, this report shatters the global illusion that oil resources magically turn into cheap flow rates. However, at first glance, the report's details do not support the urgent tone of the beginning paragraphs. Beginning tomorrow, The Oil Drum staff will be running an ongoing daily 'analysis/review' of the new IEA outlook. Below the fold is an overview/introduction to this series.

World Oil Production in IEA's Reference Scenario (IEA WEO 2008 Slide 8) Source (pdf)

The IEA published their new report on the World Energy Outlook this morning. As expected, the report raised some alarms, but really didn't go far enough.

The Oil Drum staff is working on a series of posts analyzing this report. The first of these analyses should be up in the next hour or two.