Reply #4: Time to Worry: World Oil Production Finishes Six Years of No Growth [View All]

[JohnyCanuck]

By Kurt Cobb

We are entering what may be the longest stretch of no growth in world oil production since the early 1980s. But the reasons for that lack of growth differ in ways that ought to make us all uncomfortable.

Starting in 1980, production slumped because for the first time in history people needed less oil. After the huge oil price increases in the 1970s, cars suddenly got smaller. People became more careful about combining trips to save gas. A lot of people switched their home heating to natural gas which was considerably cheaper than heating oil. And, in the United States the Congress severely restricted the use of oil for new electric power generating plants. Those using oil began to switch to cheaper natural gas and coal. The whole globe went on an energy efficiency binge.

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Now, it's not as if high prices haven't sent people looking for more oil and working on more substitutes. The problem is that all of this activity is facing a considerable headwind. It's called depletion. And, as they say in the oil patch, depletion never sleeps. It's going on in every operating well in every country around the clock, 365 days a year. Estimates suggest that the decline in current production capacity might be around 4 percent per year. That means that 4 percent of the current production capacity for oil must be replaced each year just to break even. And, of course, to grow supplies, new production capacity must exceed this amount. But it hasn't, and oil substitutes haven't really grown by any significant amount in the last six years either.

The media loves to announce new seemingly large discoveries of oil as if they are the solution to what is really an unfolding liquid fuels crisis. They point to the Tupi field off Brazil which is purported to have 8 billion barrels of oil in it. And, they point to discoveries in the deepwater Gulf of Mexico thought to contain between 3 and 15 billion barrels. And, they point to the 4 billion barrels in the Bakken Shale in North Dakota. It all sounds like a lot. When I ask audiences how long a billion barrels of oil will last the world at current rates of consumption, I often get replies that range anywhere from three months to 5 years. The correct answer is 12 days. Just multiply these multi-billion-barrel discoveries by 12, and you'll realize right away that they are not going to overcome the constraints we are experiencing in oil supplies.

http://scitizen.com/future-energies/time-to-worry-world-oil-production-finishes-six-years-of-no-growth_a-14-3714.html