Monday, 7 July 2008

Ray Leonard of Kuwait Oil on Peaking

No, not that Ray Leonard. Mr Leonard is the VP of Kuwait Energy and an industry veteran who's worked in Africa, Europe, Soviet Union, Asia and Middle-East in the oil industry.

He gave a presentation to a closed group of energy insiders in late June 2008. ASPO-USA has a summary, Energy Bulletin has the same. Some quotes:

“It’s not the size of the tank but the size of the tap.”

"Russia has simply decided that they will control production growth at 10 million b/day; they may well both be able to and decide to produce close to that level for a decade."

"The limitation on production from the Arabian Gulf is mostly due to politics, lack of motivation, investment level, and type of crude, not shortages of reserves. A rapid increase in production is not physically possible at this time. "

"Likely results during the next decade from unconventional sources: combined production is only likely to grow from today’s 2.3 million b/day to 4 or 4.5 million b/day; 6 million b/day is the most optimistic. Oil prices will need to consistently stay above $80/barrel for the investment needed. The environmental impact will be negative."

"Rise in OPEC production will be partially offset by decreasing production in the Rest of World, with FSU production steady. A production peak of ultradeep water fields will allow the “peak” to be a “plateau during the coming decade, followed by a sharp fall."

By 2010, the production of the fuel that has driven the world’s economy will start to rapidly decline. This will conflict with the steadily increasing demand for oil. The collision of these two trends will lead to shortages and increased prices, providing a strong incentive to shift to alternative fuel resources…Due to unequal distribution through the world of oil and gas supply and consumption, [the upcoming] transition will result in significant shifts in global power and wealth.”

We are nearing World Peak Oil, with resulting high prices and associated political and economic disruptions."
So, there's the optimistic assessment. Peak in 1,5 years, with a plateau at best, most likely a sharp reduction.

Less than two years to plan and mitigate. In the words of Samsam Bakhtiari:

"Preparation should be carried out on individual, familial, societal and national levels as soon as possible. Every preparative step taken today will prove far cheaper than any step taken tomorrow." - Samsam Bakhtiari