Friday, April 11, 2008

New Production Record - January 2008

The EIA has just released its numbers for January 2008. They show a new production record for Crude and Condensate production (C+C).

You saw it here first. I had prepared a piece for this in the last week as I was sure it was going to happen, but I will hold off and wait to see what those who have been adamant about 2005 being the peak have to say. Hopefully they are starting to learn that we just can't predict.

74,466 is 168,000 barrels per day above the previous monthly record of May 2005.

http://www.eia.doe.gov/emeu/international/oilproduction.html




Here is a link to graphs on EIA Revisions and what they tend to do.

11 comments:

Admiral Valdemar said...

I fail to see the relevance. Aside from the fact that this figure could easily be revised down to below the 2005 peak, it doesn't alter the situation overall at all, nor does it touch on export linked limitations either.

So we've just (maybe) scraped above the previous peak set three years ago. Peak oil is solved!

Now to buy that big Expedition.

admin said...

If you have seen my work on the EIA's recent revisions it is easy to see that this is not likely. The revisions tend to move up.

I've said nothing about peak-oil being solved. Maybe I haven't expressed it specifically, but I really don't see what can be gained by predicting false peaks that end up falling.

If you fail to see the relevance, I suggest this website:

www.theoildrum.com

They seem to be quite excited about the issue. But I think it will become more apparent in months to come.

Also, I think it is missing something to say we have just scraped above the previous record. While true, it omits the fact that production is 2 million barrels per day above where it was 6 months ago and the trend is sharply up.

-mfp

Admiral Valdemar said...

Yet, oil supplies are still tight, prices have found a floor of around $110/bbl. (yes, the dollar issue has some input on this). Going by annual average, the 2007 number is less than '05, since I, like those at TOD.com and PO.com, don't find a single month convincing.

The non-OPEC nations are on a downward trend and OPEC has very few cards to play now, especially when their own consumption is increasing and demand is still on the rise. These monthly numbers may be revised up, or they may go down, but at the end of the day, this figure changes naught.

Now, if we'd gone two mbpd over the previous year's number, rather than have declines eat it up along with additional demand from Chindia, then I'd pause and reconsider. As it stands, 1608 kbpd over '05 is hardly cause for anything other than more conservation and alternative energy measures, even if too late.

admin said...

valdemar -

I don't disagree with the things you are saying. But we have to be realistic.

I actually wrote a post last week in anticipation of this very event in which I layed out several of the "arguments" that I knew people would bring up.

(I see that you are posting on that oil drum thread, so pay close attention to the that "G. Asebius")

The things he is saying about Deffeyes are correct and the arguments thrown at him are much what I expected in my post. I've got it in draft form and am still waiting for some reaction to this news from Deffeyes and Simmons.

Simmons made the same mistake in that paper he wrote in November that I link to on the right - at exactly the time G. Asebius was discussing this.

If we are going to use years instead of months than fine. But all these people were perfectly happy to use months before. What changed?

Simple. What changed is they were proved wrong. Now they change the goalposts. It's always the same story.

Late last year when both the IEA and EIA showed new records in all-liquids production, these same people said it didn't matter, C+C was what mattered.

When (if) we have a new record year, they will say we need three years. At some point you have to stop taking them seriously.

And it isn't just one month (January). Choose any metric you like. Any moving average. They will mostly show you either flatness or a trend that is now moving up. You have to specifically cherry-pick a moving average scheme to show production falling.

The monthly record is just an opportunity to drive the point across that you can't use Hubbert Linnearization or blind faith to determine a peak.

From the looks of it, 2008 has a very good chance of having higher production than 2007. And from there it becomes the upper-bounds problem. In other words, who is to say 2009 will not be higher than 2005?

Are you going to trust people who for 2 years have been telling you with absolute certainty that 2005 was the be-all, end-all peak?

Admiral Valdemar said...

Far as I know, Deffeyes has always only counted C+C and not anything input by ethanol or heavy unconventional deposits (it is peak oil after all). The trend he uses goes by annual rates too, on the whole, and really, looking over the past few years you cannot pick any one data point to indicate anything beyond reasonable doubt. The May 2005 figure was believed to be the best chance for a peak in conventional oil, and indeed that has held for some time, until now, it seems. But other factors come into play such as the costs in both capital and energy in extracting these deposits. They have most certainly gone up, as exports have gone down.

I, frankly, don't too care for the pointing out of a random month or year and going "There! See? Peak is here" or not. It's folly. What I do get concerned about, is the trend that has been a horribly level plateaux with mega-projects hoping to shatter this state of affairs being burdened by costs and technical setbacks. Demand is still strong, China et al are growing in their usage of the product as China also starts peaking now and we're left with few near term options to change the situation. Refinery issues are another limiting factor to look at too.

It is also worth looking at the impact of the oncoming economic clusterfuck that will influence Big Oil in a big way, among others.

Again, nothing has changed here. We are still on a knife edge with discoveries and output rates being less than suitable for future growth. Deffeyes and Simmons may be wrong in their posturing and overly precise predictions, but they are certainly more believable than the people who work at CERA or the EIA/IEA who see no problems for hitting 120 mbpd in a couple of decades without hiccups.

This should be our time to try and move away from fossil fuels, what little time we may have bought. Not to celebrate an insignificant boost in output that acts as a foundation for further growth on the assumption this is the beginning of cheap energy redux.

admin said...

valdemar -

I agree completely and if you read some of the other stuff I have written here you will see that I have an even bigger problem with the CERA/IEA-type forecasts. I hope you come back and comment more often. I thought it was just me and Xeroid :)

Admiral Valdemar said...

Thanks. On the contrary, your blog is a regular visit for me, I just wish it was filled daily with such insights, but we all have lives to live as well. And there's always the fun of watching the markets bounce oil prices up and down in random chaotic ways.

Peak oil is on the back burner for me, somewhat, since the economic calamity unfolding seems to have stepped up a gear. Still, I have not spent a day since last March when I haven't read the latest on energy and thought about our future. Sometimes I wish I was wrong about assuming the worst, other times I feel we need to see the error of our ways.

At the very least, I can say I wasn't ignorant of the problem. Unlike, of course, the vast majority of people who will only notice costs going up and not think about the reasons why. If only The Limits of Growth was mandatory reading in school...

Anonymous said...

I'm still lurking :-)

Any peak and subsequent decline will be caused by the need for everybody to maximise profits.

'Net exports' (and not just of oil) are the only thing that is important to me, since I live in a country that will require all it's conventional energy needs to be imported within 10 years - if we do still have domestic oil by then it will mean we have had an economic disaster - either way, not good IMO.

Predicting the future accurately is a bit like Heisenberg's 'Uncertainty Principle' in physics. You can know what is going to happen but not when, or you can know a time in the future but not what will happen.

It doesn't help that the world's statistics on just about everything are very poor.

Xeroid.

admin said...

I agree. Especially about Heisenberg's uncertainty principle. It has been mentioned in at least two economic/finance books I've read recently and I hope to bring it up soon in the scope of the whole demand/supply/price equation.

In regards to oil, as you can see there are only 20 significant exporters in the world, and another 150 countries of significant size. So most of us are in the same boat.

-mfp

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