Oil Supply Analysis by Bill Butler

Bill Butler moderates The Suncor Energy and Canadian Oil Sands Resources Group on Yahoo. The group is primarily composed of members that probably should be classified as peak oilers, which I know will turn many of you off.  I hope you will read his analysis and take it for what its worth. This week he presented his analysis of our oil supply.  It is very simplistic, but probably as accurate as most of the more analytical studies. There certainly will be projects added and perhaps a few not included in the database, but it takes an average 7 years from the announcement of a project until it is brought online. Oil companies are becoming more active in exploration, but that also takes a lot of time. It certainly should give you pause for thought.

Chris Skrebowski's Megaprojects report (and here), a tabulation of new oil production projects includes everything from 40,000 bbl/day on up. ...

The 3.5 to 5 million bbl/day per year of new oil production coming online sounds encouraging until you take depletion of old fields into account. For the purpose of the following calculations we will assume that everything goes according to Skrebowski's tables - everything comes online on time, there will be no hurricanes, no political/military problems, etc. (If we are going to get into trouble with everything going right, then having things go wrong certainly isn't going to help things - and Murphy's Law is still very much alive.)

Historically, oil production from existing fields has decreased at about 4% per year due to depletion. If we take 4% of current world oil production of 84.5 million barrels per year (current EIA data - presumably all liquids), then we would need 3.38 million barrels of new production per year just for total production to stay constant. If we assume world population is increasing at 1% per year then we would need 5% of 84.5 = 4.23 million barrels of new production per year just to keep oil production per capita even. On this basis, if you use Skrebowski's everything-goes-right numbers, the peak in oil production per capita is in 2009, and it's downhill after that.

Comments

[Cervus]

Compounding this problem, noted by Bloomberg a week or two ago, is the big shortage of drilling rigs. There's no way to fix THAT with any speed at all. But this will give alternative fuels an opportunity to grow and prove themselves economically.

[Peter Hunt]

Nice to see Bill getting the credit he clearly deserves. If you want one of his best pieces read his " The Great Rollover Juggernaut" http://www.durangobill.com/Rollover.html

It is comprehensive in view and one of the best discusions of our petroleum problems I have seen.

It deserves broad scale attention.

[Gregor]

Does anyone know what the numbers are on vehicle usage? If the electric car becomes prominent in society, except large trucks I'm sure, what would the numbers of barrels needed per day, fall to then? Where is the majority of our oil used?

[barry hanson]

Gregor:
A PHEV able to go 60 miles on battery power would only need the engine for 20% of all miles driven. If it gets 20 mpg for those miles it gets 100 mpg overall, 40 mpg for those miles gives it 200 mpg overall. Say at 150 mpg for the 2.6 trillion miles driven in the US the gasoline requirement is then 17 B gallons instead of the current 143 B gallons, an 88% reduction.

About half of the crude oil goes to gasoline, about 20% to diesel.

But with a much lower requirement for transportation fuel other possibilities open up, for example the use of bio-methane to power a 15 KW SOFC on board, configured as a series hybrid. The vehicle would then get 500 miles per gallon of gasoline equivalent energy.

Bio-methane can be produced for under $4 per million BTUs, gasoline now costs over $20 per M BTUs at the pump, contributing to a $250 B trade deficit for crude oil. $250 B divided by 12.5 million new cars per year could be a $20,000 subsidy per vehicle to the US consumer vs ,say, a Saudi prince.

[Aaron]

Actually, Barry, the effects might be even bigger if we also consider that a huge chunk of those vehicle miles driven each year are on fairly short trips and commutes. If those electric cars could run, say, 25-50 miles (or more) on electricity without any gasoline, you could completely eliminate gasoline usage for a significant number of trips.

I imagine it could even be as high as 95% or more of gasoline usage, although that's more of a guess than a hard number.

[barry hanson]

Aaron
I did that, see my comment. I figured 80% of all miles to be on the batteries...those are the short trips, i.e. 60 miles or less.

[Nick]

Barry, GM estimates 50 MPG for the Volt when using gasoline. Given that the gas engine will be able to run extremely efficiently (even more than the Prius), that should be realistic. So, we're talking 250 MPG overall.

[Matt]

All these electric car figures sound great. How many million of them can we get online in a year and a half?

[Gregor]

Exactly Matt......it's frustrating waiting for something to happen while the oil companies profit margins soar into the billions at our expense. They are having a good laugh right now but we shall have the last laugh when Barry Hanson's numbers from above fall into place.

Once the electric cars start flowing, just watch how fast the price of oil comes down.

[oilfield equipment]

these figures sound awesome. lets keep it going.