Maugheri vs The Oil Drum: Cornucopians vs The Peak Oil Crowd

Updates

October 16, 2012: link to The Oil Drum.

This is part II of a guest post by Jean Laherrère, long term contributor to The Oil Drum. Jean worked 37 years for TOTAL on exploration and production of oil and gas, and since his retirement has worked tirelessly to analyze the world's oil & gas data and developments. 

A very, very detailed article. Critical of Maugheri's understanding of oil industry data.

Original Post 

I'm posting this mostly for my benefit to keep track of the argument.

I guess I'm somewhere between The Oil Drum peak oil and the Cornucopians: I agree that Saudi Arabia is unable to meet production expectations; I disagree with The Oil Drum: I think the Bakken will live up to its potential. But in the big scheme of things, the Bakken is not enough to make a difference globally.

First Maugheri:

Contrary to what most people believe, oil supply capacity is growing worldwide at such an unprecedented level that it might outpace consumption. This could lead to a glut of overproduction and a steep dip in oil prices.

And then, The Oil Drum:

The theme of these posts over the past eighteen months has been to look at the leading producer nations that provide crude oil to the world, and see whether it is realistic to anticipate significant increases in their production. Posts have now looked at North America, Russia, Saudi Arabia and China based on the original list of rankings produced by the EIA in 2009.

From a guest editorial at The Oil Drum following the Maugheri report.

Much as all the stakeholders in the energy industry would like to be optimistic, it isn't an oil glut by 2020 that is keeping oil prices as high as they are. It is the reality that the oil sector has been pushed to the limit of its capabilities and that this difficult challenge will dominate energy markets for the rest of the decade.

Saudi Arabia, from The Oil Drum:

At that last link, there was this comment posted:

In 2005 investment banker Mathew Simmons predicted that Saudi Arabia could not increase its oil production. Since then its output has risen from nine million barrels a day to 10 million. Meanwhile, a recent report by oil executive Leonardo Maugeri, which was published by Harvard University, provides compelling evidence that a new oil boom has begun. If, like me, you are confused I am not surprised. One thing seems clear: we are not likely to run short of oil any time soon and one piece of good news is that at least some of the soothsayers now appear willing to own up to their faults.  

In a significant statement, leading environmentalist George Monbiot admits: “The facts have changed, now we must change too.” Much to his credit he admits that he and his colleagues made either vague or specific predictions and in all cases were wrong. In a rather rueful admission he ends by saying: “The problem we face is not that there is too little oil but that there is too much.” 

EIA data for annual Saudi crude oil production (mbpd, crude + condensate):  

• 2002: 7.6 
• 2003: 8.8 
• 2004: 9.1 
• 2005: 9.6* 
• 2006: 9.2 
• 2007: 8.7 
• 2008: 9.3 
• 2009: 8.3 
• 2010: 8.9 
• 2011: 9.5 

BP data for annual Saudi net oil exports (mbpd, total petroleum liquids):

• 2002: 7.3 
• 2003: 8.3 
• 2004: 8.7 
• 2005: 9.1* 
• 2006: 8.7 
• 2007: 8.2 
• 2008: 8.4 (the delta is almost one million bopd)
• 2009: 7.3 (the delta is 1.0 million bopd)
• 2010: 7.2  (the delta is 1.7 million bopd)
• 2011: 8.3  (the delta is 1.2 million bopd)

 *Twilight in the Desert is published. Synopsis at this link.

I could be wrong, but based on a recent comment from a reader and looking at recent articles from The Oil Drum it looks like the latter has moved its position slightly. At one time, The Oil Drum was synonymous with "peak oil." Now, it appears to me that The Oil Drum has moved the production curve to the right -- that there is such a thing as "peak oil," but the graph has moved to the right, and the rate of production will slow down (or already is slowing down) on a global scale, notwithstanding what is happening in North America (Bakken, Eagle Ford, Canadian oil sands).

The Oil Drum notes that one part of the argument has evolved. From US production AND Canadian production, it is now NORTH AMERICAN production.

The perfect storm for investors: if The Oil Drum is correct, the re-election of President Obama will be better for investors in the oil and gas industry, than if Romney were to win. If Maugheri is correct, it is problematic for President Obama's renewable energy program and very problematic for oil and gas investors.

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