How do we know that the Petroleum Age is drawing to a close? Two key indicators tell us that this is so. First, many of the giant fields that have satisfied our massive thirst over so many years are experiencing diminished output. Second, although the major oil producers are spending more money each year to discover new reserves, they are finding less and less oil. Either of these factors by itself is cause for significant worry; the combination is deadly.
Few people understand how reliant we have become on a relatively small number of mammoth fields for the lion’s share of our daily petroleum intake. Though the world possesses tens of thousands of operating fields, a mere 116 of them – each producing more than 100,000 barrels per day – together account for nearly one-half of total global output. Of these, all but a handful were discovered more than a quarter of a century ago, and most are showing signs of diminished capacity. Indeed, some of the world’s largest fields – including Ghawar in Saudi Arabia, Burgan in Kuwait, Cantarell in Mexico, and Samotlor in Russia – appear to be now in decline or about to become so. The decline of these giant fields matters greatly. Compensating for their lost output will take increased yield at thousands of smaller fields, and there is no evidence that this is even remotely possible.
To better gauge the status of the world’s largest fields, the International Energy Agency (IEA), an arm of the Organization of Economic Cooperation and Development, is conducting a survey of the top 400 reservoirs. Although the survey is not due to be published until November, early drafts of the report have been leaked in The Wall Street Journal – and the prognosis is not promising. “The world’s premier energy monitor is preparing a sharp downward revision of its oil-supply forecast,” the Journal reported in May, “a shift that reflects deepening pessimism over whether oil companies can keep abreast of booming demand.”
We could live with the decline of these great reservoirs if we had some confidence that new reserves were being discovered all the time to replace all those now reaching the end of their productive life. But this is not the case.
These new discoveries may add one or two million barrels of oil per day to existing output in 2015 and beyond, but by that point output from existing fields is likely to be considerably lower than it is today. Nobody can predict exactly where combined worldwide production will stand at that time. But more and more analysts are coming to the conclusion that the output of conventional (i.e., liquid) petroleum will peak at about 95 million barrels per day in the 2010-2012 time-frame and then begin an irreversible decline. The addition of a few million added barrels from Kashagan or Tupi will not alter this trend.
FPIF
