[TonyPrep]

I was wondering, this morning, whether the projected decline rate for oil production, after the peak, would follow any of the projections we've seen, if the world's societies and economies are not as stable as they were before peak. Then I happened upon this article by Michael Lardelli, which argues that the decline is much more likely to be much steeper.

As price spikes initiate recession after recession, with corresponding demand slumps followed by oil price slumps, we're unlikely to see the levels of investments needed to keep declines to what many optimists see as a manageable level. We've already seen delays and cancellations of oil projects and reduced investment by oil companies due to the impact of reduced oil prices.

Once production enters its decline phase, should we really expect the more rosy projections of decline rates to be met, or will the decline curve end up being much steeper?

[cipi604]

It should follow the same decline in Russia after 1989.

[thuja]

Well Tony this is probably the scariest concept to deal with for those who study this issue. If the rosier projections are accurate- Bumpy plateau with <1 % decline rates. then there is some ability to mitigate. If decline rates are much worse, coupled with the Export Land modeling, we are in for very dramatic and painful effects.

Really the more I study this the more it seems like there is the strong likelihood of resource nationalization as well as knock on effects of economic recessions leading to further deterioration of the ability to increase production.

God forbid but I think we could start seeing rapid >2 % decline rates after a few years. But really the whole game may start to change. Those with the money and the resources may indeed start to horde, or extort other nations with high prices. (See Russia versus Ukraine.)

In the US we are likely to be deeply distressed as we can only produce a quarter of what we consume. That's better than some countries (Australia, Japan, etc.) but will leave us deeply beholden and ultimately impoverished by those holding the oil. This very well could create the foundation for global wars over the remaining oil...leading to further steep delcine rates in production.

All so very ugly man- depressing when I look at it clearly...

[lowem]

We probably shouldn't put too much stock in it, but IEA some time back came out with 2 decline rate figures :

4.6% "with necessary investments"
6.4% "without necessary investments"

At this point, IMHO even 2-3% is a little optimistic.

We could quickly divide it up along the lines of our old-school doomer-style scale (anyone remember that?)

So we might have :

Anything less than 4% is cornucopian thinking.
4-6% is a moderate rate.
Anything over 6% is doomer territory.

And of course that would be aggregate global oil production decline rate, post peak oil, as opposed to individual oil field decline rates.

[kpeavey]

Too many variables to come up with a meaningful estimate.
-exporting countries with rising populations and domestic consumption added to production decline can result in less oil available for the oil importing nations.
-The threat of military action to secure resources combined with a scorched earth policy: if we can't have the oil, we can't let them have it either.
-economic upheaval. Is credit available for financing new exploration? Is the money in place to maintain the oil infrastructure? Will currencies collapse?
-price issues. If the price is too low, its not economical to develop or operate some fields. If the price is too high, some demand can be permanently destroyed.
-trade issues: Do the exporting nations want US grain, Chinese technology, Russian weapons, or arable land in Africa?
-Politics: Does Chavez make nice with China? Do the arabs get angry at the US over some Israeli action? Does Iran do something smart for a change?
-Technology: does someone invent a perpetual motion machine, low cost PV cells, solve the fusion problem?

Change is difficult to predict. The only thing we can predict with certainty is that change is coming.

[yesplease]

I don't see how a 4-6% decline rate for existing conventional fields is doomerish, considering it's more or less what's been observed. Granted, pretending that it's the only figure WRT oil production, while ignoring NGL, non-conventional oil, undeveloped fields, an increase in EOR, and so on, could be considered at the very least disingenuous (We currently get over 10mbpd from NGL/non-conventional oil), but a decline rate of ~4+% for existing fields certainly seems realistic. Add the behavior of NGL, non-conventional, and so on, and we get an estimate regarding the sum of crude oil and liquid fuels in order to determine what total supply will probably look like.

[TonyPrep]

We probably shouldn't put too much stock in it, but IEA some time back came out with 2 decline rate figures :

4.6% "with necessary investments"
6.4% "without necessary investments"

Didn't they have it even higher, at one point?

That would be existing production but new production will be in much smaller fields and have to make up for the declines in existing production. That will be harder to do than with new giant conventional fields. Oil price spikes always seem to lead to recessions, or at least downturns/slowdowns, which can dent demand and, in turn, lead to lower prices. If new production increasingly needs higher oil prices to be profitable, then low prices will impact oil field development, as well as discovery, though these will get a jolt of investment as prices spike again with anything akin to a recovery.

All in all, I think a stable investment context is unlikely and so projected decline rates after peak need serious revision. However, I don't think they will be revised by the likes of the IEA and CERA, because those organisations would never want to hint at a catastrophic decline. That's a shame, because our societies need to understand the most likely situation in order to develop sensible strategies.

I don't think a decline rate of over 6% in total production is unthinkable; it may be a doomer position but that doesn't make it any less likely. A 6% decline (or even half that) in a global economy that is expecting a growth rate of 1% for the next 20 years, might even precipitate collapse.

[pup55]

We coined the term Nordic Slide a few years ago, when it appeared that the North Sea production was contracting by 6 or so percent per year, but last year it was only 4 percent....

Australia, the "aussie slide" was about 6 percent a year for the first three or four years after they had peaked, but they actually have stabilized their industry and there was a bit of an increase in 2008.... They declined 1.5 percent last year...

Mexico: That will be the poster child for the "unable to do reinvestment" case.... they dropped 9 percent this year and are within maybe 3 years at this rate from being a net importer of oil.....

[Ayoob]

I think of it in terms of a 50% threshold. When are we down by one-half? If the world is at 82MBD, when do we get to 41MBD?

Also, if the US uses 20MBD, and that amount represents currently one-fourth of world output, then we would consume about 50% of world output... which means a doubling of our SHARE, just by standing still.

I don't know why, but for some reason that 50% threshold looks like a watershed to me. I think the game will be so different on the other side of that number that we're all just dreaming during the intervening time. We can't imagine what the rules will be under those circumstances. How does your life change as the economy collapses around you once and for all, and we all become incredibly poor over the course of about 15 years? What happens at the end of that?

There have been great wars fought over much less.

[TonyPrep]

We coined the term Nordic Slide a few years ago, when it appeared that the North Sea production was contracting by 6 or so percent per year, but last year it was only 4 percent....

Australia, the "aussie slide" was about 6 percent a year for the first three or four years after they had peaked, but they actually have stabilized their industry and there was a bit of an increase in 2008.... They declined 1.5 percent last year...

Mexico: That will be the poster child for the "unable to do reinvestment" case.... they dropped 9 percent this year and are within maybe 3 years at this rate from being a net importer of oil.....

I don't think history can be much of a guide here, except to note how recessions, and associated demand drops, affect investment. Once we are into a downward spiral (recession, patch growth, recession, patchy growth ...) it's hard to see how oil production declines would not accelerate. On a related note, it's also hard to see how investment in alternatives will ever get to the levels needed (even if it were possible for alternatives to substitute for oil declines in scale and utility).

[TonyPrep]

I don't know why, but for some reason that 50% threshold looks like a watershed to me. I think the game will be so different on the other side of that number that we're all just dreaming during the intervening time. We can't imagine what the rules will be under those circumstances. How does your life change as the economy collapses around you once and for all, and we all become incredibly poor over the course of about 15 years? What happens at the end of that?

Somehow, I think we'll get to a world changing point well before a 50% decline.

[kpeavey]

50% of current production is not the watershed. Life changing disruptions will occur at a much lower decline state, possiblyt as low as 10-20% of current production. At a 6% rate of decline, we have 2-3 years from the outset to chaos. The first few months will be hectic, with a rapid slide into confusion, social upheaval, and political disarray. The population is not ready for any of this. Reaction will be intense, response will be swift, results will be ineffective.

I'll throw out a doom projection: 1, maybe 2 more years on the plateau then 6 months of crisis ending in a tempest the like of which have never been seen on this world.

[Revi]

I agree KPeavey. I think we're on the slide now, but the bottom falls out about 2 or 3 years from now when a lot of people have exhausted their unemployment and savings, and the Wal Mart economy is on the ropes.

There isn't going to be a lot of new economy up by then either.

Even a 3% rate of decline is going to make things turn sour.

If we have a supply problem there will be real trouble in places like Maine, where most of the state heats with oil.

[mos6507]

If we have a supply problem there will be real trouble in places like Maine, where most of the state heats with oil.

Assuming people don't just try to leave, if there isn't a crash program in efficiency and passive/solar, when it gets bad enough, Maine will be deforested pretty quickly, including your woodlot.

[kpeavey]

70% of the homes in the northeast are oil heat. When heating oil was through the roof last year, I was reading stories about how people coped. Much of it was by suffering. I lived in Bangor through the ice storm of 98 when much of the state was without power, for several weeks in some places. Eastern Maine Medical Center was a mile away, it was a priority, we lost power for only an hour. A friend stayed with me for a few days. Doubling up will be the solution for many, find a friend with wood, a full fuel tank, or electric heat.

I think the woods are safe in an oil crisis. Most of those oil heated homes have no fireplace, woodstove or even a chimney. Firewood is not an option. Back in the '75 just after the oil embargo my father switched to wood. The old chimney had to be torn out and replaced, hearth built, woodstove installed, seasoned wood delivered. It was a couple weeks from start to finish. There are not enough woodstoves in stock in retail stores, or flu brick/stovepipe, or seasoned firewood for a massive transition to wood heating. It won't happen. Even if a massive proigram was started right now to convert as many homes a possible, there are not enough mason, installers, umberjacks, and home inspectors to get the job done in less than 10 years.

Many dwellings are not suited to firewood heating. Apartment buildings, condos, mobile homes are good examples. Homes built specifically for oil or electric heat were not laid out to include a woodstove and chimney. Most homes built since 1950 were designed around oil or electric heat, and a small percentage for gas. Figure half the homes and all the apartments will never be converted to wood heat, even with an all out effort starting yesterday. Then there is the issue of offices and retail stores-how do they get heated? Again, mostly oil and electricity. Gonna put a bunch of woodstoves into the local Wal-Mart? If a movement to wood heat was in progress, the stores and offices would be more able to afford the stoves and installations and firewood, removing them from the market or driving the price up to make them unaffordable to an underemployed homeowner.

This just offers an idea of the scope of one aspect of our dependence on oil. Getting out from under it will take many years and we just don't have that time available. A 50% production decline is not needed to change the lives of a great many people. If 10% of the home users could not afford or acquire heating oil, its a crisis.

[AirlinePilot]

This is a GOOD thread. Probably one of the better ones Ive seen in a while

Decline rates are the whole story from here on out. For those of us who seem to understand scale and scope, doomer territory is easily supported.

I think our efforts should be geared strongly towards this issue as this is where we figure out how to solve some of the crisis which is appearing out of the mist on the horizon.

Peak and decline are presently being masked by the global recession. The issue facing us at the moment is IF and WHEN demand returns and growth in that demand puts us back where we were last Spring. It may or may not happen. If it does not come back there is going to be a prolonged period where decline will be hidden. It will be hidden in short term spare capacity and large inventories. After researching this issue I tend to agree with others here about the timing. Even with a continued recession and OECD demand remaining basically flat, the decline problem will build steam after 2011-early 2012 based on looking at Non Opec production and the present state of OPEC and specifically Saudi production.

I believe the greater declines wont rear their head until after that period and then it builds for a while. During this rising decline period it wont matter what the economy is doing as we just wont have enough production to go around. That is the key time to watch for. This is when hardship begins to become more frequent and price rises become very volatile. I used to think we would be entering this phase very soon but given the global demand picture we obviously are dodging this particular bullet at the moment. I doubt we have very long to wait for it though.

When you add up the news from the last few years I think most would agree that we are already having some serious issues which are directly attributable to our ability (or inability) to produce new oil. I.E. Grow production. There is good evidence that Export Land will be a major player in the near future. I also think that nationalization of production, Hoarding, and global Black markets will become the norm as we move away from our current paradigm and into one in which decline becomes OBVIOUS and undeniable.

This time frame where it becomes common knowledge that we are past Peak and IN DECLINE, most likely forever, is when things become ugly IMHO. Hoping things go well, IE mitigation, alternatives etc., does not jibe with our past performances as humans. I personally don't see Mad Max or apocalyptic scenarios, just a slow grind of ever decreasing standards of living and the accompanying malaise that this will bring.

Excellent thread. Sussing Decline is where it's at now. Disputing peak is a worthless endeavor.

[TonyPrep]

Anecdotally, the big finds seem to be in hard to develop locations and where steep declines post local peak are to be expected. Other finds are much smaller and, so, collectively hard to develop to levels that compensate for declines elsewhere.

The big finds are also many years away, in terms of production or peak production. With much of the optimists arguments resting on those rare big finds (in the single digits billions, mostly), if the global economy doesn't hold together and the global societies don't hold together, the hopes for those "big" fields will come to little or nothing.

This all points to accelerating declines, in my current view. That could lead to much more rapid societal collapse than many fear (or hope for). Rapid collapse is a worrying thought.

[Ayoob]

Anything less than 4% is cornucopian thinking. ------18 years until 50% of production is lost
4-6% is a moderate rate.-----------------------------------14.4 years
Anything over 6% is doomer territory.-------------------12 years

And of course that would be aggregate global oil production decline rate, post peak oil, as opposed to individual oil field decline rates.

Not much of a difference when measured against my (expected) lifetime.

18 years or 12... what's the practical difference to me?

Decline could be greater than 6% anyway. Why couldn't it be 9% given crashing oil prices due to an economic collapse? Maybe it could be even greater than 9%! Still, that would only shorten the crash from 12 years to 7... again pretty meaningless given my remaining lifespan.

Constant, crushing poverty for the remainder of my lifetime starting at age 45 or 56... what's the difference? Either way I wake up in the morning in search of something to eat along with several billion of my closest friends.

[rangerone314]

Anything less than 4% is cornucopian thinking. ------18 years until 50% of production is lost
4-6% is a moderate rate.-----------------------------------14.4 years
Anything over 6% is doomer territory.-------------------12 years

And of course that would be aggregate global oil production decline rate, post peak oil, as opposed to individual oil field decline rates.

Not much of a difference when measured against my (expected) lifetime.

18 years or 12... what's the practical difference to me?

Decline could be greater than 6% anyway. Why couldn't it be 9% given crashing oil prices due to an economic collapse? Maybe it could be even greater than 9%! Still, that would only shorten the crash from 12 years to 7... again pretty meaningless given my remaining lifespan.

Constant, crushing poverty for the remainder of my lifetime starting at age 45 or 56... what's the difference? Either way I wake up in the morning in search of something to eat along with several billion of my closest friends.

Well 12 years means I have solar panels, 10,000 rounds of 5.56, water-purification, own food supply, and a tall hedge hiding my preps from prying eyes.

18 years means I have a stone wall right behind the hedge, just in case someone is curious about what they can't see and wants to crawl through 12-feet thick of rose and blackberry and evergreen hedgerow.

[evilgenius]

I think of it in terms of a 50% threshold. When are we down by one-half? If the world is at 82MBD, when do we get to 41MBD?

Also, if the US uses 20MBD, and that amount represents currently one-fourth of world output, then we would consume about 50% of world output... which means a doubling of our SHARE, just by standing still.

I don't know why, but for some reason that 50% threshold looks like a watershed to me. I think the game will be so different on the other side of that number that we're all just dreaming during the intervening time. We can't imagine what the rules will be under those circumstances. How does your life change as the economy collapses around you once and for all, and we all become incredibly poor over the course of about 15 years? What happens at the end of that?

There have been great wars fought over much less.

I think 50% is interesting because of all of the questions that are bound to come up before we reach that level. It is tempting to look at the US as an isolated module when many of the things that the US consumes use energy in manufacture that is in one way or another derived from oil. If the US doesn't ratchet back, in other words, on its daily consumption the external inputs that make it possible to consume at that level will falter due to energy shortages. One way around this would be to see the world in an alliance that protected the external inputs within a political/military umbrella in addition to the financial one which ties them in now. Presumably along the way many big players on the stage right now would suffer against such an alliance. I'm guessing first and foremost would be Russia. Second might be organized regional consumers like South Africa, Brazil, etc.

I wonder if this isn't what is in fact de facto happening in Iraq, Afghanistan, and later Pakistan, Somalia, Sudan and possibly Nigeria?

What does it say of Babylon in the Book of Revelation? "A queen I sit, I shall not be moved."