The Peaking of Oil: Reality or Simply a Myth?

Abstract

Abstract The world's 120 largest oilfields produce close to 33 million barrels of oil a day, almost 50% of the world's crude oil supply. The 62 smallest "giant fields" account for 12% of the world's daily oil supply. In contrast, the fourteen largest fields, whose average age is 43.5 years, account for over 20%! With production from giant fields providing such a significant share of the world's oil supply, it seems important to understand the decline rates each of these fields now experience and to determine what future decline rates are likely to be. Unfortunately, there is little publicly available data for even the most visible of these giant fields to even make an educated guess at this important statistic. There is ample data showing that giant oilfields do ultimately peak and then begin to decline. All the giant fields of Texas are classic illustrations of this. Prudhoe Bay, Cusiana, or the entire population of the North Sea's true giant fields also demonstrate not only that large fields decline but also that production declines rapidly once it peaks. In 1956, M. King Hubbert predicted that U.S. oil production would peak in the early 1970's. At the time, Hubbert was widely criticized by some oil experts and economists, but M. King Hubbert's oil prediction is coming to pass in most of the world's existing oil basins. Saudi's Ghawar field, by far the largest producing oilfield the world has ever known, might last another 100 years. But, the field might also have already peaked. That no public data is available to shed any light on this issue places a giant question mark over the supply from this field. Someday even a field as large as Ghawar will begin its decline. If its decline rate comes close to those experienced by the North Sea fields or Prudhoe Bay, it would take a global drilling boom to find enough smaller fields merely to replace lost Ghawar oil supply. Sooner or later, most of the world's current population of giant fields will all be in decline. If the world's future supply needs to result from new fields that are getting progressively smaller, it could require over 3,000 new oilfields to be found and developed over the next 10 years compared to just over 400 named new oilfields that were discovered in the past decade. Until there is far better transparency on the world's giant oilfield production and decline rates, the world can only guess at its future oil supply. There is an urgent need for better data on all these key fields as the welfare of the world's economy depends on it! Manuscript The argument of energy resource adequacy has been debated for close to a century. The simple fact that the world now uses over 80 million barrels a day of oil and another 35 million barrels of oil equivalent of natural gas is proof to many skeptics of the peaking concept that this will be a problem worthy of serious analysis in 2004 or beyond.