Peak Oil is History

For many months now, the peak oil community has awaited the publication of the IEA’s World Energy Outlook which is due out on November 12th. Earlier this year, IEA spokesmen had said this year’s edition would incorporate a thorough bottom-up evaluation of the world’s oil supply and would not simply base future projections of oil production as being whatever was needed to meet demand.

On Wednesday, the Financial Times published excerpts from a leaked draft of the report.

The findings suggest the world will struggle to produce enough oil to make up for steep declines in existing fields, such as those in the North Sea, Russia and Alaska, and meet long-term demand. The effort will become even more acute as prices fall and investment decisions are delayed.

The IEA, the oil watchdog, forecasts that China, India and other developing countries’ demand will require investments of $360bn each year until 2030. Even with investment, the agency says the annual rate of output decline is 6.4 per cent.

Unless you have been living under a stone in recent months, you will not have failed to notice that the financial markets are in meltdown and coupled with a dramtic fall in oil prices many oil production projects are being mothballed.

The Financial Times notes that the draft EIA report was written a month ago and may be modified due to the deteriorating world financial situation and the decline in demand and oil prices in recent weeks. If the IEA’s final version of the report continues to hold that world oil production will soon be declining at 6 to 9 percent a year it should have a major impact on governmental thinking about the future of energy. The IEA has released a statement saying that the Financial Time’s article was indeed based on a dated draft that has since been revised and that the Agency would have no comments until the publication is formally released in November.

Richard Heinberg (pictured) points out that “considering regular crude oil only, this means that 6.825 million barrels a day of new production capacity must come on line each year just to keep up with the aggregate natural decline rate in existing oilfields. That’s a new Saudi Arabia every 18 months.”

Heinberg says that “If nine percent is even close to being the final figure, then it’s absolutely clear: July 2008 was the all-time peak in world oil production. Don’t expect anyone at the IEA to officially admit that fact until 2025 or so. But among those who pay attention to the evidence and the terms of the debate, further ink need not be spilled in speculation.

Peak oil is history.”