SeekerBlog

CERA just released a new forecast — certainly more optimistic than the peak-oil crowd. CERA is Dan Yergin’s company — and historically has been a reliable source on the industry.

CAMBRIDGE, Mass. (January 17, 2008) – The missing link for understanding the future of world oil supply – a solidly based view of oil field decline rates – has now been filled by a new field-by-field analysis of production data by Cambridge Energy Research Associates (CERA) and IHS Inc. The aggregate global decline rate is 4.5 percent, rather than the eight percent cited in many studies, based upon CERA’s analysis of the production characteristics of 811 separate oil fields.

“Some of the more gloomy, pessimistic ‘peak oil’ views about the future of oil supplies that are current today result from an assumption of high decline rates,” said CERA Oil Industry Activity Director Peter M. Jackson, author of the Finding the Critical Numbers report. “This new analysis provides the basis for more confidence about the future availability of oil.

…The primary conclusions drawn from CERA’s analysis of 811 fields during the production build-up, plateau and decline stages in the oilfield life cycle include:

• Aggregate decline rate – The 4.5 percent per year aggregate global decline rate among fields in production (FIP) is much lower than the eight percent rate cited in many studies and projections. This pessimistic estimate may be a function of the generally more rapid decline rates observed in small fields – increasingly being developed in mature non-OPEC countries – and the rise of deepwater projects, which tend to flow at high rates as a requirement of commerciality, but which also decline rapidly.

• Fields in decline stage – Only 41 percent of production is from fields in the data base that are beyond the plateau stage and into the decline phase of their production lives.

• Low decline rate, longer lives – Annual field decline rates are not increasing but, as a result of increased investment, improved planning and technology, can be maintained at low decline rates in many fields for prolonged periods, and field life is very often longer than originally projected.

• Offshore vs. onshore fields – Individual offshore fields are declining at a 10 percent annual rate compared with six percent for onshore fields, and deepwater fields decline at 18 percent annually compared with 10 percent for shallow-water fields. Non-OPEC offshore fields decline five percent per year compared with 12 percent for those in OPEC.

…“The results of this new study reinforce CERA’s existing bottom-up global liquids capacity model showing that liquids capacity of around 91 mbd in 2007 could climb to 112 mbd by 2017,” according to Jackson. “This outlook is supported by a key conclusion of this study: there is no evidence that oilfield decline rates will increase suddenly. It is important, though, to continue to research and understand evolving decline trends and further develop insight into the declines.”

Some contrary views are discussed in this WSJ article published before the new CERA report.