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Saturday, 10 September 2005 |
Australian oil production decline
Australia has been shielded from past oil shocks by our domestic oil
production from Bass Strait. Hence, as a nation we have not learnt as
much about oil conservation and transport planning as European
countries, especially the Netherlands which radically changed its
transport planning policy to reduce its oil dependence after the 1973
oil crisis.
However, Bass Strait production has been declining since 1985 and until
now other fields have filled the production gap. Reliable recent
predictions by Geoscience Australia and Woodside indicate that
Australia's oil and condensate production will fall substantially in
the next decade (Akehurst (2002), APPEA (2004)).
Figure 2. Oil and condensate production profiles of individual
Australian fields, and the forecast cumulative production at 50%
probability derived from industry data, Powell (2001), Akehurst (2002).
BI denotes Barrow Island; GF denotes giant Gippsland Basin Fields.
The dominance of a few large fields, shown in Figure 2, is typical of
oil regions. The giant fields are normally found first. An increasing
discovery rate of usually progressively smaller fields is needed to
keep production relatively constant as the giant fields decline. Then
inability to keep finding adequate volumes in ever-smaller fields leads
to an overall decline.s becoming increasingly vulnerable to serious oil
shortages, in the short term (within a year), in the medium term
(within 5 years) and in the long term (within one or at most two
decades). Self-sufficiency is expected to decline from an average of
80-90% over the past decade to about 20% by 2020 (APPEA (2004))
World oil production decline predictions
A world-renowned US Geological Survey petroleum geologist, Les Magoon,
visited Australia in November 2001 as the Distinguished Visiting
Lecturer of the Petroleum Exploration Society of Australia. He gave
talks around Australia entitled "Are We Running Out of Oil". As
reported (Australian Energy News (2001), Magoon (2001)), he describes
the "Big Rollover" as the change from the current world oil
buyers'-market to a world sellers'-market when global production starts
to decline. Various forecasts have put the "Big Rollover" date at
sometime around 2003, 2007, 2010 or by 2020 (Andrews and Udall (2003)).
"At BP, our best estimate of when global oil shortages will begin to
bite deeply is between 20 and 40 years", Greg Bourne, Regional
President of BP Australasia, told the 5th Energy in WA conference in
Perth in March 2003.
Figure 3a: Current forecast of future world oil production, including
non-conventional oil. (ASPO (2002)). Scale is in gigabarrels of
oil-equivalent per year. The peak of the curve is the “Big Rollover”
Figure 3b: Current forecast of future world oil and
gas production, (ASPO (2002)). The inclusion of gas does not change the
shape of the global hydrocarbon depletion curve substantially.
Prof. Pierre-René Bauquis of the French Institute of Petroleum told a
combined meeting of the Society of Petroleum Engineers and the
Petroleum Exploration Society of Australia in Perth that he expected
global oil production to start its terminal decline in about 16 years
(Bauquis (2004)). He does not see any significant renewable energy
substitutes for petroleum over the next 20-50 years. He was also
dismissive of hydrogen as a transport energy carrier and foresaw the
use of nuclear energy to help manufacture synthetic hydrocarbon fuels
As can be seen in Figure 1, there are some considerably more optimistic
forecasts of future oil supplies. The most optimistic ones are driven
by economic and political perspectives, rather than by geology and
engineering constraints, for example see Lynch (2002). There are very
considerable grounds on which to doubt the forecasts published by the
International Energy Agency. The IEA takes without question the oil
reserve data provided by all the national governments. Many of these
estimates are clearly misleading as they either increase dramatically
without any matching exploration success, or they remain constant for
years in spite of substantial production which must reduce the actual
oil reserves. Conflicting definitions and national and political
priorities make the IEA figures as dubious, for example, as similar
audited and glowing accounts of the financial strength of HIH and Enron
just before their catastrophic corporate crashes.
Shell has recently revised its "proven reserves" downward by 23%,
showing that oil-company reserve claims are subject to uncertainties
and mistakes. The scope for analogous errors and misrepresentation at
the national level is very substantial. Mexico has twice halved its
claimed reserves since the mid 1990s. Recent presentations by Matthew
Simmons (Simmons (2004), (2004a)) cast considerable doubt on the
reliability of the claimed Saudi oil reserve figures. Similar doubts
about OPEC's overall reserves are also raised by Salameh (2004)
In the case of Saudi Arabia, any substantial errors in reported reserve
estimates are of very serious global significance. There is of course
the complementary but lower probability that some reserves may have
been understated, but most concern has been expressed about
over-optimism. |
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Oil Depletion Overview 
