January 20, 2005
The production and reserves data for 2004 appeared in Oil & Gas Journal. During 2004, world oil production showed an uptick of 3 1/2 percent, in increase of about 2.5 million barrels per day over the 2003 figure. More than half of the increase came from two sources: Iraq and Russia. Production in Iraq doubled, and Russian production increased by 8 percent. There have been no reports of major Russian oil discoveries or field extensions, presumably the increase comes from catching up on maintenance deferred during the Communist era. My interpretation is that the uptick is part of the normal up-and-down jitter in the production curve. Worldwide, there have not been major discoveries or innovations that would put a permanent dogleg in the long-term trend.
Of particular interest is the 2004 production from Saudi Arabia: 8.75 million barrels per day. Early in 2003, Saudi Aramco and the government of Saudi Arabia announced that their production was maxed out at 9.2 million barrels per day. Yet there have been persistent stories that the Saudis could increase production to 11 million barrels per day. Both statements may be true! They could increase production, but they would soon regret having done so. An abrupt increase in their production rate would pull water up through the dolomitized streaks in the Ghawar field, like a teenager sucking on a soda straw. Saudi Arabia was supposed to be the world’s last source of unused production capacity. At this point, there seems to be no surplus oil production capacity anywhere in the world.
“Beyond Oil: The View from Hubbert’s Peak” is now at the printer. Amazon.com will get an allottment of books as soon as they come from the printer, and Amazon is now taking orders for the book. Hardcore Hubbert freaks will appreciate chapter 3 in “Beyond Oil” because Hubbert’s pages of differential equations are replaced by three lines of high-school algebra.
