February 26th Newsletter

"Don''t miss out on a very interesting talk on near-peak oil this week at the Petroleum Club.  We expect a good turn-out to hear the latest on this engaging subject, and look forward to seeing you there!"
 HGS General LuncheonSpeaker''s Name: R.C. Vierbuchen, Vice-President, Caspian/Middle East Region, ExxonMobil Exploration Co.Day: Wed 28-Feb-07 11:30 AMLocation: Petroleum Club of Houston 800 Bell St (43rd Floor) Houston, TX 77002 Summary: Production of global hydrocarbon liquids: Is there a near term peak? by R. C. Vierbuchen, ExxonMobil Exploration Company.     An evaluation of global production history and the global resource base suggests that a peak in global liquids production, resulting solely from a resource-base limitation, is unlikely to occur in the next 25 years.  Furthermore, it appears that Hubbert’s (1956) method, made famous by his correct prediction in 1956 that U. S. Lower-48 oil production would peak in the late 1960’s or early 1970’s, is not readily applicable to forecasting global liquids production.  The following observations support these conclusions:
(1)    Estimates of the liquids resource base have increased over the last 50-100 years, and are likely to continue to do so.  Forecasts of an imminent peak in global production appear to underestimate major sources of growth in the resource base, particularly improved recovery and resources made economic by new capabilities.  Hubbert’s method does not encompass the timing or the volume of future increases in the resource base.(2)   Although annual global production has exceeded annual discoveries since the early 1980’s, annual global reserve adds still exceed annual production because of reserve growth in existing fields.(3)    Advances in technology are increasing recovery, opening new producing areas, and lowering thresholds, and thereby changing estimates of the resource base and production outlook.(4)   Non-OPEC supply has grown steadily for the last ten years, and continued growth for at least the next five to ten years is highly likely, based on new development projects underway or planned.  OPEC countries have numerous opportunities to increase production.(5)   Nations with the largest liquids resources typically have production histories with long-term restraints and interruptions in production that are not envisioned in Hubbert’s method.(6)   Sources of conventional liquids other than crude oil, such as condensate, NGL’s, GTL, and refinery gains, are growing, and typically excluded from applications of Hubbert’s method.(7)    Production from “unconventional” sources, such as very heavy oil, bitumen, and shale oil is growing, and often overlooked in global forecasts of peak production based on Hubbert’s method.(8)   The interactions among supply, demand, and price cause demand growth to slow as supply tightens, and bring on new sources of supply.(9)   Current tightness in liquid supplies results from rapid demand growth and interruptions to supply, not from a decrease in supply.(10) Many previous predictions of a peak in global production, based on Hubbert’s method, dating back to Hubbert’s own prediction (made in 1969, for a peak in 2000) have been proven wrong.