29 January 2009
Oil's going straight back up to new highs
There are 70,000 oilfields in production worldwide; however, the bulk of our production comes from 20 super-giant oilfields, which account for over 25% of daily world production. Of even more concern, the vast majority of these fields were discovered 50–70 years ago.
In addition to the dearth of new discoveries, depletion rates are rising as old fields mature and decline. Remember, newer discoveries over the last two decades have been fewer and smaller, and many of them have been offshore. Smaller oilfields and offshore oilfields deplete at much faster rates than some of the "old giants."
In its latest World Energy Outlook, the International Energy Agency (IEA) estimated that the average observed decline rate worldwide is currently 6.7%, and is projected to increase to 8.6% by 2030. Decline rates for the super-giants are 3.4%, 6.5% for giant oilfields, and 10.4% for large fields. Moreover, natural decline rates (a natural decline rate strips out ongoing investment in new production) are estimated at 9% for post-peak fields. The implication of these large and accelerating decline rates is alarming: "The implications are far-reaching: investment in 1 mbd of additional capacity—equal to the entire capacity of Algeria today—is needed each year by the end of the projection just to offset the projected acceleration in the natural decline rate"
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