Nian's Blog

An argument from the author of "Steady As She Goes" article in the Economist magazine, stated that our oil peak prediction was not close enough for us to panick but still should be
taken seriously. The facts to his arguement referred to analytical reports from Cambridge Energy Research Associates (CERA). He stated that, "Though noting rising costs, the firm concludes that the worl's oil production capacity could increase by as much as 15m barrels per day (bpd) between 2005-2010."

Evidence linked to this arguement came from a press release from CERA saying, "CERA indicates that worldwide capacity could rise by as much as 16 mbd between 2004 and 2010." (1st paragraph http://www.cera.com/news/details/1,2318,7453,00.html). CERA states that oil production capacity will surprisingly continue to shoot up in the "decades to come", and that supplies will still exceed demands by a rough 6-7.5 million barrels per day between those years. (support quote below)

"As a result, supply could exceed demand by as much as 6 to 7.5 million barrels per day (mbd) later in the decade, a marked contrast to the razor-sharp balance between strong demand growth and tight supply that is currently reflected in high oil prices hovering around $60 a barrel." (2nd paragraph in press release)

CERA seems to be optimistic about new discoveries and the further push in oil production peak due to careful analysis of a field to field, head to toe analysis of oil projects from around the world and confidence. They believe that new production capacities will be shown in the future due to developing projects that started years ago. With this new movement in developement, they hope that this will extend our production as well as improving the balance of supply and demand.

The author did not mention the report on the concerns of CERA about the events that are going to be placed after 2005-2010. CERA stated that they were not sure about future developements of big projects afterthe oil boom years because of the doubt that deep water and Russian deposits can still continue to increase oil production capacity after year 2010. (support quote below)

"The CERA analysis indicates the pace of new major projects coming onstream worldwide will be sustained to 2010, with fewer giant projects going forward after that. “We have some concerns as to whether the deepwater and Russian “miracles” can continue to shore up non-OPEC liquids capacity expansion past 2010, when non-OPEC capacity growth will start to slow significantly,” say Jackson and Esser." (8th paragraph)

Other then that, the author's point on peak not being as near as we anticipated relates to the perspectives of CERA. CERA also belives that peak would not be as soon as we figured it would be, and they envision more of a plateau instead of a sharp fall in life after global oil peak. (support quote below).

"The CERA analysis rejects the current fear that a near-term “peak” in world oil production and a coming exhaustion of supply are near. The report indicates that the “inflexion” point will come in the third or fourth decade of this century. Moreover, rather than a “peak,” it will be an “undulating plateau” that will continue for several decades." (10th paragraph)