Department of Infrastructure Transport and Regional Development and Local Government
[url=http://aie.org.au/StaticContent/Images/Report_120106.pdf]Transport energy futures: Long-term oil supply trends and projections[/url]
At a glance
The trends in discovery of oil can be used to project similar trends in the subsequent
production of oil. Using a method developed here forecasts of future oil/liquids
production for 40 countries/regions around the world have been produced.
The oil production prospects of different countries and regions vary immensely.
However on balance when an aggregation is done across the globe it is predicted
that world production of conventional oil is currently just past its highest point
(conventional oil is oil pumped from wells on land or in water less than 500 metres
deep). A predicted shallow decline in the short run should give way to a steeper
decline after 2016.
However deep water and non-conventional oil production are growing strongly
turning a slight decline into a plateau for total crude oil (non-conventional oil is heavy
and viscose or indeed tar-like oil). Given the growth in deep and non-conventional
balancing the shallow decline in conventional production it is predicted that we
have entered about 2006 onto a slightly upward slanting plateau in potential oil
production that will last only to about 2016—eight years from now (2008). For the
next eight years it is likely that world crude oil production will plateau in the face
of continuing economic growth. After that the modelling is forecasting what can
be termed ‘the 2017 drop-off’. The outlook under a base case scenario is for a long
decline in oil production to begin in 2017 which will stretch to the end of the century
and beyond. Projected increases in deep water and non-conventional oil which are
‘rate-constrained’ in ways that conventional oil is not will not change this pattern.
Importantly these forecasts assume that world oil production is not constrained in the
near term by reduced demand arising from lower world economic growth. Depending
on the length of time before a return to more normal levels of world economic growth
and resulting higher demand for oil the dropoff is likely to be delayed.
The outlook is not really changed much if a scenario of increased Middle East oil
production is played out. The result of that scenario is that oil production continues
its growth for longer and then falls far more precipitously. Arguably this could be a
worse scenario as far as the world being able to cope comfortably with the transition.
The possible effect of higher prices in bringing forward production would have a
similar effect. Higher prices might also stimulate exploration but are no guarantee of
significant further discovery.
Thus at some point beyond 2017 we must begin to cope with the longer-term task
of replacing oil as a source of energy. Given the inertias inherent in energy systems
and vehicle fleets the transition will be necessarily challenging to most economies
around the world.
Coping with the supply reductions will be compounded by the fact that shrinking
oil supply will interact with measures to reduce greenhouse gas emissions in order
to address climate change. While there are opportunities for joint solutions there
will also be conflicting demands. For example two of the more obvious sources of
alternative motive energy are coal-to-liquids and gas-to-liquids. Both of these would
involve increased emissions.