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PAST OIL FORECASTS Contents: Introduction, Conclusion,
Table of Forecasts, Notes
to Table, Discussion
of The Limits to Growth, References One
of the main reasons that people, oil experts in particular, are disinclined
to believe the situation forecast by current global oil depletion
calculations is their conviction that past oil forecasts have been
wrong, particularly those made in the 1970’s. This view sees the present
calculations as just another example of ‘crying wolf’. 1 On
examination, it turns out that most reputable oil forecasts made in
the 1970’s were substantially correct. Oil
forecasts made in the 1970’s nearly all fit into one of four classes. - General,
non-quantitative, fears of global supply scarcity, based on the experience
of shortages that occurred during the oil shocks. - Predictions
of global oil would run out (i.e., reach exhaustion) in 30 years or
so, based on the then-proved oil reserves of about 30 years’ worth
of current production. - Predictions
of oil global exhaustion in a much shorter timescale, based on the
then proved oil reserves (or some assumed larger amount), but with
growth assumed to rise at a fast exponential rate, as had been the
case until fairly shortly before the shocks. - Predictions
that global oil would reach a production peak (very different to oil running out) around the year
2000. It
was this fourth view that characterised the forecasts from nearly
all reputable organisations at the time, and which was also reflected
in many textbooks and monographs on energy published at the time (see
a summary of some of these in the Table
of Forecasts, later in this section). This
fourth, ‘production peaking’, forecast was based on: - the then well-accepted estimate for the world’s conventional oil ‘ultimate’ (i.e., original endowment of recoverable oil), of roughly 2000 Gb; - the
knowledge that global production peak would not occur until something
like half of this, 1000 Gb, had been used; - the
knowledge that only ~300 Gb had been consumed at that date; - the
assumption that production would follow an ‘unrestricted’ logistic
(‘Hubbert’) production profile. On
this basis, the global midpoint was calculated to lie around the year
2000, (a precisecalculation by Hubbert giving the date as 1996). In
the event, global demand was substantially curtailed by the price
rises of the oil shocks, and an unrestricted logistic profile was
not followed; with the result that the estimate of conventional ultimate
of around 2000 Gb (still to-day, for this purpose, the best estimate
to use) simply moved the global conventional oil production peak to
around 2010. This is illustrated in the following Figure. [FIGURE 11: ] 1970’s ‘Logistic Curve’ Forecast, and
Actual Demand The graph shows: - An unconstrained logistic
(‘Hubbert’) curve with an area of 1800 Gb; - Actual production to 1999; - Estimated future production,
also with an area of 1800 Gb. (The short As can be seen, the high prices from the
oil shocks lopped the top off the unconstrained curve, and shifted
the date of peak by about 10 years. It
is true that there have been calculations in the past warning of oil’s
approaching scarcity that turned out to be misleading. Some, like
many of those enumerated by Butler of the DoE, correctly
indicated that production from a particular region or country was
soon to decline, but overlooked the scope for new discoveries elsewhere.
Other have been clearly erroneous, such as a CIA
forecast from the 1970's that was predicated not on resource limits,
but on assumed structural decline in the Soviet Union; or an early
forecast by the UK’s UKOOA that was based only on areas so far licensed.
Still others, as mentioned above, predicted oil exhaustion based on
only proved reserves, or assumed the continuation of very high growth
rates in demand. But,
as pointed out above, nearly all the forecasts made by reputable organisations
in the 1970’s combined mid-point peaking arguments with realistic
estimates for the world’s original endowment of conventional oil.
Hence these forecasts gave, in quantitative terms, exactly
the same warnings of the ‘wolf’s’ approach as given by to-day’s
oil depletion calculations: that global conventional oil production
will peak when roughly 1000 Gb has been produced. These
are warnings it would be wise to heed. Table of Forecasts of World Oil Supply
*
Gb = billion barrels. [1]. The Ecologist. ‘A Blueprint for
Survival’, Penguin, London, 1972; see pp 18 and 130. This report
looked at the impact of continued exponential demand growth on oil’s
lifetime, but also presented the ESSO forecast given here. (As mentioned
above, the calculations of the 1970’s did not foresee the global demand
reduction from the oil shocks, so assumed production would rise to
peak at about 100 million barrels per day. This put the conventional
oil peak earlier than if based on actual demand.) [2]. B. Ward & R. Dubos, ‘Only One Earth: the Care and Maintenance of a Small Planet, Penguin
Books, UK, 1972, p 184. This was a landmark report. Its status
was ‘an unofficial report commissioned by the Secretary-General of
the United Nations Conference on the Human Environment’, Stockholm,
1972. A committee of 158 extraordinarily eminent ‘scientific and intellectual
leaders from fifty-eight countries served as consultants’ in the report’s
preparation. The full extract (p184) is: “One of the most quoted estimates
for usable reserves [of oil] is some 2,500 billion barrels. This sounds
very large, but the increase in demand foreseen over the next three
decades makes it likely that peak production will have been reached
by the year 2000. Thereafter it will decline.” [3]. H.S.D. Cole et al., Eds. Thinking
about the Future: A critique of 'The Limits to Growth', Science
Policy Research Unit, Sussex University, Chatto & Windus, 1974.
This quotes a variety of estimates of ultimately recoverable oil reserves
made mostly in the 1960's, including those of Hubbert in 1969 and
Warman in 1971. [4]. W. Marshall. Energy research
and development in the United Kingdom, Energy paper No. 11, UK
Department of Energy, 1976; p 12. [5]. M.K. Hubbert. Project Interdependence:
U.S. and World Energy Outlook Through 1990. Congressional Research
Service, Washington, 1977, p 624; quoted in: ‘The Global 2000 Report to the President’, Penguin’, 1982, p 353. Hubbert
took Nehring's world ultimate oil reserves estimate of 2,000 billion
barrels, and assumed that oil production would be limited only by
resource availability. On this basis, he calculated that world production
would reach a peak at about 100 Mb/d, around the year 1996. [6]. P.R. Ehrlich, A.H. Ehrlich and J.P. Holden. EcoScience: Population, Resources,
Environment. W.H. Freeman, San Francisco, 1977, ISBN 0-7167-0567-2,
pp 400-404. A widely-quoted textbook. 2
The authors calculated a ‘Hubbert’ peak based on the ‘high-estimate’
for global conventional oil endowment of 10,900 trillion MJ (~ 1900
Gb). (Interestingly, the book also draws attention to the then-controversy
which led to the USGS revising down, by a factor of 3, its estimates
for US undiscovered recoverable oil and gas.) [As a side comment,
it is probable that the famous Simon vs. Ehrlich, Harte and Holdren
‘commodity price bet’ failed in large measure because of the more
than two-fold fall in real-terms oil price (reflected also in other
energy prices) between 1980 and 1990; energy being a large component
of mineral extraction costs. Since the high price of 1980 was driven,
fundamentally, by the US oil peak nearly a decade earlier, the conclusions
generally drawn by economists from the outcome of that bet probably
need revision.] [7]. A.F. Beijdorff. ‘Energy Efficiency’, Group Planning, Shell International
Petroleum Company, London, April 1979; p 1. (Current modeling suggests
the world peak may be fairly sharp, rather than the long plateau suggested
in this Shell study.) [8]. BP report Oil crisis ... again
?, published in 1979. In terms of UK views, this report is one
of the more significant of the examples of 'failed' forecasts that
people (e.g., J. Mitchell, P.R. Odell) choose to quote. It indicated
that non-communist world oil production would peak in 1985. This forecast
bears examination. The first step is to add back in communist production.
Then, like other forecasts of that time, the report assumed rising
production when high prices were in fact reducing demand. Adjusting
for this, and for the subsequent increases in production of NGLs and
non-conventional oil, makes the resulting prediction look reasonable;
forecasting a fall in global conventional oil production from around
the year 2000. [9]. The World Bank. Global Energy
Prospects, World Bank Staff Working Paper No. 489, 1981. See pp
37, 46. The report said: "The bulk of the world's reserves, principally
in the Middle East, was built up in most part during the 1960s. Despite
increased incentives to explore for oil provided by higher prices,
conventional oil production is projected to reach a plateau around
the turn of the century.” (Note that by the early 1980’s, the impact
of the demand reduction was becoming visible, and hence the calculated
global peak date, for a given assumed ‘ultimate’, falls later.) Elsewhere,
p 46, this quotes ultimate recoverable oil reserves as being 1,900
billion barrels, and says: "According to some estimates, the
world's ultimate recoverable gas reserves are at least equal to [those
of oil]". [10]. C.J. Campbell and J.H. Laherrère. ‘The World’s Supply of Oil, 1930 – 2050’. Report from Petroconsultants
S.A., Geneva, 1995. (See also: C.J. Campbell & J.H. Laherrère,
The End of Cheap Oil, Scientific
American, March 1998, pp59-65.) This is one of the more detailed
studies to date, and is the basis for the information provided in
this website. As explained in earlier sections of this website, this
study used full access to the standard industry oil resource database
to carry out analyses of hydrocarbon reserves, with those in particular
countries requiring adjustment. It also used a range of statistical
approaches to assess the yet-to-find, and the logistic model to generate
future hydrocarbon production. As critics have pointed out, this study
did not explicitly include the effects of technology or price on the
assessments of regional and global ‘ultimates’. But the authors maintain,
with considerable supporting evidence, that price and technology have
only a limited effect on the size of these ‘ultimates’, at least as
they affect calculations of production peak date. [11]. L.F. Ivanhoe. Updated Hubbert
Curves Analyze World Oil Supply. World Oil, Vol. 217, No.
11, November, 1996, pp 91-94. Used USGS discovery data, and the fact
that production has to largely mirror discovery. A clear warning of
the problems to come. [12]. J.D. Edwards. Crude oil and
alternative energy production forecasts of the Twenty-First Century:
The end of the Hydrocarbon Era. AAPG Bulletin, vol. 81
pp1292-1305, 1997. A reasonable study, but limited by lack of access
to industry data, so arrives at a high global ultimate. [13]. The International Energy Agency ‘World Energy Outlook’; published Nov. 1998; ISBN 92-64-16185-6. Used
the 1994 USGS mean estimate for global conventional ‘ultimate’, of
2300 Gb, for its reference case. It also used a low case of 2000 Gb,
(based on the Petroconsultants report) and a high case of 3000 Gb
(based perhaps on Odell’s data). The rate of discovery that would
support the high case ‘ultimate’ was not examined. The study did not
specifically account for the impact of likely price and technology
developments, though it did examine the scope for non-conventional
oils to come onstream. [14]. L. Magoon. USGS Open File Report, 00-320 Version 1. The main USGS
2000 survey (Ahlbrandt et al.)
examined total oil available (basin ‘oiliness’), but did not look
in detail at the rate at which these resources can be discovered.
Magoon of the USGS endorsed data in the Scientific
American article by Campbell & Laherrère on the rate at which
the resources can become available. [15]. C.J. Cambpbell. Oil Reserves
and Depletion. PESGB Newsletter, Petroleum Exploration
Society of Great Britain, March 1999, pp 87-90. A partial update of
the 1995 Petroconsultants report. It analysed polar & deepwater
oil separately, but added these back in the full analysis. [16]. A.A. Bartlett. An analysis of
US and world oil production patterns using Hubbert-style curves. Mathematical Geology, 32/1, pp1-17,
2000. Bartlett does not have access to the industry data, sopredicted
peak based on these two assumed values for the conventional ‘ultimate’. [17]. The International Energy Agency. ‘World Energy Outlook’, 2000. Used the USGS 2000 survey mean oil-plus-NGLs
‘ultimate’, including reserves growth, of 3345 Gb. The IEA state that
such data are “authoritative”, but, as mentioned above, the data pay
no attention to the rate that such oil can be discovered. Note
that USGS 2000 data include a large allocation for reserves growth,
contrary to the decision of the previous survey. The USGS team has
subsequently re-evaluated its approach of basing global reserves growth
on the US’ experience. [18]. US Energy Information Administration website, 2001. Uses the USGS 2000
mean ‘ultimate’ of for conventional oil (excluding NGLs, but including
reserves growth), of 3003 Gb. If the world decline rate is taken as
2% p.a., this puts peak at 2016. If a much steeper (probably unrealistic)
decline rate of 10%p.a. is assumed, this puts the peak later, at 2037.As
with the IEA 1998 World Energy Outlook above, this study
uses USGS 2000 survey results in an uncritical manner, both on the
rate of discovery of oil, and on the scope for reserves growth outside
the U.S. [19]. K.S. Deffeyes. ‘Hubbert’s Peak’,
Princeton University Press, 2001; ISBN 0-691-09086-6. Uses a range
of statistical techniques, based, essentially, on the discovery trend
curve indicating the likely ‘ultimate’. This study has no direct access,
we believe, to the industry database. [20]. M.R. Smith. Analysis of Global Oil Supply to 2050. Consultancy
report from The Energy Network,
March 2002. Production estimates are based on detailed country by
country exploration analyses, and use individual depletion curves
to meet calculated ‘ultimates’, rather than simple ‘mid-point peaking’.
Includes data on the non-conventionals, and expected oil price forecasts.
Global ultimate is 2180 Gb,making the global peak in 2011 if global
demand is assumed to rise by 2%/yr.; or 2016 at 1%/yr. growth. [21]. ‘Nemesis’, in a contribution in ASPO/ODAC Newsletter, Issue
15, March 2002. This study generates a range for the dates
of peak production, based on cumulative production to-date;
plus reserves and ‘net discovery’ data from Campbell and BP’s Schollnberger.
This approach avoids the need to use specific estimates of ‘ultimate’,
but yields the approximate ‘equivalent ultimates’ listed in the Table. The ‘Club of Rome’ Report: Limits to Growth Because of its
importance in many people’s perception of resource limits, it is useful
here to also discuss the Club of Rome report: The
Limits to Growth, (D.H. Meadows, D.L.
Meadows, J. Randers and W.W. Behrens III,
Earth Island, 1972.) This report was
a key contributor to the 1970’s understanding that resources are finite;
that man’s use of these could reach limits within comprehensible time
spans; and that the complex interactions between resources, population,
capital and pollution demanded system
thinking if a proper understanding is to result. Prior to the report,
oil use had been growing at around 7% per year, and the calculations
of the Club of Rome correctly showed that if this sort of growth rate
were to continue, a resource base of almost any feasible size would
be exhausted in a surprisingly short time-span. The lesson, still
true today, is that unfettered exponential growth is unsustainable. The
authors gave a table (p 58) listing the then-current
proved reserves of various minerals, including oil at 455 billion
barrels. The authors recognised that the figure they gave for each
mineral represented only the resource discovered so far, and suggested
that a larger amount, up to perhaps six times as much, might represent
the total useful quantity of that mineral. (In oil’s case, co-incidentally,
six times 455 Gb is roughly correct for conventional oil’s original
endowment, i.e.,‘ultimate’). But
the authors made no use
of these current resource numbers in their modeling. Instead they
assumed, in their 'standard computer run', that all non-renewable
resources, lumped together, had a resource base in 1970 of 250 years'
supply at 1970 rates, (p 126). The standard run then showed that society
would collapse in less than a hundred years due to resource depletion,
itself driven by: - population
growth, - compounded
by an increasing per capita use of non-renewable resources, - and
further compounded by the assumption that the material capital to
extract the Finally
a point is reached where too little capital is left for future growth,
as investment cannot keep up with depreciation (p 125), and the industrial
base collapses, taking food and service production with it. If the
authors doubled the resource base (p 127), society still collapsed,
now primarily due to pollution limits, but also to severe restraints
on resource availability. Interestingly,
in the sequel: Beyond the Limits
(D.H. Meadows, D.L. Meadows, J. Randers; Earthscan, 1992), estimates
are given for oil's ultimately recoverable
reserves (as opposed to then-current proved reserves given in the
previous book), an acceptable range of 1,800 - 2,500 billion barrels
(Table 3-2, p 71). But the authors appeared unaware of the Hubbert
'peaking from the mid-point' argument. Overall, the key
perceptions about the Club of Rome’s report
(despite the details of its simulations) are that, since no major
resource shortages have appeared, the report must be fundamentally
flawed; that forecasting resource limits is a fool's game; and that
man's ingenuity and skill will always overcome the outdated Malthusian
nightmares of resource depletion. The report is due for re-consideration. 1. Numerous references. Recent
ones include: Lord Lawson to a British meeting of energy economists;
and BP’s Professor Peter Davies in the 2002 UK House of Lords report
(op. cit., p 79). 2. Other influential books from the 1970’s, at
least on this side of the pond, include: - G. Foley, with C. Nassim. The Energy Question, Penguin Books, Middlesex,
~1975. This contains a fascinating discussion of the then-generally
available data on oil resources; including an early understanding
of apparent discrepancies in the data from Professor Odell. - J.G. McMullan, R. Morgan and R.P. Murray. Energy Resources and Supply, Wiley, 1976.
This has an excellent graph, Figure 1.3, showing the possible future
production from a wide range of fuels, including fission and fusion.
For conventional oil it shows a peak soon after the year 2000. (Professor
John McMullan is now at Ulster University, and was Chairman of the DTI’s ‘Foresight Programme’ Energy
Futures Task Force); - G. Leach et al. A Low Energy Strategy for the United Kingdom, Science Reviews, London,
1979, ISBN:
0-905-927-20-6. Page 9 has: “Forecasts show energy needs rising implacably,
with widening energy gaps appearing around the turn of the century
as oil and gas production begin to decline.”
(Gerry Leach is now with the Stockholm Environment Institute,
and is based in London.) Updated: 23/April/2002 |