PEAK OIL:  MYTH VS. REALITY
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PEAK OIL: MYTH VS. REALITY Presentation to DENVER WORLD OIL CONFERENCE November 10, 2005 By PowerPoint PPT Presentation


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PEAK OIL: MYTH VS. REALITY Presentation to DENVER WORLD OIL CONFERENCE November 10, 2005 By Henry Groppe. PEAK OIL: MYTH VS. REALITY. Major Myths and Misperceptions There can be meaningful discussion of future oil supply and demand unrelated to its price.

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Peak oil myth vs reality presentation to denver world oil conference november 10 2005 by

PEAK OIL: MYTH VS. REALITY

Presentation to

DENVER WORLD OIL CONFERENCE

November 10, 2005

By

Henry Groppe


Peak oil myth vs reality presentation to denver world oil conference november 10 2005 by

PEAK OIL: MYTH VS. REALITY

Major Myths and Misperceptions

  • There can be meaningful discussion of future oil supply and demand unrelated to its price.

  • The future of oil can be forecast as a straight line extrapolation of trends most recently experienced.

  • Reliable oil production forecasts can be derived from reserve data.

  • Geologists’, companies’ and governments’ forecasts of the timing, cost and volume of oil production from major new resource discoveries and developments are reliable.

  • Exploitation of lower grade oil resources, i.e. – Canadian oil sands and heavy oil, Venezuela Orinoco heavy oil, Western U.S. oil shale, will replace depletion of conventional oil and grow world oil production.

  •   World oil production is on the verge of precipitous decline signaling the end of the economic world as we know it.

  •  World oil production will grow fifty percent during the next twenty-five years at a reasonable price through the application of continually improving technology and support continuing growth in world oil consumption.  

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Peak oil myth vs reality presentation to denver world oil conference november 10 2005 by

Reality

  • World crude oil production is peaking.

    • Depletion is real.

    • Exploration is a rational process.

    • Production will decline irreversibly.

  • Liquids from the growing international natural gas industry will supplement crude oil supplies.

  • High prices are required to constrain consumption. There is no such thing as scarcity and no such thing as surplus. There is only price.

  • Transportation is the dominant growing use for oil.

  • High cost oil will be replaced with cheaper natural gas and other substitutes in stationary fuel use in developing economies as occurred in OECD countries in the last oil crisis.

  • The world oil industry will continue to operate essentially at capacity with permanent major price volatility.

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Peak oil myth vs reality presentation to denver world oil conference november 10 2005 by

WORLD CRUDE OIL PRODUCTION

Million Barrels

Per Day

$/Barrel

Actual Forecast

Production

(Left Scale)

Arabian Light Price

(Right Scale)

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Peak oil myth vs reality presentation to denver world oil conference november 10 2005 by

NON-OPEC CRUDE OIL PRODUCTION

Million Barrels Per Day

(Excluding Eastern Europe)

Actual

Forecast

United States

Norway

& UK

Canada

Mexico

China

4


Peak oil myth vs reality presentation to denver world oil conference november 10 2005 by

EASTERN EUROPE PETROLEUM PRODUCTION,

CONSUMPTION & EXPORTS

Million Barrels Per Day

Production

Actual Forecast

Expectation with

no collapse of

Soviet Union

Deliveries

6.3

6.1

Net Exports

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Peak oil myth vs reality presentation to denver world oil conference november 10 2005 by

OPEC CRUDE OIL PRODUCTION

Million Barrels

Per Day

Actual Forecast

Iraq

Saudi Arabia

Kuwait

UAE

Other OPEC*

* Excludes Ecuador & Gabon who withdrew from

OPEC in 1993 & 1996 respectively and Indonesia

which will soon be a net importer.

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Peak oil myth vs reality presentation to denver world oil conference november 10 2005 by

WORLD PETROLEUM PRODUCTION

Million Barrels Per Day

Actual Forecast

EIA

78.5

79.0

Other *

76.1

65.8

67.9

NGL **

62.7

55.9

OPEC Crude Oil

40.4

36.0

Eastern Europe Crude Oil

25.5

29.8

Other Non-OPEC Crude Oil

* alcohols, coal liquefaction, and gas to liquids

** condensate, natural gasoline, butanes, propane, and ethane

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Peak oil myth vs reality presentation to denver world oil conference november 10 2005 by

WORLD PETROLEUM DELIVERIES

Million Barrels Per Day

Actual Forecast

82.5

81.7

65.9

57.5

37.6

Rest of

World

United States

20.4

18.9

15.1

15.2

Western Europe

8.6

8.9

6.2

Japan, Canada,

Australia & New Zealand

Includes crude oil, other liquids and processing gain

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Peak oil myth vs reality presentation to denver world oil conference november 10 2005 by

WORLD OIL USE BY SECTOR

Million Barrels

Per Day

Transportation

51%

Industrial &

Power

39%

Residential &

Commercial

10%

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Peak oil myth vs reality presentation to denver world oil conference november 10 2005 by

MUNICIPAL POLICIES FOR A HIGH OIL PRICE ENVIRONMENT

Improve transportation efficiency and mobility.

In particular, improve options and costs for low income employees who are automobile dependent for transportation to places of work.

Continue enhancing the environment for inner city and close in living.

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