Submitted by Econbrowser

Stuart Stanfiford and colleagues continue to provide a great service for the rest of us in compiling the facts about new oil discoveries.

Here at Econbrowser we have often made use of independent efforts by Cambridge Energy Research Associates and Chris Skrebowski to compile data on all the major new oil projects around the world. This is in principle quite doable, since press releases about these projects are invariably provided by the companies and countries involved. But collecting all of this separate information together into a single database in order to document the historical and future trends is a rather daunting task.

Several of the authors at the Oil Drum have launched a Wikipedia project in which they and a number of other diligent souls are collecting this information and making it accessible for everybody. The basic data assembled are intended to include all of the significant projects that would add new oil production capacity, including, when available, estimates of the peak flow anticipated from that project.

Although this is an ongoing effort, the graph below summarizes the current estimates, which show a big surge in new projects currently scheduled to begin production in 2008.

Gross additions to new liquids production capacity in thousand barrels per day. Horizontal axis: year in which project begins producing. Vertical axis: total peak flow eventually predicted for projects that begin in that year. Source: Wikipedia Oil Megaprojects.

The additions will come from a number of different countries, with Saudi Arabia, Russia, Angola, Nigeria, Mexico, Brazil, and Kazakhstan accounting for about half of the 2008 additions. The graphic below identifies the relative contributions of different countries to the cumulative gross increase over 2003-2018.

Contributions from individual countries to gross additions to new liquids production capacity over 2003-2018. Source: Wikipedia Oil Megaprojects.

This of course does not mean that actual oil production will increase by over 7 million barrels per day next year. Because production from older fields naturally declines as the oil is removed, we need to find something like 3-1/2 million barrels per day in new production each year just to keep global production from falling. And although the projects identified above as having a 2008 start-up are supposed to begin production next year, production at the peak levels reported above is often not anticipated until 2010 or later. Stuart further cautions:

The wave of oil in 2008 is a prominent feature of the tables at present, and I’m sure will give great comfort to late-peakists. It’s perhaps a bit premature to put too much store in it yet. The years 2007, and especially 2008 are different from 2003-2006 in several important ways. One is that they’ve been largely compiled by different people, and the process might be at different stages of completeness. The other is that 2008 project schedules could still incorporate a certain amount of hope likely to be dashed by the usual complications that enter into all project schedules as they make contact with the real world. So some fraction of 2008 projects, and a much smaller fraction of 2007 projects, will get delayed. The past is less subject to unexpected delays.

Still, these numbers convince me that we are likely to see a significant increase in production in 2008, and an economic downturn would surely produce a drop in demand. I’m standing by the assessment I offered last month: for the time being, oil prices have peaked.

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