The Sunday Times ran an article headed “There’s plenty of oil, says study that debunks peak oil theory” last weekend.

According to a study by a group called Cera (Cambridge Energy Research Associates), the rates of decline are only 4.5% a year, almost half the rate previously believed. The group is particularly upbeat about the oil market, predicting that oil output will continue to rise over the next decade. So confident are they that Peter Jackson, author of the report, said: “We will be able to grow supply to well over 100 million barrels per day by 2017.”

The theory of peak oil – the point in time at which the maximum global petroleum production rate is reached, after which the rate of production enters its terminal decline. [wiki] was first used by Hubbert, who accurately predicted as early as 1956 that United States oil production would peak between 1965 and 1970. According to the Hubbert model, the production rate of a limited resource will follow a roughly symmetrical bell-shaped curve based on the limits of exploitability and market pressures.

The majority of studies and theories around peak oil project a peak between 2010 and 2020 [Andrews Paper, ASPO] According to the peak oil pundits, oil production in 33 out of 48 countries has now peaked, including Kuwait, Russia and Mexico – there is a problem. The world might not be running out of oil itself, but it is losing its ability to produce high-quality cheap and economically extractable oil on demand. After more than fifty years of research and analysis on the subject by the most widely respected & rational scientists, it is now clear that the rate at which world oil producers can extract oil is reaching the maximum level possible. This is what is meant by Peak Oil. [oildecline]

Worldwide discovery of oil peaked in 1964 and has followed a steady decline since. According to industry consultants IHS Energy, 90% of all known reserves are now in production, suggesting that few major discoveries remain to be made. There have been no significant discoveries of new oil since 2002.

It’s interesting then, that Cera - an IHS company – is now calling the above claim into question, and even more interesting that the chairman of Cera has a leadership role in the global energy industry and recently served as Vice Chair of the new National petroleum Council study [cera]

According to ASPO USA, Cera has “put more spin on this report than Tiger Woods drops on a sand wedge”, although they do credit it as an intriguing look at the critical topic. Cera looked at 811 fields, half large, half small, in its proprietary data base, and concluded that the global decline rate is 4.5% per year. Many in the peak oil community think this number is too low by half—Schlumberger CEO Andrew Gould used 8% in a corporate newsletter last spring.

According to the article by ASPO USA: "Of Cera’s 811 fields, only half have entered their decline; the rest are new fields that are still ramping up or on their maximum production plateau. In other words, what Cera calls its “aggregate global production decline” is an average of new deepwater fields, young pups, mature giants, and sclerotic geriatrics.

When Cera looks just at fields that have passed peak, its results resemble those so often quoted on peak oil websites. To wit, of 308 Non-OPEC “post-plateau” fields, the average decline is 8%. Of 209 post plateau offshore fields, the average decline rate is 10%; 29 deepwater fields are declining at 18%.

The Rule of 72 tells us that an 18% decline costs you half your output every four years. A decline that steep is like a gunshot wound to the abdomen: you are bleeding out.

But fear not, says Cera. Yes, 23 Norwegian fields are declining at 13%, but the good news is that “four of the seven largest producing countries (China, Mexico, Russia, and Saudi Arabia) are below 10 percent….There is no looming crisis linked to rapid depletion of the global reserves base.” In other words, get a life, you doomers!" [aspo-usa]

More worrisome was the implication implicit in the quotes of the article by BP that the cause for peak oil, if there is one, could come as a result of climate policies, rather than as a result of loss of supply. In other words, it is the above-ground risks that influence the rate (of oil output). [timesonline]