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Total CEO Predicts Approach of Peak Oil

hydrocarburesThe CEO of Europe’s third largest energy group predicts the world will never be able to produce more than 89 million barrels of oil a day, says the Financial Times.

Christophe de Margerie, Total’s Chief Executive, noted that the economic crisis makes it harder to finance both the production of existing reserves as well as the development of new sources. Citing the high costs of developing Canadian tar sands and political restrictions in Iran and Iraq, he predicts expensive and environmentally challenging projects will continue to be delayed. Meanwhile older fields in the North Sea will decline in production as their oil becomes more expensive to produce.

Three years ago, the International Energy Agency (IEA) predicted rates of 130m b/d by 2025. It has since revised that forecast down to just over 100m b/d by 2030.

Last week, the IEA dropped its forecast for 2009 down to  84.7 million barrels a day, predicting global demand will fall 1.2% this year, the biggest annual drop in 27 years.

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One thought on “Total CEO Predicts Approach of Peak Oil

  1. Any discussion about oil prices over the next decade must include an attempt to quantify emerging economy demand as an important driver at the margin. Here is a simple thought experiment using Chinese demand to give some idea of the magnitude of the supply issues we face:
    – China moves from 3 bbls/person/year to the South Korean per capita consumption level of 17 bbls/person/year
    – Transition takes 30 years
    – No peak in global production

    In next 10 years we must find 44 million BOPD. If you superimpose peak production on top of this demand profile using the following parameters oil prices would increase approximately 250% in real terms over next 10 years:
    – Oil demand elasticity of -0.3
    – Current production 84 million BOPD, current price US$ 80
    – Peak production 100 million BOPD
    – Post peak decline rate of 3-4%

    If you want to try the model for yourself using your own assumptions it can be found at: http://www.petrocapita.com/index.php?option=com_content&view=article&id=128&Itemid=86

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