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Merrill: Non-OPEC Peak Oil May Be Past
In February Merrill Lynch analysts issued a report saying that non-OPEC oil production may have already peaked. “In summary, assuming the ongoing recession does not turn into a multi-year event where global oil demand is pushed down structurally for the next five years, the steep decline rates in OPEC and non-OPEC countries alike could put upward pressure again on oil prices as soon as 2010 or 2011.” Here are two press reports:
Thomson Financial News
STOCKS NEWS US-Merrill: Non-OPEC oil production may have peaked
02.03.09, 02:25 PM EST
Merrill Lynch on Tuesday said that crude oil production from non-OPEC nations may have already peaked, nothing that oil production decline rates were a function of investment rates, as well as the size and age of oil fields. ‘All these factors point to steeper oil output declines going forward,’ the firm wrote.
The International Energy Agency expects an increase in non-OPEC output of 51 million barrels per day over the next seven years, the firm said, while it sees production in the range of 49 million to 50 million barrels a day in the same period.
‘Should the credit crunch push decline rates to 6 percent, however, non-OPEC production could decline precipitously toward million barrels per day by 2015 from the current levels,’ it wrote.
Has non-OPEC oil production peaked?
Source: BI-ME , Author: BI-ME staff paper out today from Merrill Lynch says the combination of low oil prices and a global credit crunch will prove rather damaging for the oil industry. Its analysis based on the IEA Field by Field Production database finds decline rates at an average of 4.2% per annum since 2003.
Extrapolating from this sample to create a global production profile, the bank believes the global decline rate has averaged at least 4.5% year on year in recent years. These rates, however, could accelerate further over the next few years, according to Francisco Blanch, Head of Global Commodities Research and lead author of the report. Furthermore non-OPEC crude oil production may have already peaked.
Broadly, oil production decline rates are a function of investment rates and the size and age of fields. All these factors point to steeper oil output declines going forward. However, the IEA works under the assumption of oil production decline rates of 4.7% to 2015, expecting an increase in non-OPEC output to 51 million bpd over the next seven years.
In contrast, in Merrill’s base case scenario it estimates output decline rates of 5%, and it sees non-OPEC oil production stuck in the current 49 to 50 million bpd range in the same period. Should the credit crunch push decline rates to 6%, however, non-OPEC production could decline precipitously towards 47 million bpd by 2015 from the current levels. The commodity super-cycle is not over, just resting.
In summary, assuming the ongoing recession does not turn into a multi-year event where global oil demand is pushed down structurally for the next five years, the steep decline rates in OPEC and non-OPEC countries alike could put upward pressure again on oil prices as soon as 2010 or 2011.
In particular, if the low oil price, high cost of money environment persists for most of this year and next, Merrill’s base case scenario for non-OPEC production could prove optimistic, exacerbating the second leg of the commodity super-cycle.
Tags: peak oil investments
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2 responses so far ↓
1 Karol // Apr 16, 2009 at 4:13 am
WILD AGAIN
So the way I understand this is:
Oil production is dropping for two major reasons, first there’s less oil to bring up and second there’s less money being spent to bring it up.
This means oil will cost more right?
Maybe not so…less demand could simply sent the price down…you know, its becoming a green world out there.
But then again when there is less demand and less oil to be had there will come a time when the price of oil will be like a race horse called “Wild Again”.
Now I don’t know how many of you readers have ever heard of the horse “Wild Again” so I’ll tell you it won the first Breeder’s Cup. And it made the three owners a cool million or so on the betting. But dig this!!! The horse never won another race. It was put out in the pasture to graze and grow old living it’s life in a way many men dream of. “Wild Again” made more money for its owners in retirement then it did on the track. Mares and fillies where brought in from all around the world and the cost for “Wild Again” service? Well, you take a guess. What will oil cost when demand is high and less and less and less is to be found? People want the best of the best. Oil Sands don’t do the justice of light sweet crude. Just as any male horse won’t do as a winning stallion will. Granted oil is just a beast of burden. Take your pick. What about batteries?
There’s going to be a break out when the gates open…have you placed you bet ?
2 Karol // Apr 19, 2009 at 4:11 am
The return of the rubber band:
Yes, non-opec peak oil may be history. And, I still always enjoy studying history.
Well, please let me take you to a “some place” in the vast water blue. Let me take you to the ocean where Darwin observed a couple things. Let me take you to Somoa.
My research has led me there. Somoa never had any oil of it’s own. What Somoa does have today is the same thing it has had since it rose from the bottom of the sea. It has lots of water and it has lots of sunshine and wind.
Now what does a rubber band has to do with anything in Somoa?
Well, a rubber band can store energy. The rubber band was the first thing that I as a kid learned could make wonders happen with stored energy.
So in today’s world I’m looking at the art of storing energy. Mother Earth stored oil. So I’ve leaped froged to gravity energy accumulators.
The idea is that if there is a power source giving to much power at one point in time and then …you guessed it … not enough at another, how can the energy be store?
P.S. check out WindJet Energy
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