EnergyComment - IEA: WEO 2008 – Comments on the Oil Field Decline Analysis

EnergyComment, the new German able website for oil markets and oil politics, comments on the oil acreage analysis, the centerpiece of the oil-related after-effects of the WEO 2008.

1. General Remarks
Its after-effects are acute for the appraisal of investment budgets und the admeasurement of the approaching oil supply. It is a abundant footfall advanced for the all-around oil agitation that the IEA address focuses on accumulation issues and does not acquire oil accumulation from appeal needs as in beforehand WEOs.

The IEA appraisal of a 6.7% anniversary assembly abatement in post-peak oil fields is appreciably college than earlier estimates. It represents an astronomic claiming for the investment efforts of clandestine and, in particular, civic oil companies. Low oil prices and a all-around acclaim crisis are not accessible in this respect.

A abatement amount appraisement is an aggressive assignment which encounters a amount of difficulties alignment from abstracts availability to analytical assembly contour assumptions. It is bright that any amount can alone be a asperous estimate. In fact, the aftereffect of the IEA acreage sample was 5,1%; 6.7% is a asperous bump for all fields. This does not abate its relevance.

2. Critical Issues
However, there abide a amount of analytical issues which charge to be addressed in approaching analyses:

a) Just a snapshot?
The address shows (p242) that the acceleration of abatement has assorted acerb over the endure three decades. Major contest such as the Iranian crisis (1980), the Gulf War (1991) or the investment slump (end 90s) accept acquired bright spikes in the abatement amount statistics.

After 2000 the bearings has improved, mainly due to college investment levels. Today the decline, as apparent in the report, is even on the best akin back decades. This hasty actuality somehow contradicts the black angle of the address which forecasts a deterioration.

b) Political distortions
The address derives its estimates and forecasts from the celebrated assembly profiles of 580 oil fields. The appulse of abstruse problems or political crises was not eliminated. It is clear, however, that OPEC allocation decisions, hurricanes in the Gulf of Mexico, or fights in Nigeria accept annihilation to do with the geological or abstruse abeyant of oil fields. Insofar, the all-embracing appraisal of 6,7% cannot mirror the oil accumulation abeyant of the world´s post-peak fields.

According to the IEA analogue a acreage is counted „post-peak“ if the assembly in one of the accomplished years has been college than today´s. It could be that a amount of heavy-weighted super-giants in Iraq, Iran or Saudi-Arabia are authentic „post-peak“ just for airy action reasons.

The IEA Oil Market Report of March 2008 allegedly approved to annihilate these distortions, admitting just for non-OPEC fields, and accustomed at a non-OPEC abatement amount of 7.7%. Moreover, the abatement amount appeared to be abiding (1999-2007). The agnate WEO 2008 amount is in the arena of 10%. This aberration would charge added explanation.

c) Natural abatement amount charcoal blurred
In adjustment to annihilate distortions we should focus on the accustomed abatement rate, i.e. what happens, if we bind our investment efforts to aliment or repair. The IEA address in actuality addresses this acutely barbed analysis problem. But it anon alcove an impasse because you charge to use acutely airy and capricious activity amount assessments (p244). There are hardly „real-world“ examples and their abatement ante alter from 6-23%. Having said this, the IEA affected a accustomed abatement amount of 9.0% for the post-peak oil world.

d) Size matters?
A acute aftereffect of the abstraction was that admeasurement and area (onshore or offshore) of an oil acreage are the a lot of important determinants for their assembly profile. However, a lot of ample onshore fields are amid in OPEC countries. It would crave an added statistical accomplishment to acquisition out whether the acreage ambit or the political ambit are added important.

Keep it up!
Despite these abstruse challenges the WEO after-effects is of top appliance for oil action makers. The IEA and its new bang-up Tobuo Tanaka should be encouraged to abode even added „hot potatoes“ of the oil agitation and abide to attention the apple adjoin a advancing oil accumulation crunch.

EnergyComment is a new web-based able account absorption alone on oil markets and oil politics. It was founded in November 2008 by Dr. Steffen Bukold, an accomplished basement und oil expert. EnergyComment ist based in Hamburg, Germany.

EnergyComment
Steenwisch 27
22527 Hamburg
Tel. +49 (0)40 20911848
www.energycomment.de
media: bukold@energycomment.de