Peak Oil Versus Peak Net Exports--Which

Should We Be More Concerned About?

Jeffrey J. Brown, Samuel Foucher, PhD,
Jorge Silveus
Three Key Topics
! Peak Oil Versus the Export Land Model
! Actual Net Export Decline Case Histories
! Projections for the (2005) Top Five Net
Oil Exporters and for Global Net Oil
Exports
Note: Principal data sources are the EIA and BP data bases
Two Peak Production Case Histories:
Texas and North Sea Crude Oil Production
1999 North Sea Peak
1972 Texas Peak
Texas Crude Oil Production (1962-1982) and North
Sea Crude Oil Production(1989-2009) Versus US
Oil Prices
Texas and North Sea Exponential Rates of Change
(ROC) Relative to Their Production Peaks
Texas
North Sea
R
a
t
e

o
f

C
h
a
n
g
e

(
%
/
y
e
a
r
)

Texas production fell at 3.7%/ year from
1972 to 1982, resulting in 1982 production
being 31% below the 1972 rate.
North Sea production fell at 4.8%/year from 1999 to
2009, resulting in 2009 production being 38% below the
1999 rate.
Three Primary Factors That Control
Net Export Declines
! Consumption as a
percentage of production at
final production peak
! Rate of change in
production
! Rate of change in
consumption
Export Land Model (ELM)
Exponential Rate of Change in Production,
Consumption and Net Oil Exports by Year, Relative to
Final Production Peak, for Export Land
-12.8
-28.8
-40
-30
-20
-10
0
10
0 1 2 3 4 5 6 7 8 9
%
/
y
e
a
r

Year
Net Exports rate of change
Production rate of change (-5)
Consumption rate of change (2.5)
Export Land
Net Export Fuel GaugeTotal Post Peak Cumulative
Net Exports (CNE)
Post Peak CNE 60%
Depleted 3 Years
into a 9 Year Decline
Annual Volume Down by
40% From Peak.
Three Primary Characteristics of Net
Export Declines:
! The net export decline rate tends to exceed the
production decline rate
! The net export decline rate tends to accelerate
with time
! Net export declines tend to be Front-end
loaded, with the bulk of post-peak net exports
being shipped early in the decline phase
Country
C/ At I|na|
roducnon
eak
5|mp|e ercentage
Changes & kates of
Change |n C, & NL
Cver NL Dec||ne
ears to CNL "na|f
L|fe" (ost-eak
CNL At Least 50
Dep|eted)
ears Aher eak
to C/ = 100
(2ero Net Lxports)
"Lxport Land" 30
C: +30 (+2.3/
vear)
: -33 (-3.0/vear)
nL:-100 (-26.3/
vear)
3 ?ears (CnL 60
uepleLed)
9 ?ears
Indones|a 33
C: +44 (+4.3/
vear)
: -26 (-2.6/vear)
nL:-100 (-23.3/
vear)
3 ?ears (CnL 33
uepleLed)
9 ?ears
Uk 39
C: +3 (+0.3/vear)
: -38 (-7.2/vear)
nL:-100 (-31.0/
vear)
2 ?ears (CnL 33
uepleLed)
6 ?ears
Export Land, UK and Indonesia Net Oil Export Comparisons
C = Consumption; P = Production; NE = Net Exports
CNE = Cumulative (Post-Peak) Net Exports
lndonesla & uk Lxponenual 8aLes of Chanae roducuon,
Consumpuon, and neL LxporLs 8elauve Lo llnal roducuon
eaks
-0.7
-2.6
9.7
4.3
-14.0
-23.3
-40
-30
-20
-10
0
10
1994 1993 1996 1997 1998 1999 2000 2001 2002 2003

/
y
e
a
r

ear
Indones|a
-8.7
-7.2
-1.4
0.3
-20.3
-30.1
-40
-30
-20
-10
0
10
1999 2000 2001 2002 2003 2004 2003

/
y
e
a
r

ear
Un|ted k|ngdom
Consumption
Production
Net Exports
UK
Net Export Fuel GaugeTotal Post Peak Cumulative
Net Exports (CNE)
Post Peak CNE 53%
Depleted in 2 Years
Annual Volume Down by
27% From Peak.
Indonesia
Net Export Fuel GaugeTotal Post Peak Cumulative
Net Exports (CNE)
Post Peak CNE 53%
Depleted in 3 Years
Annual Volume Down by
27% From Peak.
2009 Lxponenual 8aLes of Chanae (8elauve Lo rlor roducuon eaks, Whlch
Mav or Mav noL 8e llnal eaks) ln Consumpuon, roducuon, and neL LxporLs
for 16 Cll Lxporuna CounLrles showlna Muluvear roducuon uecllnes
-23 -20 -13 -10 -3 0 3 10
LavpL (1993)
Malavsla (2004)
uenmark (2004)
Mexlco (2004)
?emen (2002)
Svrla (2001)
Lcuador (2006)
Araenuna (1998)
Saudl Arabla (2003)
LquaLorlal Culnea (2003)
nlaerla (2003)
norwav (2001)
venezuela (1998)
Cabon (1996)
Cman (2001)
Colombla (1999)
neL Lxp
Consumpuon
roducuon
-10.7
-3.2
-0.2
2.3
-12.3
-4.3
-40
-30
-20
-10
0
10
1998 2000 2002 2004 2006 2008 2010

/
y
e
a
r

ear
Venezue|a
-2.4
-3.4
3.9
6.9
-3.8 -6.3
-40
-30
-20
-10
0
10
2003 2006 2007 2008 2009 2010

/
y
e
a
r

ear
5aud| Arab|a
Consumption
Production
Net Exports
venezuela & Saudl Arabla Lxponenual 8aLes of Chanae
roducuon, Consumpuon, and neL LxporLs 8elauve Lo
roducuon eaks
-2.0
-6.1
7.9
4.6
-3.4
-12.3
-40
-30
-20
-10
0
10
2002 2003 2004 2003 2006 2007 2008 2009 2010

/
y
e
a
r

ear
emen
-3.3
-1.6
3.4
3.0
-13.4
-21.7
-40
-30
-20
-10
0
10
1994 1996 1998 2000 2002 2004 2006 2008 2010

/
y
e
a
r

ear
Lgypt
?emen & LavpL Lxponenual 8aLes of Chanae roducuon,
Consumpuon, and neL LxporLs relauve Lo roducuon eaks
Consumption
Production
Net Exports
Actual and Projected Production, Consumption, and
Net Exports for Saudi Arabia
(Projections Based on Data Through 2006; 2007-2009 Actual Data Points Circled)
Consumption
Production Net Exports
Dashed Lines are 95% Confidence Intervals
Dashed Lines are 95% Confidence Intervals
Saudi Net Exports (2002-2008)
Versus US Oil Prices
2002
2006
2008
2007
2005
2004
2003
Dashed Lines are 95% Confidence Intervals
Production
Consumption
Dashed Lines are 95% Confidence Intervals
Net Exports
Actual and Projected Production, Consumption, and
Net Exports for (2005) Top 5 Net Exporters
Dashed Lines are 95% Confidence Intervals Dashed Lines are 95% Confidence Intervals
Production
Consumption
Net Exports
Projected (2005) Top 5 Net Exporters
Net Export Fuel GaugeTotal Post Peak Cumulative
Net Exports (CNE)
Post Peak CNE 53%
Depleted by End of 2012
Annual Volume Down by
34% From Peak.
Canadlan non-Convenuonal Cll Lo Lhe 8escue?
neL Cll LxporLs from venezuela and Canada
1998 - 2009
0
300
1000
1300
2000
2300
3000
3300
4000
1996 1998 2000 2002 2004 2006 2008 2010
venezuela
Canada
Sum
Rising Net Oil Exports from Canada have not even been able to offset the
decline in Net Oil Exports from Venezuela. Their combined Net Oil Exports
have fallen from 3.8 mbpd in 1998 to 2.8 mbpd in 2009.
90
100
110
120
130
140
130
160
170
180
190
200
210
1996 1998 2000 2002 2004 2006 2008 2010
N
o
r
m
a
|
|
z
e
d

1
o
t
a
|

C
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|

C
o
n
s
u
m
p
n
o
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ear
Total Oil Consumption (1998-2009) By Five Net Oil Importers
China, India, Kenya, Morocco & the US
(1998 consumption = 100, EIA)
India
u.S.
Morocco
Kenya
China
Global Net Exports
(Top 33 Net Oil Exporters, 100,000 bpd or more of
net exports in 2005)
ear
roducnon
()
Consumpnon
(C)
Net
Lxports
(NL)
C/
Ch|nd|a's
Net
Imports
Ch|nd|a's Net
Imports As a of
G|oba| NL
2005 62.2 mbpd 16.2 mbpd
46.0
mbpd
26.1 3.2 mbpd 11.3
2006 62.3 16.3 46.0 26.3 3.3 12.0
2007 62.2 17.0 43.2 27.4 6.1 13.3
2008 62.7 17.3 43.2 28.0 6.6 14.6
2009 60.3 17.3 42.8 29.1 7.3 17.1
At the 2005 to 2009 rate of increase in consumption,
top 33 net exporters consumption in 2015 would be 19.6 mbpd
Scenario One for 2015
Assume Production Declines 5% from 2005 Level (0.5%/year),
Consumption = 17.5 mbpd (2009 level)
! roducuon: 39.1 mbpd
! Consumpuon: 17.3
! neL LxporLs: 41.6
! Chlndla's ro[ecLed*
Share (12.1 mbpd): 29
! A 3 decllne ln
producuon causes neL
exporLs Lo drop 9.6, ln
slmple percenLaae
Lerms relauve Lo 2003.
Avallable" neL LxporLs,
excludlna Chlndla's
pro[ecLed share, drop
bv 28 (40.8 mbpd Lo
29.3 mbpd).
*Based on Chindias 2005 to 2009 rate of increase in net oil imports (BP)
Global
2005 Net Oil Exports
(Top 33): 46.0 mbpd
Projected 2015 Global
Net Oil Exports
Scenario One: 41.6 mbpd
(Down 9.6% from 2005)
Chindia
11%
Non-Chindia
40.8 mbpd
Chindia
29%
Non-Chindia
29.5 mbpd (Down
28% from 2005)
Scenario Two for 2015
Assume Production Declines 5% from 2005 level (0.5%/year),
Consumption Increases to 19.6 mbpd
! roducuon: 39.1 mbpd
! Consumpuon: 19.6
! neL LxporLs: 39.3
! Chlndla's ro[ecLed*
Share (12.1 mbpd): 31
! A 3 decllne ln
producuon causes neL
exporLs drop 14, ln
slmple percenLaae
Lerms, relauve Lo 2003.
Avallable" neL LxporLs,
excludlna Chlndla's
pro[ecLed share, drop
bv 33 (40.8 mbpd Lo
27.4 mbpd)
*Based on Chindias 2005 to 2009 rate of increase in net oil imports (BP)
Global
2005 Net Oil Exports
(Top 33): 46.0 mbpd
Projected 2015 Global
Net Oil Exports
Scenario Two: 39.5 mbpd
(Down 14% from 2005)
Chindia
11%
Non-Chindia
40.8 mbpd
Chindia
31%
Non-Chindia
27.4 mbpd (Down
33% from 2005)
Global Net Exports Summary
If we extrapolate the 2005 to 2009 rate of
increase in consumption by the exporting
countries out to 2015 and if we extrapolate
Chindia's 2005 to 2009 rate of increase in net
imports out to 2015, and if we assume a very
slight production decline among the exporting
countries (0.5%/year from 2005 to 2015), then
for every three barrels of oil that non-Chindia
countries (net) imported in 2005, they would
have to make do with two barrels in 2015.
Whats the Good News?
Our forecast is that the US, and many
other developed oil importing
countries, are well on their way to
becoming "free" of their dependence
on foreign sources of oil--just not in
the way that many people anticipated.
Electrified Transportation in San Angelo, Texas, Circa 1908