It comes from a presentation made by the US Energy Information Administration (EIA). It’s one of the slides from a PowerPoint presentation (here as a pdf) made by EIA director Glen Sweetnam at the group’s April 2009 Energy Conference.
The event was a round table conference, moderated by Sweetnam, involving energy analysts David Knapp (chief editor of Oil Market Intelligence for the Energy Intelligence Group) and Fareed Mohamedi (partner and the head of markets & country strategies at PFC Energy), along with Eduardo González-Pier (executive advisor to the director general of Mexico's state-owned petroleum company Pemex).
A transcript of the discussion is available on the EIA site, which features discussion centered around the 27-slide PowerPoint. The diagram produced above, World’s Liquid Fuels Supply, is the elephant in the room. No-one brings up the stark observation that it clearly projects oil peaking in 2012 and immediately declining sharply, and that this fall in production is vividly contrasted against a line showing rising demand. The widening distance between the two is marked ‘unidentified projects.’
Considering that the diagram cites Opec and non-Opec conventional and unconventional petroleum - and non-petroleum - fuels, it’s hard to say what is meant by ‘unidentified projects.’ Is it there to admit desperation, or is ‘unidentified projects’ some kind of code for the energy gap we will experience after peak oil? (Before you laugh, consider that the EIA is the American government’s political football, having been allegedly forced to lie about remaining world oil reserves and climate change – so letting this slide out is probably a way of letting an informed audience know that, Hey, we’re not stupid, we can see what’s going on, even if we are not allowed to admit it to the masses.)
Essentially, according to this chart the EIA expects global oil supply to decline by about 2 per cent per year, commencing 2012 (with supply dropping from 87 million barrels per day in 2011 to 80 million by 2015, then down to 60 million by 2022, 50 million by 2028, and so on) while demand rises to 100 million barrels per day by 2026, and upwards. By 2028, demand will be more than double the available liquids – demand around 102 million but with only 50 million available.
It’s simpler to say that, according to this EIA projection, by 2016 there will be a gap between supply and demand of 10 million million barrels per day. And the EIA has absolutely no idea how that shortfall will be met.
This does not get mentioned, directly, in the round table discussion – according to the official transcript, anyway. The nearest is in the form of comments by Fareed Mohamedi:
But we do have sort of a peak capacity world view and we have the droppingThe nearest this comes up in the subsequent debate is when Sweetnam, talking about the relationship between prices and production levels, asks Mohamedi “. . .based on what you just said, I assume you’re going to be a little bit skeptical about the 119 million barrels a day?”
non-OPEC and then in a sense OPEC after a few years, maybe after 2020 now,
struggling in a sense to keep up with global liquids demand. And we’ll get into
some of that later. And then the entire demand picture, we have also…we struggle
to try to fill in the gap, and if that demand growth continues. So we’ve been
struggling, we’ve done forecasts out to 2040 and just struggled to find the
different fuels that will power that.
Absolutely. I mean that…I don’t think we’re going to see that, in our thinking.Again, it seems to be a coded discussion - an I know that you know kind of thing. Mohamedi is pointing out an inherent contradiction in the EIA presentation – on one hand Sweetnam is talking about rising oil prices, and on the other, abundant supplies. This to and from between Sweetnam and Mohamedi just enough so that an informed audience is aware that these people aren’t stupid.
Also with the price graph that you have, we think that if you are so optimistic
on supplies, then why do you have such a…your two dominant scenarios are prices
going straight up. And that actually usually …with sufficient supplies you could
see actual prices down or at least OPEC struggling to try and keep it at current
levels or even a little higher.
What’s interesting is that the EIA officially goes out of its way to dismiss suggestions of imminent peak oil, saying we don't have to worry for another 30 or 40 years. According to a 2004 paper, Long Term World Oil Supplies, published on its official website:
In any event, the world production peak for conventionally reservoired crude isIt looks like there is the information the EIA has to publish, to keep the politicians happy, and then there is the information that some of the members believe to be the truth – and occasionally manage to slip out, as an act of defiance, or just professional pride.
unlikely to be "right around the corner" as so many other estimators have been
predicting. Our analysis shows that it will be closer to the middle of the 21st
century than to its beginning.
As an aside, PFC Energy – which was represented by Fareed Mohamedi, above – made its own peak oil prediction in a paper supplied to the three-day International Energy Forum meeting in Cancun, Mexico, in March this year. This predicted “liquids output at 89.8 mmb/d in 2030, after peaking between 2020-2025 around 95.0 mmb/d.”
What’s particularly interesting about this is that their diagram, below, suggested demand, if it continues at 1.5 per cent, outstripping supply slightly ahead of this date.