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Another potential test for Peak Oil

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SOME STILL don't believe it - Puplava talks about CERA:


Don't Worry, Be Happy


This week Cambridge Energy Research Associates (CERA) shocked the financial markets with a report that supposedly debunks “peak” oil. Not to worry — we are told — there is plenty of oil out there. According to the folks at CERA, there is no evidence of a peak before 2030. Global production will follow an undulating plateau for the next two decades. What we will experience is a period of strong production growth as a result of a combination of conventional and unconventional oil. The report is available at CERA’s website, www.cera.com. The 16 page report will cost you $1,000 and is well worth the read, if you want to hear the other side of the story. I paid the money and read the report and remain unconvinced.


According to CERA our global resource base of reserves is 4.82 trillion barrels and not 1.2 trillion as peak oil theorists believe. The source of this greater oil bounty is summarized as follows:




Cumulative Production 1,078

OPEC Middle East.......... 662

Other Conventional....... 404

Deepwater..................... 61

Arctic........................... 118

Enhanced Oil Recovery.. 592

Extra Heavy.................. 444

Oil Shale Extract............ 704

Exploration Potential...... 758

Totals :=========== 4,821


Source: "Why the 'Peak Oil' Theory Falls Down," Decision Brief, CERA, Nov. 2006


I have to question Middle East oil reserves, which we know were over-inflated in the late 1980s to achieve production quota advantages. In a similar vein I have reason to doubt heavy oil, oil shale, and exploration potential. There may be huge oil reserves in the tar sands of Canada and in the Orinoco belt in Venezuela. But reserves don’t equate to big increases in production. The best example is Canada’s tar sands. The reserve potential is vast. But oil sands is a mining operation that requires large amounts of energy to produce. It is doubtful that oil will flow out of the tar sands the same way that is flows out of Gharwar.


While peakists alarm us with the dearth in new oil discoveries each year, the experts at CERA point to the fact that most oil companies have made up the shortfall in replacement by the upgrading of existing fields. In the recent past the industry has replaced more oil reserves each year through field upgrades than from exploration activity. Furthermore they argue that global oil production will not be a simple logistical or bell curve as Hubbert suggested. Instead it will be asymmetrical and skewed as it passes the geometric peak. Instead of a cliff as peak oil theorists argue, we’ll experience various inflexion points and plateaus as conventional oil declines gradually and unconventional oil picks up the slack, extending the peak and as well as the decline.


...MORE: http://www.financialsense.com/captain/log.html

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THE EASY OIL is peaking, that's for sure...


Meantime, as Puplava points out:



Where's the demand destruction? No sign in the miles being driven.

The Y-o-y growth in miles driven has not responded to the last two year's jump in oil prices.


And a US recession, may not be the demand-killer that some expect.


"The perception in the financial markets is that a slowdown in the U.S. economy and a global economic slowdown will reduce demand for basic commodities. However, decades of neglect and supply deficits will take time and money to correct. This is a structural bull market, which is going to last for a lot longer than most experts predict. If China sells 2,000,000 automobiles this year and next that means there are going to be a lot more Chinese consuming larger amounts of gasoline. China’s economy may slowdown from its breathtaking rate of 11%. However, an 8-10% growth rate means more copper, more iron ore, more cement, more steel, and more gasoline consumption. Let us also not forget India, whose economy is growing at 9% per annum. As I have mentioned above, this is a supply-driven bull market where excess capacity has shrunk. The less excess capacity the sooner demand will overwhelm the system which is why we have been experiencing price spikes from oil, natural gas to copper, lead and zinc. You might ask yourself, if there was really a commodity bubble, would the Chinese be shopping around the globe trading their dollars for commodities? Securing access to commodities like iron ore, uranium, oil and natural gas has now become a priority in foreign policy."

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