Wednesday, August 29, 2012

World Natural Gas and Natural Gas Liquids

   In order to model World Oil Production, we need to consider other liquid fuel besides crude plus condensate(C+C).  One of the largest additions to Total Petroleum Supply besides C+C is Natural Gas Liquids(NGL).  A paper by Jean Laherrere points to a stable relationship between NGL and Natural Gas production (see figure 1 in the paper linked above.) A post by Rune Likvern also investigates future NGL output and suggests that the output of NGL per unit volume of natural gas will likely decline in the future.

Despite the work by Likvern, so far through 2011 the world trend has been either stable (1996 to 2011) or positive (1980 to 2011) based on data from the 2012 BP Statistical Review of World Energy for Natural Gas and the US EIA for NGL.  I am also attempting to create optimistic scenarios to reduce the possibility of underestimating the length of a possible continued plateau in oil output.

Two scenarios for NGL output have been created.  The first (low case) assumes that the world production of NGL per unit volume of Natural Gas output remains at the average level of 1994 to 2011 (27.5 barrels per million cubic feet(b/mcf) of natural gas).  The second (high case) scenario assumes that the slow rise in NGL per unit volume of natural gas continues (using the linear trend from 1980 to 2011) until the world level reaches the average US level from 1983 to 2011 (34.5 b/mcf of natural gas.)

The chart below is for the world:

In order to forecast natural gas output, I used a Shock Model for Natural Gas (fallow, build, and mature periods 10 years).  This model was based on discovery data from Jean Laherrere and the middle (best guess) case in Steve Mohr's thesis for natural gas URR=16730 trillion cubic feet (tcf).  A dispersive discovery model (see Oil Conundrum)
was used to fill in discovery data after 2005.  The BP outlook (xls file) was used as a basis for natural gas production from 2015 to 2030 in developing this model (the data points for 2015 to 2030 are from this forecast).

This scenario for world natural gas is likely to be optimistic, a more realistic scenario would limit the rise in extraction rate to about 7 %.  A lower case which matches Steve Mohr's dynamic scenario (case 2) is presented below:

The higher natural gas case is used for a high NGL scenario and the low natural gas case is used as the basis for a low NGL scenario.  Both are presented in the chart below.  Note that the NGL is in barrels of oil equivalent which accounts for the lower energy content of NGL (70 % based on EIA heat content data).

Using these scenarios for NGL (low case URR=313 Gb, high case URR=359 Gb) scenarios for C+C+NGL can be developed.  Stay tuned...

Excel speadsheet named worldgasmedngl1 at this link


Monday, August 27, 2012

Extraction Rates and Developed Reserves

  If there are a given amount of developed oil reserves, let's say 900 billion barrels and the extraction rate is 3 % then 27 billion barrels of oil per year (bb/a) will be produced.  If the reserves fall to 800 billion barrels and the extraction rate is unchanged, output falls to 24 bb/a.  Consider a rise in extraction rates to attempt to maintain output at 27 bb/a as reserves deplete.  If extraction rates could be increased to 3.375 %, we would remain at 27 bb/a.

In reality, the extraction rate will rise and fall based on economic conditions, oil prices and the resulting level of oil demand.  As we reach the eventual peak in oil output, we will likely see a rise in extraction rate while developed reserves are declining (because we are producing oil at a higher rate than we can develop oil reserves).  

For a while the increased extraction rate could counteract the smaller level of reserves and enable either a plateau in output (like C+C since 2005) or possibly a slow rise in output.  Eventually we will be unable to maintain a plateau or increase output further because there is some limit to how high extraction rates can rise.  Eventually developed reserves will fall from the near plateau they have been on since 2004.  Consider the following model:

From the reserves and extraction rate above we get the C+C output below:

If extraction rates are limited to 4.5 %, the plateau would end in 2035 and a limit of 4 % would mean the plateau would end in 2030 for the scenario where the URR for C+C (including oil sands at 350 Gb and Orinoco belt at 250 Gb) is 2800 Gb.  See posts below for more conservative estimates.


Wednesday, August 22, 2012

Update to Crude plus Condensate Models

I noticed that compared to a model by webhubbletelescope, that my shock model extraction rates were very high (around 13 % vs. 5.5 % in 1973).  This was due to using different discovery data that had not been backdated.  I have updated the model using better discovery data based on data from ASPO and Jean Laherrere, as well as from the most recent shock model presented on the Oil Conundrum.

Laherrere uses 2200 Gb for his URR for conventional oil + deep water.  If we add oil sands at 170 Gb and Orinoco belt reserves at 220 Gb (390 Gb total) we get a URR of 2590 Gb. An optimistic Canadian geologist might guess that the oil sands could yield as much as 340 Gb, and an optimistic Venezuelan might suggest 260 Gb of URR from the Orinoco Belt.  This combination of oil sands and Orinoco belt oil I call extra heavy oil and will have a URR from 300 to 600 Gb in total.  This is the basis of a C+C URR between 2500 and 2800 Gb.

The new models are below, they use discovery data similar to that presented at the following link:


Note that the forecast "data" is from the 2012 BP Outlook (2015-2030), but this outlook has been scaled back by my estimate of future NGL output, which is based on the BP Outlook for natural gas and continued increase in NGL per unit of natural gas to US levels worldwide.  This will be presented in greater detail in a future post.  Also note that NGL only has 70 % of the energy content per barrel compared to crude plus condensate.  I always present NGL on this energy equivalent basis.

The extraction rate profile for the larger URR of 2800 Gb is similar to the 2500 Gb case and ranges from 3 % on the low end to 5.2 % in 1973 and 2042 (for the plateau case).

For URR=2500 Gb scenarios:

The low case extends the increased extraction rate over the period 2002-2011 at the same linear rate of increase out to 2070, the medium case increases the extraction rate linearly from 2011 to 2050 up to the 1973 rate of 5.45 %.  The plateau case increases the extraction rate enough to maintain a plateau without exceeding the 1973 rate.  The BP outlook case attempts to match the forecast in the 2012 BP Outlook (after deducting my estimate of future NGL output) out to 2030 without exceeding the 1973 extraction rate.

For the 2800 Gb scenarios:

The low case extends the increased extraction rate over the period 2002-2011 at the same linear rate of increase out to 2070.  The medium case follows a linear rate of increase up to 2020 which if continued would reach the 1973 rate of 5.2 % by 2050, after 2020 the extraction rate is increased to maintain a plateau at the 2020 output level until the 5.2 % extraction rate is reached.  The plateau case simply maintains the 2011 level of output by increasing the extraction rate as necessary until the 1973 extraction level is reached.  The BP outlook case tries to match the BP outlook (after deducting NGL) to 2030 and then maintains the 2030 level until the 5.2 %  extraction rate is reached in 2035.

Note that there may be a technical limit to how high the extraction rates can rise, I have assumed that today's technology may enable us to match the level achieved in 1973.  The problem is that we do not have the young Middle eastern Giant fields today and the technical challenges of ultra deep water oil, polar oil, tight oil, and extra heavy oil are much greater today than they were 40 years ago.

For the 2500 Gb case, if the technical extraction rate limit is 4.2 %, then the plateau would end in 2020, for a limit of 4.5 % the plateau ends in 2025.  In the 2800 Gb case, 4.2 % extraction rate limit would end the plateau in 2032 and a 4.5 % limit would end it at 2036.