More Prisues Promised—Perhaps
BP: Results Up, Production Declining

Oil Week and Indonesia Peaking

This is going to be an Oil week. With the production figures coming out from the majors, I thought I’d spend some time poking around those, plus a few other aspects of global oil production and fuels that I’ve been wanting to explore for awhile but haven’t made the time to do so.

The availability of oil has a direct impact on decisions that we’re making in transportation and energy; it’s worth spending some time on it. From a post a few weeks back:

Toyota became a leading pioneer in hybrid technology because it could see increased environmental restrictions in the future. But it may be pressure from oil prices that will be the biggest driver of the technology.

indonesiaprod

Indonesia. As posted earlier, oil production from Indonesia, one of the OPEC countries, has slipped to the point where it is a net importer, not exporter of oil. As shown in the chart on the right (Click to enlarge), the country’s production seems to have tipped over the point of peak production, and is rapidly heading down the slope on the other side.

The annual data comes from the BP Statistical Review; the monthly from the US EIA.

The dip and rise in the 1980s reflects what the Association for the Study of Peak Oil calls the “OPEC saddle”—the policy-based production restrictions in that decade. You’ll see that currently, however, Indonesia’s production is far below its theoretical production quota.

There is some hope, expressed by the US EIA, that Indonesia may be able to up its daily rate based on the production of some new fields. As detailed in the quote below, however, even those fields, presuming they do come online, won’t reverse the inexorable trend.

The country’s declining oil production could be turned around once the new Cepu field in Java comes online. The field, estimated to hold reserves of at least 600 million barrels of oil, is being developed by ExxonMobil in partnership with Pertamina. However, the two oil giants have been unable to reach an agreement over profit sharing, with Pertamina demanding half the field’s output and ExxonMobil demanding that Pertamina cover half the field's production costs. Additionally, ExxonMobil wants Jakarta to extend its technical assistance contract, due to expire in 2010, for 20 years. ExxonMobil officials have indicated that the field could be operational in 2006 and could produce up to 180,000 bbl/d, according to recent reports.

Smaller fields could help boost production numbers if they become fully operational in 2004 and 2005. Unocal’s West Seno field, under development offshore from East Kalimatan, is producing 40,000 bbl/d and is expected to produce up to 60,000 bbl/d when the second phase of development is completed in early 2005. ExxonMobil’s Banyu Urip field, in Java, is expected to come onstream in 2006, according to the company, and reach its peak production capacity of 100,000 bbl/d soon after. Even with these new fields, though, Indonesia’s oil production is not likely to rise markedly, due to the continuing decline of mature fields.

This mirrors fairly precisely the peak production scenarios laid out by numerous geologists such as Deffeyes, Campbell and Laherre and some on the business side such as Simmons: the biggest fields have already been found, new discoveries are smaller, enhanced production technology accelerates the rate of depletion. Data seems to be mounting in support of those who are predicting global peaking sooner rather than later...

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