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Ricardo and Kevin J Lindemer LLC to assess the timing and impact of Peak Oil Demand

Ricardo Strategic Consulting and Kevin J Lindemer LLC will perform a multi-client study to assess the impact of concerns regarding climate change, energy security and oil price volatility—alongside ongoing advances in low carbon technologies—on the future trajectory of oil demand, identify the likely tipping point when demand will start to turn down (“peak oil demand”), and address the implications for energy producers, users, regulators and governments.

Proponents of the concept of peak oil supply argue that the world faces a situation—possibly very soon—in which its capacity to produce oil hits a ceiling, with demand subsequently having to adjust as supply begins to decline and alternatives to oil move into the market to fill the gap. (Earlier post.)

Driven by a number of growing concerns including the increasingly worrying geopolitics of oil, governments and industry are investing heavily to accelerate the development of low carbon technologies that aim to reduce, replace or obviate the use of fossil fuels in the energy mix. With around half of global oil demand dependent on the internal combustion engine, radical technology change in the automotive sector, an area in which Ricardo possesses significant expertise, will be of particular significance.

But, asks Ricardo, what will happen to oil demand as these efforts begin to bear fruit, and what are the implications for key sectors of the fuel production and processing, power generation, construction, mining, automotive and transportation industries and the investment community?

The study to be carried out by Ricardo Strategic Consulting and Kevin J. Lindemer LLC will consider, among other things, the effects of new technologies on both the supply of and the demand for oil, the emphasis increasingly placed upon energy security, and consumption patterns driven by both usage profiles and emerging demographic changes in key markets such as China.

Although they are extremely diverse, it is unlikely that any of these factors will diminish in their influence on the energy market within the 10-20 year time horizon of the study. In oil, as in other commodities, demand responses to higher prices and to policy initiatives are typically asymmetric, Ricardo notes; many of the driving forces that are now beginning to act against future oil demand growth will not reverse, and others will not fully reverse even if oil prices should fall back.

In short, while the continuation of world economic growth will certainly translate into an increasing demand for energy, the world is likely to see significant changes in the way in which that energy is produced and delivered, with a reducing dependency on oil a key, and perhaps surprising, feature of this energy transition.

Over the last few years a near “perfect storm” for peak oil demand has been forming and gathering strength. The drivers working against oil demand growth are increasing in number and intensity while those drivers supporting future oil demand growth are either stable or declining in influence. The study that we are about to embark upon will be of keen interest to actors within the oil and gas supply chain from exploration to distribution, as well as governments, regulators, NGOs, the transportation sector and the power generation industry. With a peak in oil demand now in real prospect within the longer-term planning horizons of many organizations, we would suggest that there is an increasingly compelling case for the implications of such a scenario to be incorporated into strategic thought processes.

—Peter Hughes, Ricardo Strategic Consulting director and head of the Energy Practice

Participants already enrolled in the study include OPEC, BHP Billiton, Statoil, Maersk, Lubrizol, Infineum and Fluor Corporation. The analysis and results of the study will be shared with all such participants in a series of interactive workshops.

Kevin J Lindemer LLC is an affiliation of independent energy industry experts. President Kevin Lindemer has more than 8 years experience in the refining and marketing industry and 17 years of experience in energy research and consulting. He has direct industry experience with CHS and Irving Oil. His consulting experience includes 14 years with Cambridge Energy Research Associates where he started the Downstream Oil research and consulting group and with Global Insight where he was the Executive Managing Director of the energy business.

Comments

SJC

We could hit peak oil before a tipping point in climate change, we might just be that lucky.

HarveyD

Peak oil will vary from one source to another. Africa and Canada (and many other places) are no where close to peak oil while USA and a few other places are already past that point.

Crude production is going up at about another 2 million barrel/day per year. At the current rate the world production will hit 100+ million barrel/day by 2015/2016.

Shale oil (and tar sands) could contribute a fair share in the future, thereby extending availability by a few more decades.

By 2025/2030, worldwide vehicles electrification will level off oil consumption and by 2040/2050 it may even start going down.

Treehugger

Harvey

You are making a confusion between "crude oil" and "all liquids" that include crude + LNG and biofuels. the crude production has been flat these 6 past years at 73-74 MBd when the all liquids is still slightly growing at 83MBd but certainly not by 2millionss / year

not convinced ?

see : http://seekingalpha.com/article/236212-crude-oil-production-forecast-2015

SJC

Before the crash demand was increasing, if the world's economies recover, that kind of demand will show if the world can really deliver or not.

Treehugger

You don't need to wait to have the answer, between 2004 and 2011 the oil price has increased 4X still the production has been flat. Ususally when the price of a commodity increase the production increases too, so answer the production can not keep up, so far.

SJC

It is not quite the classical model where supply increases due to price rise and then the price, demand and supply are in equilibrium. OPEC is a cartel, which throws all of that out the window.

Treehugger

And then ? OPEC doesn't even supply 50% of the world production of crude oil

SJC

They supply about 30 out of the 80 million barrels per day. That is a significant portion and has a lot of clout.

E-Biker

Someone referenced the "E-cat" device a while ago. Apparently, it exists. The Greeks are building a power plant using it, and expect to produce electricity for 10% of current market price. Here's a link to the Swedish technical webzine that is covering the hype and the scientists who are investigating Rossi's claims. It's fascinating, and could really make a dent in oil demand if it becomes workable technology on a massive scale.
http://www.nyteknik.se/nyheter/energi_miljo/energi/article3208908.ece

HarveyD

Crude oil still represent over 95% of all liquid fuels used. Current production is around 88 M/barrel/day and going up at close to 2 M/barrel/day per year due to current USA made extended financial crisis. Otherwise, it would be going up at close to 4 M/barrel/day/year.

Is E-cat another ESSTor?

DaveD

E-cat looks like Pons or Fleischmann got a plastic surgeon to change their identity and one of them resurfaced as "cold fusion, part deux" LOL

SJC

OPEC is an oil exporter, when referring to 80+ million barrels per day, that is the WHOLE world production, not what is exported. So OPEC has a large influence on the oil that is for sale on the market every day.

DaveD

Harvey, where are you getting your data to indicate the 88M/day numbers and the 2M/day/year increase???

I found these numbers from the EIA and they show us at 84M/day and NOT growing: (http://www.eia.gov/ipm/supply.html and click on 4.4 bottom right for World Oil Supply)

2005 84,595
2006 84,661
2007 84,543
2008 85,507
2009 84,389

This was done in Dec 2010 so they did not yet have the 2010 numbers. I'd be interested to see if you have better data you've dug up.

E-Biker

@ Dave D - Except that no-one could duplicate their experimental results, and they failed to demonstrate a working system after claiming to have created one. The E-Cats are up and running, for months now, investors seem to be piling on the bandwagon, the US is partnering, and the Greeks are building. I hope the technology doesn't become the great leverage of the robber barons.

E-Biker

And that a device apparently so simply constructed and supplied with abundant raw materials (we hope - not much detail about the "special catalysts") could function by an as yet unknown quantum physics principle has never yet been stumbled upon by anyone since the age of metallurgy... kind of boggles my mind

DaveD

@ Ed,

Not exactly correct on Pons and Fleischmann. It turned out to be easy to reproduce once you realize it was a simple chemical reaction. If you kept measureing for more than 30 minutes, the "magic" stopped happening...after the reactants were used up.
They got a little carried away and ran out to tell the world before realizing their was no magic or really any intent to defraud. Just poor analysis of their experimental data and bad assumptions as to what they were seeing.

As for the E-cat, it is still WAY too early to tell on that one. I've seen guys get away with scams and pull in tens of millions of dollars in investments before someone figured out they had the hidden wire in one of the tubes plugged in somewhere, or the hidden fuel tank under the seats that made the magic "HOH" car get 500miles per gallon.

I had to show a group of investors that they'd been taken for $3.5million last week. They were all bought into another hydrogen miracle fuel for refitting trucks. Very sad.

It is still WAY too early to tell if this E-cat is real. It may be, but it sure smells like another EESTOR to me right now. I'd love, LOVE to actually see someone find the magic voodoo dust that creates energy out of seemingly nothing but after thousands of years, we're still stuck with tricks and mistakes so far.

E-Biker

Point taken

DaveD

I see where some of the discrepencies are coming from in our discussions of oil production now. It turns out that most of the sources are counting ethanol and MBTE additives, etc as part of "oil production". Not quite sure I buy into that view of the world, but it explains different numbers from different sources.

This is a great article and it shows some good analysis of the things we've just been debating:

"World oil production rebounded by 2.2% in 2010 to reach 82.095 million barrels per day (B/D), up from 80.278 million B/D in 2009, but virtually unchanged from 2008 levels. World oil consumption, though, increased by 3.1% to hit 87.382 million B/D."

and
"An increase of 9.6% over the course of a decade is not much of a positive supply response to a 161.6% price increase. Instead of the negative-consumption response that the simple textbook diagram would suggest, consumption has actually increased faster than production. Clearly it looks like oil has not read the intro to economics textbooks."

Lots of good stuff in this one: http://finance.yahoo.com/news/World-US-Oil-Production-Rises-zacks-2407719090.html?x=0&.v=1

SJC

OPEC will hold production off the market to keep prices up. They learned that trick a long time ago and as long as it works they will continue to use it.

Treehugger

Harvey

Again you are talking about all liquids not Crude Oil, 83MBd includes NLG which is 9MBd. Crude oil production is only 73-74 MBd (not the 95% you mentionne, please check your reference) and has been flat since mid 2004.

Treehugger

Harvey

Please looks at the data here, crude oil is not 95% of the 84MBd,

http://www.crudeoilpeak.com/?page_id=51

HarveyD

According to BP, the world 2010 crude production was between 86 and 88 M bar/day and will increase at close to +2%/year for the next 10 years or so. At that rate it should reach about 100 m/bar/day around 2015/2016 unless the current Wall Street made financial crisis gains ground and is extended another 10+ years or so.

A sustained 1929 style depression could delay world crude 100 M/bar/day consumption/production past 2015/2016. That is a strong/serious possibility.

Treehugger

BP is one sounds of bell, Total (which I trust more than BP...) says that peak oil will happen around 2020 and for a max of 90MBd, apparently Chevron tends to agree.

I don't see oil production reaching 100MBd in 2015 not even close to that

Engineer-Poet

Scuttlebutt says that Rossi has refused to allow independent measurements of the heat output of the E-Cat, the University of Bologna has seen nothing of the supposed 0.5 million euros supposed to be paid for testing, and the supposed contract with the University of Uppsala does not exist.

E-Cat is a fraud like Steorn, not a mistake like Pons & Fleischman.

ai_vin

For one theory on how the E-cat works, and doesn't, google *nickel-64 theory of cold fusion*
and read on. Plus this is helpful; http://www.mail-archive.com/vortex-l@eskimo.com/msg39328.html
and
http://www.mail-archive.com/vortex-l@eskimo.com/msg39377.html

I hope I summarized it well enough here; http://www.greencarcongress.com/2011/07/aep-20110714.html

If not, let me know.

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