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January 16, 2004

At the end of December, Oil & Gas Journal published their oil production figures for calendar year 2003. From 2000 to 2003, world crude oil production has been essentially flat, which is to be expected as we roll over the top of the bell-shaped Hubbert curve. In the revised paperback edition of Hubbert's Peak, the only change required is to add one more dot along the line on page 157.

There was some speculation that the year 2000 might stand as the single largest year of oil production. (Production in 2001 and 2002 was not as large as the year 2000.) However, 2003 squeaked ahead of 2000 by one-half of one percent. The important news is that growth has essentially stopped. Production declines, from most countries, was offset by increases in Russia. However, Matt Simmons has pointed out that the Russians are catching up on maintenance that was deferred during the Communist era. There have been no new field discoveries or major field extensions reported in Russia.

Although it is a bit silly, we can now pick a day to celebrate passing the top of the mathematically smooth Hubbert curve: Nov 24, 2005. It falls right smack dab on top of Thanksgiving Day 2005. It sounds a little sick to observe a gloomy day, but in San Francisco they still observe April 18 as the anniversary of the 1906 earthquake.

The 20 percent reduction of oil and gas reserves by Royal Dutch/Shell on Jan 9 was widely interpreted as an event of major significance. I didn't make a big deal out of the Shell writeoff. Much larger revisions of reserve estimates have happened elsewhere in the past. Further, it takes only a modest change in costs, production per well, and prices to tip a project over the line from profitable to unprofitable. If I had to worry, I would worry that several other large companies might be carrying marginal projects on their books instead of writing them off.

To his credit, Alan Greenspan has been warning about a natural gas supply shortage in North America. None of the presidential candidates want to warn us about blood, sweat, and tears. Each is trying to promise us a better future than the next. It is probably going to require some sort of major crisis before the world oil supply gets on the national agenda.

With the Japanese and US rejections, the Kyoto Accord on carbon dioxide reduction is now dead. I'm claiming to be The New Kyoto. We won't burn as much oil each year because it simply won't come out of the ground.


 
 
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