Energy Information Administration Forecast
Vital Trivia ? Blog Archive ? Energy Information Administration Forecast
Have we, the hydrocarbon depletion aware folk of this world got it wrong? Is it reasonable to think that this small band of retired geologists, academics, amateurs and energy enthusiasts have a clearer idea of what?s going on in the world than the prestigious governments and energy agencies? Someone once suggested to me that the very fact governments and energy agencies didn?t appear to recognise an imminent peak in oil extraction rates as evidence that there wouldn?t be such a peak, at least not soon enough to really worry about. The implied point being that they have a far greater understanding and more resources than then people like us.
Let?s have a look at how this great understanding and their resources have served them in the recent past by looking back at the 2001 International Energy Outlook from the US DOE/EIA IEO2001 (1.3mb pdf).
What is US DOE/IEA? This is what it says on the Energy Information Administration (EIA) website:
The Energy Information Administration (EIA), created by Congress in 1977, is a statistical agency of the U.S. Department of Energy. We provide policy-independent data, forecasts, and analyses to promote sound policy making, efficient markets, and public understanding regarding energy and its interaction with the economy and the environment.
So they should know what they are talking about, right?
This analysis by Ron Patterson is inspired by the original work of Roger D. Blanchard who questioned the future predictions back in 2001 in his paper Analysis of the IEO2001 Non-OPEC Supply Projections , Patterson has followed up these predictions in an article here where he highlights how the EIA got it very wrong.
North Sea
Vital Trivia has written a lot about the decline in the North Sea, this is what the IEO2001 had to say about the North Sea:
In the IEO2001 forecast, North Sea production reaches a peak in 2006, at almost 6.6 million barrels/day (mb.d). Production from Norway, Western Europe?s largest producer, is expected to peak at about 3.7 mb/d in 2004 and then gradually decline to about 3.1 mb/d by the end of the forecast period with the maturing of some of its large and older fields. The United Kingdom is expected to produce about 3.1 mb/d by the middle of this decade, followed by a decline to 2.7 mb/d by 2020.
The report was published in March 2001 and talks of a peak in 2006. The facts of the matter are that the North Sea had already peaked back in 1999 at 5.947 mb/d! Today we are more than 1mb/d below that 1999 peak.
For Norway they forecasted a peak of 3.7 mb/d in 2004 declining to 3.1mb/d by 2020. In fact Norway had peaked the year earlier (2000) but the real absurdity was the forecasted rate of decline post peak of 1.1% per year. Show me any province, let alone a modern offshore one with a post peak decline rate as slow as that!
The UK forecast of a 3.1mb/d peak in 2005 compares with a reality of a 2.684 mb/d peak in 1999, a full two years before this report was published. The report goes on to forecast a decline to 2.7 mb/d by 2020, an annual fall of less than 1%, when in reality the UK has seen average annual falls of over 7% from 1999.
These forecasted decline rates are most concerning, either the EIA are incredibly ignorant or they are purposefully releasing misleading information.
Mexico
I reported on Mexico?s difficulties just last week. Here is what the IEO2001 said:
Mexico is expected to adopt energy policies that encourage the efficient development of its vast resource base. Expected production volumes in Mexico exceed 4 million barrels/day by the end of the decade and show little decline out to 2020.
It would appear Mexico has already peaked with a peak month of December 2003 at 3.455 mb/d and a peak 12-month moving average in June 2004 of 3.408 mb/d, more than half a million barrels down and more than half a decade earlier than predicted. As for showing little decline out to 2020, Pemex themselves are saying that Cantrell is some 68% depleted with flow rate likely to crash at between 10 and 20% per year.
Closing remarks
The Energy Information Administration claim to provide policy-independent data, forecasts, and analyses to promote sound policy making, efficient markets, and public understanding regarding energy and its interaction with the economy and the environment.
On the evidence of recent performance one can only assume that any policies influenced by the EIA are unsound, any markets inefficient and the public are left ignorant. I think there is far more truth in that statement than those from the EIA.
So remember, next time you hear an official sounding energy forecast from a government agency it could already be significantly wrong and rapidly deviating from reality.
Have we, the hydrocarbon depletion aware folk of this world got it wrong? Is it reasonable to think that this small band of retired geologists, academics, amateurs and energy enthusiasts have a clearer idea of what?s going on in the world than the prestigious governments and energy agencies? Someone once suggested to me that the very fact governments and energy agencies didn?t appear to recognise an imminent peak in oil extraction rates as evidence that there wouldn?t be such a peak, at least not soon enough to really worry about. The implied point being that they have a far greater understanding and more resources than then people like us.
Let?s have a look at how this great understanding and their resources have served them in the recent past by looking back at the 2001 International Energy Outlook from the US DOE/EIA IEO2001 (1.3mb pdf).
What is US DOE/IEA? This is what it says on the Energy Information Administration (EIA) website:
The Energy Information Administration (EIA), created by Congress in 1977, is a statistical agency of the U.S. Department of Energy. We provide policy-independent data, forecasts, and analyses to promote sound policy making, efficient markets, and public understanding regarding energy and its interaction with the economy and the environment.
So they should know what they are talking about, right?
This analysis by Ron Patterson is inspired by the original work of Roger D. Blanchard who questioned the future predictions back in 2001 in his paper Analysis of the IEO2001 Non-OPEC Supply Projections , Patterson has followed up these predictions in an article here where he highlights how the EIA got it very wrong.
North Sea
Vital Trivia has written a lot about the decline in the North Sea, this is what the IEO2001 had to say about the North Sea:
In the IEO2001 forecast, North Sea production reaches a peak in 2006, at almost 6.6 million barrels/day (mb.d). Production from Norway, Western Europe?s largest producer, is expected to peak at about 3.7 mb/d in 2004 and then gradually decline to about 3.1 mb/d by the end of the forecast period with the maturing of some of its large and older fields. The United Kingdom is expected to produce about 3.1 mb/d by the middle of this decade, followed by a decline to 2.7 mb/d by 2020.
The report was published in March 2001 and talks of a peak in 2006. The facts of the matter are that the North Sea had already peaked back in 1999 at 5.947 mb/d! Today we are more than 1mb/d below that 1999 peak.
For Norway they forecasted a peak of 3.7 mb/d in 2004 declining to 3.1mb/d by 2020. In fact Norway had peaked the year earlier (2000) but the real absurdity was the forecasted rate of decline post peak of 1.1% per year. Show me any province, let alone a modern offshore one with a post peak decline rate as slow as that!
The UK forecast of a 3.1mb/d peak in 2005 compares with a reality of a 2.684 mb/d peak in 1999, a full two years before this report was published. The report goes on to forecast a decline to 2.7 mb/d by 2020, an annual fall of less than 1%, when in reality the UK has seen average annual falls of over 7% from 1999.
These forecasted decline rates are most concerning, either the EIA are incredibly ignorant or they are purposefully releasing misleading information.
Mexico
I reported on Mexico?s difficulties just last week. Here is what the IEO2001 said:
Mexico is expected to adopt energy policies that encourage the efficient development of its vast resource base. Expected production volumes in Mexico exceed 4 million barrels/day by the end of the decade and show little decline out to 2020.
It would appear Mexico has already peaked with a peak month of December 2003 at 3.455 mb/d and a peak 12-month moving average in June 2004 of 3.408 mb/d, more than half a million barrels down and more than half a decade earlier than predicted. As for showing little decline out to 2020, Pemex themselves are saying that Cantrell is some 68% depleted with flow rate likely to crash at between 10 and 20% per year.
Closing remarks
The Energy Information Administration claim to provide policy-independent data, forecasts, and analyses to promote sound policy making, efficient markets, and public understanding regarding energy and its interaction with the economy and the environment.
On the evidence of recent performance one can only assume that any policies influenced by the EIA are unsound, any markets inefficient and the public are left ignorant. I think there is far more truth in that statement than those from the EIA.
So remember, next time you hear an official sounding energy forecast from a government agency it could already be significantly wrong and rapidly deviating from reality.
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