Chapter 2 - Future oil demand and supply
Oil and gas basics
2.1
Petroleum hydrocarbons, principally crude oil and natural gas, form from
the remains of marine organisms and algae which are buried by sediments and
subjected to conditions of high temperature and pressure over hundreds of
millions of years. Gas forms when the temperature and pressure are higher; oil
when they are lower. The oil and gas, being lighter than water, then migrate towards
the surface through pores or fissures in the rock. They may reach the surface
and be lost; or a recoverable reservoir may form if it accumulates in a layer
of rock which is capped by an impermeable layer that prevents it from rising
further. A petroleum reservoir may accumulate a variety of gaseous and liquid
hydrocarbon compounds, natural carbon dioxide and water at depths varying
between some tens of metres to thousands of metres.
2.2
The oil-forming process is still at work, but it is so slow that the
current oil and gas resource is effectively non-renewable.
2.3
Simple hydrocarbon molecules are comprised of a chain of carbon atoms
with hydrogen atoms attached. The properties of different hydrocarbons depend
largely on the length of the carbon chain. Short chain molecules form gases at
standard temperature and pressure while longer chains form liquids (and
eventually solids), becoming denser and more viscous as the chain lengthens.
Crude oil is a blend of up to 300 different hydrocarbons, as well as sulphur,
nitrogen and metal compounds, depending on source conditions. Refining
separates the different hydrocarbons into groups with properties that are uniform
enough to be useful as petroleum products and as feedstocks for petrochemical
plants.[1]
2.4
When burnt, hydrocarbon molecules combine with oxygen to form carbon
dioxide and water, releasing heat energy. Carbon dioxide released from burning
oil, gas and coal is the main cause of human-induced global warming.[2]
Resources, reserves and related
terms
2.5
The resource is the total amount of oil in the ground, including
oil which will never be discovered or, if discovered, will never be produced.[3]
2.6
Reserves are quantities of oil in known reservoirs which can be
recovered commercially with today's prices and technology. Reserves are divided
into:
- Proved reserves: quantities which are estimated 'with
reasonable certainty' to be recoverable reserves by the definition above; or if
probabilistic methods of estimation are used, there is a 90 per cent
probability (P90) that the amount recovered will be more than this, and a 10
per cent probability that it will be less. 'In this sense, proved reserves are
a conservative estimate of future cumulative production from a field.'[4]
- Probable and possible reserves: additional quantities
which are estimated to be commercially recoverable reserves with less certainty.
Proved plus probable reserves are an 'as likely as not' estimate of future
production; proved plus probable plus possible reserves are a more optimistic,
less likely estimate. In general, a portion of a field's probable and possible
reserves tend to get converted into proved reserves over time as operating
history reduces the uncertainty around remaining recoverable reserves.[5]
2.7
Reserves are depleted by production, and enlarged by discovery of new
oilfields and by 'reserve growth'.
2.8
Reserve growth refers to the commonly observed increase in reported
reserves in previously discovered fields over time. This results from 'a
combination of several factors, including conservative initial estimates,
improvements in exploration and drilling technology, improved production
technology, and various political and economic forces'.[6]
Future reserve growth is an important element in official estimates of future
oil supply. How valid these estimates are is a major part of the 'peak oil'
debate, considered in chapter 3.
2.9
The ultimately recoverable resource (URR), according
to BP, is an estimate of the total amount of oil that will ever be recovered.
This includes production to date, future production from discovered reserves,
and future production from not yet discovered fields.[7]
According to the International Energy Agency (IEA), 'ultimately recoverable
resources include cumulative production to date, identified remaining reserves,
undiscovered recoverable resources and estimates of "reserves growth"
in existing fields.'[8]
This amounts to the same thing if one assumes that all reserves will eventually
be produced.[9]
An alternative definition of the URR is 'the amount of oil which is thought
recoverable given existing technology and economics [including] estimates of
undiscovered oil.'[10]
2.10
Conventional oil is, in the IEA's definition, 'oil that is
produced from underground reservoirs by means of wells'. This leaves as nonconventional
oil that which 'is produced in other ways or requires additional processing
to produce synthetic crude...[including] shale oil, synthetic crude and products
derived from oil or tar sands and extra-heavy oil, coal- and biomass-based
liquids and the output of natural gas to liquids (GTL) plants.'[11]
2.11
'Conventional' and 'non-conventional oil' are sometimes defined in other
ways, and this can be a source of confusion in comparing figures from different
sources. For example, by the definition above polar and deepwater oil is
conventional; but some include it with non-conventional because of the
difficulty of reaching it.[12]
2.12
The natural nonconventional resource is mostly located in Canadian tar
sands, Venezuelan heavy oil, and oil shale. The nonconventional resource is
very large, though the proportion that is a recoverable reserve is relatively
small because of the difficulty of extracting it.[13]
There will be greater use of it in future as conventional oil is depleted. It
is sometimes said that this means that what is now non-conventional will become
conventional in future. This form of words unfortunately obscures the fact that
what is now called conventional is effectively the 'easy oil', and what is now
called non-conventional is more difficult and expensive to produce; and that
relativity is unlikely to change. Greater exploitation of harder to get oil
will become more normal as easier oil is depleted, but it will come at an extra
economic cost that economies will have to cope with.
Rate of production and recovery
factor
2.13
Oil reserves are stock; production is a flow. The immediate concern in a
market is whether the rate of production satisfies demand. Reserves are only of
interest for what they imply about future production and resource security.
2.14
As oil is produced the natural reservoir pressure which drives it to the
surface through a well bore declines. It becomes gradually harder and
eventually impossible to recover what is left. Thus an oil reservoir is not
like a tank of water, in which the last drop can be tapped almost as easily as
the first. It is more like a tank of waterlogged sand: how fast the water can
be tapped depends not only on the size of the tap, but also on how fast the
water drains through the sand to reach it. This becomes slower over time. There
is still some water in the sand when flow stops.
2.15
The rate of production over time from an oilfield will tend to
grow as the infrastructure is built up to exploit the reserve, reach a peak,
then decline as the reserve is depleted and it becomes progressively harder to
produce what is left.[14]
The same tends to apply to larger regions or nations: for example, oil
production in the US lower 48 states peaked in 1970.[15]
Non-OPEC conventional oil production is expected to peak in 2010-2015.[16]
Oil production is in decline in 33 of the 48 largest oil producing countries.[17]
What this implies for world production is part of the peak oil debate.
2.16
The recovery factor is the percentage of the oil originally in
place in a field that can be recovered. The recovery factor varies enormously
from one field to another depending on the geological conditions, but averages
about 35 per cent world-wide.[18]
The recovery factor may be increased by techniques such as injecting water or
carbon dioxide to maintain pressure. The cost-effectiveness of these techniques
also varies greatly from place to place. A small increase in the average recovery
factor through technological advances can create a large increase in reserves.[19]
What should be expected in this regard in future is another part of the peak
oil debate.
2.17
The reserves to production ratio (R/P ratio) is the ratio
of proved reserves to production in the year. World wide it is now about 40:1
for oil and 65:1 for gas.[20]
This prompts statements such as 'reserves are sufficient to maintain production
at present rates for X years.' Such statements are not helpful - firstly,
because demand will not be static; secondly, because the R/P ratio says little
about the future rate of production. Given the nature of oil depletion as
described above, it will not be possible to maintain production at a constant
rate until reserves are exhausted, as implied.[21]
Oil and gas in context of total energy use
World energy use and projections
2.18
Energy use tracks economic growth closely. Worldwide, since 1971 each 1 per
cent increase in global gross domestic product (GDP) has been accompanied by a
0.6 per cent increase in primary energy consumption. The difference between the
1 per cent and 0.6 per cent reflects the fact that the energy use for each
unit of GDP is in long term decline. This is expected to continue as reliance
on heavy industry declines and energy efficiency improves.[22]
2.19
In the International Energy Agency's World Energy Outlook 2005 'reference
scenario' (which assumes no policies to curb energy use or greenhouse gas emissions
beyond what governments have committed to already), energy use is expected to
increase by 1.6 per cent on average per year to 2030. Oil, gas and coal will
retain their dominant position, with about 80 per cent of total energy supply.
Renewables will increase significantly in percentage terms, but because they
are coming from an extremely small base, they will remain small in absolute
terms:
Figure 2.1 – World primary energy demand, IEA Reference
Scenario, 2003-2030
million tonnes of oil equivalent
|
|
2003
|
2030
|
average annual growth,
per cent
|
total growth in annual demand,
per cent
|
|
no.
|
per cent
|
no.
|
per cent
|
coal
|
2,582
|
24%
|
3,724
|
23%
|
1.4%
|
44%
|
oil
|
3,785
|
35%
|
5,546
|
34%
|
1.4%
|
46%
|
gas
|
2,244
|
21%
|
3,942
|
24%
|
2.1%
|
75%
|
nuclear
|
687
|
6.5%
|
767
|
5%
|
0.4%
|
12%
|
hydro
|
227
|
2%
|
368
|
2%
|
1.8%
|
62%
|
biomass and waste
|
1,143
|
11%
|
1,653
|
10%
|
1.4%
|
45%
|
other renewable
|
54
|
0.5%
|
272
|
2%
|
6.2%
|
218%
|
total
|
10,723
|
100%
|
16,271
|
100%
|
1.6%
|
52%
|
International Energy Agency, World Energy Outlook 2005, p.82
|
2.20
Oil as a proportion of total energy use has declined from 44% in 1971 to
the present 35% as users have moved to other energy sources, particularly in
response to the 1973 and 1979 oil crises. However it is more difficult to use
other fuels for transport, and 95 per cent of transport is fuelled by oil. Thus
the trend to prefer other fuels for non-transport purposes means that oil use
is becoming increasingly concentrated in transport. The IEA expects that in
2030 transport will use 54 per cent of the world’s oil compared to 33 per cent
in 1971 and 47 per cent now. In OECD countries, the use of oil for other
purposes is expected to decline sharply. However in many developing countries
oil products will remain the leading source of modern commercial energy for
cooking and heating, especially in rural areas.[23]
2.21
The predictions above derive energy demand from predictions of future
population growth, economic growth and energy prices. In the IEA's World
Energy Outlook 2005, the predicted price trend is for a slight increase in
real oil prices from $US36 per barrel in 2004 to $US39 per barrel in 2030 (2004
dollars). This assumes there is no constraint on supply before 2030.[24]
(The World Energy Outlook 2006 appeared at the time of writing. It
contains updated, higher price projections. Comments on it are gathered in
Chapter 3 - see paragraph 3.121).
Australian energy use and
projections
2.22
In Australia, compared with the world, coal is a bigger proportion of
total energy supply (42 per cent of the total); oil and gas are about the same,
and renewables are a smaller proportion. Energy consumption is projected to
increase by 63 per cent by 2029-30, an average rate of 1.9 per cent per year. The
most important driver of this is economic growth. As natural gas becomes more
important coal is expected to become relatively less important, though it still
increases greatly in absolute terms. Renewables are expected to increase
greatly in percentage terms, but because they are starting from an extremely
small base, they are still insignificant in absolute terms.[25]
Figure 2.2 – Projection of Australian primary energy
consumption by fuel
Petajoules
|
|
2003-4
|
2029-30
|
average annual growth,
per cent
|
total growth,
per cent
|
|
no.
|
per cent
|
no.
|
per cent
|
black coal
|
1,570
|
29%
|
2,248
|
26%
|
1.4%
|
43%
|
brown coal
|
679
|
13%
|
857
|
10%
|
0.9%
|
26%
|
oil
|
1,792
|
34%
|
2,981
|
34%
|
1.7%
|
66%
|
natural gas
|
1,048
|
20%
|
2,136
|
24%
|
2.8%
|
104%
|
hydro
|
58
|
1%
|
65
|
1%
|
0.4%
|
12%
|
biomass
|
183
|
3%
|
370
|
4%
|
2.8%
|
102%
|
other renewables
|
16
|
0.3%
|
71
|
1%
|
5.9%
|
344%
|
total
|
5,345
|
100%
|
8,728
|
100%
|
1.9%
|
63%
|
ABARE, Australian Energy: national and state projections
to 2029-2030, 2005, p. 26
1 petajoule = 23,880 tonnes of oil equivalent. 1 million
tonnes of oil equivalent = about 42 petajoules. 1 petajoule = 169,900 barrels
oil @ 5883MJ/barrel (Geoscience Australia, submission 127, p. 17.)
|
2.23
This scenario assumes that crude oil prices fall to below $US30 per
barrel by the early 2010s, 'reflecting an assumed easing of geopolitical
concerns and an expansion in oil production infrastructure.'[26]
2.24
Worldwide 47 per cent of oil is used for transport; in Australia, 77 per
cent. This is because in Australia oil is used much less in other areas such as
home heating or electricity generation.[27]
Thus for Australia an oil supply problem is to a large extent a transport fuel
problem.
World oil production and consumption
2.25
According to BP’s Statistical Review of World Energy, world oil
production in 2005 was 29.5 billion barrels (81 million barrels per day), and
proved reserves of oil and natural gas liquids at the end of 2005 were 1,200
billion barrels. Year on year production grew in the OPEC countries and the
Former Soviet Union, and declined in the OECD and other non-OPEC countries in
total.[28]
2.26
Natural gas production in 2005 was 2,703 billion cubic metres, and
proved reserves were 180,000 billion cubic metres.[29]
2.27
On BP’s figures proved reserves of oil and natural gas liquids continue
to grow: annual additions to reserves through new discoveries and reserve
growth are greater than annual production.[30]
62 per cent of reserves are in the Middle East.
2.28
This raises the question: why then have oil prices been high over the
last two years?[31]
Most analysts answer that demand has grown because of strong economic growth,
particularly in China, while supply has lagged because of insufficient investment
in new capacity since the period of low prices in the late 1990s. As well,
commentators point to the weather in 2005, including hurricanes in the USA
which disrupted production; and geopolitical instability, which has caused the
market to want ‘precautionary inventories’.[32]
2.29
In this view there is no fundamental geological constraint on the supply
of oil, and prices may be expected to fall again in the medium term as higher
prices stimulate exploration and investment, and supply catches up with demand.
ABARE predicts that oil prices ‘could remain relatively high for a number of
years, but should fall towards the end of the decade ‘in response to higher
global oil production and a substantial increase in oil stocks by that time.’[33]
Contrary views by peak oil proponents are considered in chapter 3.
Projections of world oil production
and consumption
2.30
The International Energy Agency (IEA), in its World Energy Outlook
2005, predicts that in a 'reference scenario' world demand for oil will
grow from 82 million barrels per day in 2004 to 92 million barrels per day in
2010 and 115 million barrels per day in 2030 - an average growth rate of 1.3
per cent per year over the period. The growth rate will be above average in the
developing countries, and below average in OECD countries.
2.31
The World Energy Outlook 2005 argues that resources are adequate
to meet the demand, but 'reserves will need to be "proved up" in
order to avoid a peak in production before the end of the projection period
[2030].'[34]
It comments that 'the exact cost of finding and exploiting those resources over
the coming decades is uncertain, but will certainly be substantial...financing
the required investments in non-OECD countries is one of the biggest challenges
posed by our energy-supply projections.' [35]
It makes no significant comment on the future after 2030.[36]
2.32
The World Energy Outlook 2005 assumes that most of the increased
demand for oil to 2030 will be supplied by a large increase in OPEC production,
particularly in the Middle East, 'because their resources are greater and their
production costs lower' (peak oil concerns about whether this will be possible
are considered in chapter 3).[37]
OPEC production is expected to increase from 39 per cent to 50 per cent of
world production.
Figure 2.3 – World oil production and demand
projections, IEA Reference Scenario
million barrels per day. Includes natural gas liquids and
condensates
|
|
2004
|
2010
|
2030
|
average
annual growth,
per cent
|
total growth 2004 - 2030, per cent
|
Oil production
|
OPEC[38]
|
32.3
|
36.9
|
57.2
|
2.2%
|
77%
|
of which
OPEC Middle East
|
22.8
|
26.6
|
44.0
|
2.6%
|
93%
|
OECD[39]
|
20.2
|
19.2
|
13.5
|
-1.5%
|
-32%
|
transition economies[40]
|
11.4
|
14.5
|
16.4
|
1.4%
|
44%
|
other countries
|
15.2
|
17.7
|
16.3
|
0.3%
|
7%
|
non-conventional oil[41]
|
2.2
|
3.1
|
10.2
|
6.1%
|
364%
|
total
|
82.1
|
92.5
|
115.4
|
1.3%
|
41%
|
Oil demand
|
OECD
|
47.6
|
50.5
|
55.1
|
0.6%
|
16%
|
transition economies
|
4.4
|
4.9
|
6.2
|
1.3%
|
41%
|
other countries
|
27.0
|
33.9
|
50.9
|
2.5%
|
86%
|
international marine
bunkers
|
3.1
|
3.1
|
3.3
|
0.3%
|
6%
|
total
|
82.1
|
92.5
|
115.4
|
1.3%
|
41%
|
OPEC production as percentage of world demand
|
39%
|
40%
|
50%
|
|
|
OPEC Middle East production as percentage
of world demand
|
28%
|
29%
|
38%
|
|
|
International Energy Agency, World Energy Outlook 2005,
pp 83, 90, and 124.
|
2.33
The World Energy Outlook 2005 assumes a crude oil price of about
$US35 per barrel in 2010, increasing to $US39 by 2030 (2004 dollars). It notes
that 'the near term outlook for oil prices remains unusually uncertain'; and 'the
assumed slowly rising trend in real prices after 2010 reflects an expected
increase in marginal production costs outside OPEC, an increase in the market
share of a small number of major producing countries, and lower spare
capacity.' Most of the new production capacity needed to satisfy the predicted
demand is expected to come from OPEC countries, particularly in the Middle East.
The slowly rising price trend is not intended to mean a stable market: 'indeed,
oil prices may become more volatile in future'.[42]
2.34
The IEA's World Energy Outlook 2006 was released at the time of
writing with updated, higher price projections. Comment on it is at paragraphs 3.121–3.124.
Official estimates of the ultimately
recoverable resource of conventional oil
2.35
The core document used to support the assumption that oil supply will
not be constrained before 2030 appears to be the US Geological Survey's World
Petroleum Assessment 2000 (USGS 2000). This estimated that the world’s
total conventional oil and natural gas liquids produced to 1995, or with
potential to be added to reserves from 1995 to 2025, is about 3,345 billion
barrels.[43]
This is the mean estimate.[44]
Future additions to reserves are composed of future discoveries and future 'reserve
growth' in already discovered fields as explained above (paragraph 2.8):
Figure 2.4 – USGS 2000 estimate
of conventional petroleum
with potential to be added to
reserves 1995 to 2025.
Mean estimate
billion barrels (for gas, billion
barrels of oil equivalent @ 6,000 cubic feet = 1boe)
|
|
oil
|
natural gas liquids
|
oil and NGLs
|
gas
|
World except United
States
|
undiscovered conventional
|
649
|
207
|
856
|
778
|
reserve growth (conventional)
|
612
|
42
|
654
|
551
|
remaining reserves
|
859
|
68
|
927
|
770
|
cumulative production
|
539
|
7
|
546
|
150
|
total
|
2,659
|
324
|
2,983
|
2,249
|
United States
|
undiscovered conventional
|
83
|
with oil
|
83
|
88
|
reserve growth (conventional)
|
76
|
with oil
|
76
|
59
|
remaining reserves
|
32
|
with oil
|
32
|
29
|
cumulative production
|
171
|
with oil
|
171
|
142
|
total
|
362
|
with oil
|
362
|
318
|
Total
|
undiscovered conventional
|
732
|
207
|
939
|
866
|
reserve growth (conventional)
|
688
|
42
|
730
|
610
|
remaining reserves
|
891
|
68
|
959
|
799
|
cumulative production
|
710
|
7
|
717
|
292
|
total
|
3,021
|
324
|
3,345
|
2567
|
source: US Geological Survey, World
Petroleum Assessment 2000, table AR-1.
Note: reserve and cumulative
production figures date from 1995. Proved reserves of oil at the end of 2005
were 1,200 billion barrels. Cumulative production of oil and natural gas
liquids to 2005 was 1,048 billion barrels. BP Statistical Review of World
Energy, 2006. IEA, World Energy Outlook 2005, p. 126.
|
2.36
USGS 2000 published 5 per cent probable and 95 per cent probable estimates
only for the world except the United States:
Figure 2.5 – USGS 2000 estimate of
conventional petroleum
with potential to be added to reserves 1995 to 2025.
billion barrels (for gas, billion barrels of oil
equivalent @ 6,000 cubic feet = 1boe)
|
|
undiscovered conventional
|
reserve growth (conventional)
|
Oil
|
P95 estimate
|
334
|
192
|
mean estimate
|
649
|
612
|
P5 estimate
|
1,107
|
1,031
|
Natural gas liquids
|
P95 estimate
|
95
|
13
|
mean estimate
|
207
|
42
|
P5 estimate
|
378
|
71
|
Oil and NGLs
|
P95 estimate
|
429
|
205
|
mean estimate
|
856
|
654
|
P5 estimate
|
1,485
|
1,102
|
Gas
|
P95 estimate
|
383
|
175
|
mean estimate
|
778
|
551
|
P5 estimate
|
1,362
|
924
|
Source: US
Geological Survey, World Petroleum Assessment 2000, table AR-1.
|
2.37
The USGS 2000 mean estimate of future reserve additions is much higher
than previous estimates. Most of the increase in USGS 2000 resulted from
including an estimate of future reserve growth, which the USGS had not done
previously.[45]
For example, the USGS 2000 mean estimate of future oil reserve additions (not
including natural gas liquids) outside the USA is 1,261 billion barrels
(649+612 in figure 2.4 above). The corresponding figure from the USGS's
previous survey in 1994 was 539 billion barrels.[46]
2.38
The IEA's World Energy Outlook 2005 gives an updated estimate of
the ultimately recoverable resource, based on USGS 2000:
Figure 2.6 – Estimate of ultimately
recoverable oil
and natural gas liquids.
IEA 2005. Mean estimate. Billion barrels
|
USGS 2000
mean estimate, conventional oil/ NGLs/ total
|
|
Middle East/
North Africa
|
rest of world
|
total
|
total
|
future discoveries
|
313
|
570
|
883
|
732/ 207/ 9391
|
future reserve growth in existing fields
|
109
|
199
|
3083
|
688/ 42/ 7301
|
reserves
|
784
|
322
|
1,106
|
891/ 68/ 9592
|
cumulative production
|
334
|
714
|
1,048
|
710/ 7/ 7172
|
total: ultimately recoverable resource
|
1,541
|
1,804
|
3,345
|
3,021/ 324/ 3,345
|
source:
International Energy Agency, World Energy Outlook 2005, p. 126. The
figures appear to be for conventional oil, although the accompanying text is
not explicit.
US Geological
Survey, World Petroleum Assessment 2000, table AR-1.
- USGS
2000 figures were estimates of amounts with potential to be added to reserves
from 1995 to 2025: p. IN-2.
- USGS
2000 figures for reserves and cumulative production date from 1995.
- The
IEA figure for reserve growth is said to be based on 'IEA analysis based on
USGS'. The accompanying text does not explain the large difference from the
USGS 2000 estimate of reserve growth.
|
2.39
On these figures, about a third of the ultimately recoverable resource
of conventional oil has already been produced. 'Peak oil' arguments about the
reliability of these figures are considered in chapter 3.
2.40
It should be noted that USGS 2000 was a geologists' estimate of possible
future additions to reserves. It was not concerned with whether the resource will
be brought to market in a timely way to meet demand.
Oil production and consumption in Australia and projections
2.41
Commercial crude oil production in Australia started at Moonie in 1964,
and grew dramatically after the discovery of the offshore Gippsland oilfields
in the 1960s. It has mostly been between 400,000 and 500,000 barrels per day
since then. As gas production on the North West Shelf has increased, production
of associated condensate has also increased, to around 150,000 barrels per day.
Over the last decade production of crude oil and condensate has mostly been between
500,000 and 600,000 barrels per day.[47]
2.42
The rate of new discoveries has declined significantly since the
discovery of the supergiant Gippsland fields in the late 1960s. More recent
smaller discoveries have slowed but not reversed the overall decline in
reserves as oil is produced.[48]
Geoscience Australia (GA) predicts that Australian production of crude oil plus
condensate will hold at current levels of about 550,000 barrels per day until
about 2009 then decline to about 224,000 barrels per day by 2025 (mid-range estimate).[49]
2.43
Australia’s demand for petroleum (including crude oil and condensate) is
over 750,000 barrels per day, and is projected to rise to over 800,000 barrels
per day by 2009-10, and over 1,200,000 barrels per day by 2029-30 – an increase
of almost 2 per cent per year over the period.[50]
2.44
In Australia 77 per cent of oil is used for transport, and 97 per cent
of transport is fuelled by oil. Transport accounts for 14 per cent of Australia's
greenhouse gas emissions.[51]
2.45
On Geoscience Australia’s figures, it appears that over the next 20
years Australia’s net self-sufficiency in oil and petroleum products will
decline from 84 per cent to 20 per cent (using a mid-range estimate of future
production), or from 98 per cent to 31 per cent (using an optimistic estimate
of future production):[52]
Figure 2.7 – Forecast Australian production of crude oil
and condensate.
Forecast Australian consumption of petroleum products
excluding LPG
Thousand barrels per day
|
|
production
|
consumption1
|
production as percentage of consumption
|
|
P90
|
P50
|
P10
|
|
P90
|
P50
|
P10
|
2006
|
544
|
635
|
741
|
756.8
|
72%
|
84%
|
98%
|
2010
|
400
|
510
|
654
|
817.0
|
49%
|
62%
|
80%
|
2015
|
225
|
349
|
541
|
902.9
|
25%
|
39%
|
60%
|
2020
|
177
|
269
|
409
|
998.3
|
18%
|
27%
|
41%
|
2025
|
148
|
224
|
342
|
1099.9
|
13%
|
20%
|
31%
|
P90: 90 per cent probability that the true figure will be at
least this much (most cautious estimate). P50: 50 per cent probability that
the true figure will be at least this much. P10: 10 per cent probability that
the true figure will be at least this much (most optimistic estimate). See
text for qualifications.
- 2006 figure is that shown in the source as '2005-06' etc.
Geoscience Australia, Submission 127, p. 13ff.
|
2.46
The production forecasts listed above include production expected from
already identified fields, and production expected from not yet discovered
resources in known petroleum provinces. They include future reserve growth only
in the P10 estimate. The figures do not include enhanced oil recovery in fields
nearing depletion, but GA estimates that under certain conditions this could
add up to 155,000 barrels per day. The figures do not include future
discoveries in provinces which have not been explored or have no discoveries to
date, as these cannot be estimated.[53]
2.47
ABARE expects that Australia's crude oil and condensate production will
remain steady at over 1,000 petajoules per year (about 466,000 barrels per day[54])
to 2029-30. This would means Australia's net self-sufficiency in petroleum
products falls to about 50 per cent by 2029-30. This is rather more than
Geoscience Australia's estimate.[55]
This is because ABARE, unlike GA, makes an estimate of prospective production
from resources that have not yet been discovered in basins that have not yet
been fully explored, based on the resource estimates of USGS 2000. This
includes modelling economic variables which are not within GA's brief.[56]
2.48
In either case Australia’s oil self-sufficiency is predicted to decline significantly.
The predicted demand growth is a much more important cause that the exact level
of future Australian production.
2.49
The Australian Petroleum Production and Exploration Association (APPEA)
noted that Australia has historically been a net exporter of oil, gas and
petroleum products; however this situation has turned around in the last two
years because of rising prices and a fall in domestic crude oil production. In
2005 imports exceeded exports by $4.7 billion. APPEA suggested that by 2015
this figure could be in the range of $12 billion to $25 billion, depending on
assumptions about Australian production and price.[57]
2.50
How serious the effects of this reversal are will depend in part on the
long term price of oil.[58]
That will reflect the long term supply-demand balance. That brings into play peak
oil concerns about future oil supply, which are considered in the next chapter.
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