An authoritative study published last week suggests that perceptions of a quickly approaching peak of oil production are based on incorrect assumptions.
Cambridge Energy Research Associates (CERA), an international energy adviser based in Cambridge, Massachusetts, conducted a field-by-field analysis of the production characteristics of 811 separate oilfields.
It concluded the aggregate oil production decline from its peak is 4.5% compared with the 8% quoted in past studies as evidence that oil production is rapidly falling.
The study also found that only 41% of global oil production comes from fields that are beyond the plateau stage and into the decline phase of their production lives.
CERA concludes that the decline rate is a function of reservoir physics and investment strategies. The rates are not increasing because of growing investment in the sector’s infrastructure and planning allowing low decline rates to be maintained and field life to be extended beyond previous projections.
The study has potentially huge significance for global oil prices, which briefly hit $100 a barrel this month. Analysts, including Francisco Blanch, director of commodity research at Merrill Lynch International, have attributed the rise in the price of the commodity to a tightening supply and demand balance which would only be exacerbated if the rates of production decline were increasing.
“This new analysis provides the basis for more confidence about the future availability of oil,” says Peter M Jackson, CERA oil industry activity director.
“The amount of new oil supply that will come on stream to satisfy oil demand depends to a large extent on a comprehensive understanding of annual decline rates of existing fields,” he says.