The International Energy Agency, IEA, was formed by the OECD nations to monitor the global energy market. Every year it publishes data and analysis on energy in its World Energy Outlook (WEO) report. In "The Oil Market Outlook" section of this year's report (WEO 2010) is a new subheading "A peak at the future?". This shows that the IEA is thinking about "Peak Oil".
Energy is a critical strategic issue for the OECD nations so it is naïve to think that there is no political agenda when the IEA publishes its prognoses. Bad news on the energy front can make life difficult for politicians so it is no surprise that the numbers presented in WEO 2010 are given a positive spin. But when we make our own analysis of the numbers the picture is anything but positive.
In WEO 2010 the IEA continues its tradition of previous years by discussing future oil demand without considering whether supplying it is possible. The demand trend published last year in WEO 2009 is now called the "Current Policies Scenario" while this year's demand prognosis is called the "New Policies Scenario" (NPS). They also include a demand scenario based on the political desire to keep atmospheric carbon dioxide levels below 450 ppm. Last year the IEA stressed the importance of oil for economic growth and concluded that 106 million barrels per day (mb/d) would be required by 2030, an increase of about 20 mb/d over current production. This year the IEA only predicts 99 mb/d by 2035 and avoids any discussion of economic growth. We can interpret this as meaning that the desired economic growth is not possible.
When the IEA compares the OECD nations with the rest of the world it predicts that OECD oil consumption will fall from today's 41.7 mb/d to 35.3 mb/d by 2035. This means that all OECD nations, including Australia, must revise downward their future consumption prognoses. Nations outside the OECD are now expected to increase their oil consumption by 19 mb/d by 2035. Two thirds of this increase will occur in China and India.
For its report, the IEA accepts the oil reserve estimates published by the Oil and Gas Journal in December 2009 as well as the stated changes in reserves that have occurred since 1980. That means they believe the politically-inspired dramatic upwards revisions in oil reserves made by the OPEC nations during the 1980s. They also believe that the "oil" in Canada's tarsands and Venezuela's Orinoco fields should be counted as oil reserves.
The IEA notes that, since 1980, we have been consuming oil faster than we have been discovering it. We now consume 30 billion barrels per year which is more than double what we find. Amazingly, the IEA asserts that we will need to find an additional 900 billion barrels of oil over the next 25 years to meet anticipated demand. But at the current discovery rate of only 10 billion barrels this would take 90 years! To meet the IEA's demand prognosis, by 2035 the non-OPEC nations will need to have produced more oil than currently in their reserves. Furthermore, in 2035 they must still be producing oil at 46 mb/d!
As in previous years the IEA continues to assume that "demand" will determine oil production and so, as previously, their production expectation for 2035 is unrealistic. However, despite several unrealistic conclusions, WEO 2010 also contains some real numbers to focus on. The 68 mb/d of crude oil from fields producing in 2009 is now estimated to drop to only 16 mb/d by 2035. They use a decline rate of 8.3% which is in complete agreement with my team's research. The IEA asserts that 40% of the oil produced in 2035 must come from fields that have not yet even been found. Also, when estimating production from known fields that are not yet producing the IEA has failed to heed the criticism of their methodology presented in our scientific paper, The Peak of the Oil Age" published last year.
In WEO 2010 the IEA presents facts that mean only one thing - the peak of oil production is imminent. By showing this data without announcing the obvious conclusion the IEA is making a cry for help to do what, for them, is politicly impossible. WEO 2010 is a cry for help to tell the truth about peak oil.
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