One of the most intense standoffs within the oil industry today might be described as Cambridge Energy Research Associates vs. the Peak Oil school. Having attended the annual meeting of the US branch of the Association for the Study of Peak Oil (ASPO), I can attest that CERA's far more upbeat findings about world oil supply are largely greeted with barely-concealed contempt by believers in the Peak Oil model.
So it was no surprise that a study issued by CERA a few weeks ago on oil field decline rates has drawn a fiercely negative reaction.
In the study, CERA concluded that the "the aggregate global decline rate" is 4.5%, much less than the 8% "cited in many studies." CERA said it studied 811 separate oil fields in reaching its conclusions.
The reference to 8% appears to have come, among other places, from statements issued by Schlumberger. Robert Hirsch, a consultant and member of the advisory board of ASPO-US, was quick to criticize CERA's claim to have numbers superior to those of Schlumberger. "Schlumberger may have better data than anyone else on oil fields throughout the world, because they operate almost everywhere that oil is produced," Hirsch said in his post on the CERA study.
"This includes the OPEC countries, where most data are considered state secrets. For IHS or CERA to have better data, they would have to have a competent, far-reaching spy network, which IHS/CERA has not claimed and couldn't claim without significant repercussions. Indeed there is no indication that IHS/CERA has better oil field data than anyone else. Schlumberger…(has) been too responsible for too long to believe that they would off-handedly estimate an 8% decline rate without knowing the facts. An 8% world oil production decline rate means that the world is in for very serious oil shortages almost any time now."
In defending its numbers, CERA said the 8% rate "may be a function of the generally more rapid decline rates observed in small fields -- increasingly being developed in mature non-OPEC countries -- and the rise of deepwater projects, which tend to flow at high rates as a requirement of commerciality, but which also decline rapidly." It further added that only 41 percent of production is from fields in the data base that are beyond the plateau stage and into the decline phase of their production lives.
CERA's annual meeting, which has become a monster gathering and seems to grow every year, will be held the week of February 11 in Houston. It's not the type of gathering marked by spirited debates in the various breakout sessions; it's a far more civil meeting. It's also not like anyone can just wander in, either. CERA clients receive admission as part of their contract with CERA, but non-clients pay several thousand dollars to attend. It's unlikely that a peak oil theorist is going to fork over that money just to rip this study. So the debate goes on online. But you never know. It could be an interesting few days.
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