"Prediction is very difficult, especially about the future." The Danish physicist Niels Bohr first said this, and it's true. Of course, we all like to try anyway, and I've done so myself with my articles on peak oil and the end of growth. I could well be wrong. It's happened before. But the International Energy Agency (IEA), I believe, runs a greater risk of being wrong with its prediction that the US will become the world's largest oil producer by 2020 and energy independent by 2030 in their 2012 World Energy Outlook (WEO).
I don't keep up with the day-to-day peak oil discussions the way I did 7 or 8 years ago, but when I need to find out what the peak oil community thinks about a topic, I know where to turn. Two of the people who write well informed articles about this are Stuart Staniford (another physicist) and Gail Tverberg (an actuary). They're pretty good with numbers, and they've got some analysis of the 2012 WEO predictions. Here's what they say.
Staniford, whose blog is called Early Warning - Rational Analysis of Global Civilizational Risk, wrote an article earlier this week about the IEA's prediction. He's one of the smartest people I know who writes about peak oil, and he always takes an objective look at the data. His first take on the prediction is:
I am less persuaded myself that using a thousand oil rigs to generate an extra one million barrels per day of oil is necessarily a sign of a large and long-term sustainable increase in US oil production (as opposed to, say, frenzied scraping of the bottom of the barrel). But, still, I'm not certain beyond a reasonable doubt just how deep this particular barrel can be scraped.
Then he makes an interesting point about the data that you won't hear in the mainstream media. If the US is going to take the lead by hitting 10 million barrels per day (mbd) of oil production, he suggests, that means the IEA sees Russia and Saudi Arabia dropping, or at best staying about where they are. They're currently at 10.75 mbd and 9.5 mbd, respectively.
Staniford also showed a chart (below) of where the new production is coming from, illustrating that it's not the easy, conventional oil we're used to. Conventional oil and gas are continuing their decline.
Tverberg, in her article at The Oil Drum, points out that the we're not talking about conventional oil here, and the costs to get it are high. Her main contention is that, because of the diminishing returns associated with unconventional sources like the Bakken formation in North Dakota, costs will be higher than the IEA predicts. She goes into great detail about the nature of the diminishing returns in her Oil Drum post, which is an abridged version of the article on her own blog, Our Finite World.
I think the truth here is that the IEA's prediction that the US will lead the world in oil production is overly optimistic. "The statements about rising oil production in the US are just a distraction," Tverberg wrote. The more restrained Staniford paints it as an act of desperation: "Apparently the agencies have now accepted that Saudi Arabia cannot or will not increase production and the US is now being assigned the role of supplier of last resort for future energy projections."
It's also interesting that suddenly the news is flooded with this report of an oil bonanza. Just two years ago, the big news was that the US military was predicting oil shortages by the year 2015. Surely our military strategists wouldn't have missed something so big that it could turn their prediction upside down in a short two years.
Time will tell which side is right.