Bracing For Peak Oil Production By Decade's End  

Forbes has an interview with Charles Maxwell, discussing where oil's production peak is and how that affects investments. Maxwell is a "senior energy analyst at Weeden & Co." - Bracing For Peak Oil Production By Decade's End.

Charles Maxwell: The use of petroleum in the world is now up to about 30 billion barrels per year. The rate at which we have found new supplies of petroleum over the last 10 years has fallen to an average, of only about 10 billion barrels per year.

We're obviously in an unsustainable situation. We are now using up a greater number of barrels that we have found in the recent past and that we have reserved in the ground. We are now beginning to use it up relatively quickly--with scary consequences for the future.

The peak of production usually comes sometime between 30 and 50 years after the peak of finding oil. "The peak of discovery," as they call it. For instance, in the North Sea, the peak of discovery was in the late 1960s, and the peak of production was in the late 1990s. So it was around 30 years between the peak of finding oil and the peak production of that oil.

Wallace Forbes: From those sources in the North Sea?

Maxwell: Yes. In the United States, the actual peak of discovery was 1931, quite a bit earlier. We were the first country to actually peak in the world of oil production. Our peak of production came in late in 1970. So that was a 39-year transition from the peak of finding the oil to the peak of producing it.

Now the question remains in front of us, has the world peaked in its level of discovery and if so, how long will it take the world, if it has peaked, to reach the peak of oil output? I believe that the peak of discovery fell in the five-year interval between 1965 and 1970. So if you took it at, say, 1968, and then you added 50 years, you would get to 2018.

Forbes: Is technology reducing the time between finding and producing oil?

Maxwell: Technology is trying to give us the ability to produce more out of a giant field. In the early days we only produced about 25%. Today we're producing about 40% of the oil in place when a field is found. These numbers are gaining rather slowly now. What's happening is that the increase in the world's population and greater use of oil in transportation, particularly in the emerging countries, is working to lift oil demand, and that spurs us to drain a field more quickly, but not necessarily to get a higher proportion of oil out of it. So we have technology improving production capability, but actually taking the oil out faster rather than getting much more out. I cannot tell you whether we are lengthening the life of a field very much in these times. It’s a slow process, at best.