Wednesday, September 8, 2010

The Shape of Oil Decline - continued

In another post (and earlier in post #27 of this thread at CM's site) I tried to use my recent calculations, considering the effect that the export-land model would have on hastening gas/diesel rationing in the USA, to illustrate how the “Rosy Scenario,” described in Orlov’s article,  might be adjusted.
My calculation was a very gross estimate of how oil import would decline by applying Brown’s estimate of 6.2% of the initial decline in exports for the top five exporters. My application was very gross because it didn’t account for the fact that at some point these exporters stop exporting altogether. That is, rather than the exports gradually trailing off to infinity, they just stop.

This post describes how I accounted for this, and, my revised results as applied to correcting the Rosy Scenario for export-land model effects.

Of course, the problem is that I don’t actually have the data that Brown used to arrive at his estimated initial 6.2% decline. However, I do have Brown’s composite graphs from the FSN article:

Brown Fig 16


Brown Fig 17

From these graphs I can read that the composite oil production for the top 5 exporter in 2007 was 27.6 MB oil/d and that the composte domestic consumption was 7.3 27.6 MB oil/d. Additionally, the estimated production was estimated to decline at -3.8% per year and the domestic production to increase at 1.8% per year.

From this, I created a spreadsheet to calculate the expected year-by-year decline in production (P) and increase in domestic consumption (C), and the difference between these two numbers (P-C):

Year       P         C       P-C

2007   27.60   7.30   20.30

2008   26.55   7.43   19.12

2009   25.54   7.57   17.98

2010   24.57   7.70   16.87

....

2028   12.23   10.62   1.62

2029   11.77   10.81   0.96

2030   11.32   11.00   0.32

2031   10.89   11.20   -0.31

The difference, P-C, equals the amount of oil available for exports. In good agreement with Brown’s Fig 17, I calculate that the exports go to zero at 2031.

Expressed in terms of year-by-year changes in the percentages of oil available for export and oil used domestically, the Export-Land Model looks like this:



Now I’m ready to apply this to my model for estimating oil decline the USA. I previously estimated that USA oil imports for 2009 equaled 11.7 MB oil/d. I assume that these USA imports would subsequently follow the Export-Land model for Brown’s top five exporters. Now I know from the above graph, that in 2009, the 11.7 MB oil/d number corresponds to 70.38% of total production and the remaining 29.62% corresponds to domestic consumption. From this I can estimate the exporter’s total production must be equivalent to 16.6 MB oil/d (11.7/.704).

Therefore I can model the percentage decline in USA imports and add this to USA domestic production, assuming a 2% /yr domestic decline:


Finally, I can scale these curves (“Land-export model Scenario”) and overlay them onto the “Rosy Scenario” view of peak oil:

The initial part of the decline curve looks about the same as my earlier, grosser estimate, and therefore the conclusions are about the same. To the extent that the disruption events listed to the right are driven by a certain percentage decline in oil, early events like, “Shortages and Rationing, Financial Market Collapse, Crime & Civil Disorder, etc..,” are all predicted to occur about 10 years sooner than in the “Rosy Scenario.”

A big difference compared to my earlier model occurs as we approach the inflection point at 2031, where foreign oil imports are predicted by the "Export-Land Model Scenario" to drop to zero. Now, the extremely disruptive events like, “government collapse, “deep depression,” “Riots, Famine” are predicted to occur 15-25 years sooner than in the “Rosy Scenario.”

Despite the depressing shape of the “Export-Land model Scenario,” the perceptive reader will appreciate even this scenario maybe somewhat “rosy.”

Why?

Because the other three factors that Orlov’s article discussed (overstated reserves by some oil exporters; the deleterious effects of decreasing EROEI on production; disruptions in the oil industry integration) if accounted for, may make my oil import and domestic production curves shift to the left, be even steeper, and/or go to zero sooner, than modeled here.

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