Peak capacity not necessarily peak production
November 19th, 2009 by Jim JustThe November 2009 OilWatch Monthy is now available. The report says the world may experience a couple years of oil glut, especially if the current economic weakness continues. But expect to hit peak oil production capacity by the middle of the next decade.
In the coming years to 2012 higher additions to OPEC capacity are to be expected, based on current projects, in comparison to increases between 2004 and 2008. Hence if decline continues at the same rate as before, OPEC capacity will increase significantly. If at the same time demand increases only at a sluggish rate, a glut of capacity lasting beyond a couple of years occurs, driving down oil prices to near OPEC production cost levels. The end result may be that we hit peak oil production capacity somewhere early to mid next decade because of ensuing underinvestment, but that the effects will only become apparent several years after capacity peak due to low economic growth.
Peak oil production capacity has little to do with actual production. For the moment, the July 2008 peak in both crude and all-liquids production still stands.
These graphs from the report are posted by Rembrandt at The Oil Drum: Europe.
