Industry taskforce delivers oil shock warning
11-12-2010
The UK Industry Taskforce on Peak Oil and Energy Security (ITPOES) has produced a briefing update called “Peak Oil: The implications of the Gulf of Mexico spill”.
In it, the Taskforce, composed of a consortium of British businesses, including Virgin Group and Scottish and Southern Energy, projects total gross capacity additions to amount to 30.9mbpd, of which 29% (8.9mbpd) will come from deepwater projects. However, it expects total loss of capacity over same period due to reservoir depletion to amount to 25.4mbpd, putting total production capacity in 2015 at around 95mbpd. While the IEA projected back in June that demand in the same year could be in the 89.5-92mbpd range, ITPOES believes it could exceed 95mbpd, given strong demand growth from non-OECD countries.
While the report makes the point that the loss of BP’s Macondo well is relatively insignificant in global terms, the it may lead to “project delays as a result of new legislation, tighter controls or more inspections of deepwater installations.” The report analysed the impact of an average six-month delay to such projects and found that this could reduce total new capacity additions by 2015 to 30.1mbpd, putting production capacity at 94mbpd, bringing “spare capacity with respect to the IEA’s high demand reduced to nearer 2mbpd, nearly one third less.”
The briefing document concludes by warning that up to 2mbpd of OPEC spare capacity could be “theoretical, inoperable, or unsaleable and that the depletion rate used in its analysis (4.5%) could be on the low side. It expects major rises in oil prices over the next few years and calls on the UK government to accelerate the introduction of renewables and energy efficiency measures as well as creating a contingency plan to address “the risks of peak oil and speeds up our transition to a low-carbon economy.
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