al-Husseini: Global oil supply plateau unlikely to extend beyond 2020.

ASPO USA: Sadad al-Husseini interviewed by Steve Andrews: “Since the autumn of 2011, a storyline of “oil revolution” and oil abundance–even “North American energy independence”—has taken the US media by storm.  ….What is your perspective on that storyline?  Should we be bracing for the notion of energy independence in the USA or do you feel the future will diverge from that optimistic scenario?”
“A: ….Given the need for these continued major oil imports, it’s hardly a case of US “oil independence” under the best of circumstances.
Q: There are even voices within OPEC nations which fear the longer term impacts of the North American unconventional oil boom.  Do you line up with those who are concerned about the unconventional oil boom’s impact on world oil supply or do you see things otherwise?
A: ….In the long term, given the severe declines in shale oil productivity, the limited prospects for major new basins, and the plateau in US capacity starting in 2016, improved access to markets and so forth, domestic US oil prices are bound to make a strong recovery starting in 2016. This and the maturity of major fields across the world, the high cost of deep offshore and Arctic production, and the continued violent turmoil in many oil producing are bound to keep oil prices at historically high levels for decades to come.
Q: Have you estimated a range of what level of total oil production might come out of the USA, thanks to the tight oil boom? If so, how do you see the subsequent plateau and decline, in terms of approximate production rate and timing?
My forecast for the US is a little more conservative than the EIA’s due to limited shale oil opportunities and rapid declines. If the US were able to achieve 8.5 Mbd of conventional oil and condensates by 2016 and sustain it beyond 2020 that would be a very exceptional best case accomplishment.
….Q: What do you anticipate will be the progression of production growth from tight oil from outside of North America?
A: With the possible exception of China, hardly any region outside the US and Canada can rival the ability of the US to deploy equipment and provide financing and personnel to exploit tight oil resource on a scale that affects regional markets. The number of rigs, organizations, infrastructure investments, legal provisions, field support equipment and volumes of materials and consumables are a logistical hurdle that few regions outside the US are in a position to manage. This is a reality that cannot be overcome irrespective of favorable geology or the local demand for affordable energy. The economics and scaling up of oil shale developments outside the US will require decades of industrial evolution which is unlikely to materialize at the current pace of progress outside the US.
Q: In terms of conventional oil, the majority opinion seems to be that supply will have to grow considerably from the Persian Gulf states.  Do you anticipate such growth over the next decade?
A: ….Major capacity increases from this region require massive funding and resource mobilization which remains dependent on a broad political stabilization that does not appear imminent.”
Q: In the larger context, how has your view of future world oil production supply evolved over the last four or five years?  As a benchmark, I reference your slides from the 2009 Oil & Money Conference slides.
A: In 2009 I highlighted several factors that inhibit production expansion including: decline rates (more extreme than ever with shale oil and deep offshore), limited investments (quadrupled capex/barrel in the last few years) and economic growth (still recovering). In the long term, reserves depletion remains very high with totally inadequate reserves replacements regularly obscured by resorting to claiming “resources” as reserves.
The industry has moved into a higher cost paradigm with very limited growth in conventional oil and condensate supplies, accelerated “proven” reserves depletion, and high levels of violence and conflicts around the world’s major basins of low-cost oil production.
The realities of the 2009 O&M forecast of a limited plateau of oil supplies have been pretty much vindicated since then. The oil plateau may now inflated by about 1 – 2 Mbd of high cost unconventional oils but all major forecasters see this as pretty much transitional. The plateau itself remains a reality and unfortunately its duration is still unlikely to extend beyond the end of this decade.”