Agcapita Energy Update
It would seem virtually axiomatic that if individual oil wells peak, fields
peak and regions peak, global production should also peak. The
more pertinent issue then becomes the timing of the peak and the
rate of post peak decline. The research presents a wide range of
answers to these questions. A recent survey paper from the UKERC
–	The global average decline rate of post-peak fields is at least
6.5%/year and the corresponding decline rate of all currently
producing fields is at least 4%/year. This implies that
approximately 3 mb/day of capacity must be added each
year just to maintain production at current levels – equivalent
to a new Saudi Arabia coming on-stream every 3 years.
An additional 1 mb/day must be added to meet demand
–	More than two thirds of existing capacity must be replaced
by 2030 solely to prevent production from falling.
–	A peak in conventional oil production before 2030 appears
likely and there is a significant risk of a peak before 2020.
For example, a 2008 report by The UK Industry Taskforce on
Peak Oil and Energy Security warned that a “peak in cheap,
easily available oil production” was likely by 2013.
As a thought experiment, Agcapita has produced a model based on
known country by country oil demand, emerging versus developed
market oil demand growth profiles, demand elasticity profiles
and known pre and post peak production growth/decline rates.
The purpose of this exercise was not to make highly accurate oil
price predictions but rather to gain some insight into the potential
magnitude of price changes given fairly conservative production,
demand and decline assumptions.
Stephen Johnston - Partner
Peak Oil Price Modeling
IEA – Peak Oil is Here?
Peak oil PriCe Modeling
Peak oil price models attempt to reflect an
enormously complex system like oil supply/demand
and pricing. Even a simplified model will be highly
sensitive to post peak decline rates, reserve