OPEC Reveal Global Light Sweet Crude Peaked
I’m writing this after last week’s story that oil extraction rates from Western oil majors have peaked and are now in decline. This week we learn that light sweet crude oil has also peaked globally and is now in decline.
This information has come to us from a most unexpected source, the Organisation of Petroleum Exporting Countries (OPEC) itself. OPEC publish a monthly report on the global oil market and the August 2005 issue has data on non-OPEC and OPEC oil extraction by weight and sulphur content from 2000 to 2004.
In 2000, non-OPEC crude output was 66 mb/d and the split of non-OPEC crude production by light (>35 API), medium (26 to 35 API), and heavy (<26 API) was approximately 41%, 44%, and 15%, respectively. However, in 2004 with production at 70 mb/d, the split was 34%, 49%, and 18%, respectively. In terms of sulphur content, 47% of crude production in 2000 was sour (sulphur >0.5%) whilst in 2004 it was 51%.
OPEC crude production during the 2000 to 2004 period saw an average increase of 1 mb/d of light sweet and 0.9 mb/d of medium sour crudes, while heavy sour output dropped 0.7 mb/d…
August 2005 OPEC Monthly Oil Market Report, Page 4
The key point is that non-OPEC light sweet crude went from 41% of 66 mb/d to 34% of 70 mb/d from 2000 to 2004, a drop of 3.26 mb/d. OPEC added 1 mb/d of light sweet crude over the same period resulting in a global reduction of light sweet crude of over 2mb/d showing that global light sweet crude has peaked and is now in decline.
Although the total volume of ‘oil’ extracted in 2004 compared with 2000 has increased, the proportions of different grades of oil have shifted. Light sweet crude is the most attractive because it is easier to refine, global refining capacity is geared to light sweet crude of which there is now a shortage. This shift in grades has resulted in a shortage of refining capacity for the available medium/heavy sour oil and tough competition for the reduced amount of light sweet oil available.
It is these two factors (less light sweet oil available and lack of refining capacity for the medium/heavy sour oil) that are chiefly responsible for the current high prices.
As oil becomes scarce it is clear that the best stuff will be pumped first, the best stuff is the light sweet crude. The fact that this is now in decline adds more weight to the argument that that the total global oil extraction rates will soon peak.
To recap:
- Individual countries have peaked (America, Norway, Venezuela, UK, Indonesia etc.)
- Individual companies have peaked (Chevron, Exxon, Shell, Total)
- Individual grades of oil have peaked (Light sweet crude)
The only thing left to peak is total all oil extraction rates for which the experts predict 2007/8.
This post was written by Chris Vernon
This entry was posted on Saturday, August 20th, 2005 at 9:55 am and is filed under Hydrocarbon Depletion. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
August 20th, 2005 at 7:38 pm
This is a very good catch. The OPEC report is not entirely clear about what kind of liquids are being included - it’s difficult to believe that non-OPEC extraction of “regular” oil was 70mbd in 2004 - and I got caught on that.
The point - which I’m sure you saw immediately - is that it doesn’t matter. You were still able to calculate the break-out by grades no matter what the aggregate is referring to.
I’ve already pointed to this page from my campaign web site; I hope it stays still!
BTW: Very nice web site.
August 24th, 2005 at 10:45 am
Great stuff Chris! Brilliant bit of digging to prise this one out.
I agree with your conclusions entirely, that indeed this is futher evidence of declining world oil production, or at very least in the words of Chevron’s President, the end of cheap oil.
A pity there are no reliable EROEI figures for oil extraction, i can only find vague approximations. a figure of 4 or 5 times currently are the best offers. This will be the next major milestone, when oil in place becomes an energy sink rather than an energy sourse. If you plotted EROEI on the vertical axis and year on the horrizontal, this would yield another Hubbert like analysis and approximation for the date of eventual depletion.
Naresh
August 26th, 2005 at 2:56 pm
[…] imited refinery capacity for these heavier grades of crude. Chris Vernon’s webpage, Vital Trivia ferreted out this conclusion from the OPEC report; The key point is that non-OPEC light swe […]
September 28th, 2005 at 12:19 am
The OPEC Market Report cited is very dry and hard to follow.
The non-OPEC data is in graphic form and only shows percentage shares of crude types, not the actual production.
Whereas the OPEC number is placed in the following text.
Anyone would think they were trying to bury it !
Is there a full historical production table, broken down by API crude type, to be found anywhere ? This needs to be put into a helpful graphic form and spread far and wide.
September 28th, 2005 at 8:11 pm
I’m confused. Why does the report say that non-OPEC crude production was 70mb/d in 2004? What numbers are they using?
September 29th, 2005 at 10:28 pm
Andrew, I don’t know exactly what OPEC are referring to but as Stu Kautsch points out in the first comment it doesn’t matter (as long as they didn’t change the rules between 2000 and 2004). What we can see is that the proportion of whatever they are counting that is light sweet has fallen over the last few years.
March 12th, 2007 at 6:00 am
You said the following:
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
To recap:
* Individual countries have peaked (America, Norway, Venezuela, UK, Indonesia etc.)
* Individual companies have peaked (Chevron, Exxon, Shell, Total)
* Individual grades of oil have peaked (Light sweet crude)
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
There is no such country as “America”. In fact, different parts of America have diffent types of reserves and different oil extraction graphs.
March 12th, 2007 at 6:51 am
Okay, I did mean The United States of America. However, it doesn’t really matter. Whichever way you cut it, every state of the US has peaked and even the continent of North America has peaked.