July 10, 2007
International agency anticipates oil supply crunch after 2010
Jason Minvielle and Michael Vaughan, with the Hosermobile; photo by Nicole Griffin. Click image to enlarge
Paris, France – The International Energy Agency (IEA) has released its Medium-Term Oil Market Report, which anticipates “increasing market tightness” beyond 2010, according to a report by the Green Car Congress. The report says that stronger demand and OPEC spare capacity declining to minimal levels by 2012 will be to blame.
The IEA forecasts global oil product demand to expand by 1.9 million barrels per day (mb/d), or 2.2 per cent per year on average, reaching 95.8 mb/d by 2012, due to stronger oil demand growth in non-Organization for Economic Cooperation and Development (OECD) countries, particularly in Asia and the Middle East. Demand in these areas will grow more than three times faster than that of OECD economies, with transportation fuels accounting for the bulk of demand growth in all countries.
The IEA projects that biofuels will expand significantly over the forecast period, but will still remain marginal in terms of total oil demand. The report anticipates that ethanol and biodiesel will displace a total of 1.1 mb/d of oil product in demand, rising to almost 1.8 mb/d in 2012; ethanol is expected to replace about 27 per cent of gasoline, while biodiesel will only displace about 5 per cent of gasoil.
With supply, the IEA expects net oilfield decline rates to average 4.6 per cent annually for non-OPEC crude, and 3.2 per cent per year for OPEC crude. The forecast suggests the industry needs to generate 3.0 mb/d of new supply each year, including aggregate and deepwater reserves, simply to offset decline.
While the report notes that “the concept of peak oil production and its timing are emotive subjects which raise intense debate,” the forecast suggests that non-OPEC conventional crude appears to have reached an effective plateau, rather than a peak. The conventional crude supply has remained unchanged since attaining 40 mb/d in 2003 and could do so through 2012. Although significant increases are expected in some areas, the report says these are only sufficient to offset declines in crude supply elsewhere, and that all of the growth in non-OPEC supply over 2007-2012 will come from gas liquids, extra-heavy oil, biofuels, and by 2012, coal-to-liquids from China.