New Oil Projects Cannot Meet World Needs This Decade

The London based Oil Depletion Analysis Centre studied all of the major new oil projects scheduled to come on stream over the next six years--68 projects with a projected 12.5 million barrels a day of production--and concluded that; "This new production would almost certainly not be sufficient to offset diminishing supplies from existing sources and still meet growing global demand."

The study assumed a decline in production from older fields of about 1 million barrels a day per year, leaving only half of the new production left to meet demand growth. If demand were to increase by two percent annually, available supplies could fall short of the total needed in 2010 by more than two million barrels a day.

However, the study's assumptions may be optimistic. According to numbers supplied by
the Energy Information Administration, twelve of the thirty countries they list are in decline. Furthermore, almost all of the increase that has occurred so far in 2004 (their numbers go through August) has come from OPEC (which has brought
online what is left of their surplus capacity) and Russia.

Between December, 2003 and August 2004, OPEC's production has increased by 1.26 million barrels a day and Russia's production has increased by 815 thousand barrels a day.

But worldwide production has only increased by 861 thousand barrels a day. That means that, outside of OPEC and Russia, there has been a net loss of over 1.2 million barrels a day of production. This is a stunning number. OPEC has no more reserves to bring online so they cannot repeat this year's performance and Russia cannot keep up this level of growth forever. The world may already be experiencing a depletion rate greater than the average rate assumed by the study for the next six years, and as more countries roll over into decline, this number will only grow larger.