411. REALITY CHECK FOR "ACE"
Today's a good day to review one of the oil production forecasts made by the Oil Drum's primary forecaster, Tony Eriksen aka "ace". (Quick question: How narcissistic do you have to be to call yourself "ace"?)
On August 6, 2007, ace published the following prediction on the Oil Drum:
World C&C production continues to retain its May 2005 peak and is forecast to decline by 1%/yr until 2009. The decline rate steepens to 4%/yr until 2012. The main reason for the end of the total liquids plateau in 2009 (Fig 1) is that the C&C production decline rate changes from 1%/yr to 4%/yr in 2009.The graph of this forecast is as follows. Notice in particular the steep increase in the decline rate to 4%/yr which ace forecasted to begin right now, in the Summer of 2009 (click the graph to enlarge):
Now, let's compare this forecast with the actual results to date (from the latest Oilwatch Monthly):
As you can see, the first part of the forecast was not very accurate. Ace stated that there would be no new peak after 2005, but in fact a new peak was set in July 2008. Furthermore, production did not decline by 1%/yr from May 2007. In fact, there was a sharp increase in production, until the steep drop due to the recession.
However, those points are all pretty minor. The funky part of ace's forecast starts about right now, in July 2009. As you can see in the graph, he is predicting that world C&C (conventional crude) production will now begin a shocking and unprecedented nosedive, and decline by 4%/yr until 2012. (Compare this with the 1.3% C&C decline forecast by Kjell Aleklett.)
Current C&C production is roughly 72 mbd (EIA, April 2009). So here's ace's forecast for the next few years:
Summer 2010: 69 mbd
Summer 2011: 66 mbd
Summer 2012: 64 mbd
Those are horrendous declines. The total crude production of Saudi Arabia gone, in just three years. So stay tuned folks. Either oil production, or ace's credibility, is going to swirl down the toilet in the next year or two. I'm betting on the latter.