Economy & Energy
  Year  I  - No 4
Sep/Out 1997
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Oil Depletion
Brazilian Debt
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Cogeneration in ES
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Editoração Eletrônica
marcos@rio-point.com
Revised:
Sunday, 13 December 1998.

Part 1

Part 2

Future Production

Oil consumption ( and production) in the future in the medium term is a crucial question in energy policy. And it should be under the optic of some fundamental factors:

• It is not considered probable that the producer countries will maintain a growing production or even a stable one up to the last drop of oil of their commercial oil and raise the price afterwards. This is not physically possible ( well production regime) nor economically probable;
  
• As far as the 6 "Swing Producers" countries detain a large share of the market they will be in a better position to impose prices;
  
• The balance price when these countries will be in the condition of imposing prices will depend ( after the transition, when anything can happen, including nothing) on the costs of oil substitution. These costs are different for each application.

Starting from the condition of each country and of the regions, the Petroconsultant study arrives at a depletion model for the world oil reserves which considers:

The production of the other countries will follow the present direction relative to their medium point (in most cases, the peak production).

Once the medium point is reached the production in each country will fall hyperbolically maintaining the depletion ratio (production/reserve) of this moment.

Prices would be altered as long as the contributions from the "Swing Producers" will reach 30 %, what would happen between 1997 and 2000.

The production would be according to 4 hypothesis illustrated in figure 6. The inflection points suppose an oil price alteration in order to modify the demand profile. The different hypothesis are related to the demand level which would trigger the price raise.

Figure 6

The basic hypothesis (A) considers that this will happen gradually when dependency on the countries of the region will reach 30%. This limit considers implicitly that the power balance will be maintained in the region and the participation of the international corporations in the Golf region market.

With this hypothesis, oil consumption would grow gradually until it reaches the referred participation and would maintain itself stable until the world would reach the medium point consumption of the original total reserve when it would start to decrease maintaining the same depletion rate.

With this hypothesis , the end of this decade would already be experiencing a gradual oil price increase and approximately in the year 2004 , oil consumption would start to decrease.

Figure 7 a shows scenario A indicating the historical and projected participation of the different regions. It should be noted the recuperation of the Gulf countries’ participation in the world production in the last decades and the predominance that it will have in the next one. Figure 7 b shows the same data in percents.

Figure 7a

Figure 7b

In figure 8 the logistic projection for 1630 and 1800 total reserves are compared to those of Petroconsultant. One can notice that the fittings are coincident in that we would have the maximum production close to year 2000.

Figure 8

Finally, figure 9 shows the evolution observed in oil production and what it would mean in terms of existing and remaining reserves along the past years and close to a total reserve of 1800 Gb. We would actually be in the accumulated consumption of half of the commercial oil existing in the world.

Figure 9

Conclusions

The analysis presented here is closely related to the theme of this seminar which tries to foresee the future of alcohol in the Brazilian and world energy panorama. We came from a sector, the nuclear one, which experienced a low profile decade in the world panorama. Today nuclear energy is the clear energy option of the Far East countries and maintained its participation in the rich western countries. Even the environmental objections are becoming relative when facing the greenhouse effect.

The period for definition about the oil future is just a decade which in terms of energy means tomorrow. The economic analysis at the time of the PROALCOOL program establishment showed that it was competitive with oil prices at that time, US$ 50 per barrel ( corrected by the inflation) and that there was room for costs reduction and that alcohol could be competitive with oil at US$ 30 or US$35 per barrel. It should still be remembered that it presents, from the point of view of emissions, a clear advantage over any liquid fuel (or gas) when CO2 emissions are included.

The oil situation analysis does not recommend reducing the use of its less polluting substitutes and the program will be maintained at least at the present levels. I am sure that the "desert journey" for this fuel is approaching its end. It happens that in order to maintain the present production and consumption it is necessary that new alcohol cars reach the market unless an alternative use is found. That is, as in Lewis Carrol’s Through the Looking Glass ..."Now, here, you see it takes all the running you can do, to keep in the same place."...

It would be an incorrect strategic (excuse me again for the bad word) decision to dismantle the network distribution and to renounce to the technological knowledge reached. It would also be incorrect to follow an extraction pattern of the "Trinidad Tobago" type - peak - of production and not that of the United States or former Soviet Union - plateau. Nevertheless this is not a valid argument since it is part of the new world order strategy to convince us that strategy does not exist.