TrendLines ResearchTrendLines Researchpresentation to thepresentation to the

2007 USA (NPC)2007 USA (NPC)Nat'l Petroleum Council'sNat'l Petroleum Council'sGlobal Oil & Gas StudyGlobal Oil & Gas Study

Aug 24, 2007Aug 24, 2007

Freddy HutterFreddy Hutter

Updates at Updates at www.TrendLines.ca/www.TrendLines.ca/npc.htmnpc.htm

(867) 660-5533 fax/tel(867) 660-5533 fax/tel

graphs@trendlines.cagraphs@trendlines.ca

Marsh Lake, The Yukon ~ CanadaMarsh Lake, The Yukon ~ Canada

Chart #1

With this and its predecessor versions, ASPO-Ireland has unwittingly assisted in creating a culture of urgency and/or despair in a small but growing portion of the populace.

Has Annual Production outpaced Yearly Discoveries since 1985? Are Discoveries truly only one-third of Annual Production? And it’s getting worse?

This hallmark forecast graphic of pending doom & gloom amid the rhetoric of economic collapse are not helpful to meaningful discussions.

How does one square this dismal familiar picture with the reality of growing annual production & optimistic forecasts by Agencies/Analysts/IOC’s?

Forecasts that say this advancing trend shall continue for a couple of decades.

This query goes to the very heart of the Oil supplies segment of the NPC Study … when it states that "the world is not running out of energy reserves".

2007 version of ASPO-IE Discovery graph:

Chart #2

Below is a TrendLines adaptation of the ASPO-IE Discovery Graph updated withColin Campbell’s July 2007 2600-Gb URR data.

It attempts to replace the current illusion of pending collapse by illustrating thepre-backdating (behind-the-scenes) reality of URR growth.

Each year ASPO-IE et al backdate most of the new Discoveries & Reserve Growth(as shown in yellow, where Black bars = 1995).

The bright yellow/black hashes illustrate the “before” (backdating) picture!

Red = future Conv Discoveries & RG … Lime = Non-Conv D & RG

Chart #3

In 2006, Trendlines premièred itsURR Estimates presentation:

In June, we (conveniently for NPC)explored its bottom two and mostlyimperceptible graph lines:

"Annual Growth & Annual Consumption"

This is timely ‘cuz that data relates to the previous Annual Discovery/Reserve Growth controversy.

For supply chain, planning & marketplace stability purposes, the petroleum industry has long beencomfortable with a 40-yr Reserve/Production ratio measure of future inventory. This ratio hasbeen maintained for two decades. Below, tracking by BP, OGJ & the Trendlines 19-Estimate AVGillustrate that the market is supplied well in advance when “called”.

There is NO apparent need to commence the 50-yr or 60-yr R/P ratio that ASPO infers is needed.

Chart #4

Most everyone agrees that URR is not a problem and most would agree with that a Hubbert type bell curve is in play wrt Supply. URR becomes an issue for those that believe URR is less than 3-Tb. With 1.1-Tb consumed, a 3-Tb global URR would mean that only 400-Gb is available ‘til the midpoint crossover … less than 12 years ‘til maximum supply (Peak Rate).

TrendLines most recent 19-Estimates AVG is 3392-Gb and presently growing at a 190-Gb/yr rate (using 3yr avg).

The NPC Study made converts of some in the belief that URR’s greater than 3-Tb do not mean the Peak Year is pushed out in bell curve fashion. Most new oil Discoveries will likely be Non-conventional but its supply is likely to dampen the Post Peak Decline Curve Slope … not significantly raise Peak Rate nor push out the Peak Date.

In 2007, we have incorporated increased URR Estimates from OPEC, ASPO-IE, BP, Saudi Aramco, IEA & OGJ.

Chart #5ASPO-Ireland Scenarios 1991-2007:

In July 2007, Colin Campbell raised his Peak Rate towards 94-mbd. This is a career high that surpasses his Estimated of 93-mbd (for 2009) made in 1999.

Problematic of strict bottom-up forecasting is that New Project announcements for the 7-12 year range are historically absent and thus are outside of the medium/long term parameters of those analysts relying on facts rather than supposition.

IOC’s, Agencies & some Analysts (e.g. Michael Lynch) seem to build in a slush component that precludes the upward revision issues of strict bottom-uppers.

While not perfect, we are grateful to this pattern of upward/outward revisions of Peak Rate & Peak Date as the consistency is an intuitive and beneficial tool. Rather than ridicule such revisions, these Outlooks serve the purpose of setting a baseline for policy-makers.

For NPC purposes, it's important to monitor the rate of their (real) changes moreso than the absolute numbers. If the revisions cease or turn downward … it's a sign!

Chart #6

TrendLines Scenarios Avg remains 95-mbd in 2020:

• The models & Outlooks continue to merge …

• Pessimists continue to raise forecasts for Peak Rate & Peak Date in 2006/2007

• And Optimists are sharpening their pencils with increased their data being (instantly) scrutinized much more by media, peers, analysts & pundits

Thanx for your attention today ~ See our website for monthly updates to these charts!