1. Oil production outlook 2006 Separating facts from fiction De Waag, 1 November 2006, Amsterdam

2. Terminology Current situation Production outlook until 2010 Beyond 2010 Discussion

3. Oil sits under pressure in the ground

4. Liquids production Conventional oil (light + medium crude oil - >20 degrees API) Unconventional oil ( heavy + extra heavy crude oil - <20 degrees API) Natural Gas Liquids Processing gains Biofuels / coal to liquids / gas to liquids (not included in this outlook) Resources  Total amount of oil in the ground Reserves  Recoverable amount of oil in the ground Terminology

5. “ The Canadian tar sands contain 1.8 billion barrels of oil, seven times as much as the known reserves of Saudi-Arabia. At least 300 billion barrels are recoverable, 15% more then Saudi reserves.” The world needs oil production flows! Unconventional oil needs to be heated or diluted before being produced. Production has entirely different mechanisms/timelines. Don’t compare apples with oranges

6. Terminology Current situation Production outlook until 2010 Beyond 2010 Discussion

7. Why worry about oil prices and availability? Source: Dutch Central Bureau for Statistics Dutch consumption = 1 million barrels per day 23 % 41 % Road transport Air + Ship transport 25 %Industry 8% 3% Energy production Farming & Households

8. 2001 - China joins the WTO

9. Steel prices double in three years Source: World Watch Institute

10. Scramble for oil begins in 2002 Source: Cambridge Energy Research Associates

11. New price reality emerges Source: IEA, EIA

12. Terminology Current situation Production outlook until 2010 Beyond 2010 Discussion

13. Why I look at flows, not reserves TSHTF when flows can’t meet the required demand Reserve data is weak and usually biased Reliable Middle East + Russian data remains undisclosed Western data is unreliable due to financial rules instead of geological New project flows can be monitored Outright, visible, decline/depletion can be listed The demand that can be met established

14. Decline running at 4% or 5% annually Source: International Energy Agency, ASPO Netherlands Database

15. 4% - Demand / supply barely in balance Source: ASPO Netherlands Database

16. 5% - Demand destruction of 5 mb/d by 2010 Source: ASPO Netherlands Database

17. That’s only the theoretical scenario Project slippage (happens regularly) Increasing taxes/tighter terms (happening) Accelerating decline (happening) Upheaval in major producers (Iraq, Nigeria, Venezuela) Accelerating demand growth (China, India) Rig shortage >500 offshore rigs need to be replaced within 5 years “The big crew change” (half of the personnel will retire within 10 years) What will the oil price do on the short term? Base price level of 50 – 75 dollars per barrel likely too conservative Superspike period (goldman sachs) >100 dollars per barrel

18. Terminology Current situation Production outlook until 2010 Beyond 2010 Discussion

19. What do we need between 2010 - 2015? Source: ASPO Netherlands Database

20. Present activity planned for 2010 – 2015: Conventional crude + NGL projects ~ 7 Mb/d Unconventional crude projects ~ 3 Mb/d Divided by the largest increments : Saudi Arabia (1.5 mb/d), Iraq (1.3 mb/d), Iran (1.0 mb/d), Kazakhstan (1.0 mb/d), Canada (0.7 mb/d), Brazil (0.6 mb/d), Angola (0.5 mb/d) We need another 10 Mb/d to keep production flat! Don’t place your bets on meeting demand

21. Where is the oil discovery miracle? Discoveries Peaked in the ‘60s Production > discovery since ’80s Discovery rate in last four years lowest since WWII 75% of conventional oil already found (USGS assessment) Where are the ten annual “Jack” discoveries as promised by the International Energy Agency? Source: IHS Energy (Conventional crude oil + NGL)

22. Europe needs to find a new large supplier Source: WoodMackenzie, International Energy Agency Russia: Past production 135 Gb Current proven Reserves 74.4 Gb Likely ultimate prod. of 250 Gb IEA expectation: Flat production until 2030 Ultimate of 300 Gb

23. There are warnings, but who is listening? Amsterdam, 7 June 2006, World Gas Conference Thierry Desmarest, CEO of Total oil company: “The capacity of raising (oil) production is a real challenge... if we stay with this type of production growth our impression is that peak production could be reached around 2020.” “We say to governments, it's urgent to take action plans to reduce oil demand growth.” Source: Reuters

24. Peak oil crisis can be solved What’s on the horizon for transport Super fuel efficient cars Efficient and cheap electrical cars 2 nd generation biofuels (created using little energy) The Netherlands could become the knowledge centre for high quality chemical products produced with biofuels In the meantime, the world has to “tighten it’s belt” on moving products, food and people: Minimize long distant truck deliveries Minimize transport by car Maximize moving goods by water Grow foods more regionally (within Europe)

25. Thank you for listening http://www.peakoil.nl contact@peakoil.nl