Is Depletion Underpinning High Oil Prices?
While analysts have been offering wide-ranging explanations for current high oil prices, one rarely mentioned factor is the effect of depletion. But, according to Chris Skrebowski, editor of Petroleum Review, “depletion is starting to have a significant impact — and one that can only grow.” With 29 percent of global oil production in 2002 coming from areas already in permanent decline, he estimates that annually production in those areas is falling by around 850,000 barrels a day. “The under-recognised impact of this is that, to meet this year’s projected demand growth of 1.6 mn b/d, the producers still able to expand production have to meet [that demand growth] and make up for the largely unreported 850,000 b/d of decline,” he says. The actual rate at which they must increase production, therefore, “is not the overall 2.1% growth reported by the IEA but a rather more demanding 4.1%.” The demands on those producers will become even greater as more of the world’s production goes into de
