Cambridge Energy Research Associates continues to make news with its annual energy conference in Houston which it dubs CERAWeek. Star attractions such as the CEO’s of Shell and BP told the gathering that despite the recent drop in demand, the prospects for long term growth remain unchanged and that the industry must continue to invest to meet demand that is expected to double in the next 40 years.
Saudi Oil Minister al-Naimi keynoted the event by touching on a variety of topics ranging from the challenges of the current global recession to the “nightmare scenario” that would occur should the world attempt to switch prematurely to alternative sources of energy that will not meet expectations. The minister noted that with the addition of 1.2 million b/d of production capacity from the Khurais field this year, the Kingdom will have 4.5 million b/d of spare production capacity.
The willingness of the oil industry to work with the Obama administration on global warming also made headlines as did a panel of celebrity economists who not only predicted $20 oil but could offer little hope for a quick economic recovery.
From a peak oil perspective, one of the more interesting aspects of the conference was a discussion of the long running dispute between CERA and the peak oil community regarding the prospects for future oil production. As reported by Platts, CERA managing director James Burkhard made an oblique reference to the disdain that his organization has faced in its dispute with the peak oil community, by saying that “”CERA has been looked at as wildly optimistic, …. But when you look at the complete story, it’s not as nice and tidy.” He said CERA does see crude supplies “flattening out” after 2010, though the current economic slowdown may delay that until 2015 as production slows.
CERA now holds that increasing supplies of biofuels and natural gas liquids will substitute for growth in crude oil production, despite criticism that these are not sources for distillate production. Burkhard admitted that “production of enough distillates to satisfy demand will be an increasing challenge.”