The term Peak Oil was created in 2000 after Jean Laherrère and Colin Campbell wrote an article in 1998 in Scientific American which title was "the End of Cheap Oil". This paper was ignored until 2005 when oil price reached 50$/b anf fully accepted in 2008 when 140 $/b was reached. With the burst of shale oil, many papers have been published on the "Peak Oil Myth" and the fact that the USA would become energy independent thanks to the shale oil & gas revolution. However the oil production peaked in many countries and the end of cheap oil is more than ever a reality that will strongly impact our economies. New oil projects with higher extraction costs require $100/b+ oil price to be profitable while oil demand (and GDP) contracts when oil price surpasses $120/b !

1. Peak Oil – Myth or Reality?
Jean Laherrère
President of ASPO France
Long paper available on ASPO France Website
MIT Club of France - 28th of April 2014
Oil Reserves – The End Of Cheap Oil
by Colin J. Campbell and Jean H. Laherrère, Scientific American, 1998

2. 2
Life is one cycle - we are all mortal and the Sun will also eventually die!
UK coal peak was in 1910, France & Belgium coal peak was in 1960.
 The production increases until the peak and then declines despite sharp price increase
0
16
32
48
64
80
96
112
128
144
0
10
20
30
40
50
60
70
80
90
1800 1825 1850 1875 1900 1925 1950 1975 2000 2025
price$/t
annualproductionMt
year
France & Belgium coal annual production
Rutledge Mt
EIA Mt
price US anthracite $/t
price NW Europe $/t
Jean Laherrere 2010 source: Rutledge, EIA
wars

3. 3
Life is cycles
Cycles can also be the race between predator & preys or oil discovery, which can witness
several cycles followed by production cycles such as in France or in Belgium
0
5
10
15
20
25
30
35
40
1940 1950 1960 1970 1980 1990 2000 2010 2020 2030
annualoilMb
year
France annual oil discovery (smooth 7 yr
& shift 7 yr) with 2 cycles and production with 3 cycles
discovery shift 7 yr
oil production
C1
C1+C2
C1+C2+C3
Jean Laherrere July 2013
production including
Pechelbronn & Autun

4. 4
Oil Reserves keep on increasing!
The political/financial oil reserves kept on increasing since 1950 with jumps when OPEC
added 300 Gb during their quota fights but technical oil reserves peaked in 1980
0
200
400
600
800
1000
1200
1400
1600
1800
1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
remainingreservesGb
year
World remaining oil reserves
from political/financial and technical sources
technical = backdated 2P excl XH
technical 2P SciAm 1998
current 1P reserves EIA/OGJ
Jean Laherrere Oct 2013 Sources: IHS, USDOE, CAPP, API, OGJ
-omission of probable
-incorrect aggregation
Ghawar
including tarsands
+200 Gb Venezuela
+175 Gb Canada
OPEC fight for quotas
+300 Gb = speculative
resources al-Husseini
excluding 215 Gb
Orinoco from
1936 to 1939
first production
Orinoco 1979
Athabasca 1967

5. 0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
Mb/d
year
World excluding US oil production from EIA
all liquids = total oil supply
crude +condensate + NGPL
crude + condensate
US crude + condensate
Jean Laherrere March 2014
5
Peak Oil is already fact in many basins such as the North Sea (2000)
Chevron reported in 2011 that 33 of the 48 largest producing countries are in decline
At a global scale excluding the US oil production:
• The “Thirty Glorious” 1945-1975 displays an exponential growth...
• Stopped by the oil shock of 1973/1979...
• With the oil counter shock of 1986 ....
• Followed by the “twenty less glorious 1986- 2005”....
• Since 2005, it is a bumpy plateau within a range equal to the accuracy of the data.
55
60
65
70
75
80
1995 2000 2005 2010 2015
Mb/d
year
World excluding US oil production from EIA
all liquids = total oil supply
crude +condensate + NGPL
crude + condensate
Jean Laherrere April 2014

6. 6
The American dream of oil independence will soon disappear...
Chevron reported in 2011 that 33 of the 48 largest producing countries are in decline
•The Gulf of Mexico oil peak is likely to be in 2001 & 2009 at 560 kb/d with a sharp decline after 2020
•The Texas oil discovery peak was in the 1930s, the oil peak in 1973 and the secondary peak will be in 2014
•The Eagle Ford oil production will peak soon with an ultimate of 3 Gb
•The Permian Basin (Texas & New Mexico) has already produced 35 Gb since1923. Its ultimate is 40 Gb with a
first peak in 1973 at 2 Mb/d and a second peak in 2016 at 1.5 Mb/d
0
50
100
150
200
250
300
350
400
450
500
550
600
1950 1970 1990 2010 2030 2050
annualoilproductionMb
year
US Gulf of Mexico oil production & forecast
U=24 Gb
all
U=14 Gb
shallow
U=10 Gb
deep >1000 ft
Jean Laherrere April 2014
0
250
500
750
1000
1250
1500
1750
2000
2250
1890 1910 1930 1950 1970 1990 2010 2030 2050
Mb
year
Texas oil discovery & production (+Eagle Ford) with
forecast for U = 75 Gb
back disc EIA-0534
U = 75 Gb
prod Texas
U = 72 Gb
Texas -EF
East Texas prod
U = 3 Gb
Eagle Ford
Jean Laherrere 8 April 2014
discovery
1926 Yates 2 Gb
1930 East Texas 5.4 Gb
1936 Wasson 2.3 Gb

7. 7
Human behave with cycles depending upon their moods and constraints …
…and so does the US number of wells following several cycles of different width and heights
It is amazing to see that most of the time the cycles are symmetrical
 “What goes up declines with similar rate”
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
90 000
100 000
1945 1955 1965 1975 1985 1995 2005 2015
annualnumberofwells
year
US annual number of wells
all wells
oil
gas
dry
Jean Laherrere April 2014

8. 8
When will the peak oil happen?
All liquids production is likely to peak around 2020 as a bumpy plateau.
 In 2050, all liquids production will be less than 60 Mb/d, which is 33% lower than in 2013
0
4
7
11
15
18
22
26
29
33
37
40
44
0
10
20
30
40
50
60
70
80
90
100
110
120
1900 1950 2000 2050 2100 2150 2200
productionGb
productionMb/d
year
world all liquids production & forecast from ultimates
with EIA/IEO, IEA/WEO, BP & OPEC/WOO forecasts
U = 3 Tb
IEO 2011
WOO 2013
WEO 2013 NP
WEO 2012 NP
BP 2014
world
U=3000 Gb
crude+NGL
U = 2200 Gb
crude -XH
U NGPL 300 Gb
NGPL
U XH 500 Gb
XH
3% crude-XH
ref gain
A = 5 Mb/d
other liq. (biofuels)
Jean Laherrere April 2014

9. 9
How easy is it to forecast future oil production?
Ask the IEA! They seem to have some trouble in doing so...as per their 1998 forecast, we
should be producing 102 Mb/d in 2014 which is 15% higher than actual production
70
80
90
100
110
120
130
1995 2000 2005 2010 2015 2020 2025 2030 2035
Mb/d
year
Evolution of "Oil supply" (biofuels excluded) forecast
from IEA/WEO 1998-2012
WEO1998
WEO2000
WEO2002
WEO2004
WEO2006
WEO2008
WEO2010 NP
WEO2012 current
WEO2012 NP
WEO2012 450 ppm
oil supply IEAASS
Jean Laherrere March 2013

10. 10
Peak oil or Peak demand? That is the question...
If demand was the driver, the price should drop as there is plenty of oil as some claim...but oil
price cannot drop below production costs which range from 70 $/b in the Bakken to as high
as 125 $/b in Kashagan (Caspian Sea - 50 G$ project)
Note: Estimates for breakeven prices do not include the costs of acreage acquisition or exploration which, if included, would
lead to higher breakeven commodity prices. This might be particularly material for North American onshore resource plays
Source: Goldman Sach Research Estimates
Breakeven of non-producing & recently on stream oil assets
- Marginal Top 360 oil fields -

11. 11
Peak Oil drives higher oil prices which in turn drives Peak Demand
There is a ceiling on oil prices at 120 $2011/b while there is a wall for oil production at 77 Mb/d

12. 12
What about the shale gas revolution in the US?
Shale gas will peak soon and the decline will be sharp.
NG Production is likely to fall to 10 Tcf in 2040 when AEO forecasts 3 times more with 33 Tcf!
0
5
10
15
20
25
30
35
1900 1920 1940 1960 1980 2000 2020 2040 2060
Tcf
year
US natural gas production & forecasts
AEO dry 2013
AEO dry 2012
WEO 2013 NP
U=2000 Tcf
gross-repress
U=1250 Tcf
conventionnal
U=750 Tcf
unconventional
Jean Laherrere Feb 2014

13. 13
What about coal & gas? Will they also peak?
Fossil fuels are expected to peak around 2025 although there is still a big unknown about coal
• Oil production will decline after 2020, natural gas production will decline after 2030 but the big
unknown is about coal …
• But the fossil fuels production per capita has been on a bumpy plateau between 10 and 11
barrel of oil equivalent since 1970 (while it was 5 only boe in 1950)
 It will peak around 2020 and will be down to 1950 levels before 2100
0
1,4
2,8
4,2
5,6
7
8,4
9,8
11,2
12,6
14
0
10
20
30
40
50
60
70
80
90
100
1850 1875 1900 1925 1950 1975 2000 2025 2050 2075 2100 2125 2150 2175 2200
Gtoe
Gboe
year
world fossil fuels annual production & forecasts assuming no above
ground constraint
coal Gboe
U=750 Gtoe=5.4 Tboe
all liquids Gb
oil U = 3 Tb +biofuels
natural gas Gboe
U = 13 Pcf = 2.2 Tboe
fossil fuels
U = 10,6 Tboe
Jean Laherrere April 2014
0
1
2
3
4
5
6
7
8
9
10
11
12
1850 1900 1950 2000 2050 2100
annualproductionpercapitaboe
year
world fossil fuels production per capita
fossil fuels
U = 10,6 Tboe
coal Gboe
U=750 Gtoe=5.4 Tboe
all liquids Gb
oil U = 3 Tb +biofuels
natural gas Gboe
U = 13 Pcf = 2.2 Tboe
Jean Laherrere April 2014 population = UN 2012 revision

14. 14
The End of Peak Oil Myth?
• Production data in the world are very poor, unfriendly, incomplete with very poor or no
definitions.
• Reserves data are even worse, in particular for the political/financial proved reserves,
which are wrongly added, leading to artificial reserve growth.
• There are no global rules in the world oil industry, no referees and no red cards for bad
reporting!
• IEA recognized in 2010 that the world conventional crude oil had peaked in 2006, but
since 2005 all liquids display a bumpy plateau within a range of the same order of
magnitude that the accuracy of the oil supply data which varies among sources between
plus and minus 2 Mb/d.
• The boom of the shale oil (now called light tight oil) in the US led some economists to
claim that the peak oil theory was dead (the end of peak oil, peak oil myth).
• Estimating ultimate for US shale oil leads to forecast that the US tight oil boom will peak
soon (EIA forecasts the peak for 2017 to 2020) and will decline faster than forecasted by
EIA.
• But it is likely that oil (all liquids) peak will occur soon and as there is no sufficient
substitute to oil for transport, we need to find an alternative solution...