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PEAK THEORY OF HUBBERT
HRISHIKESH RC: 08D17002
DEPARTMENT OF ENERGY SCIENCE AND ENGINEERING INDIAN INSTITUTE OF TECHNOLOGY, BOMBAY (IITB) POWAI, MUMBAI 400 076 APRIL 2012
INTRODUCTION 2. HUBBERT’S PEAK THEORY 3. APPLICATION OF THE PEAK THEORY 3.1 US 3.3 World 4. CONCLUSION 5. REFERENCES iii iv 1 2 5 7 8 9 11 12 ‘ 2 .2 Former Soviet Union 3.TABLE OF CONTENTS LIST OF FIGURES NOMENCLATURE 1.
5 Ultimate world crude oil production assuming initial productions of 1250 Gb Figure 3.LIST OF FIGURES Figure 2.2 Crude oil production curve for Illionis Figure 2.7 Matching of shifted discovery and production curves (US) Figure 3.3 Production curve for multiple oil fields (8) Figure 3.9 Matching of shifted discovery and production curves (US) Figure 3.5 The original hubbert curve with an ultimate of 200 Gb compared with the actual data (US) Figure 3.1 The bell-shaped curve showing the mathematical relations involved in the production of the reserve Figure 2.6 Laherrere's hubbert curve with the actual data (US) Figure 3.1 Production curve for a single oil field Figure 3.4 Ultimate US crude oil production assuming initial productions of 150 and 200 Gb Figure 2.10 Oil production and discovery curves for the world 2 2 3 3 4 5 5 5 6 7 8 8 8 9 9 3 .8 Former Soviet Union's production data modelled with hubbert curves having different ultimates Figure 3.2 Production curve for multiple oil fields (4) Figure 3.3 Crude oil production curve for Ohio Figure 2.4 Comparable Hubbert and Gauss curves along with their derivatives Figure 3.
NOMENCLATURE P Qt Q Pm tm b s Pi ti Production rate of resource Total resource consumed at time t Ultimate reserve of resource Production rate of resource at peak Time of peak Slope factor Standard deviation Production rate of resource at point of inflection Time of inflection 4 .
a constant resource of fossil fuels. governments need to have mitigation procedures prepared to deal with this fallout. However. these are converted into what we presently know as coal and petroleum. and a series of processes. denoting maximum production rate occurrence. Along with the Industrial Revolution. it has become an important question for governments of today. the slow rate of formation means that in the present age. we would need newer and/or more efficient sources of energy to supplement the energy deficit. due to effect of heat and pressure. we have practically. made at the behest of the US Department of Energy. coupled with the oil crises in the 1970s has led to the issue gaining prominence. which will be seen in this report.1. This. This implies to satisfy the existing (and increasing) demand. gives rise to the question of how long they can run into the future. This in turn. Considering the present reliance of our daily lives on fossil fuels. At the same time. ‘Peak’ refers to the fact that the production curve is normally bell-shaped with a peak. 5 . where he predicted correctly that the US oil production would peak between 1965 and 1970. Fossil fuels originate from the decomposition of buried dead organisms over hundreds of millions of years. because this represents the point after which production can only reduce. on a number of points. Hubbert’s peak theory is the earliest attempt to model the rate of fossil fuel production with time. Over time. This theory was presented by Marion King Hubbert to the American Petroleum Institute in 1956 in the form of a paper. Therefore. INTRODUCTION Fossil fuels have proved one of the most important resources for mankind over the last one and a half centuries. to look at the energy problem of the US. This was the objective of the Hirsch Report. this theory has its fair share of criticism. it has led to a dramatic increase in living standards. The ‘peak’ for world oil production is an important tipping point.
In the few decades unto the publishing of the paper (1955). I will restrict myself to the scenario of oil. which leads to Natural Gas Liquids as a byproduct (NGLs). However. with data from various states in the US and the US itself. 6 . isobutene and other condensates. However. Hubbert gives his arguments for the curve using empirical research. and products derived from crude refining. butane. ∫ The area under the curve denotes the ultimate reserves of that particular resource. the ‘oil’ Hubbert refers to includes only crude oil. Figure 2. crude and liquid hydrocarbons were synonymous because NGLs were not produced in significant amounts. the curve is shown to follow a symmetrical bell-shape. These along with  Figure 2. The paper analyses three fossil fuels using the same methodology: oil. and not liquid hydrocarbons. HUBBERT’S PEAK THEORY In his paper. The upstream industry involves the searching and recovery of crude oil and natural gas. Hence. The upstream industry also involves processing of natural gas.1 The bell-shaped curve showing the mathematical relations  involved in the production of the reserve First let me define ‘oil’ as used in the paper. The petroleum industry is divided broadly into two parts: upstream. that had changed. downstream.2. These include higher alkanes like ethane. coal and natural gas. propane.2 Crude oil production curve for Illionis crude oil are called liquid hydrocarbons. Hubbert derives a general curve for production rate vs time without giving an obvious formula. while the downstream industry involves the refining of crude. In this report. selling and distribution of natural gas.
Moving on. Improvements in technology lead to more ultimate reserve. This may be due to various political or profit-based reasons. easy to extract. Two terms are generally used for depicting reserve data: Proven Reserves (also referred to as Proved reserves) – The amount of reserves which are known to exist. In order to predict how the production rates will trend. we’ll need to understand the reserve data. These will be explained later. the paper focusses on the US and the world. Another 7 . Using the Figure 2. (1 Gb = 1 billion barrels of oil). unconventional is not easy to recover because production requires a great deal of capital investment and supplementary energy. 150 and 200 Gb Wallace Pratt and modifying them. One of the two problems associated with the estimation of ultimate reserves is that it does not take into account improvements in technology. whose production had not reached a significant amount. a more system involving probabilities is used to indicate resources that have not yet been produced or discovered.Hubbert then justifies the ‘peak’ using the production curves for two regions. Thus it is costly and not preferred.3 Crude oil production curve for Ohio  Nowadays. This will also be elaborated on later.4 Ultimate US crude oil production assuming initial productions of  estimates of LG Weeks. Hubbert comes with two curves for the US and the world. Unlike ‘conventional’ oil. the problem seems to be with the state of Illionis. he arrives at a figure of 1250 Gb for the world and 150 Gb for the US. This includes the already consumed resource along with the proven reserves and expected future discoveries Figure 2. For calculation of total reserves of crude oil. At the same time. the proven reserves for the US and the world were 30 Gb and 250 Gb respectively. While the production curve for the state of Ohio has a clear peak. However this is due to the fact that Illionis had two distinct spells of oil discovery and therefore there are two peaks signifying the production spells following the discovery spells. The other problem is that the reserve amounts are misreported at various levels. and possibly a delay in the ‘peak’. Using these data and the already known consumed oil data. which is light. Hubbert ignores the unconventional sources of oil. but have not yet been produced Ultimate Reserves – The estimate of the total possible reserves of oil. (This is a criticism of Hubbert’s theory in general). Unconventional oil is a ‘heavy’ form of oil.
Why was he wrong? Figure 2.5 times that of what it was in 1955. he also considers for US. Why is this assumption required? It’ll be explained in the next chapter. Using these graphs. the best case of ultimate reserve at 200 Gb (instead of 150 Gb) and calculates the peak to be at 1970. while for the world.assumption Hubbert mentions for calculation for the world peak is that the peak production rate is 2. Hubbert predicts ‘peak oil’ for world to be around 2000 and the US at 1965. Assuming improvement in production techniques.5 Ultimate world crude oil production assuming initial  productions of 1250 Gb 8 . He was proven to be correct in the case of US. we are still not sure whether the tipping point has come or not.
placing a small number of large fields near the beginning and a large number of small fields at the end.2 Production curve for  multiple oil fields (4) Figure 3. Laherrere looks at some practical cases. So the production curve for a political domain can be understood as a combination of oil fields following a ‘natural’ exploration pattern. Also. the combined values produce something like a bell curve.3. political boundaries should be avoided What Laherrere says is intuitively understandable. published in 2000 addresses these questions. one glaring detail missing is the lack of an equation for the bell-shaped curve. Jean H Laherrere. This explains the first and third points. Laherrere details three constraints for application of the bell-shaped curve: When there is a large population of fields in the country. the smoother the curve. The well-known bell shaped curves are the Gauss. But first. The logistic curve is a curve used to 9 . An individual field's production generally appears something like H1 . in his paper titled ‘Hubbert’s curve. one has to wonder whether is any special significance attached to the structure of the curve. I think the reason the hubbert curve takes the bell shape is that the additive production curve of a number oil fields is of a shape similar to the bell-shape. APPLICATION OF THE PEAK THEORY While Hubbert explains the peak theory using empirical research. Normal and the derivative of the logistic curve. such that the sum of symmetrical fields becomes normal under the Central Limit Theorem of Statistics When exploration follows a natural pattern unimpeded by economic or political factors Where a single geographical domain with a natural distribution of fields is considered. Obviously the more wells one adds. We know that Hubbert used a bell-shaped curve. He also tries to apply the peak theory to different regions. as happens in oil exploration. Figure 3. However. the second point merits explanation.3 Production curve for  multiple oil fields (8) When one combine many fields together. This makes it even more difficult to analyze the logic behind his peak prediction.a gradual increase to maximum output. its strength and weaknesses’. he tries to identify an equation for the hubbert curve.1 Production curve for a  single oil field Figure 3. then a long plateau and a gradual decrease. The examples below (H2 and H3) show how just four and eight 'wells' begin to approximate the shape of the Hubbert Curve.
the hubbert curve can be constructed ‘fairly’ well only 10 .model population curve. tm is the time of the peak and b is a factor such that. where. ( ( )) Where Pm (in Gb) denotes the production at peak. Also used is the Gauss curve. According to Laherrere.4 Comparable Hubbert and Gauss curves along with their derivatives  If the peak is known. constructing the curve is easy as we just need to calculate the slope factor b (which in a sense denotes the spread of productions rate across time). The problem comes if the peak is not known. Here U (in Gb) denotes the ultimate reserve for the resource. ( ) ( ) S is the standard deviation and ( ) Figure 3. it is more convenient to use the derivative of it to model the hubbert curve. Then.
In fact. Hubbert needed to make the assumption of world production peak to be 2. We saw in the previous chapter. (The production curve referred to is the curve formed by joining the points representing the production rates. an assumption needed to be made. )) And. what goes unexplained is the fact that production peak is higher than expected. Let’s move ahead and see the application of the peak theory by Laherrere on different regions in the world. tm and b. the result turns out to be And.1 US While Hubbert gets the peak timing right.5 The original hubbert curve with an ultimate of 200 Gb compared with the actual data (US) 11 .5 times of the peak in 1955. three equations ( ( Also. Therefore. The inflection point is the point where the derivative of the production curve reaches the maximum.5 Gb. This curve implies a drop in the decade before and after the peak while starting to witness a rise in the 90s. because we haven’t plotted the hubbert curve yet!) Using this we get. The production point of the world had not reached inflection. The three unknowns are Pm. Even the curve used is the one made by Hubbert for the higher estimate mentioned in the previous section.The reasons given for the drops Figure 3. This may also be the reason why he was wrong. Laherrere in his paper uses a completely different hubbert curve whose peak is at 3. 3.if the inflection point is known.
 It usually involves limiting production proportionally to a fraction of the total capacity of each producer.  Figure 3. However. Prorationing logically accompanies a drop in production. This seems to be a flaw in Laherrere’s analysis according to me. Laherrere suggests that there is a link between production and discoveries. This seems right in Laherrere’s analysis. as mentioned by Hirsch in his report. The hubbert curve for an ultimate of 200 Gb then shows the peak to be near the end of the 80s. This happens when the production far exceeds the demand. the ultimate has been shown to be overstated. This in a sense protects the oil industry. This seems logical as there would be a lag corresponding to the setup of equipment before drilling.Figure 3. The inflection point occurs at 1975. because the peak arrives around the mid-80s and the production Figure 3. it was reported in 1980 (before the peak) that they had 200 Gb of ultimate reserves. Therefore. Hubbert in his paper made clear he was not including NGLs. In absence of prorationing.2 Former Soviet Union (FSU) In the Soviet Union’s case. This would lead to a swipe in profits for the companies.8 Former Soviet Union's production data modelled  with hubbert curves having different ultimates 12 . The time lag for the US is seen to be at 33 years. Further. the government maintains an artificially high price and allocates production to suppliers according to their production capacity. 3. the incentive would be there for the supplier to reduce prices to gain advantage over his competitors. The ability of a state to limit oil and gas production.7 Matching of shifted discovery and production curves (US) However.6 Laherrere's hubbert curve with the actual data (US)  on both sides is prorationing and economic respectively while attributing the rise to an increase in production of NGLs. usually based on market demand is called prorationing. I think the increase in oil production in the late 90s should be attributable to improved recovery practices.
things have changed a lot. but the source has not been mentioned. 200 Gb for the NGLs is included. the cumulative discovery data was sought. This was because of the formation of OPEC. The convention for indicating reserves has changed. the production – discovery is also valid. Along with 2P. These reserves have more than 90% probability of being produced Probable reserves have more than 50%. It turns out to be 1800 Gb. On the right side. in 1973. This indicates the 2P reserves. Clearly. referred to as 2P Possible reserves have more that 10%. In fact the Hubert curve with an ultimate of 170 Gb is shown to be a better fit. In fact. Along with proven reserves. The reduction in production after the peak is due the disintegration of the Soviet Union. OPEC reduced production of oil and this causes a significant tremor in the production curve. It’s unclear how the data for the ultimate i.rate is also much lower. which the hubbert peak theory has helped identify. 3. To find the ultimate reserves. The new system used has three categories for reserves: Proven reserves. OPEC (Organization of Petroleum Exporting Countries) is an intergovernmental organization of 12 oil-producing countries. It operates on the principle of prorationing. Due to political reasons. Hubbert’s estimation of 1250 Gb for the ultimate is also proven to be wrong. referred to as 3P Figure 3.9 Matching of shifted discovery and production  curves (FSU) The figure on the right gives the oil data for the world. also called 1P. From 1955. as is clearly seen. however this time with a lag of only 17 years. but less than 50% probability of being produced. The discovery curve shifted 30 years satisfies the production curve up to the oil crisis in 1973. there is a misreporting of reserves.e.  Figure 3.10 Oil production and discovery curves for the world 13 . Hubbert never had a chance of getting it right. formed to protect the interests of its members’ petroleum industry. 2000 Gb is obtained. but less than 90% probability of being produced.3 World In the case of the world.
the curve here has production rates above the initial ‘peak’. we can see that the production does not follow the hubbert curve strictly. In any case. The production-discovery link is a very good for future production forecasting. a new major discovery cycle has started. unless as Laherrere rightly mentions. 14 . Interestingly. The method of using multiple curves is an interesting work-around and has inspired further paper(s). it is important to understand its limitations. Unlike in the previous cases where the production curve was modelled using a single cycle. The total production H1 with an ultimate of 150 Gb to correspond with a peak at 1979. which is championed as a major success for the peak theory. In this case. Laherrere suggests modelling the production curve with more than one hubbert cycle. there is a bigger snag. even in the US case. H2 with an ultimate of 1850 Gb. though it did not have a significant contribution then. the peak is predicted to be near 2010. However. Using this.However. a third curve H3 is added to denote unconventional oil. This modified model satisfies the production curve well until 2000. Its ultimate is 750 Gb.
The OPEC not only delays the peak. it was only because the production was past the inflection point. a consulting company in the United States has suggested that peak is very much a hyped issue and that we are actually heading towards a plateau (as opposed to peak) of oil production. In conclusion. Different data sources (BP. The Hirsch report was created by request for the US Department of Energy and published in February 2005. ENI EIA) have different definitions of oil and this furthers the problem in creating an accurate hubbert curve. there is heavy debate over the issue of peak oil.4. Misreporting happens at various levels and it will be difficult to take this into account. there are suggestions that peak has already been reached. improvements in technology cannot be taken into account by the curve. the application of the hubbert curve can explain more or less the production curves. However flaws are also pointed out. CONCLUSION We’ve seen in all cases. Prorationing. as unconventional oil along with improved recovery methods and reserve growth (unaccounted in the hubbert curve) will balance out the expected decline. In fact. While it may ultimately fail. It has also put into perspective the fact that oil will peak. While the misreporting in the case of USSR was found out. In terms of applicability on the world. the peak theory has helped uncovering the true ultimate reserve of oil in the USSR and despite its failing to take into account the political issues. for all its apparent failings. there are doubts over whether the hubbert curve will be followed in its case. identified the US peak accurately. and their likely impacts. it has created a lasting interest into this issue 15 .g. as the 90s production rise in the US suggests. E. the peak is very much real and that mitigation measures must start 20 years before peak to minimize the impact of reduction in production along with the increase in demand. On the other hand. which wasn’t the case when the paper was published. Also. but renders the one-peak hubbert obsolete. it fails to take into political reasons. G. the necessary mitigating actions. It suggests that while the time of peak may wary. Data clarity is also a serious issue as Laherrere fails to acknowledge the exclusion of NGLs by Hubbert. unconventional oil has not been taken into account. On the other hand. the peak theory must be given credit for what it has done. especially as its industry is in its infancy. as was the case in the US caused the production curve to fall beneath levels suggested by Hubbert. CERA. Maggio et al(2009) outline the difficulty in understanding the exact definition of oil considered. While Laherrere does this. It examined the time frame for the occurrence of peak oil.
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