With EIA data to the end of 2006 now available, here are the key figures and comparison to 2005:

Crude Oil and Condensate: 73.5 Mb/d (down 0.2)
Natural Gas Liquids (NGLs): 7.9 Mb/d (up 0.14)
Other Liquids: 3.3 Mb/d (up 0.08)
Total Liquids: 84.6 Mb/d (up an insignificant 0.02)

Mb/d = million barrels per day
kb/d = thousand barrels per day

Oil prices set new records and the industry maintained a historically high level of activity in 2006. Energy agencies issued consensus forecasts that production would rise. Yet crude oil production was down and total liquids production was flat. The economists should be shaking in their boots.

In Saudi Arabia, despite bringing Haradh III onstream in the second quarter with a capacity of 300kb/d, annual production fell 400kb/d (see further analysis at www.theoildrum.com/node/2325). The Khursaniyah group of fields, claimed to add 750kb/d of oil and natural gas liquids capacity, is not expected on stream until the end of 2007. If Saudi Aramco are in fact pumping close to flat out and battling depletion, production will continue to fall steadily this year. That claim may either be refuted or supported if the world makes a call on Saudi 'spare capacity' at any stage this year, which seems probable. I expect we will see another large fall in 2007 but Khursaniyah will temporarily reduce the impact of declines in 2008.

Russia provided the largest single contribution to oil supply growth in 2006, with average production 200kb/d higher than 2005. Production was higher in the second half of the year, with the highest value in October. I expect Russia's production will average close to the same again in 2007 - meaning that last year's largest production increment may not be fully repeated.

Other positive performers in 2006 were: Angola, Canada, Iraq, United Arab Emirates, Brazil, China, Azerbaijan and Libya. Most need to grow the same amount again to again offset declines in other countries. Announced projects suggest they have a chance of achieving that. Whether China can continue its expansion will be significant, with evidence that it now needs to call on other fields to make up for the aging Daqing giant. Other growth candidates to watch this year include Algeria, Qatar and Venezuela, which declined in 2006. Given the late rise in Australia's production in 2006, presumably the arrival of Enfield NW shelf production, our average for 2007 may also be higher than last year.

In a nutshell, for the world outside Saudi Arabia and Russia, further new projects in deep water, unconventional oil and natural gas liquids may just hold steady against declines in all other countries. The fate of world oil production now rests with the two countries together accounting for one quarter of supply. If net production from Saudi Arabia and Russia continues to fall in the first quarter of 2007, as I expect it will, then the case for peak oil having passed within the last two years will strengthen.

All manner of possible disruptions only add to the downside but, for the oil consuming nations, things already look grim. In the US especially, economies are struggling to recover from last year's high oil prices and flow-on effects to housing markets. The oil producing nations have no such trouble. High oil prices have created booming economies and internal oil consumption is rising steadily. That leaves less oil for them to export to the rest of the world. Our insatiable appetite is about to get squeezed.

Phil Hart
Petroleum Facilities Engineer, Melbourne
Australian Association for the Study of Peak Oil
www.philhart.com/contact