Image above from University of Minnesota.
David Strahan is a British journalist, known among peak-oilers for his book "The Last Oil Shock". He doesn't mince words in his attack to Leonardo Maugeri's recent, very optimistic report titled "Oil: the next revolution."
Whereas most commenters have criticized the report for its general approach and conclusions, Strahan has been more aggressive and has looked for the details, finding a true mathematical howler in it. At first, I didn't want to believe it, but I went to check and Strahan is right. At page 20 of the report, you can read:
From 2000 on, for example, crude oil depletion rates gauged by most forecasters have ranged between 6 and 10 percent: yet even the lower end of this range would involve the almost complete loss of the world’s “old” production in 10 years (2000 crude production capacity = about 70 mbd). By converse, crude oil production capacity in 2010 was more than 80 mbd. To make up for that figure, a new production of 80 mbd or so would have come on-stream over that decade. This is clearly untrue: in 2010, 70 percent of crude oil production came from oilfields that have been producing oil for
decades.
Nearly unbelievable: Maugeri tries to demonstrate that most forecasters have been wrong in the past by noting that a 6% depletion rate would lead to the complete loss of the world's production in 10 years. How can that be? As Strahan correctly says, the loss would be 46%, definitely not "nearly complete" as Maugeri says. Even with a 10% yearly decline, after ten years you would still have more than 30% of the original production.
Strahan then rubs salt into the wound by reporting that:
When I put this to him, Mr Maugeri seemed genuinely confused, and tried briefly to persuade me the loss was much larger. “If you have a 6% decline each year over a 10 year period, the loss of production is close to 80%”, he said, but then the penny dropped. It looks to me as if he compounded 6% in the wrong direction – for growth, not decline. “Maybe on this you are right”, he conceded sheepishly.
Strahan's post highlights how vulnerable most people are to fell victim of their own entrenched beliefs. It is called "confirmation bias", it is what happens when people gather or remember information selectively, or when they interpret it accordingly to their biased view. Here, Maugeri clearly fell for the idea that "past forecaster have always been wrong," something deeply entrenched within most cornucopian views of the future.
Of course, it is not a single mistake that can demolish a study and, apart from this misinterpretation of the decline rates, Maugeri's report contains valid data and valuable insights. However, it is also true that there exists something that I call the "Bailey Effect" which consists in destroying a whole study by finding a single mistake in it, no matter how minor or marginal it may be. It is because of this effect that "The Limits to Growth" 1972 study was demolished, as I described here.
Will Maugeri's study survive Strahan's demolition? Probably not, but it is what it deserves for plenty of other reasons (see e.g. here, here, and here,).
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Here are some excerpts from Strahan's article
Monbiot peak oil u-turn based on bad science, worse maths
Posted on Monday, July 30th, 2012
...
Plenty of ink has already been spilled by oil depletion experts exposing some of the wildly optimistic assumptions contained in Maugeri’s report. More damning is that the work is shot through with crass mistakes that render its forecast worthless.
When I interviewed him, Mr Maugeri was forced to admit a mathematical howler that would disgrace the back of an envelope, and it also became clear he did not understand the work of the other forecasters he attacks. It also looks as if he has double or even triple counted a vital component of his predicted oil glut.
Maugeri claims this looming glut has three legs: booming upstream
investment by the oil industry; the rise and rise of unconventional
production such as US shale oil; and a tendency among forecasters to
over-estimate massively the rate at which production from existing oil
fields declines. The first point is uncontroversial, the second is moot,
but the third is the most important; without it, Maugeri’s glut
evaporates.
...
...
Maugeri cherrypicks numbers from the IEA study and misrepresents them
to claim that “most forecasters” work on decline rates of 6 to 10
percent. He then argues this is incompatible with the observed growth of
the oil supply over the last decade – and therefore must be wrong – and
uses this conclusion to justify his inflated oil production forecast.
But the whole thing is a straw man; an email he sent me revealed he
simply doesn’t understand the IEA numbers. The IEA’s global decline rate
is actually 4.1%, and CERA’s broadly agrees, at 4.5% (see here for more detail).
Even if we were to accept his 6 to 10 percent range, Maugeri has got his sums horribly wrong. In the key section of the report, he claims that even the lower end of the range “would involve the almost complete loss of the world’s “old” production in 10 years”. But this is laughable. A 6% annual decline over 10 years leaves you with 54% of your original production, because each year’s 6% decline is smaller volumetrically than the previous one. So over a decade the decline is 46% – and very far from an “almost complete loss”.
When I put this to him, Mr Maugeri seemed genuinely confused, and tried briefly to persuade me the loss was much larger. “If you have a 6% decline each year over a 10 year period, the loss of production is close to 80%”, he said, but then the penny dropped. It looks to me as if he compounded 6% in the wrong direction – for growth, not decline. “Maybe on this you are right”, he conceded sheepishly.
Even if we were to accept his 6 to 10 percent range, Maugeri has got his sums horribly wrong. In the key section of the report, he claims that even the lower end of the range “would involve the almost complete loss of the world’s “old” production in 10 years”. But this is laughable. A 6% annual decline over 10 years leaves you with 54% of your original production, because each year’s 6% decline is smaller volumetrically than the previous one. So over a decade the decline is 46% – and very far from an “almost complete loss”.
When I put this to him, Mr Maugeri seemed genuinely confused, and tried briefly to persuade me the loss was much larger. “If you have a 6% decline each year over a 10 year period, the loss of production is close to 80%”, he said, but then the penny dropped. It looks to me as if he compounded 6% in the wrong direction – for growth, not decline. “Maybe on this you are right”, he conceded sheepishly.
.....
