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Sunday, March 05, 2006


Predictions about the future of Russian oil production abound in uncertainty. The large number of basins and complicated political and economic environment subject 'top-down' depletion models such as Hubbert's to a variety of confounding variables. The best hope for understanding the Russian production landscape thus seems to be a 'bottom-up' model, which considers Russian production field by field and basin by basin.

While this is a daunting task, OPR Weekly posts on Sunday will attempt just that in the comming weeks. OPR Updates during the week will continue to address a variety of topics concerning Russian political economy and oil. Today's post sets out the logic and guiding questions of the 'bottom-up' research program.


Predictions about oil reserves and production are notoriously difficult to make. A bewildering set of technical, economic, and political variables confront those who attempt such prognostications. Because of these difficulties, some analysts have applied a fairly simple model called “Hubbert Linearization” to gauge a given field or region’s likely production path.

Named for its progenitor, American geophysicist Marion King Hubbert, the model posits that the total amount of oil extracted from a field or region over time will follow a logistic or ‘S’ curve because field discovery is followed by a rapid increase to the maximum rate of production (the top of the ‘S’) before falling rapidly to the point at which oil can no longer be economically extracted. The resultant bell shaped curve is referred to as a Hubbert curve.

The implication of Hubbert’s model is that given past oil production data for a field or region and an accurate estimate of the total quantity of oil in the field or region, one can predict the date of maximum oil production and estimate its likely rate of decline. In 1956 Hubbert famously predicted that U.S. oil production would Peak in 1970, which turned out indeed to be the case.

Current Hubbert modelers, using more refined variants of the original model, have predicted that world oil production will soon peak. In fact, Ken Deffeyes, a retired Princeton geologist and author of an acclaimed book on Peak Oil, claimed last year that Thanksgiving Day of 2005 would be the day that oil tops out. While that prediction turned out not to be true, many believe that world production is now hovering around its plateau.


One of the primary weaknesses of Hubbert models is that they make two key assumptions that are often violated in the real world. First, they assume that the amount of total oil in the world is known, when in fact it is exceedingly difficult to know how much recoverable oil is in a given field, let alone the world writ large. Second, they assume that production levels are not subject to significant social or political interference. While small disruptions in production will not have a significant effect on the overall analysis, larger deviations from the full production assumption can weaken the predictive value of the model.

Recognizing these weaknesses, Jean H. Laherrère, another well known Peak Oil author, described the conditions under which the model will have the most predictive power. A simple Hubbert curve may be ideally applied, he says, only in the following cases:

  • Where there is a large population of fields, such that the sum of a large number of asymmetrical distributions becomes symmetrical;
  • Where exploration follows a natural pattern unimpeded by political events or significant economic factors;
  • Where a single geological domain having a natural distribution of fields is considered.

Where these conditions do not pertain, Laherrère says, the model is limited in its predictive ability.

Even a cursory glance at Laherrère’s conditions should make one skeptical of the model for Russia. While Russia certainly does have a large population of fields, exploration has certainly been subject to the vagaries of Russian political and economic upheaval and it its oil is distributed among a large number of disparate basins with varying geological and climatic challenges. Of all the world’s producers –and let us keep in mind that Russia is the world’s second most prolific—Russia is least amenable to Hubbert’s curve.

So what, then, should the erstwhile Russian modeler do? The only recourse left seems to be an inductive model, taking a look at Russia basin by basin and field by field in order to piece together some semblance of a prognosis. In addition, a better understanding of the political-economic effects on the Russian history of oil will help to understand the future. While this is a daunting task, there seems no other way.


In the following weeks (months? years?), I will attempt to do this to the extent that data and information are available. At the outset, several key questions appear to be the most relevant guide to such an analysis:

  1. How did the Russia’s primary producing regions achieve their growth and production until the collapse of the Soviet Union? Why did Russian production collapse after during the early to mid 1990s? How did Russian production rebound in the years following collapse?
  1. To what extent is Russia’s primary oil region, the West Siberian basin, depleted? How fast is it declining? Are there any new projects there to make up the decline? Are there significant prospects for enhanced recovery there?
  1. To what extent is the Volga-Ural basin depleted? How fast is it declining? Is there any enhanced recovery production potential there?
  1. What is the potential for Caspian production? Are there any real prospects there for future discoveries? How much production can be expected from projects there already under development?
  1. How much oil has been discovered in East Siberia? How much of East Siberia has been prospected? How difficult and expensive will East Siberian projects be to develop? How long will it take?
  1. What is the potential production from Timan-Pechora and known Barents Sea discoveries? How quickly will it come on line? How likely is it that more oil will be discovered in these and other Arctic regions? Even if it is discovered, can such oil realistically be produced?
  1. What is the potential for future production on Sakhalin Island and in the Far East? Has the Eastern shelf been fully prospected? If oil is discovered there, is it likely to be commercially viable?

These questions will guide my research in the coming weeks. While definitive answers would surely be too much to hope for, I suspect that significant insight into the vexing question of Russian production will be gained in due course.


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