* Global oil production capacity seen peaking in 2009
* Spare capacity of 5.2 million bpd wiped out by 2012
* Long-term price reaction seen muted
By David Sheppard
LONDON, Sept 16 (Reuters) - Peak oil supply will be hit this
year after the economic crisis and low prices in the first
quarter of 2009 slashed much needed investment, a senior
executive at Australian investment bank Macquarie said.
"This is our view -- capacity has pretty much peaked in the
sense that declines equal new resources," Iain Reid, head of
European oil and gas research at Macquarie, told Reuters.
The peak oil theory that oil supply is at or near its peak
was long considered marginal.
It gained currency when prices zoomed towards their record
of nearly $150 hit in July last year, with leading exponents
suggesting various dates for the supply peak to be reached.
Some oil majors have acknowledged the prospect of dwindling
production, but others have argued better extraction techniques
and other technological advances will offset any decline.
Reid's latest research report -- The Big Oil Picture: We're
not running out, but that doesn't mean we'll have enough -- sees
global oil production capacity topping out at 89.6 million
barrels per day (bpd) this year, a far more pessimistic view
than most other banks or traditional forecasters.
Underinvestment in mature fields, rising resource
nationalism, and the cost and difficulty of retrieving oil from
discoveries in ultra-deep water could see global production
capacity fall to 87.3 million bpd by 2015, according to Reid.
Reid, who spent 16 years with oil firms Shell and Amerada
Hess, saw the current spare capacity cushion of around 5.2
million barrels wiped out by 2012.
"With the reduction in spending on mature fields, that's the
major driver. Then really it's about, 'where do the new sources
come from?'," Reid said, adding the economic crisis had further
restricted investment.
"If you look around the world it's either locked up in
countries which are difficult to access or it's locked up in
countries where they are tightening access or it's in these huge
mega-structures which are very difficult to develop technically
and cost-wise."
The International Energy Agency, adviser to 28
industrialised nations, has predicted global supply will
continue to rise through 2015, but that demand might grow faster
than that.
Macquarie saw the potential for a huge supply deficit to
emerge, with global oil demand predicted to rise to 90.9 million
bpd by 2015 from 84.2 million bpd today because of rising
consumption from China and other emerging markets.
"Adding sufficient productive capacity on time is nearly
impossible," Reid said in his report.
PRICE TO RISE, BUT NOT SO MUCH
Episodes of higher oil prices would be an obvious
consequence, without either a greater political push for
efficiency savings or new technological advances, he said.
But his price forecasts were still relatively conservative.
He expected the benchmark U.S. crude contract will average
$84 a barrel in 2012, compared with around $71 now. The bank's
"long run" forecast is for an average price of $75.
The level of nearly $150 hit last year was unlikely to be
repeated, Reid said, because of its immediate damaging effect on
the world economy and on fuel demand.
"One hundred dollars a barrel is perhaps liveable with in
certain scenarios, but I would say gasoline will reach the $4
level again and that will naturally force more efficiency in the
United States," Reid said, adding it was difficult to forecast
when such levels would be hit.
Eventually, the trend could be towards peak demand, rather
than peak supply as higher prices drive the quest for greater
efficiency and alternative energy sources.
"(Oil near $150) would very soon create another set of
global economic drivers which would spell much lower demand in
the future," said Reid.
"In the very long term we can see demand for oil falling
quite substantially."
(Editing by William Hardy)
