What is a Decline Curve?

A decline curve refers to the descending portion of a bell curve, depicting the waning production of a nonrenewable natural resource, typically oil, as the continuing production depletes the supply. First proposed by M. King Hubbert in 1956, the bell curve model follows the pattern of petroleum production closely, with the ascending slope representing new oil discoveries and new infrastructure for removal and distribution of the oil. Predictions of oil production rates are built on historical discovery rates and production practices. According to Hubbert’s peak theory, the curve flattens and eventually peaks as the rate of petroleum discovery and added infrastructure reaches a maximum and declines. The decline curve rate of descent depends on a number of factors, including changes in demand, government regulations, and engineering methods.

In the United States, oil production reached its climax in 1970. Since then, U.S. production has steadily declined. In 1999, the American Petroleum Institute estimated that the world’s oil supplies would run out between the years 2062 and 2094. The Institute based those estimates on an average daily consumption rate of 80 million barrels per day worldwide. Predictions by the United States Energy Information Administration indicate a much steeper decline curve for petroleum, however, with the world oil consumption likely to reach 118 barrels per day by the year 2030.

Although the Hubbert Peak Theory has predicted oil production of oil wells, oil fields, and international oil production fairly consistently, the production curve shapes may be altered by several factors. If the government taxes or restricts the use of hydrocarbons, the demand for oil will decrease, flattening the final curve and dampening the decline curve. The establishment of effective, alternative energy sources would also produce this change. Injection of water or gas may re-pressurize the field, allowing a temporary increase in production rates. Finally, hydraulic fracturing or introduction of hydrochloric acid into the rock wall of an oil well will increase oil production by increasing the pore size of the rock.

Enhanced oil recovery (EOR), or tertiary recovery, facilitates the extraction of more oil from each well than traditional recovery methods. EOR can increase the oil yield by 10 to 20 percent. It incorporates the use of chemicals, gases, microbes, or steam to force oil out of the surrounding foundation to enhance recovery. Although the process adds to the cost of production, the United States Department of Energy has estimated that the use of EOR could lead to the production of an additional 240 billion barrels of oil, which would decrease the steepness of the decline curve.