I'll just post a few bits of info for everyone to consider...
Ghawar (Saudi Arabia) is the world's largest prducing oil field with daily production around 4.5 million barrels per day (mmbpd). It has for some time now been heavily flooded (intentionally) with sea water in order to maintain extraction rates (that is, to avoid the normal decline as the reservoir depletes).
Water flood in this manner doesn't increase the overall recovery of oil, in many cases it reduces it, but it maintains high production rates until near the end. The horizontal wells they have drilled at Ghawar have the same objective - high production rate but not necessarily high overall recovery of oil.
Think of it like this. You have a "pool" of oil floating on water (the oil is physically in the structure of rocks but I'm keeping this simple). On top of the oil you have natural gas. So, three layers - gas, oil and water.
It works like an aerosol can where you have a liquid (eg cleaning spray etc) in the can and pressurised gas above that liquid. A small pipe extends from the top of the can to the bottom. When you press the button, the pressure from the gas forces the liquid from the bottom up the pipe. (Hence why only gas comes out if you turn the can upside down.)
Much the same with oil. In a typical new field using conventional vertical drilling, the pressure of gas (natural gas, the same stuff you use for cooking etc) forces the oil into the pipe and out it flows. This incredibly high pressure is what makes blowouts etc possible. As with the aerosol can, some gas will come out with the oil - this is either reinjected (put back in the ground), flared (burnt off - total waste) or used as fuel (natural gas).
But as oil and some gas is taken from the field the pressure gradually falls and the flow rate drops. At the same time, natural water ingress to the field often occurs so you have water coming up with the oil as well as gas. So, lower volume of production and some of that production is water. End result - oil production slowly but persistently falls.
In order to overcome this, the pressure can be maintained rather than allowed to fall. Injecting nitrogen is an option, so is carbon dioxide but the easy option is usually water. In the case of Saudi Arabia, that's sea water.
So, push more water in the bottom of the field thus pushing the remaining oil up higher (since oil floats on water) and compressing the remaining gas. End result - higher pressure.
Now, to get the best from this you don't want heaps of water coming up with the oil. That's a real problem when you're pumping more water in than you're taking out oil (since you want to increase pressure). Solution? Rather than drill the wells vertically, drill them horizontally straight into the oil. So you literally take the oil out of the middle and leave the gas on top and the water below.
As the oil is extracted, the thickness of the "oil" component falls - the field becomes more and more water. Problem is, once the water reaches the horizontal well it basically dies there and then. No gradual decline, the oil just stops and out comes water. Since it's not even drinkable water, it's no use at all.
Overall, it's like a sprint runner versus a marathon runner. The sprinter runs faster but basically collapses once they cross the finish line whereas the marathon runner covers a greater distance at a slower pace. What the Saudi's (and plenty of others) are doing is comparable to the sprinter - push as hard as you can until it falls apart. A bit like revving your car engine until it blows rather than cruising at moderate speed.
This is what's being done at Ghawar according to virtually all outside knowledge on the field. It is also known to be the case at Cantarell (Mexico, world's second largest producing oil field).
Now, this is the scary bit. PEMEX (the Mexican national oil company) quite freely admits that the thickness of the oil column at Cantarell is down to about 230 metres and falling at about 2 metres per week. Do the maths there... Within 2 years their wells will be swapping from oil to water and once that happens it's game over. Since there are multiple wells drilled into Cantarell, they won't all stop at once but it will happen faster than anyone would like.
Has this happened before? The Yibal field in Oman is the best known example. Once natural decline set in, they went for the abovementioned strategies particularly horizontal drilling. Spectacularly, production went up and up until it peaked in 1997. Since that time, production collapsed even more spectacularly than it rose and it is now only one third the rate it was 9 years ago.
The Saudi's, Mexico and others are using the same techniques as used at Yibal. If it ends the same way (Mexican data strongly suggests it will in their case) then we're in serious trouble.
Kuwait admits that their Burgan field (worlds second largest in terms of reserves but not production) is in decline and that they can no longer sustain previous production rates. They seem to be taking a different approach - slower production over a longer period. The world will likely interpret this as withholding oil from the market to force up prices but it is simply a matter of geology.
Recently in Alaska, production has been cut by half to 400,000 barrels per day due to pipeline problems. What the media fails to mention is that in 1989 production was running at 2 million barrels per day. The field is, roughly, 90% depleted (excluding reserves in ANWR) according to most data so production decline is inevitable.
Or closer to home where Bass Strait production has crashed 80% since its' peak in 1985.
As for the Saudi's, their production is down from 9.6 mmbpd to around 9.1mmbpd over the past 6 months. They say they can't find buyers for their oil (but they could before...) whilst at the same time outbidding everyone for drilling rigs. In the aftermath of hurricane Katrina which hit oil fields in the US, several drilling rigs headed straight to Saudi Arabia because they outbid US oil companies. Hmm... You can't sell your oil and say you've got plenty and then spend a fortune hiring 120 drilling rigs to look for more? I don't think so...
If that's not enough, you could always look to the UK where North Sea production of both oil and gas has seriously slumped since peaking in 2000 - end result is surging gas / electricity prices, a return to coal etc. Or you could look to New Zealand and wonder whatever happened to the giant methanol plants which a few years ago supplied 10% of world demand. What happened? The gas is running out and the plants are uneconomic using expensive imported LNG.
Oil production over the life of a field, group of fields, a whole country (and in theory the whole world) follows a curve that isn't easy to explain. The best I can do is use the following analogy:
When a human is born, it has virtually no physical strength. From that point on, as long as it gets some sort of food (not necessarily the best food) and doesn't succumb to some unfortunate incident, strength will increse. At the age of 10, it will have drastically more strength than it had 5 years earlier. And this will continue. Even if you start drinking regularly, smoking and eating junk food as a teenager, your young age largely prevents any immediate fall in physical strength. Just keep putting food in and strength continues to grow.
But then the point comes where it gets harder. It's harder to maintain growing strength at 30 than at 18. You have to have better management - eat the right food, limit the alcohol etc or your strength will decline.
But it keeps getting harder. By the age of 50, your strength is likely to be in decline. Sure, you can start exercising more etc but you will NEVER get back to your peak strength. You have peaked just like an oil field and all you can do now is manage the decline. Do it right and the decline will be slow, do it wrong and it will be rapid but you'll decline no matter what.
Ultimately, by age 100 you'll have little stength if you haven't already died. 100 year olds just aren't as fit, no matter how much they exercise, eat the right foods etc as an 18 year old who pays no attention to such things. The cycle of rise, peak and decline.
It's the same with oil. As long as you drill wells and build pipelines etc, production will rise in a young field without any real difficulty. But then it gets harder and ultimately impossible to increase production. And then it falls, ultimately to zero.
But what about technology? You could take drugs to boost your stength in your 40's and avoid the early stages of decline. But all that's likely to do is make the final decline far steeper than it otherwise would have been - an early death. You'll be stronger for longer but you'll die early and have less overall productive ability over your lifespan. Same with horizontal drilling etc - more now but a lot less tomorrow.
Once the collective fitness of the world's oil fields peaks, that's it. We'll still have oil but in decreasing quantities. How fast the decline is depends on how it's managed - accept the inevitable and do everything possible to prolong life, albeit with slowly declining fitness. OR live in denial, take drugs to halt the decline for the moment but face an early death.
Apart from the technicalities of actual production, gas is and will almost certainly continue going the same way as oil. Time lag is about 30 years historically although above trend increased usage once oil peaks may shorten that somewhat.