The basic idea of the peak oil hypothesis is that global oil production will follow a bell-shaped curve over time, and that we are somewhere near the top of the bell. Once it is passed, a steep decline in output is expected, probably alongside quickly rising prices. The bell-shaped progression is one that has been observed in individual countries that have seen their output peak, including the United States. The Oil Drum is probably the premier website discussing the peak oil possibility.
A world with swiftly falling hydrocarbon availability and rising prices would have numerous economic and geopolitical consequences, from rising food prices to a probable scramble for alternative fuels. That being said, not everyone finds the peak oil theory convincing. Some argue that improved technology will allow us to tap ever-more-unconventional sources of hydrocarbons. Some argue that, rather than falling off sharply, global production will go into a long plateau phase. Others argue that the emergence of alternative fuels – such as biofuels – will fill the gap associated with falling production easily.
What do readers here think? Are we likely to see a sharp contraction in global oil output in coming decades? If so, what would the consequences be? (We already talked about hedging against the possibility.) What effect will new technologies have on this, and what consequences does it have for climate change outcomes and policy-making?
(On one side note, some economists who I’ve spoken to expect carbon pricing to seriously decrease the demand for oil by 2030 – to the point where global prices collapse and unconventional reserves such as the Athabasca oil sands are not worth exploiting. What do people think of that possibility?)
The peak oil question is interesting because, in essence, it’s about how pure a market for oil do we believe in?
Peak oil would be tautologically true if there were a constant demand, and a set of reserves at varying intensities of difficulty for extraction – where the cost of extraction of any particular reserve is constant over time.
But, in the real world, the cost of extraction of reserves reduces over time. Just saying that takes care of most of the “objections” to peak oil – those who believe in the Plateau simply believe that the change in cost of extraction is fast enough that the peak will be flattened out. Biofuels can be simply concieved as difficult to extract resources, getting less difficult to extract over time – there doesn’t seem to be any need to consider them theoretically different from difficult to tap mineral oil reserves.
The other thing the real world has, however, is the possibility of false reporting of existing oil reserves. This could mean there is less easy to extract oil than believed, and could (everything else held equal) steepen the curve (both on upslope and downslope, since imagined over supply could in theory lower prices and increase consumption/production).
Oil producers and game theory
19 Jun 2008
“The simple fact is, at cheap prices, the billions of people in emerging markets will consume a lot of oil, and billions of people can’t consume a lot of oil without global production ramping up faster than it has at any time in the past half century. The only way to prevent large growth in petroleum use in rapidly developing nations is for prices to make such growth unattractive. But that implies prices that are high enough to bite in petroleum-thirsty countries like America. “
“The only way to prevent large growth in petroleum use in rapidly developing nations is for prices to make such growth unattractive. But that implies prices that are high enough to bite in petroleum-thirsty countries like America. “
Implies with an assumption – that the market for oil is fair and open. That any actor can purchase oil for the same price as any other. I assume this will become less and less true as wars are more and more explicitly over oil reserves.
I don’t see how wars could help keep American oil cheap in the long run. As the Iraq II debacle shows, the cost of modern day imperialism is terifically high.
I just had a visit with a long time friend from Vancouver who is now working in Qatar. She argued with me adamantly that there is a lot more oil than we believe. Her husband has worked in the oil fields both in Iran and in Qatar and claims that there is enough oil in Qatar alone to last more than 200 hundred years. Is there a reason why Canada is opening all kinds of universities and business ventures in Qatar? As to your questions, I think that oil is a lot like cigarettes and we have an addiction to it. We will continue to buy it at high prices as long as it is available.
As I understand it, Qatar has hardly any oil – just a lot of gas.
Qatar is OPECs smallest oil producer, though it remains an important supplier to world oil markets. In 2006, Qatar produced 1.1 mmbpd of total oil liquids (815,000 bpd was crude oil). Qatar also produced an estimated 250,000 bbl/d (40,000 m³/d) of NGLs and 35,000 bbl/d (5,600 m³/d) of condensate, which are exempt from the country’s OPEC production quota. Qatar’s proven oil reserves were 15.2 Gbbl (2.42×109 m3) as of January 2007.
Related prior posts:
When it comes to the risk posed by climate change, running out of oil quickly and dramatically might be a godsend.
Energy Independence and Peak Oil
By bystander on peakoil
A Saudi Prince tells America to give up futile dreams of energy independence. Op-Ed in the NYT says Peak Oil is a waste of energy and an illusion. Meanwhile, the OECD’s energy advisors, the IEA are saying cheap oil will run out in ten years, a decade sooner than estimates made as recently as 2007.
Shorter Prince Faisal: “Who do you think you’re kidding? Remember back in the 70’s, when you said you were quitting smack for good? How’d that turn out for ya? Now be a good little whore and get yer ass back on the street and turn some tricks for daddy.”
It is interesting to consider how the role of the Middle East will change as countries run out of cheap oil and others are weaning themselves off fossil fuels to combat climate change.
Without oil production, states like Saudi Arabia would lose their international clout. Domestically, they would also need to transition from being rentier states to having economies not centred around extractive industries, as well as tax bases not based on resource revenues.
Geopolitical Diary: The Saudis’ Oil Game Plan
June 23, 2008
The long-awaited Jeddah Oil Conference on oil supplies was held and yielded the long-expected answer. The Saudis are going to increase oil supplies by the amount floated a week ago, and are prepared to increase supplies even more if there is demand for more product, which they do not see at this time. The subtext of the meeting was simple. Oil prices are not the result of insufficient supply or extraordinary demand. Supply and demand are pretty much balanced. Therefore, $135 a barrel for oil does not represent a problem to be solved; it represents a reasonable price for crude.
It doesn’t take a rocket scientist to understand the Saudi view. Making a $135 a barrel is better than making a $100 a barrel, and beats the hell out of making $50 dollars a barrel. In some cases, countries that buy oil might have non-economic leverage to use against oil producers. In the case of Saudi Arabia, the most important exporter, there is not much that can be done. On the contrary, the Saudis have the leverage.
The only country that could use political leverage against the Saudis is the United States, and at the moment the United States is more dependent on the Saudis politically than the other way around. The Saudis are critical to two major strategic U.S. initiatives: stabilizing Iraq and the Israeli-Palestinian talks. The Saudis are not involved in these matters for Washington’s benefit, but Washington is benefiting. There are no non-economic threats the United States could make, assuming it would really want to bring down oil prices.
—
Geopolitical Diary: The Real Reasons Behind High Oil Prices
January 3, 2008
An oil trader at the New York Mercantile Exchange purchased a barrel of oil at a price above $100 for the first time ever Jan. 2. In inflation-indexed terms, the all-time record for crude oil was set in 1979 — at approximately $110 a barrel in today’s dollars.
We have not commented on the high price of oil in some time, mostly because there has been little to say. While we believe that the peak oil theory — the idea that there is only a finite amount of crude, so eventually production will peak and then fall — is correct, we do not believe such a peak will occur any time soon. Less than one-quarter of the world’s surface has been explored for petroleum to date, and advances in deepwater drilling and exploiting nonconventional crudes such as oil sands — in just the past decade have been mind-numbing. True, the costs of extracting that crude — and the large capital costs behind cutting edge technologies — may well go up, but even here familiarity and economies of scale argue for the opposite.
We see much of the price increases of recent years as geopolitical in origin — specifically in light of the idea of increased risk. There are few places in the world that produce oil that have not suffered bouts of instability of late. Nigeria has seen massive attacks on its infrastructure; Venezuela has crippled its national energy firm for political reasons; Osama bin Laden has rallied against Saudi Arabia and the other petro-economies of the Persian Gulf; Iraq is enmeshed in a civil war; and Iran has threatened war with the United states — and been threatened with war in return. Add it together and it is small wonder that oil traders can see straight, much less function.
Thank you for a concise one paragraph explanation of the peak oil theory which makes sensse to me (even as I am finishing work today Sunday at midnight).
I think as a world are going into somewhat unchartered territory. I cannot think of a commodity which had become so critically important to economies and which could become scarcer. Gold was of artificial importance as a currency as opposed to its practical function.
Another interesting element of it is that relatively few nations have it in abundance and many nations are dependant on it, including powerful nations and economies..
I think if the peak oil phenomenon occurs, it will be very destabilizing. Our hope is that other forms of energy will come on stream to replace the diminishing and increasingly damaging effects of oil.
Can anyone think of a similar commodity which experienced this potential peak phenomenon?
I don’t think there has ever been a global peak in the production of an equally important resource.
We may well have passed ‘peak fish’ but that has less geopolitical importance. Also, fish stocks are fundamentally renewable, so they would recover to some new equilibrium if we stopped exploiting them. Oil reserves, for all intents and purposes, are fixed in quantity (though we can make synthetic petroleum from bitumen, coal, biomass, etc).
Total issues oil shortage warning
The head of oil giant Total has told the BBC the world could face a shortage of oil because of underinvestment.
Chief executive Christophe de Margerie warned that too little has been spent trying to tap into new oil reserves because of the economic crisis.
“If we don’t move [now] there will be a problem,” Mr de Margerie said. “In two or three years it will be too late.”
He also said he thought oil prices would rise to more than $100 a barrel, from their current level of around $70.
“The reserves of oil are there, but if you don’t invest they don’t come on the market,” Mr de Margerie said.
That last paragraph provides the crucial context. In what has been a notably good year for oil discoveries, exploration has turned up in half a year what the world consumes every four months. That’s right; global petroleum consumption is about 86 million barrels per day, or a bit over 30 billion barrels per year. And that’s with nearly a billion people in China and India still living in dire poverty.
If prices remain elevated, then these discoveries will be exploited and may begin coming on line within ten years or so. By that time, the world will probably have burned through at least 300 times the amount of oil found in the above bonanza.
There may be plenty of oil left in the ground, but you don’t have to be a peak oil fanatic to understand that there is trouble brewing. At current prices, there is no way to get enough oil to the surface to satisfy growing demand. Either significantly more ambitious exploration and development efforts must be stimulated, or demand must be trimmed. And the way those changes are generated is a rise in the price of oil.
The Breaking Point
By PETER MAASS
Published: August 21, 2005
The largest oil terminal in the world, Ras Tanura, is located on the eastern coast of Saudi Arabia, along the Persian Gulf. From Ras Tanura’s control tower, you can see the classic totems of oil’s dominion — supertankers coming and going, row upon row of storage tanks and miles and miles of pipes. Ras Tanura, which I visited in June, is the funnel through which nearly 10 percent of the world’s daily supply of petroleum flows. Standing in the control tower, you are surrounded by more than 50 million barrels of oil, yet not a drop can be seen.
The oil is there, of course. In a technological sleight of hand, oil can be extracted from the deserts of Arabia, processed to get rid of water and gas, sent through pipelines to a terminal on the gulf, loaded onto a supertanker and shipped to a port thousands of miles away, then run through a refinery and poured into a tanker truck that delivers it to a suburban gas station, where it is pumped into an S.U.V. — all without anyone’s actually glimpsing the stuff. So long as there is enough oil to fuel the global economy, it is not only out of sight but also out of mind, at least for consumers.
I visited Ras Tanura because oil is no longer out of mind, thanks to record prices caused by refinery shortages and surging demand — most notably in the United States and China — which has strained the capacity of oil producers and especially Saudi Arabia, the largest exporter of all. Unlike the 1973 crisis, when the embargo by the Arab members of the Organization of Petroleum Exporting Countries created an artificial shortfall, today’s shortage, or near-shortage, is real. If demand surges even more, or if a producer goes offline because of unrest or terrorism, there may suddenly not be enough oil to go around.
Is the global oil tank half-full, is it half-empty … or are we running on fumes?
Posted 1:01 PM on 28 Sep 2009
by Richard Heinberg
In his article in the New York Times Sept. 24, “Oil Industry Sets a Brisk Pace of New Discoveries,” staff reporter Jad Mouawad cites oil discoveries totaling 10 billion barrels for the first half of 2009. The Tiber field in the Gulf of Mexico alone accounts for four to six billion barrels of crude that may eventually find its way into the world oil system. Indeed, this year has seen discovery results that could end up being the best since 2000. But, the article notes, the new oil was expensive to find, it will be expensive to extract, and both exploration and production are only possible because of high levels of investment and sophisticated, expensive new technologies.
To justify the needed level of effort, the oil industry requires prices in excess of $60 per barrel, according to Mouawad; otherwise, the new projects will turn out to be money-losers. Some analysts believe the magic break-even number is closer to $70. In any case, the figure is much higher than was required only a few years ago, and still-higher prices may be necessary to make exploration and production profitable for future projects—prices perhaps close to $80.
Warning over global oil ‘decline’
By Sarah Mukherjee
Environment correspondent, BBC News
There is a “significant risk” that global production of conventional oil could “peak” and decline by 2020, a report has warned.
The UK Energy Research Centre study says there is a consensus that the era of cheap oil is at an end.
But it warns that most governments, including the UK’s, exhibit little concern about oil depletion.
The report’s authors also state that the 10 largest oil producing fields in the world are all in decline.
If it’s just a matter of improved technology, conservation etc, to solve the peak oil problem, then why is it that every single country that has reached peak oil and gone into decline has solved the problem by importing oil from elsewhere, a solution that wont exist when the world as a whole passes peak and goes into decline. The same can be said for alternatives. If they can fill the gap, then why aren’t they. The US hit peak in 1970 and has been declining every since. If alternative can fill the gap then why are they importing 60% of their oil from other countries. Its been nearly forty years since the US peaked………still no sign of alternatives filling the gap……..so what makes you think that alternatives will suddenly fill the even bigger gap when the world enters into decline.
Amory Lovins on winning the oil endgame
To make matters worse, [Mexico’s] oil industry, its fiscal cash-cow for the past three decades, is declining swiftly (see chart). As recently as 2004 Cantarell, the country’s main offshore field, produced 2.1m barrels per day (b/d) of crude. Now its output is just 600,000 b/d. There are no obvious replacements: 23 of the 32 biggest fields are in decline. Barring big new finds, the world’s seventh-largest oil producer is forecast to become a net importer by 2017.
Saturday, October 17, 2009
A High School Senior Asks About Peak Oil
“RR: I think it all ties together. A sharp peak will cause an initial supply shortfall that will result in spiking prices which can cause recession/depression – as well as a drop in funding for renewables. This will cause demand to fall, which will cause prices to fall. Demand then picks back up, and we repeat the cycle. Due to reduced funding for alternatives in troubled economic times, the longer term mitigation options are endangered. This is how I foresee peak oil. It will cause economic troubles, which will feed back into demand. The ultimate impact is that oil will last longer than had the peak not resulted in economic difficulties. This was my premise in The Long Recession.
…
Ultimately, I think you have to plan for some of the scenarios you think are low probability in the same way that you buy homeowner’s insurance for a house that you don’t believe will ever burn down. You do have to draw a line somewhere, though.”
Hubbert’s Peak – John Kinhart’s Comic
John Kinhart gave us permission to repost this cartoon from Sorry Comics.
Oil production could peak in 10 years’ time
9 October 2009, by Tamera Jones
There is a ‘significant risk’ that global oil production will peak in less than ten years’ time, say researchers in a report from the UK Energy Research Centre.
The report’s authors add there is a growing consensus that the age of cheap oil is coming to an end.
But they warn that governments, including the UK’s, are not concerned about global oil depletion, despite the fact that oil provides a third of the world’s energy.
As the modern industrial world is largely built on the availability of cheap oil, this is likely to have a huge impact on the global economy.
The whole issue of peak oil has long been contentious. A growing number of commentators say the world is near peak oil production, predicting that oil will run out as reserves become more and more depleted. Others argue we have enough oil to see us well into the twenty-first century.
Peak Oil will certainly happen. The multi-trillion dollar question is exactly when.
Key oil figures were distorted by US pressure, says whistleblower
Exclusive: Watchdog’s estimates of reserves inflated says top official
The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying.
The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves.
The allegations raise serious questions about the accuracy of the organisation’s latest World Energy Outlook on oil demand and supply to be published tomorrow – which is used by the British and many other governments to help guide their wider energy and climate change policies.
Reality A: No withheld data. Data is disseminated with some initial shock that by 20xx we will have oil shortages. People get a chance to plan accordingly. Private business gets a chance to cash in on better alternatives and more efficient products marketed to the consumer. California starts to look a little less crazy. Gasoline and fuel slowly becomes more expensive over the years as production slows. People adjust.
Reality B: It’s 20xx, suddenly there’s no oil. Mass panic. People flip out. People die. Fuel shortages lead to water/food/heating shortages lead to war. Private industry doesn’t have a chance to adjust. People aren’t prepared to buy a new vehicle on the spot. Californians ride the nearest comet to Heaven’s Gate. Crime increases, lawlessness arises, civilization breaks down, I’m forced into a Thunderdome with Cowboy Neal for my right to live.
If the IEA is capable of any logic at all, they are not cooking the books or withholding data. What’s the motive of retaining data or fixing charts?
Both your setups (and, from what I’ve seen, everybody else’s) miss a fundamental fact: There’s no on/off oil spigot. It’s a gradual process. If there really isn’t much oil left, then oil will slowly become more and more expensive as the remaining oil becomes harder and harder to extract. We will never truly run out of it — it will just get so expensive that it will be used for only a few things. Along the way, as the price goes up, alternatives will develop. People will switch to more fuel-efficient cars, perhaps plug-in hybrids, substituting nuclear and hydro energy for oil energy. Similar innovations will happen through every place that oil is used today. We have nuclear-powered aircraft carriers, why not nuclear-powered super cargo ships? You will see a slew of new battery technologies as companies realize that there’s a lot of money to be made in replacing oil. In fact, the more expensive oil gets, the more alternatives become viable. The only real shortage would happen if some government put a price cap on oil or gasoline, perhaps saying “You cannot sell gas for more than $5 a gallon” at a time when market forces would set the price at $10. In that case, there would be shortages. Otherwise, there would just be a bunch of people refraining from buying oil because the prices are too high.
If Nothing Else, Save Farming
Posted November 16, 2009
It’s probably too late to prepare for peak oil, but we can at least try to salvage food production.
By George Monbiot. Published in the Guardian 16th November 2009
I don’t know when global oil supplies will start to decline. I do know that another resource has already peaked and gone into freefall: the credibility of the body that’s meant to assess them. Last week two whistleblowers from the International Energy Agency alleged that it has deliberately upgraded its estimate of the world’s oil supplies in order not to frighten the markets. Three days later, a paper published by researchers at Uppsala University in Sweden showed that the IEA’s forecasts must be wrong, because it assumes a rate of extraction that appears to be impossible. The agency’s assessment of the state of global oil supplies is beginning to look as reliable as Mr Greenspan’s blandishments about the health of the financial markets.
If the whistleblowers are right, we should be stockpiling ammunition. If we are taken by surprise; if we have failed to replace oil before the supply peaks then crashes, the global economy is stuffed. But nothing the whistleblowers said has scared me as much as the conversation I had last week with a Pembrokeshire farmer.
Wyn Evans, who runs a mixed farm of 170 acres, has been trying to reduce his dependency on fossil fuels since 1977. He has installed an anaerobic digester, a wind turbine, solar panels and a ground-sourced heat pump. He has sought wherever possible to replace diesel with his own electricity. Instead of using his tractor to spread slurry, he pumps it from the digester onto nearby fields. He’s replaced his tractor-driven irrigation system with an electric one, and set up a new system for drying hay indoors, which means he has to turn it in the field only once. Whatever else he does is likely to produce smaller savings. But these innovations have reduced his use of diesel by only around 25%.
“Mr Wright has nothing against alternative energy. He grows camelina, a type of oilseed, to make biodiesel. He cares about energy-efficiency, too: his watering system is powered by gravity, as the water is piped down from the nearby mountains. But he cannot see how he could run his farm without cheap fossil fuels. The work that four generations ago was done by men and horses is now mostly done by machines. He has no full-time employees, but owns about 20 vehicles, plus another 20 broken-down ones he tinkers with or plunders for parts.”
Australian Senate: Peak Oil motion defeated 31:6
Posted by Phil Hart on November 20, 2009
The Motion was defeated 31:6 with the five Greens Senators supporting the motion and presumably South Australian independent Senator Nick Xenophon as the sixth supporting vote.
The major parties are not just ignorant of ‘peak oil’. They are, with clarity of purpose, voting against any attempt to respond or even investigate further.
“We currently have about 86 million barrels a day in worldwide crude oil demand. That still represents a figure below pre-crisis levels. However, all of the organizations mentioned above (with the exception of the API) are now estimating a rise to around 87.5 million over the next year, with increases accelerating thereafter.
Current global supply, on the other hand, will max out at 91-92 million barrels. That gives us a small cushion – just a few years – before the real fireworks start. Period.
Because new volume coming on line will barely replace declining production from older fields, we have little prospect of avoiding insufficient supply producing a spike in crude oil prices. This is not necessarily a bad development from the investor’s perspective, since a volatile market will provide profit opportunities, especially if the direction in price remains sustainable over any period of time.”
“As stated by Coy, McWilliams and Rossant (1997), officially reported global reserves are higher than ever, but these reserve figures are unreliable. One tactic used to inflate reserves is to include unconventional petroleum sources in the estimate. Venezuela doubled its reserves in 1988 by including 20 billion barrels of heavy oil, which had been known for many years (Campbell, 1997). Unconventional sources, such as heavy oil, tar sands, and oil shale, do represent an enormous amount of potential petroleum, and people often incorrectly assume that these resources will easily make up the differences when conventional sources falter. A common view expressed by Dr. Peter Odell, and many others, is that large-scale exploitation of non-conventional petroleum resources is currently limited only by lack of demand and corresponding absence of profit, and that as soon as it is profitable to produce, non-conventional resources will be ready to seamlessly fill the gap left by a shrinking conventional petroleum supply (Odell, 1997).
On the contrary, at this time petroleum cannot be produced from unconventional sources at rates approaching more than a small fraction of production from conventional sources as required by global demand. Canada, for example, is currently producing petroleum from oil sands, a nonconventional resource. Syncrude Canada Ltd expected to ship 76 million barrels of synthetic crude in 1997 – one year of production equaling approximately 1.17 days of conventional global production at the 1997 rates (Oil and Gas Journal, 1997; Basic Petroleum Data Book, 1998). The comparison is not meant to belittle Canada’s oilsand endeavors; on the contrary, they should be applauded for their farsightedness and imitated. Nevertheless, unconventional petroleum resources are no substitute for conventional sources at this time and will require significant development, considerable time, huge capital investments, and innovative new technology in order to fill that role when needed.
Unfortunately, the development of unconventional resources is not being aggressively pursued at this time. The oil shortages of the 1970s spurred activity in the research and development of alternative energy sources, but many of the efforts were abandoned as soon as the price of oil dropped. In order to someday produce any alternative energy source in an economically feasible manner and in sufficiently large quantities to be a viable substitute for conventional petroleum, an enormous investment of time and money is necessary immediately, as is a commitment to continue that investment regardless of fluctuations in oil prices. What should have been a wake-up call in the 1970s has largely been forgotten (Hatfield, 1997b).”
January 20, 2010
No Hover Cars for You
Now we rarely talk about the future or think about the future except in apocalyptic terms.
…
The Canadian documentary, The End of Suburbia, aired the other night on TVO. It features my eco-crush, James Howard Kunstler, so I’ve seen it a few times. Though his vision of the future, and the message of the documentary overall, is bleak, I think it’s also accurate.
…
But ifn case they’re not nuts, here is some of the stuff we can expect in the future:
* Price of gasoline will become prohibitively expensive
* People will not be able to afford to buy, maintain or run a car
* Suburbanites will have difficulty commuting to work, shopping, schools
* Suburbanites and others living in McMansions will not be able to afford to heat their homes
* Like the Victorian mansions of days gone by, McMansions will be chopped up into several apartments housing more than one family
* Kunstler believes the suburbs will become slums; others think with a little vision and foresight we can convert them into self-sufficient villages
“Some people see the prospect of peak oil as good news for the environment, as it might be the only threat which could prompt governments to reduce our dependence on fossil fuels. But it is also likely to encourage them to stimulate investments in even dirtier sources of energy: tar sands, oil shales and turning coal into synthetic petroleum.
But whether we burn filthy unconventional fuels or slightly less filthy oil and gas, beyond a certain point they will tip us beyond a critical level of global warming. Most governments identify this as 2C. Several game-changing papers published in Nature last year suggest that even if we were to burn no unconventional fossil fuels, we can afford to use only 60% of current reserves of oil, gas and coal if we’re to prevent the global average temperature from rising by more than 2C.
In other words, if governments are serious about climate change, then far from encouraging the expansion of supplies, they should be deciding which 40% or more of current reserves they are going to leave in the ground. Current policy suggests that they are not serious about climate change.“
Global reserves ‘exaggerated by a third’
The world’s oil reserves have been exaggerated by up to a third, leading UK scientist Sir David King claimed today, warning of oil shortages and price spikes within years.
News wires 23 March 2010 14:59 GMT
The scientist and researchers from Oxford University claimed official figures are inflated because Opec member countries over-reported reserves in the 1980s when competing for global market share.
The new research, released today, said estimates of conventional reserves should be downgraded from 1.15 trillion barrels to 1.35 trillion barrels to between 850 billion and 900 billion barrels, adding that demand may outstrip supply as early as 2014, an Australian Associated Press report said.
The researchers also claimed it is an open secret that Opec is likely to have inflated its reserves, but that the International Energy Agency (IEA), the Energy Information Administration and World Oil do not take this into account in their statistics.
“It is necessary to investigate ambiguities and sources of error that are broadly acknowledged but not taken into account in public data due to political sensitivities,” the researchers said.
09/01/2010
‘Peak Oil’ and the German Government
Military Study Warns of a Potentially Drastic Oil Crisis
By Stefan Schultz
A study by a German military think tank has analyzed how “peak oil” might change the global economy. The internal draft document — leaked on the Internet — shows for the first time how carefully the German government has considered a potential energy crisis.
The term “peak oil” is used by energy experts to refer to a point in time when global oil reserves pass their zenith and production gradually begins to decline. This would result in a permanent supply crisis — and fear of it can trigger turbulence in commodity markets and on stock exchanges.
The issue is so politically explosive that it’s remarkable when an institution like the Bundeswehr, the German military, uses the term “peak oil” at all. But a military study currently circulating on the German blogosphere goes further.
The study is a product of the Future Analysis department of the Bundeswehr Transformation Center, a think tank tasked with fixing a direction for the German military. The team of authors, led by Lieutenant Colonel Thomas Will, uses sometimes-dramatic language to depict the consequences of an irreversible depletion of raw materials. It warns of shifts in the global balance of power, of the formation of new relationships based on interdependency, of a decline in importance of the western industrial nations, of the “total collapse of the markets” and of serious political and economic crises.
The study, whose authenticity was confirmed to SPIEGEL ONLINE by sources in government circles, was not meant for publication. The document is said to be in draft stage and to consist solely of scientific opinion, which has not yet been edited by the Defense Ministry and other government bodies.
The lead author, Will, has declined to comment on the study. It remains doubtful that either the Bundeswehr or the German government would have consented to publish the document in its current form. But the study does show how intensively the German government has engaged with the question of peak oil.
“In the end, Plan B isn’t more tar sands production from Canada or Venezuela, or more deep-water production from Brazil or Africa. Whatever comes from those sources will barely cover depletion, and what’s left over will be gobbled up by the exploding oil appetites of the BRIC economies.
Plan B can only be less oil consumption. Whether Americans realize it or not, they are already on that path. The disaster in the Gulf is just putting that reality into sharper focus. Last year there were four million fewer vehicles on the road in the United States than there were the year before. In the next decade, there will be 40 to 50 million fewer cars than today. In the process, an economy that once consumed over 20 million barrels of oil per day will find a way to run on 15 million barrels or even less.
Peak supply defines peak demand. That, in a nutshell, is Plan B. “
“Estimates of oil reserves in Saudi Arabia are overstated, meaning crude output could peak within the next decade, leaked US diplomatic cables reveal. Washington fears Saudi Arabia overestimated its oil reserves by as much as 40 percent and the kingdom can’t keep enough oil flowing to control prices, US diplomatic cables obtained by WikiLeaks and published by The Guardian newspaper in London reveal.”
Saudi Arabia’s ability to act as the swing producer forever, however, is open to question. Six years ago, Matt Simmons wrote a book called Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. Using as much technical information as he could find – Saudi Arabia’s oil reserve data are notoriously opaque – he warned that some big Saudi fields were in decline and that peak production might be dangerously close.
The doubts about OPEC’s spare capacity have persisted. Last month, The Guardian published the contents of U.S. embassy cables from Riyadh, which were released by Wikileaks and based on information provided by Sadad al-Husseini, a geologist and former head of exploration at the national oil company Aramco. They suggested that Saudi Arabia may not have enough capacity to prevent oil prices from galloping ahead and that the kingdom’s reserves were greatly exaggerated.
Earlier this week, the oil analysts at Goldman Sachs accused the Saudis and the other cartel members of, in effect, fudging their output figures. “We believe that Saudi Arabia has been producing 0.5 million to one million barrels a day above the official numbers since November … implying that OPEC spare capacity is significantly lower than reported,” they said.
“Peak coal” for Britain passed in 1913, peak oil in 1994 and peak gas in 2000. Peak nuclear, at least for the time being, passed in 1998. Overall British primary energy production maxed out in 1999 at 263m tonnes of oil equivalent and next year production will fall to less than half that level.
There is enough oil in the ground to deep-fry the lot of us, and no obvious means to prevail upon governments and industry to leave it in the ground. Twenty years of efforts to prevent climate breakdown through moral persuasion have failed, with the collapse of the multilateral process at Rio de Janeiro last month. The world’s most powerful nation is again becoming an oil state, and if the political transformation of its northern neighbour is anything to go by, the results will not be pretty.
http://www.guardian.co.uk/commentisfree/2012/jul/02/peak-oil-we-we-wrong
A barrel of West Texas Intermediate fetches around $100, even as gas prices recently hit a ten-year low. This has encouraged gas producers to scurry after oil in liquid-rich shale beds such as the Bakken in North Dakota. To do this, they use the same rigs and techniques, such as fracking and horizontal drilling, as they use for gas. Within a few years the Bakken and other shale beds could be producing up to 3m barrels of oil a day, reckon optimists. That is around a third of current imports.
The International Energy Agency produced a report on Iraq’s energy future, which forecast that the country could produce 8.3m barrels of oil a day by 2035, up from the current 3m. This would see Iraq overtaking Russia as the world’s second-biggest oil exporter, which the IEA described as a “game-changer for world markets”. However, the agency also warned that legal, infrastructure and security obstacles could check Iraqi oil growth, costing it a big chunk of the $5 trillion in revenues it stands to gain over the period.
The IEA thinks the most likely scenario is for oil demand to peak after 2040, but if the Paris agreement is strictly adhered to, it said, oil demand would peak in 2020 and fall off quickly after that.
“We know that Canada’s tarsands have a few special features that would lead one to expect that they’ll be the first to go when oil consumption declines,” said Kathryn Harrison, a political scientist at the University of British Columbia.
“It’s more expensive [to produce], so when consumption declines, the price of oil will also decline, so Canada’s oil will not be competitive when other countries start getting serious about reducing their emissions.”
Harrison said she expects carbon pricing and other regulators to further hamper the oilsands to the point where they are no longer economically viable, what she describes as a case of market forces responding to government regulation.