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January 19, 2006

Bracing The World For Peak Oil Peak Oil

The Independent reports on a Peak Oil conference Tuesday in London. Excerpt:

Chris Skrebowski, the editor of the Energy Institute's Petroleum Review, believes peak oil will occur in 2008, at which point the world will move into "a land without maps where we are all likely to be poorer".

For oil is essential to almost everything we do — 90 per cent of world transport is oil-dependent; all petrochemicals are produced from oil; 99 per cent of our food relies on oil in some way, either to grow it or get the produce to market; and 95 per cent of lubricants are oil-based. And, in many cases, oil is not easily replaceable. There are no realistic alternatives to oil for fuelling aircraft and ships, producing petrochemicals or powering cars, without massive investments in technology such as hydrogen. [...]

The peak oil debate tends to divide into two camps. On the one hand there are geologists who argue it is almost upon us or shortly will be, based on analysing past production and discovery rates and field exhaustion and extrapolating into the future. On the other there are economists, political scientists and the oil majors who believe that oil producers — be they governments or companies — will always find a way to meet demand, whether through cleverer ways of finding and extracting oil or greater fiscal incentives to discover and produce more.

Yesterday's conference in London, organised by the Dutch investment bank Insinger de Beaufort, represented both strands of opinion. Mr Skrebowski says that the world's big five oil majors all produced less in 2005 than they did in 2004, while North Sea oil production is declining so rapidly that it will halve in the next seven years.

According to the University of Reading's Dr Roger Bentley, the secretary of the Association for the Study of Peak Oil & Gas, the evidence is irrefutable. He points out that 64 of the world's 100 or so oil-producing countries are already past the point of peak production and on the downward slope. Although there may be a "mini-glut" as output is stepped up from Russia, the Caspian and Iraq and new sources come on stream such as deepwater oil and oilsands, the trend, he says is unmistakable. Dr Bentley believes that non-Opec production will reach a peak within the next 30 months while global output will start to decline between 2010 and 2015 or 2020 at the latest depending on the contribution from non-conventional sources such as oilsands. "Alongside global warming, this is one of the two extraordinary challenges facing mankind," he says. "The numbers may slip a little but the fundamental underlying direction does not change."

Dr Jeremy Leggett, an oil industry geologist turned environmental campaigner turned chief executive of a solar energy company, paints an even more apocalyptic scene. He believes that peak oil will occur some time this decade. That will not only produce "horrible economic pain" as oil prices rise to choke off demand but it will also precipitate environmental disaster as oil-consuming countries switch to coal and hasten global warming. "The shortfall between current expectations of oil supply and actual availability will be such that neither gas, nor renewables, nor liquids from gas and coal, nor nuclear, nor any combination thereof will be able to plug the gap in time to head off economic trauma," he warns. [...]

Despite the ingenuity of the oil industry in extracting oil from ever more hostile environments, it is, adds Dr Leggett, a quarter of a century since the world discovered more oil in one year than it produced. In 2000 there were 16 discoveries of giant fields containing 500 million barrels or more — in 2003 there were none. [Emphasis added]

I love the paragraph about the peak oil debate being divided into two camps. On the one side, the article says, there are petroleum geologists — i.e., people who actually know something about finding and extracting oil. On the other side, there are economists, political scientists and the oil majors — i.e., people who don't know anything about finding and extracting oil (economists and political scientists) and people who have a vested interest in reassuring markets, propping up their stock price, etc. (the oil majors). Who you gonna believe?

Posted by Jonathan at January 19, 2006 12:30 PM  del.icio.us digg NewsVine Reddit YahooMyWeb


So is it wrong to borrow like a mad man to prop up the economy. If the Global Economy does crash doesn't it mean we got money for free....

Not my thoughts, but maybe those of the boy king...

Posted by: mark at January 19, 2006 04:38 PM