Peak oil
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- Further information: Oil depletion
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Peak oil is the point in time when the maximum rate of global petroleum production is reached, after which the rate of production enters its terminal decline. If global consumption is not mitigated before the peak, an energy crisis may develop because the availability of conventional oil will drop and prices will rise, perhaps dramatically. M. King Hubbert first used the theory in 1956 to accurately predict that United States oil production would peak between 1965 and 1970. His model, now called Hubbert peak theory, has since been used to predict the peak petroleum production of many other countries, and has also proved useful in other limited-resource production-domains. According to the Hubbert model, the production rate of a limited resource will follow a roughly symmetrical bell-shaped curve based on the limits of exploitability and market pressures.
Some observers, such as petroleum industry experts Kenneth S. Deffeyes and Matthew Simmons, believe the high dependence of most modern industrial transport, agricultural and industrial systems on the relative low cost and high availability of oil will cause the post-peak production decline and possible severe increases in the price of oil to have negative implications for the global economy. Although predictions as to what exactly these negative effects will be vary greatly, "a growing number of oil-industry chieftains are endorsing an idea long deemed fringe: The world is approaching a practical limit to the number of barrels of crude oil that can be pumped every day."[1]
If political and economic change only occur in reaction to high prices and shortages rather than in reaction to the threat of a peak, then the degree of economic damage to importing countries will largely depend on how rapidly oil imports decline post-peak. The Export Land Model shows that the amount of oil available internationally drops much more quickly than production in exporting countries because the exporting countries maintain an internal growth in demand. Shortfalls in production (and therefore supply) would cause extreme price inflation, unless demand is mitigated with planned conservation measures and use of alternatives, which would need to be implemented 20 years before the peak.[2]
Optimistic estimations of peak production forecast a peak will happen in the 2020s or 2030s and assume major investments in alternatives will occur before a crisis. These models show the price of oil at first escalating and then retreating as other types of fuel and energy sources are used.[3]
Pessimistic predictions of future oil production operate on the thesis that the peak has already occurred[4][5][6][7] or will occur shortly[8] and, as proactive mitigation may no longer be an option, predict a global depression, perhaps even initiating a chain reaction of the various feedback mechanisms in the global market which might stimulate a collapse of global industrial civilization. In early 2008 there are signs that a possible recession will be made worse by rising oil prices.[9]
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[edit] Demand for oil
- Further information: Oil consumption rates, Industrialization, and Developing countries
The demand side of Peak oil is concerned with the consumption over time, and the growth of this demand. World crude oil demand grew an average of 1.76% per year from 1994 to 2006, with a high of 3.4% in 2003-2004. Demand growth is highest in the developing world.[10] World demand for oil is set to increase 37% over 2006 levels by 2030, according to the US-based Energy Information Administration's (EIA) annual report. Demand will hit 118 million barrels per day (188,000 m³/d) from 2006's 86 million barrels (13,700,000 m³), driven in large part by the transportation sector.[11][12]
As countries develop, industry, rapid urbanization and higher living standards drive up energy use, most often of oil. Thriving economies such as China and India are quickly becoming large oil consumers. China has seen oil consumption grow by 8% yearly since 2002, doubling from 1996-2006,[10] indicating a doubling rate of less than 10 years. China imported roughly half its oil in 2005, and swift continued growth is predicted. India's oil imports are expected to more than triple from 2005 levels by 2020, rising to 5 million barrels per day (7,900 m³/d).[13]
Energy demand is distributed amongst four broad sectors: transportation, residential, commercial, and industrial.[14][15]
The sector that generally sees the highest annual growth in petroleum demand is transportation, in the form of new demand for personal-use vehicles powered by internal combustion engines. [16] Cars and trucks will cause almost 75% of the increase in oil consumption by India and China between 2001 and 2025.[17] As more countries develop, the demand for oil will increase further. This sector also has the highest consumption rates, accounting for approximately 68.9% of the oil used in the United States in 2006,[18] and 55% of oil use worldwide as documented in the Hirsch report. Transportation is therefore of particular interest to those seeking to mitigate the effects of Peak oil.
[edit] Population
Another large factor on petroleum demand has been human population growth. Oil production per capita peaked in the 1970s.[19] The world’s population in 2030 is expected to be double that of 1980.[20] Some analysts project that people will be much more oil-dependent than they are now.[citation needed] Author Matt Savinar predicts that oil production in 2030 will have declined back to 1980 levels as worldwide demand for oil significantly out-paces production.[21][22] Physicist Albert Bartlett claims that the rate of oil production per capita is falling, and that that decline has gone undiscussed because a politically incorrect form of population control may be implied by mitigation.[23] Oil production per capita has declined from 5.26 barrels (0.836 m³) per year in 1980 to 4.44 barrels (0.706 m³) per year in 1993,[24][20] but then increased to 4.79 barrels (0.762 m³) per year in 2005.[24][20] In 2006, the world oil production took a downturn from 84.631 million barrels per day (134,553 m³/d) to 84.597 million barrels per day (134,498 m³/d) although population has continued to increase. This has caused the oil production per capita to drop again to 4.73 barrels (0.752 m³) per year.[24][20]
One factor that has so far helped ameliorate the effect of population growth on demand is the decline of population growth rate since the 1970s. In 1970, the population grew at 2.1%. By 2007,the growth rate had declined to 1.167%.[25] However, oil production is still outpacing population growth to meet demand. World population grew from 6.07 Billion in 2000 to 6.45 Billion in 2005, or by 6.2%,[20] whereas according to BP, global oil production during that same period increased from 74.9 million barrels (11,910,000 m³) to 81.1 million barrels (12,890,000 m³), or by 8.2%.[26] or according to EIA, from 77.762 million barrels (12,363,200 m³) to 84.631 million barrels (13,455,300 m³), or by 8.8%.[24]
[edit] Agriculture and population limits
- Further information: Agricultural effects of peak oil, Food vs fuel, and World population
Because supplies of oil and gas are essential to modern agriculture techniques, a fall in global oil supplies could cause spiking food prices and unprecedented famine in the coming decades.[27][28][29].[30] Geologist Dale Allen Pfeiffer contends that current population levels are unsustainable, and that to achieve a sustainable economy and avert disaster the United States population would have to be reduced by at least one-third, and world population by two-thirds.[31] The largest consumer of fossil fuels in modern agriculture is fertilizer production via the Haber process. If a sustainable non-petroleum source of electricity is developed, this process can be accomplished without fossil fuels using methods such as electrolysis[citation needed].
[edit] Petroleum Supply
[edit] Reserves
| “ | All the easy oil and gas in the world has pretty much been found. Now comes the harder work in finding and producing oil from more challenging environments and work areas. | ” |
|
—
William J. Cummings, ExxonMobil's spokesman in Angola, Dec 2005
, [32]
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As Peak oil is concerned with the amount of oil produced over time, the amount of recoverable reserves is important as this determines the amount of oil that can potentially be extracted in the future.
Conventional crude oil reserves include all crude oil that is technically possible to produce from reservoirs through a well bore, using primary, secondary, improved, enhanced, or tertiary methods. This does not include liquids extracted from mined solids or gasses (tar sands, oil shales, gas-to-liquid processes, or coal-to-liquid processes).[33]
Oil reserves are classified as proven, probable and possible. Proven reserves are generally intended to have at least 90% or 95% certainty of containing the amount specified. Probable Reserves have an intended probability of 50%, and the Possible Reserves an intended probability of 5% or 10%.[34] Current technology is capable of extracting about 40% of the oil from most wells. Some speculate that future technology will make further extraction possible,[35] but to some, this future technology is already considered in Proven and Probable reserve numbers.
In many major producing countries, the majority of reserves claims have not been subject to outside audit or examination. Most of the easy-to-extract oil has been found.[32] Recent price increases have led to oil exploration in areas where extraction is much more expensive, such as in extremely deep wells, extreme downhole temperatures, and environmentally sensitive areas or where high-technology will be required to extract the oil. A lower rate of discoveries per explorations has led to a shortage of drilling rigs, increases in steel prices, and overall increases in costs due to complexity.[36][37]
The peak of world oilfield discoveries occurred in 1965.[38] Because world population grew faster than oil production, production per capita peaked in 1979 (preceded by a plateau during the period of 1973-1979).[19]
The amount of oil discovered each year also peaked during the 1960's at around 55 Gb/year, and has been falling steadily since (in 2004/2005 it was about 12 Gb/year). Reserves in effect peaked in 1980, when production first surpassed new discoveries, though creative methods of recalculating reserves has made this difficult to establish exactly.[6]
[edit] Concerns over stated reserves
| “ | [World] reserves are confused and in fact inflated. Many of the so called reserves are in fact resources. They’re not delineated, they’re not accessible, they’re not available for production | ” |
|
—
Sadad
Al-Husseini, former VP of Aramco,
Oct. 2007; by Al-Husseini's estimate 300 billion of the world’s
1,200 billion barrels (190,000,000,000 m³) of proved
reserves should be recategorized as speculative resources. [7]
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One difficulty in forecasting the date of peak oil is the opacity surrounding the oil reserves classified as 'proven'. Many worrying signs concerning the depletion of 'proven reserves' have emerged in recent years.[39][40] This was best exemplified by the 2004 scandal surrounding the 'evaporation' of 20% of Shell's reserves.[41]
For the most part, 'proven reserves' are stated by the oil companies, the producer states and the consumer states. All three have reasons to overstate their proven reserves:
- Oil companies may look to increase their potential worth.
- Producer countries are bestowed a stronger international stature
- Governments of consumer countries may seek a means to foster sentiments of security and stability within their economies and among consumers.
The Energy Watch Group (EWG) 2007 report shows total world Proved (P95) plus Probable (P50) reserves to be between 854 and 1255 Gb (30 to 40 years of supply if demand growth were to stop immediately). Major discrepancies arise from accuracy issues with OPEC's self-reported numbers. Besides the possibility that these nations have overstated their reserves for political reasons (during periods of no substantial discoveries), over 70 nations also follow a practice of not reducing their reserves to account for yearly production. 1255 Gb is therefore a best-case scenario.[6] Analysts have suggested that each of the OPEC member nations also has economic incentives to exaggerate their reserves, due to the OPEC quota system, which allows greater output for countries with greater reserves.[35]
The following table shows suspicious jumps in stated reserves without associated discoveries, as well as the lack of depletion despite yearly production:
| Declared reserves with suspicious increases in bold purple (in billions of barrels) from Colin Campbell, SunWorld, 80'-95 | |||||||
| Year | Abu Dhabi | Dubai | Iran | Iraq | Kuwait | Saudi Arabia | Venezuela |
| 1980 | 28.00 | 1.40 | 58.00 | 31.00 | 65.40 | 163.35 | 17.87 |
| 1981 | 29.00 | 1.40 | 57.50 | 30.00 | 65.90 | 165.00 | 17.95 |
| 1982 | 30.60 | 1.27 | 57.00 | 29.70 | 64.48 | 164.60 | 20.30 |
| 1983 | 30.51 | 1.44 | 55.31 | 41.00 | 64.23 | 162.40 | 21.50 |
| 1984 | 30.40 | 1.44 | 51.00 | 43.00 | 63.90 | 166.00 | 24.85 |
| 1985 | 30.50 | 1.44 | 48.50 | 44.50 | 90.00 | 169.00 | 25.85 |
| 1986 | 31.00 | 1.40 | 47.88 | 44.11 | 89.77 | 168.80 | 25.59 |
| 1987 | 31.00 | 1.35 | 48.80 | 47.10 | 91.92 | 166.57 | 25.00 |
| 1988 | 92.21 | 4.00 | 92.85 | 100.00 | 91.92 | 166.98 | 56.30 |
| 1989 | 92.20 | 4.00 | 92.85 | 100.00 | 91.92 | 169.97 | 58.08 |
| 1990 | 92.20 | 4.00 | 93.00 | 100.00 | 95.00 | 258.00 | 59.00 |
| 1991 | 92.20 | 4.00 | 93.00 | 100.00 | 94.00 | 258.00 | 59.00 |
| 1992 | 92.20 | 4.00 | 93.00 | 100.00 | 94.00 | 258.00 | 62.70 |
| 2004 | 92.20 | 4.00 | 132.00 | 115.00 | 99.00 | 259.00 | 78.00 |
Kuwait, for example, was reported by a January 2006 issue of Petroleum Intelligence Weekly to have only 48 Gb in reserve, of which only 24 are "fully proven." This report was based on "leaks of confidential documents" from Kuwait, and has not been formally denied by the Kuwaiti authorities. Additionally, the reported 1.5 Gb of oil burned off by Iraqi soldiers in the first Gulf War[42] are conspicuously missing from Kuwait's figures.
On the other hand investigative journalist Greg Palast has argued that oil companies have an interest in making oil look more rare than it is in order to justify higher prices.[43] Other analysts in 2003 argued that oil producing countries understated the extent of their reserves in order to drive up the price of oil.[44]
[edit] Unconventional sources
Unconventional sources, such as heavy crude oil, tar sands, and oil shale are not counted as part of oil reserves. However, oil companies can book them as proven reserves after opening a strip mine or thermal facility for extraction. Oil industry sources such as Rigzone have stated that these unconventional sources are not as efficient to produce, however, requiring extra energy to refine, resulting in higher production costs and up to three times more greenhouse gas emissions per barrel (or barrel equivalent).[45] While the energy used, resources needed, and environmental effects of extracting unconventional sources has traditionally been prohibitively high, the three major unconventional oil sources being considered for large scale production are the extra heavy oil in the Orinoco river of Venezuela,[46] the tar sands in the Western Canada Basin,[47] and the oil shale in the Green River Formation in Colorado, Utah and Wyoming in the United States.[48][49] Chuck Masters of the USGS estimates that, "Taken together, these resource occurrences, in the Western Hemisphere, are approximately equal to the Identified Reserves of conventional crude oil accredited to the Middle East."[50]
Despite the large quantities of oil available in non-conventional sources, Matthew Simmons argues that limitations on production prevent them from becoming an effective substitute for conventional crude oil. Simmons states that "these are high energy intensity projects that can never reach high volumes" to offset significant losses from other sources.[51] Moreover, oil extracted from these sources typically contains contaminants such as sulfur, heavy metals and carbon that are energy-intensive to extract and leave highly toxic tailings[52]. However, oil prices of over $90 a barrel in 2007 have brought increased attention to potentially mining these sources.[35] A study by Wood Mackenzie suggests that within 15 years all the world’s extra oil supply will likely come from unconventional sources.[53]
A 2003 article in Discover magazine claimed that thermal depolymerization could be used to manufacture oil indefinitely, out of garbage, sewage, and agricultural waste. The article claimed that the cost of the process was $15 per barrel.[54] A follow-up article in 2006 stated that the cost was actually $80 per barrel.[55]
[edit] Production
The point in time when peak global oil production occurs is the measure which defines Peak oil. This is because production capacity is the main limitation of supply. Therefore, when production decreases, it becomes the main bottleneck to the petroleum supply/demand equation.
World wide oil discoveries have been less than annual production since 1980.[6] According to several sources, world-wide production is past or near its maximum.[4][5][6][7][8]
World oil production growth trends were flat from 2005 to 2008. The U.S. Energy Information Administration showed in 2008 a production peak in May 2005.[56] According to a January 2007 International Energy Agency report, global supply (which includes biofuels, non-crude sources of petroleum, and use of strategic oil reserves, as well as production) averaged 85.24 million barrels per day (135,520 m³/d) in 2006, up 0.76 million barrels per day (1,210 m³/d) (0.9%), from 84.48 million barrels per day (134,310 m³/d) in 2005.[57] Production in Q3 2007 was 85.08 million barrels per day (135,270 m³/d), down 0.62 million barrels per day (990 m³/d) (0.7%), from the same period a year earlier. Average yearly gains in world oil production from 1987 to 2005 were 1.2 million barrels per day (1,900 m³/d) (1.7%), with yearly changes since 1997 ranging from a decrease of 1.4 million barrels per day (2,200 m³/d), (-1.9%; 1998–1999) to an increase of 3.3 million barrels per day (5,200 m³/d) (4.1%; 2003–2004).[citation needed]
Of the largest 21 fields, at least 9 are in decline[58]. In April, 2006, a Saudi Aramco spokesman admitted that its mature fields are now declining at a rate of 8% per year (with a national composite decline of about 2%)[59]. This information has been used to argue that Ghawar, which is the largest oil field in the world and responsible for approximately half of Saudi Arabia's oil production over the last 50 years, has peaked.[60][35] The world's second largest oil field, the Burgan field in Kuwait, entered decline in November, 2005.[61]
Mexico announced that its giant Cantarell Field entered depletion in March, 2006,[62] due to past overproduction. In 2006, Cantarell was declining at a rate of 13% a year.[63]
OPEC had vowed in 2000 to maintain a production level sufficient to keep oil prices between $22–28 per barrel, but did not prove possible. In its 2007 annual report, OPEC projected that it could maintain a production level which would stabilize the price of oil at around $50–60 per barrel until 2030.[64] On November 18, 2007, with oil above $98 a barrel, King Abdullah of Saudi Arabia, a long-time advocate of stabilized oil prices, announced that his country would not increase production in order to lower prices.[65] Saudia Arabia's inability, as the worlds largest supplier, to stabilize prices through increased production during that period suggests that no nation or organization had the spare production capacity to lower oil prices. The implication is that those major suppliers who had not yet peaked were operating at or near full capacity.[35]
Commentators have pointed to the Jack 2 deep water test well in the Gulf of Mexico, announced September 5, 2006,[66] as evidence that there is no imminent peak in global oil production. According to one estimate, the field could account for up to 11% of US production within seven years.[67] However, even though oil discoveries are expected after the peak oil of production is reached[68], the new reserves of oil will be harder to find and extract. The Jack 2 field, for instance, is more than 20,000 feet (6,100 m) under the sea floor in 7,000 feet (2,100 m) of water, requiring 8.5 kilometers of pipe to reach. Additionally, even the maximum estimate of 15 billion barrels (2,400,000,000 m³) represents slightly less than 2 years of U.S. consumption at present levels[69].
The increasing investment in harder-to-reach oil is a sign of oil companies' belief in the end of easy oil.[32] In addition, while it is widely believed that increased oil prices spur an increase in production, an increasing number of oil industry insiders are now coming to believe that even with higher prices, oil production is unlikely to increase significantly beyond its current level. Among the reasons cited are both geological factors as well as "above ground" factors that are likely to see oil production plateau near its current level.[70]
[edit] Nationalization of oil supplies?
Another factor affecting global oil supply is the nationalization of oil reserves by producing nations. The nationalization of oil occurs as countries begin to deprivatize oil production and withhold exports. Kate Dourian, Platts' Middle East editor, points out that while estimates of oil reserves may vary, politics have now entered the equation of oil supply. "Some countries are becoming off limits. Major oil companies operating in Venezuela find themselves in a difficult position because of the growing nationalization of that resource. These countries are now reluctant to share their reserves."[71]
According to consulting firm PFC Energy, only 7% of the world's estimated oil and gas reserves are in countries that allow companies like ExxonMobil free rein. Fully 65% are in the hands of state-owned companies such as Saudi Aramco, with the rest in countries such as Russia and Venezuela, where access by Western companies is difficult. The PFC study implies political factors are limiting capacity increases in Mexico, Venezuela, Iran, Iraq, Kuwait and Russia. Saudi Arabia is also limiting capacity expansion, but because of a self-imposed cap, unlike the other countries.[72] As a result of not having access to countries amenable to oil exploration, ExxonMobil is not making nearly the investment in finding new oil that it did in 1981.[73]
Alternately, commodities trader Raymond Learsy, author of Over a Barrel: Breaking the Middle East Oil Cartel, contends that OPEC has trained consumers to believe that oil is a much more finite resource than it is. To back his argument, he points to past false alarms and apparent collaboration.[44] He also believes that Peak Oil analysts are conspiring with OPEC and the oil companies to create a "fabricated drama of peak oil" in order to drive up oil prices and profits. It is worth noting oil had risen to a little over $30/barrel at that time. A counter-argument was given in the Huffington Post after he and Steve Andrews, co-founder of ASPO, debated on CNBC in June 2007.[74]
[edit] Timing of peak oil
M. King Hubbert initially predicted in 1974 that peak oil would occur in 1995 "if current trends continue."[75] However, in the late 1970s and early 1980s, global oil consumption actually dropped (due to the shift to energy-efficient cars,[76] the shift to electricity and natural gas for heating,[77] and other factors), then rebounded to a lower level of growth in the mid 1980s. Thus oil production did not peak in 1995, and has climbed to more than double the rate initially projected. This underscores the fact that the only reliable way to identify the timing of peak oil will be in retrospect. However, predictions have been refined through the years as up-to-date information becomes more readily available, such as new reserve growth data.[78] Predictions of the timing of peak oil include the possibilities that it has recently occurred, that it will occur shortly, that a plateau of oil production will sustain supply for up to 100 years, or that oil production will not peak.
[edit] Pessimistic predictions of future oil production
Saudi Arabia's King Abdulla told his subjects in 1998, "The oil boom is over and will not return... All of us must get used to a different lifestyle." Since then he has implemented a series of corruption reforms and government programs intended to lower Saudi Arabia's dependence on oil revenues. The royal family was put on notice to end its history of excess and new industries were created to diversify the national economy.[79]
The Association for the Study of Peak Oil and Gas (ASPO) predicted in their January 2008 newsletter that the peak in all oil (including non-conventional sources), would occur in 2010. This is earlier than the July 2007 newsletter prediction of 2011.[80]
Kenneth S. Deffeyes argues that world oil production peaked on December 16, 2005.[4]
Texas oilman T. Boone Pickens stated in 2005 that worldwide conventional oil production was very close to peaking.[81] Data from the US Energy Information Administration shows that world production leveled out in 2004, and reached a peak in the third quarter of 2006,[5] and an October 2007 retrospective report by the Energy Watch Group concluded that this was the peak of conventional oil production.[6] If current estimates hold, that peak may have been exceeded in December 2007, though it is unclear how much of this amount is crude oil production and how much is natural gas and other sources.[82]
Sadad Al Husseini, former head of Saudi Aramco's production and exploration, stated in an October 29, 2007 interview that oil production had likely already reached its peak in 2006,[7] and that assumptions by the IEA and EIA of production increases by OPEC to over 45 MB/day are "quite unrealistic."
The July 2007 IEA Medium-Term Oil Market Report projected a 2% non-OPEC liquids supply growth in 2007-2009, reaching 51.0 mb/d in 2008, receding thereafter as the slate of verifiable investment projects diminishes. They refer to this decline as a plateau. The report expects only a small amount of supply growth from OPEC producers, with 70% of the increase coming from Saudi Arabia, the UAE and Angola as security and investment issues continue to impinge on oil exports from Iraq, Nigeria and Venezuela.[84]
In October 2007, the Energy Watch Group, a German research group founded by MP Hans-Josef Fell, released a report claiming that oil production peaked in 2006 and will decline by several percent annually. The authors predict negative economic effects and social unrest as a result.[85][6] They state that the IEA production plateau prediction uses purely economic models which rely on an ability to raise production and discovery rates at will. [6]
Matthew Simmons, Chairman of Simmons & Company International, said on October 26, 2006 that global oil production may have peaked in December 2005, though he cautions that further monitoring of production is required to determine if a peak has actually occurred.[86]
[edit] Optimistic predictions of future oil production
[edit] Plateau oil
Not all non-'peakists' believe there will be endless abundance of oil. CERA, for example, which counts unconventional sources in reserves while discounting EROEI, believes that global production will eventually follow an “undulating plateau” for one or more decades before declining slowly.[3] In 2005 the group had predicted that "petroleum supplies will be expanding faster than demand over the next five years."[87]
Dr. R.C. Vierbuchen, Vice President, Caspian/Middle East Region, ExxonMobil Exploration Co. believes a peak, "from resource limitations, is unlikely in the next 25 years." He claims that future technologies will increase production, and that the peak will be the result of non-production factors.[88]
Similarly, some analysts believe that the rising oil prices will instigate a move toward alternative sources of fuel, and that this will take effect long before oil reserves are depleted[citation needed].
[edit] Energy Information Administration and USGS 2000 reports
The U.S. Energy Information Administration projects world consumption of oil to increase to 98.3 million barrels per day (156,300 m³/d) in 2015 and 118 million barrels per day (188,000 m³/d) in 2030.[89] This represents more than a 25% increase in world oil production. A 2004 paper by the Energy Information Administration based on data collected in 2000 disagrees with Hubbert peak theory on several points:[16]
- Explicitly incorporates demand into model as well as supply
- Does not assume pre/post-peak symmetry of production levels
- Models pre- and post-peak production with different functions (exponential growth and constant reserves-to-production ratio, respectively)
- Assumes reserve growth, including via technological advancement and exploitation of small reservoirs
The EIA estimates of future oil supply are countered by Sadad Al Husseini, retired VP Exploration of Aramco, who calls it a 'dangerous over-estimate'.[90] Husseini also points out that population growth and the emergence of China and India means oil prices are now going to be structurally higher than they have been.
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Colin Campbell argues that the 2000 USGS estimates is a methodologically flawed study that has done incalculable damage by misleading international agencies and governments. Campbell dismisses the notion that the world can seamlessly move to more difficult and expensive sources of oil and gas when the need arises. He argues that oil is in profitable abundance or not there at all, due ultimately to the fact that it is a liquid concentrated by nature in a few places having the right geology. Campbell believes OPEC countries raised their reserves to get higher oil quotas and to avoid internal critique. He also points out that the USGS failed to extrapolate past discovery trends in the world’s mature basins.[91]
[edit] No Peak Oil
| “ | Yes, there are finite resources in the ground, but you never get to that point. | ” |
|
—
Jeff Hatlen, an engineer with Chevron[92]
|
Some commentors, such as economist Michael Lynch, believe that the Hubbert Peak theory is flawed and that there is no imminent peak in oil production; a view sometimes referred to as "cornucopian" by believers in Hubbert Peak Theory. Lynch argued in 2004 that production is determined by demand as well as geology, and that fluctuations in oil supply are due to political and economic effects in addition to the physical processes of exploration, discovery and production.[93]
Abdullah S. Jum'ah, President, Director and CEO of Aramco, states that the world has adequate reserves of conventional and nonconventional oil sources for more than a century[94][95], though Sadad Al-Husseini, a former Vice President of Aramco who formerly maintained that production would peak in 10-15 years, stated in October 2007 that oil production peaked in 2006[7].
OPEC has never acknowledged imminent Peak oil concerns.[citation needed] In OPEC's 2007 annual book[96], which discusses issues such as future supply position, forecasted demand, and ultimate recoverable reserves (URR), the authors state that the conventional oil resource base is sufficient to satisfy demand increases over the projected period until 2030 at a price of $50-60 per barrel, increasing afterwards to account for inflation. It also states that, comparing the 5% confidence (P5) URR of 3300(sic) billion barrels from the 2000 USGS survey[97] to what appears to be (there is no reference given) the 95% confidence (P95) URR of 1700(sic) billion barrels from the 1980 Rand corporation survey, production after 1980 has been only 1/3rd of reserve additions happening during the same period, which would contrast with Peak oil predictors. However, four other surveys from 1980 give estimates of 2600, 2400, 2280, and 2,015 billion barrels (320,400,000,000 m³).[98] Comparing the average of the five 1980 estimates (2219 billion barrels when using the actual Rand estimate of 1800 billion barrels) to the P95 URR from the 2000 USGS survey (2272 billion barrels), production after 1980 has been over 10 times more than reserve additions.
[edit] Abiogenesis
The theory that petroleum is derived from biogenic processes is held by the overwhelming majority of petroleum geologists. Abiogenic theorists however, such as the late professor of astronomy Thomas Gold at Cornell University, assert that the source of oil may not be a limited supply of “fossil fuels”, but instead an abiotic process. They theorize that if abiogenic petroleum sources are found to be abundant, Earth would contain vast reserves of untapped petroleum.[99] A February 2008 article on abiogenic low-carbon hydrocarbon production using data from experiments at Lost City (hydrothermal field) reported how the abiotic synthesis of C1 to C4 hydrocarbons (though not petroleum) may occur in the presence of ultramafic rocks, water, and moderate amounts of heat.[100]
The most important counter arguments to the abiotic theory involve various biomarkers which have been found in all samples of all the oil and gas accumulations found to date. The prevailing view among geologists and petroleum engineers is that this evidence "provides irrefutable proof that 99.99999% of all the oil and gas accumulations found up to now in the planet earth have a biologic origin." In this process, oil is generated from kerogen by pyrolysis.[101] While, Thomas Gold hypothesized that bacteria exist deep within the Earth's crust, and are the source of the biomarkers[102], these bacteria have not been found, the natural abiogenic formation of high-carbon hydrocarbons has not been demonstrated, and evidence for the biotic origin of petroleum is abundant.
[edit] Possible effects and consequences of Peak Oil
- Further information: Malthusian catastrophe, Olduvai theory, and Backstop resources
- For information on the timing of peak oil, see Predicting the timing of peak oil
The widespread use of fossil fuels has been one of the most important stimuli of economic growth and prosperity since the industrial revolution, allowing humans to participate in takedown, or the consumption of energy at a greater rate than it is being replaced. Some believe that when oil production decreases, human culture and modern technological society will be forced to change drastically. The impact of Peak oil will depend heavily on the rate of decline and the development and adoption of effective alternatives. If alternatives are not forthcoming, the products produced with oil (including fertilizers, detergents, solvents, adhesives, and most plastics) would become scarce and expensive. At the very least this could lower living standards in developed and developing countries alike, and in the worst case lead to worldwide economic collapse. With increased tension between countries over dwindling oil supplies, political situations may change dramatically and inequalities between countries and regions may become exacerbated.
[edit] The Hirsch Report
In 2005, the US Department of Energy published a report titled Peaking of World Oil Production: Impacts, Mitigation, & Risk Management.[103] Known as the Hirsch report, it stated, "The peaking of world oil production presents the U.S. and the world with an unprecedented risk management problem. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking."
[edit] Conclusions from the Hirsch Report and three scenarios
- World oil peaking is going to happen, and will likely be abrupt.
- Oil peaking will adversely affect global economies, particularly those most dependent on oil.
- Oil peaking