"Experts" have told the Energy 2030 conference held in Abu Dhabi last month that near-term peak oil is not going to happen. This flies in the face of conclusions made by a large number of analysts, which I have documented in these postings. For example, Matthew Simmons, Chairman of Simmons and Company International, said last month that global oil production may have already reached its peak in December 2005, although he mollifies this with the caveat that continued monitoring of production is necessary to be sure that the peak has indeed occurred. My understanding is that production is down from all major fields, which does not urge the view that the peak is comfortingly distant. Some geologists think that even if we include the most favourable efforts in exploration and the consequent discovery of new fields like the Gulf of Mexico, the world production of oil will peak during 2010 - 2020 at somewhere between 95 and 110 million barrels a day, and then turn smoothly into an irreversible, steady decline.
Projected world demand for petroleum liquids indicates an increase from approximately 85 million barrels per day in 2005 to 115 barrels daily, in 2030, according to ExxonMobil estimates. This can only be sustained if there is enough oil actually in the ground to be extracted and whether it can be recovered at the necessary rate. Dr Richard Vierbuchen, who is the vice-president of the Caspian/Middle East region for ExxonMobil said that supply can adequately meet the increasing demand. I guess he would say that though, wouldn't he? He stated further that "estimates of the liquids resource base have been increased over the last 50-100 years, and are likely to continue to do so." Now why is that exactly? Well, he says that "Forecasts of an imminent peak in global production appear to underestimate major sources of growth in the resource base, particularly improved recovery and resources made economic by new capabilities." I presume the latter is a veiled allusion to "unconventional oil", for example that recovered from oil sands ("Tar sands" in reality), or produced by coal liquefaction. He then went on to attack the fundamental analysis made by M. King Hubbert in 1956, stating that it is not readily applicable to forecasting global liquids production, while conceding that it did work in predicting that US Lower-48 oil production would peak in 1965-70, and it did in fact peak in 1971.
His criticism of the Hubbert method is that it cannot account for an increasing resource base, and this much is true. In effect, what Hubbert did was to estimate how much oil was in the ground, how much had been drawn off and hence how quickly the peak in production was likely to be arrived at. One consequence of his analysis was that there is a lag of about 40 years between the peak in oil discovery and the peak in oil production. Hubbert's method was based on the number of squares on a sheet of graph paper, representing the volume of oil in the reserve, which must be fitted under a curve representing the rate of extraction, and in its simplest form is "bell-shaped", so that production leading up to the peak is a symmetrical mirror-image of the production after the peak. Of course, it will never be so simple, as extracting oil beyond the peak point (when the reserve is half empty) is a more difficult matter than when the first well is sunk into eager, virgin territory.
He has a point, but the issue of peak oil is not about running out of oil; but that cheap oil will run-out, and the price thereafter increase to some imponderable level (with consequences that may be pondered only too clearly). The central and underpinning feature of any prediction is the quantity of oil there really is down there - further issues are how readily that may be extracted depends on the precise geology of particular regions, and the quality of that oil, in terms of the refining of it that is necessary before it can be used as a fuel.
According to Vierbuchen, "although annual global production has exceeded annual discoveries since the early 1980's, annual global reserve additions still exceed annual production because of reserve growth in increasing fields." I think he is referring to methods of improved oil extraction, that previously unyielding wells can be made to do so, e.g, by blasting steam into them. Such enhanced recovery methods, are believed to damage the well-geology, and it is thought that the Saudi reserve may be partly inaccessible because the damaged rock will hinder extraction of the oil . However, this is simply getting more of what is contained out, not increasing the volume of the reserve. He also refers explicitly to oil from gas, coal, very heavy oil, bitumen and shale, but as I have pointed out before, these are much harder to convert into oil, in terms of the energy that needs to be invested, potentially reducing the EROEI to an unfavourable ratio. (i.e. it takes so much energy to get the stuff out it isn't worth it for what energy is actually recovered from the final oil product).
Now, in support of this, Michael Huston, who is professor at the University of Huston (and also a managing partner of a petroleum consulting firm), reckons that peak oil will not strike for "at least the next three centuries". This is by way the most optimistic estimate I have seen, but let's see what it means in reality.
We are now extracting 85 million barrels a day x 365 = 31 billion barrels a year. If this increases to the projected daily production of 115 million barrels, by 2030, in that year the world will have drawn off 42 billion barrels. Undoubtedly, some of this will be in the form of "unconventional oil" and as this is a rough estimate I shall assume that over time, on average, 100 million barrels are extracted daily, or 36.5 billion barrels each year. In "three centuries", that means 300 x 36.5 = 10,950 billion barrels... or 11 trillion barrels (roughly).
Now my understanding is that there is 1.2 trillion barrels left in the ground (equal to what has already been used, and so we are at that half-way point), which is enough for say 32 - 38 years. I posted an article called "Peak Oil - all Bunkum?" recently, which refers to another optimistic reckoning that there are 3.74 trillion barrels worth to be had, but that seems to include everything - crude oil from wells, and all manner of synthetic oil. This was based on a report entitled "Why the Peak Oil Theory Falls Down: Myths, Legends, and the Future of Oil Resources," produced by Cambridge Energy Research Associates (CERA), a consulting company based in Cambridge, Massachusetts, which is only available for $1,000, which I am not prepared to pay.
So, even 3.74 trillion barrels is only enough for 100 years (with a half-way point in 50 years, if projected production levels are met and maintained), and as I have pointed out, to produce most of that is going to involve huge efforts to provide the necessary infrastructure for coal and gas liquefaction, bitumen extraction etc. etc. and of course the energy to run it. I am feeling that we will manufacture a lot more oil, and mostly from coal, and we will burn more coal per se for direct heating and as the means to generate ever-increasing amounts of the world's electricity. I am uncomfortable about these very high estimates of what might be produced in terms of oil, simply because they give the appearance that getting it will be easy, along the lines of the kind of oil production we are familiar with, and this is deceptive, or indeed a deception. Probably these different "kinds" of oil should not all be reckoned together on the same energy balance sheet. I doubt there is any coincidence that it is those with the most to profit from acting as though the "business as usual" scenario can go on for decades or centuries, who seem to be most blatant in their denials that peak oil is imminent. Perhaps they will be living protected behind armed-defenses, when they are proved unequivocally wrong, and the majority of human civilization collapses.
Peak oil is about running out of the cheap oil we have become accustomed too, and that certainly is running out, whether or not we find access to other, more costly won, versions of its commodity, in the future. In any event, human societies will find themselves based around the facts of less, readily available oil.