Wednesday, September 27, 2006

Peak Oil for Sure... but no Need for Panic.

There has been much written on the matter of Peak Oil, including by me in this blog. Peak oil is not that the world is running out of oil per se, but represents a maximum in the production of cheap oil, upon which the industrialised world has been built. The industrial revolution began its life on wood, and garnered momentum in earnest fired by coal. As the decades of the 20th century passed, the availability of cheap oil usurped the underpinning position of coal, and hence as the world production peak looms (friends of mine in the oil industry think it is already here), our accustomed way of life is under threat. Worst case protagonists foresee a "Die-Off", in which the current 6.5 billion world population falls below one billion. That is a simple statistic, and put in real human terms, it is probably unthinkable and certainly unimaginable. True, that huge number of us has only grown upon the cornucopia of cheap oil and gas - the latter being used to make cheap chemical fertilisers upon which we grow 99% of the world's food. Without it, starvation and war seems inevitable.
Die-off could happen, if we simply carried on consuming hydrocarbons (oil and gas) at present rates, until we hit a brick wall, and overnight there was effectively none left. It is more likely that the change will be of a more gradual kind, and things (food included) will become increasingly expensive, thus sifting lifestyles over decades not days. That does not mean that the circumstance will be pleasant, but we should survive. On the news this morning was a sound-bite about the U.K. being Europe's major debtor. If there is an economic recession - which seems possible, if raw-materials and energy become increasingly expensive - people may well lose their jobs, and if they are heavily in debt, they will be in some difficulties. Nonetheless, that is no reason to think that we will experience an immediate social disintegration of "Mad Max" proportions. In any event, the "jolt" of the oil-powered gravy-train we have all been on pulling-up suddenly can be made softer by applying the brakes steadily rather than slamming them on.
Without question, now is the time to rethink our fuel consumption, acceptable levels of transportation, city planning - even if we are best placed to do without cities in the formal sense that we are used to - means for energy efficiency, and energy generation. In my opinion smaller "pods" of up to say 20,000 people, supplied by local farms and provided for in terms of energy using micro-generation: hydro, wind, CHP systems and so on, might be the most practical way to live. A basic grid could be powered using renewables - according to the Oxford University Environmental Change Institute, 20% of our electricity, used nationally, could be produced from "sea-power" (wave and tidal stream), which is the same as is currently made from nuclear power, and so this option should be thoroughly investigated. It seems possible that a nuclear power station might be used on say a county level to run a basic grid, to be tapped into as necessary, but many communities could be exempt from it, running under their own steam, as it were!
Transportation remains a huge problem, consuming around a quarter of all energy used in the U.K. As I have demonstrated, bio-fuels and hydrogen cannot sensibly meet this massive demand. Electric hybrid vehicles could offer an option for providing transport to run on much less fuel (perhaps 80% less, but only if 'battery technology' improves and can be installed sufficiently), but more localised "pod" communities could cut down fuel use by 90% in any case, so there is room to manoeuvre around this issue.
How much time do we have? That is the crux of the matter. As noted, there are oil-experts (people in the oil industry who should know their subject) who think that the peak is with us already. That is, however, not the official stance of the industry. Estimates vary, but 3o years away is as clear to a consensus as I can find. There is of course, the vexed question of exactly how much oil is there in the ground? Conspiracy theorists suggest there is far less than e.g. Saudi claim, and Shell got itself into a lot of trouble a couple of years back, for overstating the volume of their reserves. The mere presence of even an elephant field somewhere (that is oil industry vernacular for a very big field) says nothing about the quality of the oil or the geology through which it must be extracted. I have noted previously that the more fractured is the surrounding rock strata, the less readily will a fluid permeate it. There is evidence too that modern "enhanced" extraction methods have damaged the physical integrity of some fields, and so getting the rest of the oil out may prove more difficult than originally estimated.
I think that the best dipstick for Peak Oil is how production in the existing fields is faring given the unprecedented high price of oil. While the price of West Texas Intermediate oil was above $70 a barrel for much of the first half of 2006, global production was down by over 100,000 barrels a day compared to the previous year. Much of the increase in oil production seen between 2003 and 2005 was due to the OPEC (Middle East, and mainly Saudi), and now there is little or no excess capacity to bring on-stream. There have been many successful new oil extraction projects in the past few years, and more planned for the next 5 years, but they cannot compensate for the decline in the world's many large fields. North Sea production has declined too, from 6.3 million barrels a day in 2001 to 4.5 million barrels daily this year. Mexican oil production is also down by about 100,000 barrels a day in 2006, compared with last year. Worst of all, the mega-giant fields in Ghawar (Saudi) and Burgan (Kuwait) are experiencing severe production difficulties which limits the ability of these countries to increase production.
All the evidence is that Peak Oil is with us (or we have just passed the zenith of production), and so we need to expect and prepare for the inevitable consequences, but not fear for our lives. Since we know all these things, any failure to act will be a fault of greed, since there are many with much to gain from maintaining the status quo for as long as the markets can bear it. Then the brakes will come-on with a slam, and there will be casualties!

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