Oil production is somewhat confounded by the reference more lately to “liquids” rather than “oil”, which includes hydrocarbons that are recovered, sometimes in great quantity, from natural gas wells, which condense from the gas in liquid form once the temperature drops below the dew-point. The latter are also called condensates, and to their volume may be added natural gas liquids, hydrocarbons that exist in fields as constituents of natural gas but which are recovered separately as liquids, including propane, butane, pentane, hexane and heptane, but not methane and ethane, since these hydrocarbons need refrigeration to be liquefied. Thus the production of oil per se may be falling worldwide but total liquids have so far held pace with demand.
Unconventional oil is a complex, vexed and multifarious subject, and strictly, the above liquids should be classified under this heading. More “conventional” oil will certainly be recovered, and we are in no sense running out of it. The world proved oil reserves are close to 1.2 trillion (1,200 billion) barrels, to be compared with 6,300 trillion cubic feet of natural gas.3 Since the commonly used conversion factor is that 1 barrel of oil has an energy equivalent to 6,000 cubic feet of natural gas, the remaining energy reserves of the two kinds of fuel appear nearly equal. There is almost certainly far more oil in the ground to be recovered than this, but I stress it is the rate of recovery that is the more pressing issue, not so much how big the reserve is in total. If the rate of recovery of oil remains too slow to meet (rising) demand, we will experience a demand-supply gap within the next decade, a situation that has been described as “gap oil”. At best the maximum in oil production, peak oil, might be delayed, a situation that will enlarge the gap.
There is also the issue of the quality of crude oil. Light sweet (low sulphur) crude is the most desirable as it can be easily refined into gasoline, which is burned in spark-ignition engines, world production of which peaked in 2005. Brands of light sweet crude include West Texas Intermediate, Brent oil from the North Sea, and of course that from Ghawar in Saudi Arabia. Heavy sour (high sulphur) crude requires removal of the sulphur and catalytic cracking of the longer carbon chain molecules to shorter species in order to recover petrol from it in quantity. This necessitates more complex and expensive refining methods to process heavy sour oil, for which there is presently insufficient capacity worldwide. Hence new refineries will need to be built as the oil recovered in the future tends more toward the heavy kind, which is better used to make diesel fuel, requiring further a greater production of diesel engines.
“Fracking” is a term that has been used frequently and condescendingly in the media recently, in the context of recovering gas from shale. It is claimed that 10% of Britain’s gas-requirements could be provided from shale and there is a pilot project about to be inaugurated onshore near Blackpool, otherwise famous as a holiday resort with its “illuminations”, “kiss-me-quick” hats, “sticks of rock” and “big-dipper” rollercoaster. The process of hydraulic fracturing (called frac’ing in the industry but fracking in the media) has been used since 1947 to fracture rock to assist the recovery of oil and gas. A hydraulic fracture is formed by pumping a fracturing fluid into a borehole drilled into the source-rock so that the downhole pressure exceeds that of the fracture gradient of the formation rock.
The pressure causes the formation to crack, so that the fracturing fluid may enter and extend the crack more deeply into the formation. To keep the fracture open once the injection is complete, a solid proppant, commonly a sieved round sand, is added to the fracture fluid. The propped hydraulic fracture then becomes a high permeability conduit through which the formation fluids can flow to the well. Since the fluid contains various toxic materials, including hydrocarbons, benzene etc., there are environmental fears that these may leak out and contaminate e.g. aquifers from which drinking water is drawn. There are cases reported too, where methane can leak-out further afield into wells and tap-water in sufficient quantity that it can be ignited! That such measures are being seriously considered appears as an abject demonstration of desperation. It seems clear that oil-supplies are going to fail at some point and sooner not later.
Given the limited timescale, it is improbable that unconventional oil can be implemented in sufficient amount to take up the slack from conventional production on that 30 billion barrel annual equivalent scale. Agreed that all of that quantity does not need to be replaced in one go, but the ramping-up of unconventional production as the former declines will be unable to meet the shortfall, leading to a rapid decline in the number of the 700 million vehicles that currently grace the world’s roads. There is a further impact on aviation and rising demand for it, which already consumes almost one quarter of all fuel used in the United Kingdom, and is also unlikely to be met. Globalism will fade while "localism", involving a way of life based around small communities appears an almost certain default outcome.