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Chris Skrebowski on alarming new peak oil report
(audio)
Julian Darley, Global Public Media
Chris Skrebowski, editor of the UK Petroleum Review, speaks with GPM’s Julian Darley about the remarkable new oil report from the German-based Energy Watch Group, which states that world oil production peaked in 2006 and will decline by half as soon as 2030.
(23 October 2007)


Peak Oil could trigger meltdown of society

Energy Watch Group, press release via YubaNet
According to a newly published global oil supply report to be presented by the Energy Watch Group at the Foreign Press Association in London, world oil production peaked in 2006. Production will start to decline at a rate of several percent per year. By 2020, and even more by 2030, global oil supply will be dramatically lower. This will create a supply gap which can hardly be closed by growing contributions from other fossil, nuclear or alternative energy sources in this time frame.

“The most alarming finding is the steep decline of the oil supply after peak”, warns Jörg Schindler from the Energy Watch Group. This result, together with the timing of the peak, is obviously in sharp contrast to the projections by the International Energy Agency (IEA). “Since crude oil is the most important energy carrier at a global scale and since all kinds of transport rely heavily on oil, the future oil availability is of paramount importance as it entails completely different actions by politics, business and individuals.”, says Schindler.

This cautious energy outlook corresponds with statements made by former US Defense Secretary and CIA Director, James Schlesinger, who said at a recent oil summit in Cork: “The battle is over, the oil peakists have won. Current US energy policy and the administration’s oil strategy in Iraq and Iran are deluded.”

However, until recently the International Energy Agency denied that a fundamental change of energy supply is likely to happen in the near or medium term future. Hans-Josef Fell MP, a prominent member of the German Parliament, is clear: “The message by the IEA, namely that business as usual will also be possible in future, sends a diffusing signal to the markets and blocks investments in already available renewable energy technologies.

Remaining world oil reserves are estimated to be 1,255 Gb (Giga barrel) according to the industry database HIS (2006). For the Energy Watch Group (EWG), however, there are sound reasons to modify these figures for some regions and key countries, leading to a corresponding EWG estimate of 854 Gb. This oil supply outlook does not rely primarily on reserve data which in the past have frequently turned out to be unreliable. Hence the EWG analysis is based primarily on production data which can be observed more easily and which are more reliable.

Peak oil is now. “The oil boom is over and will not return. All of us must get used to a different lifestyle.”, said King Abdullah of Saudi Arabia, the largest global oil producer. For quite some time, a hot debate has been going on regarding peak oil. Institutions close to the energy industry, like CERA, are engaging in a campaign trying to debunk peak oil as a “theory”. However, the EWG report shows that peak oil is real. The world is at the beginning of a structural change of its economic system. This change will be triggered by a sharp decline of fossil fuel supplies and will influence almost all aspects of daily life. Climate change will also force mankind to change energy consumption patterns by significantly reducing the burning of fossil fuels.

Anticipated supply shortages could easily lead to disturbing scenes of mass unrest as witnessed in Burma this month. For government, industry and the wider public just muddling through is not an option anymore as this situation could spin out of control and turn into a meltdown of society.

“My experience of debating the peak oil issue with the oil industry, and trying to alert Whitehall to it, is that there is a culture of institutionalised denial in government and the energy industry. As the evidence of an early peak in production unfolds, this becomes increasingly impossible to understand”, says Jeremy Leggett, the Solarcentury CEO and former member of the British Government’s Renewables Advisory Board.

Further information:

The Energy Watch Group was founded on joint initiative by Hans-Josef Fell MP, international parliamentarians and scientists. It is supported by the Ludwig-Bölkow-Foundation and produces reports on fossil and nuclear energy resources, scenarios for regenerative energy and also strategies for a long-term secure energy supply. The focus lies thereby on the analysis of economical and technological implications. Results of these studies are to be presented not only to expert audiences but also to the wider interested public.
(23 October 2007)
Contributor Rick Lakin writes:
Here is a quote that is the jewel in the large paper and communicates most effectively our situation:

“In the period 1960 to 1970 the average size of new discoveries was 527 Mb per New Field Wildcat. This size has declined to 20 Mb per New Field Wildcat over the period 2000 to 2005.”

Just 30 years ago, newly discovered fields were 25 times as large as they are now.


Energy Watch Group report on peak oil: excecutive summary

Energy Watch Group (Germany)
The main purpose of this paper is to project the future availability of crude oil up to 2030. Since crude oil is the most important energy carrier at a global scale and since all kinds of transport rely heavily on oil, the future availability of crude oil is of paramount interest. At present, widely diverging projections exist in parallel which would require completely different actions by politics, business and individuals.

The scope of these projections is similar to that of the World Energy Outlook by the International Energy Agency (IEA). However, no assumptions or projections regarding the oil price are made.

In this paper a scenario for the possible global oil supply is derived by aggregating projections for ten world regions.

… the scenario results presented in this paper are very different to the scenarios presented by the IEA in their periodic editions of the World Energy Outlook (WEO) where continuing growth of oil supply and as a consequence a continuation of business as usual for decades to come is deemed possible.

Methodology

The analysis in this paper does not primarily rely on reserve data which are difficult to assess and to verify and in the past frequently have turned out to be unreliable. The history of discoveries is a better indicator though the individual data are of varying quality. Rather the analysis is based primarily on production data which can be observed more easily and are also more reliable. Historical discovery and production patterns allow to project future discoveries and – where peak production has already been reached – future production patterns.

The analysis is based on an industry database for past production data and partly also for reserve data for certain regions. As reserve data vary widely and as there is no audited reference, the authors have in some cases made their own reserve estimates based on various sources and own assessments. Generally, future production in regions which are already in decline can be predicted fairly accurately relying solely on past production data.

Only oil that has been found before can be produced. Therefore, the peak of discoveries which took place a long time ago in the 1960s, will some day have to be followed by a peak of production. After peak oil, the global availability of oil will decline year after year. There are strong indications that world oil production is near peak.

The growing discrepancy between oil discoveries and production is shown in Figure 1.

…So, the production pattern over time of an oil province can be characterised as follows: To increase the supply of oil will become more and more difficult, the growth rate will slow down and costs will increase until the point is reached where the industry is not anymore able to bring into production a sufficient number of new fields quick enough. At that point, production will stagnate temporarily and then eventually start to decline.

Key findings

• “Peak oil is now”.

For quite some time, a hot debate is going on regarding peak oil. Institutions close to the energy industry, like CERA, are engaging in a campaign trying to “debunk” the “peak oil theory”. This paper is one of many by authors inside and outside ASPO (the Organisation for the Study of Peak Oil) showing that peak oil is anything but a “theory”, it is real and we are witnessing it already. According to the scenario projections, the peak of world oil production was in 2006.

The timing of the peak in this study is by a few years earlier than seen by other authors (like e.g. Campbell, ASPO, and Skrebowski) who are also well aware of the imminent oil peak. One reason for the difference is a more pessimistic assessment of the potential of future additions to oil production, especially from offshore oil and from deep sea oil due to the observed delays in announced field developments. Another reason are earlier and greater declines projected for key producing regions, especially in the Middle East.

• The most important finding is the steep decline of the oil supply after peak.

This result – together with the timing of the peak – is obviously in sharp contrast to the projections by the IEA. But the decline is also more pronounced compared with the more moderate projections by ASPO. Yet, this result conforms very well with the recent findings of Robelius in his doctoral thesis. This is all the more remarkable because a different methodology and different data sources have been used.

• The global scenario for the future oil supply is shown in the following Figure 7.

Conclusion

The major result from this analysis is that world oil production has peaked in 2006. Production will start to decline at a rate of several percent per year. By 2020, and even more by 2030, global oil supply will be dramatically lower. This will create a supply gap which can hardly be closed by growing contributions from other fossil, nuclear or alternative energy sources in this time frame. The world is at the beginning of a structural change of its economic system. This change will be triggered by declining fossil fuel supplies and will influence almost all aspects of our daily life.

Climate change will also force humankind to change energy consumption patterns by reducing significantly the burning of fossil fuels. Global warming is a very serious problem. However, the focus of this paper is on the aspects of resource depletion as these are much less transparent to the public.

The now beginning transition period probably has its own rules which are valid only during this phase. Things might happen which we never experienced before and which we may never experience again once this transition period has ended. Our way of dealing with energy issues probably will have to change fundamentally.

The International Energy Agency, anyway until recently, denies that such a fundamental change of our energy supply is likely to happen in the near or medium term future. The message by the IEA, namely that business as usual will also be possible in future, sends a false signal to politicians, industry and consumers – not to forget the media.
(22 October 2007)
See the 13-page original PDF of the Executive Summary for more text and some excellent graphs. The 101-page full report can be downloaded from the Energy Watch Group site.

The English versions can be downloaded from here. The German versions are here. Their website is: www.energywatchgroup.de/

The UK Guardian broke the story on October 21 with their article: Steep decline in oil production brings risk of war and unrest, says new study.
-BA


New Report on Peak Oil Argues That We Have Already Peaked…

Rob Hopkins, Transition Culture
This morning’s Guardian appears to have beaten the rest of the media to the story of the imminent release of a report by the Energy Watch Group which argues that in fact we peaked in 2006, and that annual decline rates from hereonin will be 7% a year. This is chilling stuff. The report, rather than make guesses about total world reserves, focused instead on global production data, which it sees as being a lot more reliable.

…I refuse to see this report as bad news though. It is chilling, and it gives no further room for putting doing things off for a few more months while we get one more cheap flight to Prague in, but it is, ultimately good news. The Oil Age has brought many benefits, but mostly to us in the world’s wealthier nations, and at a huge cost. As the Big Melt study set out, we need to cut emissions to zero yesterday, and if the EWG report is correct, the illusion that we can choose what we do at this point just crumbled to dust. We need to plan now for contraction, for relocalisation and for a decoupling of happiness and economic wellbeing from the amount of fossil fuels we consume. Lester Brown’s concept of a ‘wartime mobilisation’ keeps returning to the front of my mind, we need this, but clearly cannot wait for Governments to do this.

David Strahan’s recent interview with Robert Hirsch is also essential listening, Hirsch argues that peak oil means peak economy, that once we pass the peak the economy contracts in line with the depletion rate. The rebuilding of local resilience is key and is of the utmost urgency, and the viral spread of the Transition concept is evidence of the hunger out there for facing this problem with creativity rather than denial. As these two great issues accelerate before our eyes, we can choose to, as I did as a child watching Dr Who, hide behind the sofa waiting until the scary bits are past, or read what’s happening as the best opportunity we have ever had to actually get to work and rebuild local economies, bringing people together again and starting to relearn the essential skills we will need. As the great South African poet Mark Mzwake put it “Now is the Time”.
(22 October 2007)


Editor’s Pick: Peak Oil Is Now

Mikka Pineda, RGE Monitor
German-based Energy Watch Group released its October Oil Market Report which claims “peak oil is now”.

-Looking at the countries outside of the Former Soviet Union and OPEC, it can be noticed that their total production increased until about the year 2000, but since then total production has been declining.

-Only a very limited numberof countries will still be able to expand production, particularly Brazil and Angola.

-King Abdullah of Saudi Arabia: “The oil boom is over and will not return. All of us must get used to a different lifestyle.”

-World’s biggest fields in decline.

-Based on the analysis of the world’s giant oilfields peak oil will happen somewhere between 2008 and 2018 [Robelius 2007].

-Growth of production has come to a standstill and production now is more or less on a plateau despite historically high oil prices.

-The historical maximum of oil discoveries after some time has to be followed by a maximum of oil production (the “peak”), which was in May 2005

-33 of the 48 largest oil producing countries have already passed peak [Chevron 2007].

-IEA projections are not a very reliable basis for planning the future.
(22 October 2007)
Nice summary by a financial consultancy. Co-founder of RGE Monitor is Dr. Nouriel Roubini, who teaches finance and economics at the Stern School of Business at NYU. More on RGE:

RGE Monitor delivers ahead-of-the-curve global economic insights that financial professionals need to know. Our analysts define the key geostrategic debates and continuously distill the best thinking on all sides.

Other news articles on the Energy Watch Group report:

Agence France Presse (AFP) via Pakistan Times

Islamic Republic News Agency (IRNA) via Mathaba news (Wikipedia on IRNA)

Canadian Broadcasting Corporation (CBC)

… and a defining silence from the mainstream media in U.S., Australia, and elsewhere. -BA