Looking back 10 years - Campbell's "The End of Cheap Oil"
From ASPO-USA’s perspective, the article entitled “The End of Cheap Oil,” published 10 years ago in the March issue of Scientific American magazine, marked a turning point in the discourse about peak oil—at least in the US. While a few books and a lot of articles had featured peak oil prior to that article, none had the circulation or prestige that the Sci-Am article carried with it—again, at least in the U.S. No, the world didn’t wake up to peak oil over night after the article was published, but it generated more interest than any document written during the previous two decades. It paved the way for the slew of books on peak oil that followed. It appears to have galvanized activists to action. We asked authors Colin Campbell and Jean Laherrere to revisit and reflect on their article these 10 years later. Here are Colin’s brief thoughts; Jean’s will be printed next week.
In 1998, Jean Laherrère and I were asked to write an article for Scientific American magazine based on a study of oil depletion that we had recently made for Petroconsultants, which at the time maintained an accurate database of the world’s oilfields. It was privileged industry information but Petroconsultants had a sense of wider responsibility, and encouraged the study.
Our study is now ten years old, and it might be worth re-visiting it to see if there is a need to revise its conclusions or whether events have tended to confirm its findings. With oil having recently passed the $100 a barrel barrier, it a question people are increasingly asking.
The article opens by explaining that the oil shocks of 1973 and 1979 were politically inspired, adding that the next oil crunch will not be so temporary. It added that within the next decade the supply of conventional oil will be unable to keep up with demand. With prices soaring, that seems to be confirmed, but it does not address the possibility that oil demand might fall if the high prices trigger economic recession, of which there are now increasing hints with the growing debt crisis around the world.
The article then rightly dismissed the widespread practice of forecasts based on the Reserve/Production Ratio. It is often depicted as stating that reserves support present production for a given number of years, despite the absurdity of imagining that production could stay flat and then stop overnight, when all oilfields are observed to decline gradually.
It also rightly commented on the extremely unreliable nature of public reserve estimates. The latest version of the Oil & Gas Journal database, for example, reports unchanged reserves for as many as 70 countries: it stretches credulity to suppose that production in 2006 exactly matched the sum of reserve revision and new discovery to leave the reserves unchanged.
The study then moved on to address the statistical analytical techniques with a number of illustrations, including the critical one showing that discovery peaked in the 1960s. They remain valid methods, whose conclusions are being vindicated. They correctly predicted that the United Kingdom and Norway, for example, would pass their peaks around the turn of the Century as indeed they did : UK in 1999 Norway in 2001.
One of the topics that the article did not emphasise was the issue of definition. There are of course several categories of oil: some being easy, cheap and fast to produce and others the precise opposite. It is important to model each category appropriately. There is much confusion over the boundary between Conventional and Non-Conventional oils, which lacks a standard definition. It is also important to stress that production is not the same as supply because it is necessary to take into account refinery gains, stock changes, war loss, operating usage, and other factors. The article also failed to evaluate the natural gas situation.
But the overall message is summed up in the final paragraph: The world is not running out of oil – at least not yet. What our society does face, and soon, is the end of the abundant and cheap oil on which all industrial nations depend. That seems to be a fair conclusion ten years hence, as the oil situation has by and large evolved as predicted, but the peak itself will not be evident until some years after it has happened.
Dr. Colin J. Campbell: After being awarded a Ph.D. in geology at Oxford University in 1957, Campbell joined Texaco in 1958 as an exploration geologist in South America, later moving to BP with assignments in Colombia, Australia, and Papua. In 1968, he joined Amoco in New York as regional geologist for Latin America, becoming Chief Geologist in Ecuador in 1969. With the opening of the North Sea, he returned to England in 1972 as General Manager of the Texas independent Shenandoah Oil Corporation, before rejoining Amoco to become Exploration Manager in Norway in 1980. In 1985, he was appointed Executive Vice-President of Fina in Norway. He is now a petroleum consultant. He is now a Trustee of the Oil Depletion Analysis Centre ("ODAC"), a charitable organization in London that is dedicated to researching the date and impact of the peak and decline of world oil production due to resource constraints, and raising awareness of the serious consequences. Having published extensively, his recent articles have stimulated lively debate. His views are provocative yet carry the weight of a wide international experience. He is also, of course, the founder of ASPO (2001) and ASPO-Ireland (2005).
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