Click on the headline (link) for the full text.
Many more articles are available through the Energy Bulletin homepage
CERA v. peak oil
David Ebner, Globe & Mail
CERA, the Boston energy consultancy, took another swing at peak oil on Thursday morning, announcing what it called “the missing link for understanding the future of world oil supply.”
That link? Decline rates, as in how quickly do production rates in the world’s oil fields slide each year. The figure is indeed key because the rate indicates how much oil needs to be found just to make up current-year declines, never mind increasing the world’s total output.
Cambridge Energy Research Associates, after analyzing 811 oil fields (that account for two-thirds of global production and half of proved and probable reserves), concluded that the world’s annual oil production decline rate is 4.5 per cent – about half of the 8 per cent CERA said is cited in many studies.
Basically, without getting into some math (calculating decline rates are more complicated than they might seem), a lower decline rate obviously is much better than a higher one for producers and consumers.
… CERA, as is obvious, is not a peak oil preacher. It sees world oil production easily exceeding 100 million barrels a day within a decade, keeping up with demand and more. In terms of any peak in production, CERA envisions an “undulating plateau,” lasting decades, giving the world ample time to ease its addiction to the black gold that fuelled the 20th century (and the first decades of the 21st).
Others, however, are less sanguine and way more skeptical. … [the late] Ali Morteza Samsam Bakhtiari, cited by the review as “one of the world’s foremost experts on the subject of peak oil” who died of a heart attack last October.
Mr. Bakhtiari was a senior corporate planner for the National Iranian Oil Co. in Tehran and was especially skeptical about the Middle East’s so-called reserves, specifically of his home country Iran. Of the “Middle East Five” – that is Iran, Iraq, Kuwait, Saudi Arabia and United Arab Emirates – Mr. Bakhtiari saw only about 355 billion barrels of oil reserves, half of the advertised 710 billion or so. Only in Iraq did Mr. Bakhtiari see anything close to the widely advertised figures of what is below those deserts.
Whether he’s right is obviously unknown, but another main point – be skeptical – cannot be argued.
“It goes without saying that when assaying Middle Eastern oil reserves, one should tread carefully,” Mr. Bakhtiari wrote in a 2006 commentary.
… Underlying CERA’s analysis is a likely assumption that Middle Eastern reserves are what those countries say they are. Dan Yergin started CERA and is the author of The Prize, the Pulitzer-Prize winning history of the oil business. He is also close with top officials in Saudi Arabia – some industry players argue he’s too close – and in November received a special award for his work from the kingdom (and, it is rumoured, $100,000 in cash) when it held a summit of OPEC leaders.
Mr. Yergin is a smart man. Mr. Bakhtiari was, too. Mr. Yergin’s undulating peak is immediately more reassuring – we have lots of time to change. Mr. Bakhtiari was more anxious, seeing change forced on the world much more quickly…
(17 January 2008)
Here’s hoping for more thoughtful pieces like this in the media. -BA
UPDATE (Jan 18) Reader JF writes:
I wanted to draw your attention to this in-depth study of a prior CERA forecast of UK oil production by Euan Mearns: The forecasting record of CERA and other commentators.
Peter Jackson admits they didn’t factor in a fast enough decline rate, which I thought was interesting in light of the current report.
World not running out of oil, say experts
Carl Mortished, UK Times
Doom-laden forecasts that world oil supplies are poised to fall off the edge of a cliff are wide of the mark, according to leading oil industry experts who gave warning that human factors, not geology, will drive the oil market.
A landmark study of more than 800 oilfields by Cambridge Energy Research Associates (Cera) has concluded that rates of decline are only 4.5 per cent a year, almost half the rate previously believed, leading the consultancy to conclude that oil output will continue to rise over the next decade.
Peter Jackson, the report’s author, said: “We will be able to grow supply to well over 100million barrels per day by 2017.” Current world oil output is in the region of 85million barrels a day.
The optimistic view of the world’s oil resource was also given support by BP’s chief economist, Peter Davies, who dismissed theories of “Peak Oil” as fallacious. Instead, he gave warning that world oil production would peak as demand weakened, because of political constraints, including taxation and government efforts to reduce greenhouse gas emissions.
… [Hubbert’s] analysis is disputed by many geologists today, who argue that technology has changed the equation, allowing oil companies to produce more oil from reservoirs than was previously possible.
(18 January 2008)
Related articles with a more balanced presentation:
CERA v. peak oil (Globe and Mail)
BP economist: no imminent peak to oil production (Marketwatch)
Gloomy outlook for oil disputed (Houston Chronicle)
-BA
UPDATE (Jan 22, 2008). Contributor SP points to an Australian publication of this article and says:
The main factor adding credibility to this piece is that the economics opinion writer Allan Wood didn’t write it! It appears to be a piece originally from The Times.
The continual regurgitation of the talking points found in articles like this is reminiscent of articles in The Australian circa 2005-7 about global warming.
And the closer? The last paragraph essentially says that Peak Oil will be a response to lowered demand becuase of the policies introduced by those pesky greenies to curb climate change… so blame them.
Bush acknowledges peak oil
Jerome a Paris, European Tribune
This is a pretty stunning admission, during his press conference in Saudi Arabia:
I hope that OPEC, if possible, understands that if they could put more supply on the market it would be helpful. But a lot of these economies are going — a lot of these oil-producing countries are full out.
There are various definitions of peak oil – the “hard” one being actually declining production, with a “soft” version being production unable to catch up with latent demand and prices increasing instead. Then you can measure it for oil alone, or for oil plus various liquid substitutes that we are increasingly using (ethanol, processed tar sands, coal-to-liquids, etc…).
With the above quotes (repeated again below), Bush is clearly into “soft” territory, and could be argued to be in “hard” territory. There is no longer any argument in the industry that non-OPEC oil is peaking (that includes the International Energy Agency and even ExxonMobil), which means that any production increase must come from OPEC. If they are also producing “full out”, you can reach your own conclusions….
And this was not just an isolated assertion by Bush – the topic was disucssed 3 separate times in the interview:
(17 January 2008)
Also at Daily Kos.
The Coal Question Revisited
Kurt Cobb, Scitizen (“Bringing science closer to society”)
Many people believe the world has enough coal to last hundreds of years. Recent assessments now suggest that coal production could actually start to decline as early as 2025.
Coal, in truth, stands not beside but entirely above all other commodities. It is the material energy of the country–the universal aid–the factor in everything we do. With coal almost any feat is possible or easy; without it we are thrown back into the laborious poverty of early times.
—William Stanley Jevons, The Coal Question
The country to which William Stanley Jevons refers is Great Britain, and the year is 1865. Jevons investigated whether the coal from British mines would last as long as optimists were forecasting, that is, several hundred years. He concluded it wouldn’t. Today, the phrase, “That’s like bringing coals to Newcastle,” referring to the former center of the British coal trade, has lost all its punch. The last mine within the boundaries of Newcastle closed in 1956. In 2006 the United Kingdom produced only 20 million short tons of coal, one-seventh its production in 1980.
With the concern that worldwide oil production may not rise much from here, and that it may, in fact, begin to decline in the next decade, those looking for alternatives are naturally drawn to coal. Coal is being trumpeted as both abundant and versatile. This is because worldwide reserves are assumed to be very large and because coal can be turned into the liquid fuels we’ll need as oil declines.
(17 January 2008)
Climate change forces car manufacturing rethink (text and video)
Kerry Brewster, ABC-Victoria (Australia)
The head of car giant General Motors has publicly warned the switch to biofuels such as ethanol and electric cars is now inevitable and with oil prices at record highs, motorists may soon become familiar with the phrase “peak oil”.
It is the theory that more than half the planet’s oil reserves have now been used and demand will inevitably outstrip supply, driving prices ever higher.
While some experts reject the theory, arguing the planet still holds enormous reserves of oil and gas, peak oil has won a powerful new backer.
This week, the chief executive of US car giant General Motors, Rick Wagoner, publicly warned the switch to biofuels such as ethanol and electric cars was now inevitable.
Mr Wagoner concedes the petrol engine’s days are numbered, saying oil supply has peaked and the race is on for replacement fuels.
“We need to develop alternative sources of propulsion based on diverse sources of energy,” he said.
At the massive Detroit car show, the battle lines are drawn as rivals jostle for the spotlight to show off their green machines – electric petrol hybrids, ethanol friendly engines and more.
(18 January 2008)
Author Brewster goes on to talk about hybrids, biofuels, Australian cars… covers just about all the bases. -BA
