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Plateau
Editorial, Houston Chronicle
Non-OPEC production of crude oil seems to have stalled, promising even higher prices at the pump.
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The theory of peak oil holds that at some point – a year from now, a decade – global production of crude will peak, possibly plateau and theSmart Energy Show via Energy Policy TVn inexorably decline. On the eve of the Offshore Technology Conference here, the latest production figures for non-OPEC sources, 60 percent of global supply, indicate output hasSmart Energy Show via Energy Policy TV stalled at about 50 million barrels a day.
The flat production is particularly worrisome, because it comes at a time of record-high prices that ordinarily would stimulate production growth. As that has not occurred, the world’s capacity to produce oil from conventional sources might have been reached.
The obstacles to increased production are many: Drilling costs have climbed. Trained workers are scarce. Production from older fields in the North Sea and Alaska is at 40 percent to 60 percent below their peaks. Most of the world’s oil reserves are controlled by national oil companies and are out of the multinationals’ reach.
… Given U.S. energy policy’s lack of utility or thought, the expectation of higher and higher oil prices looks like a good bet.
(3 May 2008)
Oil is expensive because oil is scarce
David Strahan, Telegraph (UK)
Polishing the portholes on the Titanic hardly does it justice. This week saw ministers giving an uncanny impersonation of Corporal Jones urging calm over the Grangemouth refinery strike; lorry drivers protesting in Park Lane over a two pence rise in fuel duty; and much righteous indignation over the level of profits reported by Shell and BP. All of which entirely misses the point. These issues are trifling compared to global oil depletion, where there have been several distinct turns for the worse in the last month.
The idea that oil companies are somehow ‘to blame’ for record oil prices and rising fuel costs is seductive but absurd. For all their power and profits, the international oil companies are in fact in trouble. They may still be swimming in cash, but no longer in oil. Despite vast investment in exploration and production, these days they generally fail to replace the oil they produce each year with fresh discoveries, or even to maintain current levels of output. Shell’s oil production has been falling for six years, BP’s seems to have peaked 2005, and this week even the mighty Exxon was forced to admit its output dropped 10% in the first quarter of the year.
None of this should come as a surprise since all the evidence now suggests the world is rapidly approaching “peak oil”, the point when global oil production goes into terminal decline for fundamental geological reasons.
… And yet the British government’s central forecast is that oil will cost $57 per barrel in 2010 and fall to $53 by 2020. This absurd prediction is incomprehensible until you consider the political realities: even more than climate change, peak oil demands that governments confront voters with uncomfortable truths that will impact living standards. In Whitehall, legs will remain crossed and buttocks clenched as politicians and officials pray it doesn’t happen in their term of office, or before they draw their inflation-linked pension.
(3 May 2008)
David Strahan is an EB contributor.
Dawn of an energy famine
Just as the need for renewables becomes critical, the oil giants signal an alarming retreat
Jeremy Leggett, Guardian
This week the shape of the global energy crisis came into its sharpest focus yet. The world needs renewable energy fast, but as BP and Shell announced record profits, they also demonstrated that they are in essence retreating from renewables, perhaps with the exception of biofuels. They intend to focus their record billions on expanding production of what remains of traditional oil and gas, plus tar sands and liquid fuels from coal – ruinous in their effect on the climate.
The oil giants are recarbonising, wilfully choosing to forget both global warming imperatives and the need for renewables in national security terms. Shell pulled out of the biggest offshore UK windfarm yesterday and BP is losing interest in solar and investing in the tar sands – having once refused to do so on ethical grounds because of the greenhouse gas emitted in processing.
The European oil giants are behaving in this way in part because ExxonMobil became the most profitable of the big players while turning its back on the climate issue and pouring scorn on renewables investment.
… Those who hoped Opec would come to the rescue also received a blow this week. The cartel said it wouldn’t lift production, even if oil rises to $200 a barrel. Meanwhile, fuelled by $120 oil, the economies of the producers are booming, sucking up ever more of the oil and gas we will need. As for nuclear, it cannot produce a single unit of electricity for at least 10 years – far too late to help with a gas shortfall and largely irrelevant to oil, anyway.
We need renewables today like we needed tanks and planes in 1929. Those who ignore this may soon face accusations of betrayal from a population staring energy famine in the face.
(2 May 2008)
The cost of keeping the economy afloat on oil
Lindsay McIntosh, Scotsman
A two-day stoppage gave Scotland a flavour of what might happen when North Sea supplies run out, and the effects are grave, writes LINDSAY McINTOSH
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IN THE Forties fields of the North Sea last week, the black gold that had gushed forth for years spluttered to a drip and then stopped completely. For 48 hours, no oil flowed into the BP pipeline that feeds Scotland’s only oil refinery and there wasn’t a drop of the £50 million that flows into the economy daily as a result.
Aghast, the country’s motorists laid siege to the petrol forecourts, sparking a fuel shortage that helped send prices to astronomical rates.
The effects of a two-day walk-out by one workforce – the staff at Grangemouth – threw into sharp relief the reliance the UK places on oil and the fragility of this dependence. And, to rub salt in the wounds of beleaguered drivers, oil giants Shell and BP then announced collective profits of £7 billion.
There was much hand-wringing among the motorists, much cursing of the capitalists. But still they returned to the forecourts and handed over their pounds and pence.
… While the perceived wisdom of the chattering classes is that the oil is running dry, in fact there are still regular finds.
Offshore Brazil is going to come online in 2011. Sakhalin’s massive project for Shell in Russia started in 2001 and does not come on stream until next year. Even the North Sea, in terminal decline but providing economic boosts through its decommissioning programme, is still throwing up massive finds. However, the average size is now a tenth of what it was in the first ten years of the industry.
… Sally Fraser, of Oil & Gas UK, the pan-industry body, said: “The UK still has significant oil and gas reserves, which is news to some people.
… “The UK has a particularly high cost basin because the bits easiest to get have already been got as we have been producing for four decades.
(X May 2008)
It is flattering to be told that the “chattering classes” are on board with peak oil. However, it should be pointed out that peak oil does not mean that oil is running out, but that it has reached maximum production and that subsequent oil will be harder to obtain. If this is understood, then peak oil is entirely in accordance with the quotes and evidence cited in the article. -BA
It’s the oil crisis of the Seventies back to haunt us
Eddie Hobbs, Independent (Ireland)
THERE’S been a lot of bull talked about a temporary little problem with oil. That’s why the OPEC president’s prediction last week that oil prices will rise to $200 a barrel especially if the dollar stays weak, will stun the Department of Finance. The piston in the National Development Plan is the assumption that oil would be $100 per barrel (42 gallons) by 2020. The Government’s big strategy, so clearly priced on pre-peak oil economics is already bog-roll, but, officially, the Government is sticking to the daft idea that our energy input costs will remain a constant for the next 12 years and plans to build an infrastructure for the oil age.
Think of home heating and petrol prices doubling and consider the effects on your own net take-home pay when energy and motoring costs rise to absorb a chunk somewhere between 15 per cent and 20 per cent of average wages. Now consider the effects on the world’s fourth most dependent economy on imported oil and gas which already has a lousy record in integrated planning on everything from its health service, to decentralisation, to transport and tell me that the risk of the mother of all cock-ups isn’t on the cards.
Despite the presence of two Green ministers who understand the maths, there’s no sign of collective urgency or understanding from the Cabinet.
(4 May 2008)
