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Industry Taskforce Sounds Alarm on Peak Oil
Chris Vernon, The Oil Drum: Europe
On Wednesday 29th October 2008 I attended a press conference at the London Stock Exchange. The meeting was convened by the “Industry Taskforce on Peak Oil & Energy Security” (www.peakoiltaskforce.net) to introduce a new report: The Oil Crunch, securing the UK’s energy future.
September last year, former US Energy Secretary Dr James Schlesinger addressed the ASPO6 conference in Cork, Ireland with these words:
The peakists have won … to the peakists I say, you can declare victory. You are no longer the beleaguered small minority of voices crying in the wilderness. You are now mainstream. You must learn to take yes for an answer and be gracious in victory.
The taskforce behind this report formed around 18 months ago.
Wednesday’s meeting proved Schlesinger right. A group of serious, respectable organisations, had just published a serious and respectable report, in a serious and respectable venue stating:
The effects of peak oil will be felt in the next five years.
The risks to UK society from peak oil are far greater than those that tend to occupy the Government’s risk-thinking, including terrorism.
The UK Government needs to re-prioritise peak oil – as the impacts are more likely to arrive first – before climate change.
The Taskforce
“no longer the beleaguered small minority of voices crying in the wilderness”.
FirstGroup plc – the world’s leading transport company. Annual revenue of over $5bn, 137,000 employees and carry more than 2.5bn passengers per year.
Scottish and Southern Energy (SSE) – one of the UK’s big six electricity companies.
…
… Conclusion
In conclusion, this is a ground breaking report. Not so much for its content however Shell’s inclusion is a very positive development, but for the companies behind it. These are not a “beleaguered small minority of voices” but billion dollar, international companies, employing tens of thousands of people sounding the alarm bell.
(3 November 2008)
Supply Worries Persist in Oil Market, Just Not Now
Gregory Meyer, Wall Street Journal
Future Crude Futures Haven’t Fallen As Far as Present Crude Futures Have
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While oil may be at its cheapest in months, prices deep in the future reveal a market with serious concerns about long-term supply.
As evidence, analysts point to charts of crude oil futures. Oil for delivery years from now costs more than oil for imminent sale, and the difference has widened. While front-month crude is down 53% from its July peak, oil contracts for later delivery dates have fallen far less.
For example, as recently as last summer, December 2008 and December 2013 crude-oil futures on the New York Mercantile Exchange cost the same. Now, the 2008 contract is $21.50 a barrel below 2013, an unprecedented discount.
… A pause in the march of world demand helped topple crude from record levels above $145 a barrel. But the current price weakness could set the stage for an explosive move higher when consumption takes off again. Analysts say the fall has been so steep it could diminish investment in new supplies that are only profitable in a high-price environment.
(3 November 2008)
So *this* is what Peak Oil looks like
Robert McClure, Seattle Post-Intelligencer
Just remember that you heard it here first: Look for gas prices to go up after the election.
OK, savvy readers may have actually got that news first from the Financial Times, which obtained a leaked International Energy Agency report saying that output from oilfields is declining faster than previously understood — a rate of 9 percent a year.
It’s not as if this prediction of Peak Oil is a first — but coming from the IEA, it has a lot more weight. The conclusion appears to be that world oil production peaked in July of this year.
IEA, btw, says the report the Times obtained is out of date, and so is the depletion figure cited in it. But still — if oil production is going down anywhere near 9 percent per year, we have dug ourselves a very deep hole.
… It’s also possible that the current economic slowdown could buffer the price hikes, by reducing demand. In that case it could take several years for gas prices to rise, the report indicates.
We actually learned of this from our friends at Energy Bulletin. Some interesting commentary is here.
(3 November 2008)
China’s Oil Reserve Forecast and Analysis Based on Peak Oil Models
Lianyong Feng, Junchen Li and Xiongqi Pang, Energy Policy via ASPO-USA
[This is a condensed version of a 15-page paper that is posted at www.aspo-usa.com and that is appearing in the November issue of Energy Policy. This short version appears here with the permission of the authors.]
In order to forecast future oil production it is necessary to know the size of reserves and to use models. We use two peak oil models—the Hu-Chen-Zhang model, usually called HCZ model, and the Hubbert model—which have been used commonly for forecasting in China and the world, to forecast China’s oil Ultimate Recovery (URR). The former appears to give more realistic results based on an URR for China of 15.64 billion tons (115 billion barrels) and a peak by 2011. The study leads to some suggestions for new policies to meet the unfolding energy situation.
1. Introduction
Every country, including especially the so-called developing countries, has become addicted to oil. China’s economy has expanded rapidly in recent years, leading to soaring oil demand and growing imports. It was able to meet its needs from indigenous production up to 1993 (Fig.1), but imports have since grown rapidly such that by 2006 as much as 47.5% of its consumption had to be imported. The gap between production and consumption is expected to continue to widen, presenting a major challenge for the country’s oil industry.
Since oil has to be found before it can be produced, it is useful to extrapolate the discovery trend to obtain an indication of the size of the endowment. With this in place, it is possible to forecast this Ultimate Recovery using the statistical HCZ and Hubbert models. This knowledge may be valuable to policy-makers in designing future economic and political strategies.
2. China’s Discovery Trend
China’s oil history may be divided into five stages. The first stage (1907-1949) saw the birth of the industry with discoveries in the Ordos Basin and in a few other places.
… 5.1 Analysis of Results
The two models give very different results and it is difficult to know which to accept. But Zhai Guangming (2002) estimated an Ultimate Recovery of 16 billion tons and a Government study in 2005 indicated 16.4 billion tons under the 95% confidence level, suggesting that the HCZ model is to be preferred. On the other hand, C. J. Campbell, founder and chairman of ASPO (Association for the Study of Peak Oil and Gas), in his book Oil Crisis gives 55 billion barrels (7.5 billion tons) in 2004, subsequently revised to 65 billion barrels (8.87 billion tons), while Jean Laherrère, the well-known French analyst, gives 70 billion barrels (9.55 billion tons). Both are close to the results of the Hubbert model discussed herein, but far below the official forecast. Recognizing the huge amount of study behind the official estimates, we conclude that Campbell and Laherrère are unduly pessimistic. Exploration in China is at a much less mature status than, for example, in the United States, so we conclude that there is plenty of scope for new discovery. Accordingly, on balance, we prefer the HCZ forecast (URR = 15.64 billion tons).
Lianyong Feng and Junchen Li are with the Department of Business and Administration, China University of Petroleum (Beijing); Xiongqi Pang is on the faculty at China’s University of Petroleum, Natural Resource and Information Technology Dept., (Beijing)
(3 November 2008)
The condensed version, from which this excerpt comes, appears in the second part of ASPO-USA’s Peak Oil Review (Nov 3).
The full report is also online.
The authors note that the optimistic HCZ result derives from the official forecast. Perhaps China is different, but we have seen repeated examples of over-optimistic forecasts from government sources. -BA
