(Note: Commentaries do not necessarily represent ASPO-USA’s positions; they are personal statements and observations by informed commentators)

A few weeks ago, in the name of Peak Oil and … fishing … we traveled to Shell’s Perdido Project in the Gulf of Mexico. Perdido is a floating spar platform in 7800′ of water. Despite the fact that the spar was put in place last summer, it has already created a mini-ecosystem that favors all marine life. Don’t tell anyone, but the fishing was great! Of course, getting there is a bit of an adventure, since Perdido is about 150 miles off the Texas coast!

Much like the engineer in the “girl and the bicycle” joke, I spent the first 30 minutes taking pictures of the spar, while everyone else was catching fish! Currently, the project is fairly unremarkable at the surface, as the topside deck has not yet been set. So, it looks much like a big floating tank, only it doesn’t move with the ocean since it is pulled tight against the seafloor with huge chains and ropes. (Yes, high-tech polyester ropes.) The spar itself is about the same height as the Eiffel Tower, but only the top 100′ or so is visible above the ocean. In the distance, Noble Drilling’s Clyde Boudreaux semi-submersible drilling rig is drilling some of the first wells, which will feature subsea controls and will be connected by flexible pipe to the Perdido spar. The Perdido project includes a number of subsea innovations.

Now, some math. When Perdido is put on production it is designed to produce a maximum of about 100,000 barrels of oil per day. That’s a lot of oil, right? And, it is domestic oil. It won’t contribute to our trade imbalance, and it won’t be subject to geopolitical problems. Perdido has created a lot of good jobs for steelmakers, welders, pipefitters, designers, engineers, roughnecks and a whole bunch of others. Overall, it is a great project for all of us – diatoms and fish included – and hats off to the folks at Shell Offshore, Inc. for getting it done.

But hold on, let’s put this $3 billion, state-of-the-art, deepwater project into Peak Oil perspective.

Cantarell Field, the world’s second or third largest field, is located in “shallow water” a few hundred miles to the south of Perdido, offshore Mexico. It is one of the “giant” oilfields on which the world has been unconsciously relying; in the case of Cantarell, since 1979. Unfortunately, Cantarell’s reserves and production make Perdido look like what we call a “stripper” project in the industry, by comparison. Cantarell had a peak production rate of 2,100,000 barrels of oil per day, as recently as the end of 2004. In 2005 it began to decline. And it had never declined, before. By the end of 2008, Cantarell was producing “just” 862,060 barrels per day.

That’s a decline of over 1,200,000 barrels, in just 4 years. And Perdido will produce at a maximum rate (before it begins to decline) of “just” 100,000 barrels per day. And it has taken 13 years to get the Perdido to the production stage, from the initial leasing!

So, you are beginning to see the picture. The old “giant” oilfields are going away (all have peaked like Cantarell, except maybe Ghawar), and our new, incredibly expensive, state-of-the-art projects that can take a decade or more – can’t begin to replace the declining “giants”. That’s Peak Oil.

What to do about it? Well, this doesn’t mean that we shouldn’t encourage projects like Perdido. Perdido is a win-win-win for mankind, the environment and the United States of America. Believe me, the fish are having a great time at Perdido! So, we should facilitate drilling and production offshore Florida and the East and West Coasts. Furthermore, in most of these areas the water is much shallower, so the projects will be simpler.

At the same time, we need to keep it all in perspective. No, offshore drilling won’t solve all of our problems. But alternatives won’t either. We need both, along with significant conservation! We need what has increasingly become known as the “all of the above solution”:

  • energy conservation (this is where we can have the greatest effect, the soonest)
  • mass transportation retrofits (likely optimized and marketed bus and carpool efforts)
  • natural gas vehicles and stations (start with fleets to solve the Catch-22)
  • expanded natural gas drilling (solve infrastructure & supply problems)
  • wind energy (stop the tax credit hocus pocus – fix it for a reasonable time period)
  • vehicular electrical storage research (cost effective and reliable batteries or other devices)
  • design & production of more efficient cars (lighter, smaller EV’s, plug-in hybrids and diesels)
  • offshore drilling (offshore West Coast, East Coast, Florida Coast)
  • biofuels research (enzyme & pyrolysis-based cellulosic ethanol, algae-based oil production)
  • biomass (use grasses and waste products, but be cognizant of soil needs)
  • nuclear plants (fast-track & standardize the design, licensing and construction, use breeders and reprocessing to minimize waste)
  • coal plants (use best available, cost-effective clean up technology)
  • coal-to-liquids (limited by rate, but part of the solution)
  • solar thermal innovations & implementations
  • geothermal and waste heat recovery installations

So, you offshore drilling guys, don’t be tempted to scoff at the solar guys. And conservation guys, stop pointing your fingers at the “oil companies”. We need all of the above. In 2009 let’s get past the finger-pointing, and get on with good jobs leading to energy solutions! And quickly!

Endnote: For the record, given where we are now, we can’t keep liquid fuel supply flat, let alone grow it, even if we do all of the above. But, going this route could make the coming tough transition a more manageable process. (In a few weeks, Part 2 will expand on these last points.)

Martin Payne, based in Austin (TX), is an upstream oil and gas professional with over 25 years of experience. He has served as Chairman of the Houston Chapter of the American Petroleum Institute and is a member of the American Society of Mechanical Engineers, the Society of Petroleum Engineers, the American Solar Energy Society, and the Association for the Study of Peak Oil (ASPO-USA).