Science magazine has a major "news focus" piece ($ub. req'd) arguing the peak is nigh:
Even those who believe there's plenty of oil left in the ground to meet rising demand are warning that the final crisis could come uncomfortably soon. Although price spikes and drops may recur for years, says [IEA] economist Fatih Birol, "we think the era of cheap oil is over."
As noted earlier, the IEA report concludes, "Oil price to rebound to $100 when economy recovers, then soar to $200 by 2030."
It's getting harder and harder to find an optimist" on the outlook for the world oil supply, says Beijing-based petroleum analyst Michael Rodgers of PFC Energy, a consulting company. Indeed, the IEA report as well as one coming from the U.S. Department of Energy's Energy Information Administration (EIA, confusingly enough) see hints that the world's oil production could plateau sometime about 2030 if the demand for oil continues to rise. Unless oil-consuming countries enact crash programs to slash demand, analysts say, 2030 could bring on a permanent global oil crunch that will make the recent squeeze look like a picnic.
That's right -- the IEA report thinks we won't peak/plateau for over two decades. Needless to say, the peakists are disappointed that even the now-alarmist IEA isn't sufficiently alarmist.
In a recent memo to fellow peakists, Robert Hirsch wrote, "Many may be tempted to directly challenge the recent IEA World Energy Outlook. I am among those who were very disappointed." Given the realities of rapidly depleting fields around the world and that we haven't seen much of supply growth in the last few years, I tend to agree with Hirsch.
Even the IEA recognizes that we need to find the equivalent of six Saudi Arabias in the next 22 years just to stave off the peak until 2030:
Signs of strain may already be emerging. Outside OPEC, oil production has not risen since 2004, even as prices soared. IEA sees no recovery in this non-OPEC production from conventional oil fields. Moreover, it projects that the plateau in conventional oil will turn into a decrease beginning in the middle of the next decade, accelerating through to 2030. Only the growth of production from expensive unconventional sources, such as mining tarry sands in Canada, will keep total non-OPEC production from falling during the next 20 years, according to IEA ...
"Non-OPEC conventional production is definitely at a peak or plateau," says Rodgers. "That's starting to make people nervous. It's not what even pessimistic people anticipated."
Only massive expansion of climate-destroying unconventional sources like the tar sands can stop a serious decline in non-OPEC oil. Makes one sleep better.
A big part of any problem with slaking the world's thirst for oil, according to IEA's report (www.iea.org/Textbase/npsum/WEO2008SUM.pdf [PDF]), is the rapid decline of production from fields past their prime. Any new field produces increasing volumes of oil each year as more and more wells are drilled, but production eventually peaks and, in time, begins to decline. IEA studied 800 fields around the world that had already passed their peak production to see how fast they are declining -- a rather rapid 6.7% decline per year, it turns out. And that rate could increase to 8.6% by 2030, IEA says, as the industry turns more and more from waning giant onshore fields to smaller fields and offshore fields, both of which decline faster after peaking.
The decline rate "is a major challenge in itself," says Birol. "We have found that if we want to stand still -- that is, continue producing 85 million barrels per day -- for the next 22 years, we need new production of 45 million barrels per day to compensate for the decline. That means four Saudi Arabias." Add on a demand increase of the sort seen the past couple of decades -- equivalent to another two Saudi Arabias -- and the world will have to work that much harder to meet rising demand, Birol says.
So why isn't the IEA even more alarmist? My guess is that the once-bland international energy institute is suffering a bit from the alarmist fatigue, what with the IEA being quite clear that peak oil is not even being the biggest energy problem we face.
In its first look ever beyond 2030, the U.S. EIA is finding even less support for a rosy oil scenario than IEA is. Its report is yet to be released, but EIA's Glen Sweetnam of the Washington, D.C., offices outlined preliminary results at an EIA conference in April (www.eia.doe.gov/conf_pdfs/Monday/Sweetnam_eia.pdf [PDF]) ...
Things look fine right through the rest of the century if, starting now, the whole world severely curbs its appetite for oil, the EIA analysis suggests. In this low-demand scenario, the lingering demand for oil could be met even if the nondemand factors were unfavorable.
The U.S. Energy Information Administration has been blander and more cautious than the IEA for many years now. If they are becoming more pessimistic, it is time to start hoarding!
The energy agencies "have done a good job of describing the fix we're in," says energy analyst David Greene of Oak Ridge National Laboratory in Knoxville, Tennessee. "They're recognizing that the non-OPEC world won't be able to increase production much if at all. The IEA correctly points out the massive investment required" to meet any increase in demand. In fact, it's not clear to Greene or other analysts that OPEC has any intention of upping production to keep the price of oil relatively low, which would not be in its self-interest. Better to keep more oil in the ground, pinching supply, and sell that oil later at a higher price. And some OPEC countries, such as Iran and Iraq, may not be capable of making the required investment, even though they have the oil.
So where exactly are the six new Saudi Arabias going to come from?
The bottom line is we are going to peak/plateau before 2030.
This post was created for ClimateProgress.org, a project of the Center for American Progress Action Fund.
Oil: enough energy to melt glaciers!
Comments
View as Flat
Billhook Posted 8:11 am
25 Nov 2008
Moreover, we cannot afford the unconventional liquid fuels' expansion, either financially or atmospherically or, bizarrely, in energy terms, (given their consumption of coal or gas or power as process inputs).
The crash in oil prices from $147/bbl was mirrored in many other commodities as the scale of the looming recession became clearer, and as the margin calls on major banks positions became imperative.
Thus it may be that the rate of oil supply in Sept '08 was the final peak, with continued depletion during the recession precluding increased supply (above 85mbbl/day) if and when economic growth restarts.
Certainly there are reports from worldwide of vital oil exploration & development being sharply curtailed under the $50/bbl price regime.
A likely prospect is of a sawtooth progress of economic decline, with spurts of growth allowing oil-demand, & prices, to rise to the point of stalling that growth back into recession.
The recent drives for tar-sands, ex-rainforest biofuels, coal-to-oil, methyl hydrates, liquid hydrogen and even nuclear electricity
all stem to some extent from the long-foreseen crisis of peak oil.
Perhaps the most vicious of cycles that we face is the fact that the poorer our societies get, the less able we are to afford the orderly adoption of sustainable technologies and resource-usages that could launch a new global economy that is not reliant on the discredited doctrine of endless economic growth on a finite planet.
Thus I have to draw attention to that fine old quip:
"IT IS LATER THAN YOU THINK !"
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Pangolin Posted 9:45 am
25 Nov 2008
How do you go to a bond company and ask them to finance that? How do you buy a jumbo jet? You would have to have the cash to lock in your final energy price on the contract date and hope that there was an economy to buy your product.
I'm probably wrong but I don't see where. Anybody?
Put the Carbon Back
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amazingdrx Posted 2:58 pm
25 Nov 2008
So work to reduce demand incrementaly year after year over the next couple of decades. We have the technology to do it, namely plugin hybrids. Only mass production is lacking.
Peak oil discussions are a waste of energy. The mindset that obesses around peak oil is obsolete. Peak GHG is the important peak. The GHG tipping point and the recession/depression tipping point the relevant points on the fossil fuel/GHG graph.
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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Pangolin Posted 4:31 pm
25 Nov 2008
That said I still believe that replacing the heating oil market with ground-loop heat pumps is the fastest route to demand destruction in the US.
In the rest of the world the Chinese-manufactured electric scooter is going to dominate city traffic. Nothing more easy and convenient has ever been built. I saw a white-haired old lady of the first order on one last Saturday and she was thrilled. If she can ride one anyone can.
Put the Carbon Back
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Billhook Posted 7:24 pm
25 Nov 2008
With a post-peak decline rate of between 6% and 9% per year we face a halving of global supply over an 8 to 12 year period.
That is, half the farm machinery running, half the diesel trucks & trains, half the rail-freight (such as power-stations' coal), half the heating oil, half the oil-feedstocks for the plastics, chemicals & pharmaceuticals industries -
and half the petrol passenger-vehicles too . . .
With recent oil-prices having burst the housing bubble and exposed the utter mess of modern global banking, it is hard to see how even basic sustainable alternatives in energy supplies & technologies will be funded reliably -
Have a look at what the present bust is doing for such investment plans globally . . . .
Plainly, the displacement within the planet's richest nation of some petrol engines and some oil heaters by plug-ins & ground-heat collectors will barely put a dent in the global economic destabilization that such an oil supply decline rate will cause.
The concern which climate campaigners need to address now, not after the event, is the predictable surge of funding into "unconventional oils". Agri-biofuels & coal-to-oil seem pretty foul, but just wait till Russia, Canada & others wake up to the massive potential of processing their huge peatlands - while many maritime nations also begin to exploit their vast but fragile methyl hydrate reserves.
To get an idea of the popular pressure on govt's that even a 6%/yr decline of global oil supply will generate, consider first that economic growth has been in lockstep with oil consumption for many decades. Then observe that during the USSR's great collapse, its economy was shrinking by just 5%/yr.
For Govt's to withstand that public pressure (aka "drill, baby, drill" ?) they will need the backing of a treaty of the Atmospheric Commons that is not only as transparently simple in its structure as C&C will allow, but is also as eminently fair in the allocation of developing national emission rights.
Anything less, even if it were negotiable, would be voted out by sufficient nations' inpoverished electorates to collapse the whole treaty.
Thus I'd suggest that PO is a very necessary subject of discussion, specifically as a subset of the equally long overdue discussion of the structure of the requisite global climate treaty.
Regards,
Billhook
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Bart Anderson Posted 1:05 am
26 Nov 2008
I read the "Science" article mentioned by Joseph, and, while not too bad, it is rather superficial. The problem is that oil projections are complicated and highly political.
Very little good analysis has been done in the mainstream press.
The Oil Drum and Energy Bulletin have posted a number of articles on the report, for those who want to understand what is going on beneath the surface.
Here's a quick summary by Tom Whipple of ASPO-USA: Edging Towards Reality
Bart
Energy Bulletin
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