The Peak Oil Crisis: Y2K & Peak Oil

Falls Church News-Press

By Tom Whipple
September 15, 2005

Do you remember Y2K? Back at the end of the last century, the world was seized with the notion that at the stroke of midnight between the old and new millennia, many of the world's most important computers would come to a halt. The lights would go out, the phones would cease to function, and our bank balances would be reset to zero. All this was to happen in one instant, because the ancients who invented the first computer programming decided not to include century digits in the date fields.

As I recall, my local government spent some $10+ million getting ready for the event. Aged COBOL programmers were called from retirement to fix faulty computer code. Generators were leased to provide emergency power when the lights went out and police were on full alert to deal with the resulting civil disturbances. However, the appointed time of the appointed day arrived and nothing discernible happened. Either the aged programmers did a great job or there never really was a problem.

The point of all this is that with Y2K, we knew years in advance and the exact second when something that could have been very bad was going to happen and we outdid ourselves preparing. Would it were so with peak oil.

The ongoing debate about when peak oil will come is starting to spill over into the mainstream press. Last week, even the New York Times ran a story airing both sides of the issue leaving the reader to decide whether the Armageddon of oil depletion is just around the corner or is decades away.

Both sides in the debate acknowledge petroleum deposits are finite and concede that one day, the greatest cornucopia the world has ever known will end. What is at issue is, whether we should be doing something now to get ready, or if we can we relax and let the next generation deal with it.

While it is easy to lay out the factors determining when peak oil will occur, it is difficult to put an accurate value on many of the interconnected variables, to permit anyone to say just when the trouble will begin.

The basics are simple. There are currently a lot of oilfields in the world that together are producing 84 million barrels of oil per day. In recent years, the demand for this oil has been growing by a couple of million barrels a year; however, the unprecedented price increases that have taken place in the last year are starting to reduce demand.

Thus, we have the first complication for picking a year when oil depletion will begin. How much and how fast will demand be reduced by the much higher prices that will come as we get closer to the peak? In the United States , it seems to be very little so far. In the poorer parts of the world, $65 oil is clearly destroying demand at an alarming rate.

Worldwide, total oil production from existing fields has been dropping by about 1 million barrels per day each year as more and more older fields reach their peak and go into decline. This worldwide decline from existing fields is expected to increase markedly in the next few years as more producing countries reach their individual peaks. Many believe this decline may be faster than previously believed due to the damage caused by modern production techniques of injecting water and gas into the earth to force out the oil.

The only way to stem this worldwide decline is to go and start up new oil fields. Thus, each year ahead, we must bring into production some 2-3 million barrels a day of oil from new drilling projects or face serious economic troubles. Is this possible, and for how long can we keep it up?

Starting a new oil field, especially under the sea, is a big project costing billions of dollars and it takes at least 4-5 years before meaningful quantities of oil start to flow. Most of these big projects are well publicized so that interested analysts can follow the progress and make informed estimates as to how much oil they will be producing in which future year.

Several research organizations in the US and Europe have attempted to tabulate the worldwide increases in production expected from new oil fields. Strangely enough, two of the most widely publicized of these research efforts have reached startling different conclusions.

In the US, Cambridge Energy Research Associates(CERA) rejects the notion of peak oil coming in this decade and does not foresee real production shortages coming until after 2020, maybe in the 2030's or 40's. CERA calculates that between 11 and 16 million barrels a day of new production will come online in the next five years— more than enough to satisfy increasing demand and overcome the loss of production from older fields.

Over in Britain however, the Petroleum Review's annual tabulation also agrees that enough oil is scheduled to come from new projects in the next couple of years to meet demand. However, they are far more worried about whether these "projects" can be turned into actual production on time and what the actual pace of oil depletion in the older fields will be. Taken together, they foresee the possibility of shortages beginning in the next two years and serious problems developing thereafter.

The Petroleum Review does not believe enough new oil development projects are underway to replace the decline from aged oil fields and meet the needs of continued world economic growth.

While there is no known phenomenon that can create large quantities of new oil production, the world is rife with ways to stop existing flows. Two weeks ago, Hurricane Katrina took a big piece out of a million barrels of daily production for an indefinite period. Two years ago, the US invasion of Iraq took a million barrels per day out of production.

It does not take much imagination to foresee the Iraqi situation deteriorating into a full-blown civil war that would stop another million plus barrels of production each day. From there, there are endless possibilities for sectarian and tribal fighting spread across the oil producing states of the region. If any of this were to happen, then peak oil would occur on the spot, for even if this production was to be resumed in some more peaceful age the renewed output would only stem the decline.

Acceptance of peak oil seems to be a lot like acceptance of global warming. As long as a handful of "scientists" express doubts it is actually happening, there is sufficient reason for the government to wait for better evidence before committing to doing something.

No one wants to hear that peak oil is coming, and as long as some "respected" voices can claim peak oilers are false prophets, most will listen.

Of one thing we can be certain. The outcome of all this will not be nearly as pleasant as that of Y2K.

http://www.fcnp.com/528/peakoil.htm