'Peak oil' issue piques interest

Denver Business Journal

By Cathy Proctor
August 14, 2005

With the price of oil and gasoline spiraling higher, top energy analysts wonder about two things:

* Where will it end?

* Are the world's supplies reaching what experts call "peak oil," the point where supplies steadily decline and prices rise even more sharply higher?

Some experts say the world's oil production peak could be five to 15 years away. Others scoff, noting it's been predicted for decades. And besides, skeptics say, new technologies will bring more oil to the market.

The city of Denver will wade into the debate when it hosts a two-day seminar Nov. 10-11 on "peak oil" and what it may mean to Denver and the nation's economy. The U.S. arm of the International Association for the Study of Peak Oil & Gas (www.aspo-usa.com) will co-host the event.

Mayor John Hickenlooper, the state's most famous former petroleum geologist, said he heard Tom Petrie, chairman and CEO of Denver oil and gas investment firm Petrie Parkman & Company Inc., give a presentation on the topic about a year ago.

"It was so compelling that I thought more people should be aware of this going on," Hickenlooper said. "That this is happening, has or is about to happen.

"I don't think, 'the sky is falling, the sky is falling.' But the sooner we begin to examine what the alternatives could be, as the price of oil increases, the better off we'll be and the less trauma and less economic hardship we'll endure. Like any business, you want to plan for these things."

Petrie has studied the world's oil economy for years. The firm has advised Saudi Arabia about its natural gas resources, the state of Alaska on gas-pipeline options and the U.S. Department of Energy on the sale of an oilfield. Petrie has advised on more than $130 billion worth of energy-related mergers and acquisitions.

In early August, during a presentation at the Colorado Oil and Gas Association's annual conference, Petrie told a crowd of oil and gas executives he believes "peak oil" could hit in the next decade.

"We're a lot nearer to peak oil than some people like to acknowledge," he said.

Oil prices on the New York Mercantile Exchange neared $65 per barrel Aug. 10, up 40 percent from a year ago.

Prices at the pump were at record levels both in Colorado and across the nation on Aug. 10. AAA reported the national average at a record $2.376 per gallon for regular unleaded while Colorado's average was $2.32 per gallon, a 22 percent jump from a year ago.

But some believe the oil and gas industry will respond to higher prices with new technology to reach new resources.

"I am extremely skeptical that we're looking at a peak oil perspective. We have tar sands, oil shale, advances in deep drilling. There's a lot out there," said Edward Murphy, group director for refining and marketing at the American Petroleum Institute in Washington, D.C., whose 400 members include the world's major oil companies.

"It's hard to make a convincing case that we're reaching peak oil production. It's really a technology issue. The question is how quickly is technology going to advance and will it advance as quickly as demand."

But even if new technology increases oil supplies -- albeit at higher prices -- the effect on the nation's and world's economies will be broad.

"When you look at how widespread and critical our reliance on oil is, the bigger the issue is. Everybody has a dog in this fight," Hickenlooper said.

http://www.postcarbon.org/node/491