The Peak Oil Crisis: Sythesizing the Power Points

Falls Church News-Press

By Tom Whipple
November 17, 2005

The Association for the Study of Peak Oil (ASPO) was formed in Europe circa 2001. After four years, the Association decided it could more effectively educate the world about the advent of peak oil by breaking up into national organizations. At last report, 15 national ASPOs are in some stage of formation – mostly in Europe .

Last week ASPO-USA, a not yet fully formed organization, had its first meeting in Denver . Some 450 people showed up to hear an array of knowledgeable speakers on nearly every aspect of when world oil production will peak and what we can or should do about it.

The top issue —is peak oil imminent and if so when— was discussed in depth by five respected and highly qualified speakers. The heart of their presentations was simple:

• The world is currently producing about 85 million barrels per day (mb/d).
• As long as the world’s economy continues to grow, it will need another 1-2 mb/d each year.
• Production from the fields that are currently producing our 85 mb/d is continuously dropping. The optimists say this depletion is as little as 2.5 percent each year, while credible pessimists are saying 8 percent a year may be more realistic.
• The answer to the rate of depletion question (and we won’t know for several years) is the key to the "when" of peak oil. If the depletion rate is only 2.5 percent then existing fields will still be producing about 74 mb/d in 2010. This amount can possibly be offset by production from new fields with a little left over for some economic growth. If the depletion rate is much higher then supply will not cover demand and we will see much higher priced oil.

This is the peak oil debate in a nutshell. It is the interplay between the worldwide demand as determined by price, the rate at which existing fields are depleting, and the oil industry's ability to bring new fields into production in the next five years. All this will determine the year when production peaks.

Differences among the speakers as to when peaking will occur hinge on their opinions about these variables. All, however, seemed to agree that we should see the peak within the next five years or so.

The most disturbing number presented at the conference was that the world's depletion rate may be as high as 8 percent. An 8 percent depletion rate for production from existing fields would be catastrophic because production would drop by nearly 30 mb/d by 2010. This is an amount that simply cannot be made up by production from new fields. If this rapid decline comes to pass, there will be widespread economic disruption, for there is little we can do to increase the production of substitute energy sources so quickly.

Several speakers are concerned there are not enough drilling rigs in the world and not enough experienced people to operate them. Even the eternally optimistic Saudis, while in the midst of announcing their expansion plans last week, caveated that these plans might slip due to the unavailability of sufficient drilling rigs. The damage and loss of drilling rigs during recent hurricanes in the Gulf of Mexico did little to help the situation. Indeed, there is some thought that the hurricanes did so much damage (some 730,000 b/d are still not back in production) and will require so many resources to repair, they will turn out to be a major reason why peak oil will occur sooner rather than later.

One speaker emphasized the precarious political situation in the major exporting countries— tribal unrest in Nigeria, re-nationalization of oil in Russia, chaos in the Middle East, and the biggest threat to the US of all, the assassination of Venezuelan President Chavez. If Chavez were assassinated, the price of oil is likely to climb to over $100 per barrel within 48 hours. Should fighting over his replacement ensue, the US could lose about 14 percent of our oil supply within two weeks.

After dealing with the "when" question, the conference turned to "what can we can we do about it". It was reiterated by several speakers that what we are about to confront is a "liquid fuels" rather than an "energy" crisis. It is conventional wisdom that once we all grasp that oil depletion is a fact of life; we will do everything we can to mitigate the situation by finding other sources to power our vehicles. For now choices seem to be non-conventional oil (tar sands, shale, and heavy oil), liquefy coal, and biomass. Of the three, only biomass is sustainable and may indeed be the only choice feasible on a scale of tens of millions of barrels per day.

The highlight of the first ASPO-USA conference may have been when Congressman Roscoe Bartlett asked if we really want to "mitigate" by spending all our treasure to produce oil substitutes after peak oil arrives. Would we not be better off if we started moving towards a world with minimal consumption of liquid fuels as soon as possible?

Right now the cry is "find more oil". Forget the environment and drill wherever and as much as necessary. The International Energy Agency is suggesting that with an investment of a mere $17 trillion (that's right trillion with a "tr") to find, produce, and refine oil, life-as-we-know-it can go on for another 25 years.

When it becomes apparent, however, we can no longer keep up conventional oil production, the cry will change to "produce substitutes." Billions, and perhaps trillions of dollars will be allocated to producing synthetic liquid fuels. If this can come from biomass it might make some sense, but if we ravage Alberta and our coal reserves to power our SUVs for a few decades longer, it does not.

This indeed my turn out to be mankind's key decision for the first half of the 21st century. Do we power down gracefully to a greatly reduced liquid fuel world; or do we thrash around for a decade or two trying to maintain life as we have known it?

http://www.fcnp.com/537/peakoil.htm