Predicting the timing of peak oil

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Main article: Peak oil

Peak oil
Mitigation of peak oil
Predicting the timing of peak oil
Hubbert peak theory
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M. King Hubbert, who devised the peak theory, correctly predicted in 1956 that oil production would peak in the United States between 1965 and 1970^[1]. Hubbert further predicted a worldwide peak at "about half a century" from publication and approximately 12 gigabarrels (GB) a year in magnitude, though he revised this estimate in 1974 to 40-Gb/yr in 1995.^[2] "if current trends continue". In a 1976 TV interview Hubbert added that the actions of OPEC might flatten the global production curve but this would only delay the peak for perhaps 10 years^[3].

In the late 1970s and early 1980s, global oil consumption actually dropped (due to large oil price shocks in 1973 and 1979, the shift to energy-efficient cars,^[4] the shift to electricity and natural gas for heating,^[5] and other factors), then assumed a lower level of growth in the mid 1980s (see chart on right). Thus oil production did not peak in 1995. This underscores the fact that the only reliable way to identify the timing of peak oil will be in retrospect. However, predictions have been refined through the years as up-to-date information becomes more readily available, such as new reserve growth data.^[6]

Colin Campbell of the Association for the Study of Peak Oil and Gas (ASPO) had suggested that the global production of conventional oil peaked in the spring of 2004. During 2004, approximately 24 billion barrels (3,800,000,000 m³) of conventional oil were produced, as well as 6 billion barrels (950,000,000 m³) from unconventional sources (heavy oil and tar sands, deep water oil fields, and natural gas liquids). In 2005, ASPO revised its prediction for a world peak again, from both conventional and non-conventional sources, to the year 2010.^[7]

Another peak oil proponent Kenneth S. Deffeyes predicted in his book Beyond Oil - The View From Hubbert's Peak that global oil production would hit a peak on November 25, 2005 (Deffeyes has since revised his claim, and now argues that world oil production peaked on December 16, 2005).^[8]

Texas oilman T. Boone Pickens stated in 2005 that worldwide conventional oil production was very close to peaking^[9]. Data from the US Energy Information Administration shows that world production leveled out in 2004, and reached a peak in the third quarter of 2006^[10]. An October 2007 retrospective report by the Energy Watch Group concluded that this was the peak of conventional oil production.^[11]

Sadad Al Husseini, former head of Saudi Aramco's production and exploration, stated in an October 29, 2007 interview that oil production could remain flat for the next "10 to 15 years", although market and production forces would raise prices by about $12 per year from 2007. Al Husseini also indicated oil production had likely already reached its peak in 2006,^[12] and that assumptions by the IEA and EIA of production increases by OPEC to over 45 MB/day are "quite unrealistic."

Contents 1 Peak oil production—has it happened already? 1.1 IEA reports 2 Non-dramatic peak oil 3 Energy Information Administration and USGS 2000 reports 4 No Peak Oil 4.1 Abiogenesis 5 Peak oil for individual nations 6 See also 7 References 8 External links

[edit] Peak oil production—has it happened already?

Matthew Simmons, Chairman of Simmons & Company International, said on October 26, 2006 that global oil production may have peaked in December 2005, though he cautions that further monitoring of production is required to determine if a peak has actually occurred.^[14]

Saudi Arabia's King Abdulla appears to have seen the writing on the wall as early as 1998, telling his subjects, "The oil boom is over and will not return... All of us must get used to a different lifestyle." Since then he has implemented a series of corruption reforms and government programs intended to lower Saudi Arabia's dependence on oil revenues. The royal family was put on notice to end its history of excess and new industries were created to diversify the national economy.^[15]

Analysts from Wood Mackenzie contend that maximum production of oil will not occur before 2014. Kate Dourian, Platts' Middle East editor, has a different opinion. "Some sources say half the world's oil has already been produced, whereas Saudi Aramco is saying there is still another trillion barrels out there." She also states that politics has entered the equation. "Some countries are becoming off limits. Major oil companies operating in Venezuela find themselves in a difficult position because of the resource nationalism that's spreading. These countries are now reluctant to share their reserves"^[16]

Commodities trader Raymond Learsy, author of Over a Barrel: Breaking the Middle East Oil Cartel, contends that OPEC has trained consumers to believe that oil is a much more finite resource than it is. To back his argument, he points to past false alarms and apparent collaboration.^[17] He also believes that Peak Oil analysts are conspiring with OPEC and the oil companies to create a "fabricated drama of peak oil" in order to drive up oil prices and profits. It is worth noting oil had risen to a little over $30/barrel at that time. A counter-argument was given in the Huffington Post after he and Steve Andrews, co-founder of ASPO, debated on CNBC in June 2007.^[18]

In October 2007, with oil prices in the United States over $90 per barrel, the Energy Watch Group, a German research group founded by MP Hans-Josef Fell, released a report claiming that oil production peaked in 2006 and will decline by several percent annually. The authors predict negative economic effects and social unrest as a result.^[19][11]

Some have argued that it will be difficult to see peak oil coming because many international actors including governments, oil producers, and other corporations have some incentives to create uncertainty regarding the amount of oil reserves that remain. This uncertainty can create innacuracies in market prices because the markets depend on accurate and timely information. These authors suggest increased transparency of oil production in the oil producing states.^[20]

[edit] IEA reports

The July 2007 International Energy Agency (IEA) Medium-Term Oil Market Report projected a 2% non-OPEC liquids supply growth in 2007-2009, reaching 51.0 mb/d in 2008, receding thereafter as the slate of verifiable investment projects diminishes. They refer to this decline as a plateau. The report expects only a small amount of supply growth from OPEC producers, with 70% of the increase coming from Saudi Arabia, the UAE and Angola as security and investment issues continue to impinge on oil exports from Iraq, Nigeria and Venezuela.^[21]

The IEA's plateau contention of any future growth is refuted by some reports^[11] which state the IEA uses purely economic models for predictions, which rely on the ability to raise production and discovery rates at will. Reserves in general have been falling since 1980 when production eclipsed discoveries (notwithstanding suspicious recalculating of reserves), and several sources believe that Peak Oil occurred sometime in 2006.^{[8][10][11][12]}

In its December 14, 2007 report, the IEA stated that world oil supply in November 2007 had risen again to 86.5 Mb/d, for a predicted 2007 average of 85.7 Mb/d (+1.1% over 2006). The report also predicted 2008 demand to increase to 87.8 Mb/d (+2.5%). Production figures are lower than supply (which is a combination of production, strategic reserves, and refinery gain). November OPEC production was 31.11 mb/d (down from October), while the non-OPEC production average for 2007 was expected to be 50.2 mb/d^[22] (with an expected peak^[21] of 51.3 in 2008). The report predicted the annual seasonal peak would again happen in December, as a result of new refinery processing capacity, and predict a 2008 demand increase twice that of the 2007 demand increase. They state that there are concerns over supply growth^[22] . Indeed, their January OMR states an initial Supply of 87-mbd for December^{[citation needed]}.

[edit] Non-dramatic peak oil

Not all non-'peakists' believe there will be endless abundance of oil. CERA, for example, which counts unconventional sources in reserves while discounting EROEI, believes that global production will eventually follow an “undulating plateau” for one or more decades before declining slowly.^[23] In 2005 the group had predicted that "petroleum supplies will be expanding faster than demand over the next five years."^[24]

Dr. R.C. Vierbuchen, Vice President, Caspian/Middle East Region, ExxonMobil Exploration Co. believes a peak, "from resource limitations, is unlikely in the next 25 years." He claims that future technologies will increase production, and that the peak will be the result of non-production factors.^[25]

Similarly, some analysts believe that the rising oil prices will instigate a move toward alternative sources of fuel, and that this will take effect long before oil reserves are depleted. Some have argued that while OPEC ensures through its regulations that oil prices do not fall too low, it also shows concern that overly inflated prices will cause many countries to move toward alternative energy sources, for economic as well as political reasons. In 1990 Saudi Arabia in particular flooded the market to prevent prices from going too high. The recent rise in oil prices to nearly $100 per barrel in November 2007 brings the price well above where analysts have speculated that this process could take place, although it is expected that this would happen over an extended period of time.^[26][27]

[edit] Energy Information Administration and USGS 2000 reports

The U.S. Energy Information Administration projects world consumption of oil to increase to 98.3 million barrels per day (15,630,000 m³/d) in 2015 and 118 million barrels per day (18,800,000 m³/d) in 2030.^[28] This represents more than a 25% increase in world oil production. A 2004 paper by the Energy Information Administration based on data collected in 2000 disagrees with Hubbert peak theory on several points:^[29]

• Explicitly incorporates demand into model as well as supply
• Does not assume pre/post-peak symmetry of production levels
• Models pre- and post-peak production with different functions (exponential growth and constant reserves-to-production ratio, respectively)
• Assumes reserve growth, including via technological advancement and exploitation of small reservoirs

The EIA estimates of future oil supply are countered by Sadad Al Husseini, retired VP Exploration of Aramco, who calls it a 'dangerous over-estimate'.^[30] Husseini also points out that population growth and the emergence of China and India means oil prices are now going to be structurally higher than they have been.

Colin Campbell argues that the 2000 USGS estimates is methodologically flawed study that has done incalculable damage by misleading international agencies and governments.^[31] Campbell dismisses the notion that the world can seamlessly move to more difficult and expensive sources of oil and gas when the need arises. He argues that oil is in profitable abundance or not there at all, due ultimately to the fact that it is a liquid concentrated by nature in a few places having the right geology. Campbell believes OPEC countries raised their reserves to get higher oil quotas and to avoid internal critique. He also points out that the USGS failed to extrapolate past discovery trends in the world’s mature basins.

[edit] No Peak Oil

Some commentors, such as economist Michael Lynch, believe that the Hubbert Peak theory is flawed and that there is no imminent peak in oil production; such views are sometimes referred to as "cornucopian" by adherents of the Hubbert Peak Theory. Lynch argued in 2004 that production is determined by demand as well as geology, and that fluctuations in oil supply are due to political and economic effects in addition to the physical processes of exploration, discovery and production.^[32]

Abdullah S. Jum'ah President, Director and CEO of Aramco states that the world has adequate reserves of conventional and non conventional oil sources for more than a century,^[33][34] though Sadad Al-Husseini, a former Vice President of Aramco who formerly maintained that production would peak in 10-15 years, stated in October 2007 that oil production peaked in 2006.^[12]

OPEC has never acknowledged imminent Peak oil concerns.^{[citation needed]} In OPEC's 2007 annual book,^[35] which discusses issues such as future supply position, forecasted demand, and ultimate recoverable reserves (URR), the authors state that the conventional oil resource base is sufficient to satisfy demand increases over the projected period until 2030 at a price of $50-60 per barrel, increasing afterwards to account for inflation. It also states that, comparing the 5% confidence (P5) URR of 3300(sic) billion barrels from the 2000 USGS survey^[36] to what appears to be (there is no reference given) the 95% confidence (P95) URR of 1700(sic) billion barrels from the 1980 Rand corporation survey, production after 1980 has been only 1/3rd of reserve additions happening during the same period, which would contrast with Peak oil predictors. However, four other surveys from 1980 give estimates of 2600, 2400, 2280, and 2,015 billion barrels (320,400,000,000 m³).^[37] Comparing the average of the five 1980 estimates (2219 billion barrels when using the actual Rand estimate of 1800 billion barrels) to the P95 URR from the 2000 USGS survey (2272 billion barrels), production after 1980 has been over 10 times more than reserve additions.

[edit] Abiogenesis

Main article: Abiogenic petroleum origin

The theory that petroleum derives from biogenic processes is held by the overwhelming majority of petroleum geologists, however abiogenic theorists, such as the late professor of astronomy Thomas Gold, assert that oil may be a continually renewing abiotic product, rather than a “fossil fuel” in limited supply. They hypothesize that if abiogenic petroleum sources are found and are quick to replenish, petroleum production will not decline.^[38]

One of the main counter arguments to the abiotic theory highlights the biomarkers which have been found in all samples of all the oil and gas accumulations to date. These suggest that oil has a biological origin, and is generated from kerogen by pyrolysis.^[39][40]

[edit] Peak oil for individual nations

Further information: List of oil fields

Peak Oil as a concept applies globally, but it is based on the summation of individual nations experiencing peak oil. In State of the World 2005, Worldwatch Institute observes that oil production is in decline in 33 of the 48 largest oil-producing countries.^[41] Other countries have also passed their individual oil production peaks.

The following list shows significant oil-producing nations and their approximate peak oil production years.^[42]

• Australia (disputed): 2004; 2001
• Egypt: 1987^[43]
• France: 1988
• Germany: 1966
• Iran: 1974
• India: 1997
• Indonesia: 1991^[44]
• Japan: 1932 (assumed; source does not specify)^{[citation needed]}
• Libya: 1970
• Mexico: 2003
• New Zealand: 1997^[45]
• Nigeria: 1979
• Norway: 2000^[46]
• Oman: 2000^[47]
• Russia: 1987
• Syria: 1996^[48]
• Tobago: 1981^[49]
• Venezuela: 1970
• UK: 1999
• USA: 1970^[50]

Peak oil production has not been reached in the following nations (these numbers are estimates and subject to revision):^[51]

• Iraq: 2018
• Kuwait: 2013
• Saudi Arabia: 2014

In addition, the most recent International Energy Agency and US Energy Information Administration production data show record and rising production in Canada and China.

[edit] See also

• Hubbert's peak
• Peak oil
• Petroleum

[edit] References

[edit] External links

• TrendLines' current Peak Oil Depletion Scenarios Chart A monthly compilation update of 24 recognized estimates of URR, Peak Year & Peak Rate

v • d • e Peak Oil Issues Peak oil · Mitigation of peak oil · Predicting the timing of peak oil · Hubbert peak theory · Hirsch report · Oil Depletion Protocol · Price of petroleum · Oil price increases since 2003 · Energy crisis · Export Land Model · Food vs fuel · Oil reserves People Albert Bartlett · Colin J. Campbell · David Goodstein · Richard Heinberg · M. King Hubbert · James Kunstler · Jeremy Leggett · Dale Allen Pfeiffer · Richard Rainwater · Matthew Simmons · Doomer Books The Long Emergency · Out of Gas · The Party's Over · Power Down Films Crude Awakening · The End of Suburbia · How Cuba Survived Peak Oil · What a Way to Go Organizations ASPO · Energy Watch Group · ODAC · OPEC