Peak Oil ConceptsScientists began studying petroleum discovery and production trends almost as soon as the first oil well was drilled in Titusville , Pennsylvania in 1859. Geology is now a very mature science: industry has known the location of the giant fields for decades; and new technology in exploration, drilling and production has helped us exploit these fields- as well as many smaller fields- on land and sea in virtually every part of the world. Modern oil depletion studies were begun in the 1940s, culminating in the mathematical work presented by Shell petroleum geologist Dr. M. K. Hubbert in the mid-1950s. The result of his seminal work, predicting the “peak and decline” of US oil production in the early 1970s, is now termed “Hubbert’s Curve.”. In recent years, an international group of petroleum geologists, including students and colleagues of the late Dr. Hubbert, have formed the Association for the Study of Peak Oil & Gas (ASPO) for the study of the “Peak Oil” phenomenon. Peak Oil refers to recent depletion analysis that predicts world oil production is likely to peak sometime between the years 2003-2008. After production peaks, the scientists say, the world will not be “out of oil”; but production will decline from that point on- never to rise again- while demand continues to grow along with population and development. If the scientists are right, the effects on the world’s economic systems, which generally require additional energy inputs for economic growth, could be profound. We quote from some of the scientists’ published writings and from articles and speeches of other knowledgeable commentators below. “In 1956, the geologist M. King Hubbert predicted that U.S. oil production would peak in the early 1970s. Almost everyone, inside and outside the oil industry, rejected Hubbert's analysis. The controversy raged until 1970, when the U.S. production of crude oil started to fall. Hubbert was right. Around 1995, several analysts began applying Hubbert's method to world oil production, and most of them estimate that the peak year for world oil will be between 2004 and 2008. These analyses were reported in some of the most widely circulated sources: Nature, Science, and Scientific American. None of our political leaders seem to be paying attention. If the predictions are correct, there will be enormous effects on the world economy.” (Source: Hubbert's Peak: The Impending World Oil Shortage by Kenneth S. Deffeyes) “Discovery of oil and gas peaked in the 1960s. Production is set to peak too, with five Middle East countries regaining control of world supply. The oil shocks of the 1970s were short-lived because there were then plenty of new oil and gas finds to bring onstream. This time there are virtually no new prolific basins to yield a crop of giant fields sufficient to have a global impact. The growing Middle East control of the market is likely to lead to a radical and permanent increase in the price of oil, before physical shortages begin to appear within the first decade of the next century. The world's economy has been driven by an abundant supply of cheap oil-based energy for the best part of this century. The coming oil crisis will accordingly be an economic and political discontinuity of historic proportions, as the world adjusts to a new energy environment.” (Source: The Coming Oil Crisis By Colin J. Campbell ) In the late 1980s, several OPEC countries announced huge and abrupt increases of their oil reserves at about the same time that OPEC began allocating production based on the countries’ reserves. Since the reserves are not independently validated, some analysts are skeptical of the validity of those increases. For example when Exxon, Chevron etc, were managing ARAMCO, they estimated that the huge Ghawar field had a capacity of approximately 65 billion barrels, of which 55 billion barrels have already been produced. Saudi Arabia currently contends that the Ghawar field still holds 125 billion barrels of oil reserves. Current world oil production is approximately 82 million barrels per day, which is approximately equal to world demand. China ’s oil demand has been growing by approximately 20% per year, and it is now the 2nd leading importer of oil, lead only by the United States . India is now growing its oil import requirements at a rate of 13% per year. World demand is projected by the Energy Information Administration to expand to 120 million barrels per day by 2030, but numerous analysts say that world oil production is at or near its peak and will soon start its decline, and may decline to a level as low as 60 million barrels per day by 2030.. Graphs and analyses published in the ASPO November 2004 newsletter follow as well as graphs and analyses published in 2000 by the US Geological Survey (USGS) illustrating the peak oil phenomenon. Since 2000, largely due to the significant growth in China and India , world demand has increased at higher rates, resulting in significantly less production margin over demand, resulting in market forces driving oil prices higher as required to reduce the demand to the supply available. Charles Maxwell, a senior energy analyst at Weeden & Co., wrote in the November 15, 2004 issue of Barron’s, “Over the next 25 years, a new world energy economy will arrive in three waves. We are near the top of the first and smallest one, a warning wave. A second more powerful wave likely will hit in the 2009-2010 period when the non-OPEC world may reach its all-time highest output of crude oil, subsequently declining to become ever more dependent on OPEC for incremental barrels of production. The final wave should break around 2020, or earlier, as even OPEC's vast reserves are tapped at a maximum rate of production. After that, oil volume should head down and keep falling, never to revive.” “Each year now, some 4% to 5% of world crude production is depleted, and an equivalent amount must be found, developed and brought onstream to maintain the original production volume. A further 2% must be found, developed and made available to the market to cover global growth needs. Few people outside the oil industry understand that 6% to 7% more oil must be found and made available to the market each year in order to meet 2% growth in world consumption. It's a huge job; and it is getting harder to do, as the potential reserve size of prospects we are drilling today is smaller, and the large, prolific fields found in the past are advancing along their decline curves. Currently, some 70% of the oil that is consumed comes from fields discovered 25 or more years ago.” The following excerpts are taken from a recent speech made by Exxon-Mobil’s chairman, Lee Raymond, to a Chinese audience with an emphasis upon satisfying Asian demand: · "....The world will see total growth in energy demand of about 50% by 2030. ...This will be a huge amount of energy. The increase in demand alone will be equivalent to more than 100 million barrels of oil per day, or about ten times Saudi Arabia 's current oil production. · ...when you also factor in that production from existing fields declines over time, oil and gas supplies from new developments will need to be about 170 million barrels per day oil-equivalent, one-third higher than today's total oil and gas production. · We project that oil and gas demand will each grow by close to 40 million barrels a day oil equivalent by 2030 and coal by almost 30 million oil equivalent barrels per day. The remainder will come from other sources.” More information concerning these issues and the range of opinions and forecasts may be found at the following web sites: http://www.oilcrisis.com/
Copyright B&R Energy LLC |