This post begins with history. At *** it start discussion of the likely oil peak in the future.
The peak oil theory holds that any individual oil field (or oil-producing country) will experience a high rate of production growth during initial development, when drills are first inserted into a oil-bearing reservoir. Later, growth will slow, as the most readily accessible resources have been drained and a greater reliance has to be placed on less productive deposits. At this point — usually when about half the resources in the reservoir (or country) have been extracted — daily output reaches a maximum, or “peak,” level and then begins to subside. Of course, the field or fields will continue to produce even after peaking, but ever more effort and expense will be required to extract what remains. Eventually, the cost of production will exceed the proceeds from sales, and extraction will be terminated.
Conventional oil production is predicted to drop by over 50% in the next two decades and tight oil (or ‘shale oil’ in popular discourse) is unlikely to replace more than 6%. Once conventional oil’s rate of loss exceeds unconventional oil’s rate of production, world production must peak. Production of sweet, light crude actually peaked in 2005 but this has been masked by the increase in unconventional oil production, and also by lumping together different kinds of material with oil and referring to the collective as ‘liquids’. The energy return on energy invested (EROEI) is worse for all unconventional oil production methods than for conventional oil. This means that more energy must be invested to maintain output. As a rough comparison, conventional crude oil production has an EROEI in the range 10–20:1, while tight oil comes in at 4–5:1. Oil recovered from (ultra)deepwater drilling gives 4–7:1, heavy oil 3–5:1, and oil shale (kerogen) somewhere around 1.5–4:1. Tar sands is around 6:1, if it is recovered by surface mining, but this falls to around 3:1 when the bitumen is ‘upgraded’ by conversion to a liquid ‘oil’ substitute. As conventional oil production has fallen, so has oil’s EROEI as we recover it from increasingly inhospitable locations, and with new technologies. The price of a barrel of oil has trebled over the past decade, but output has effectively flatlined. We may be close to the ceiling of global oil production,2 and the prospect of filling the gap with oil from alternative sources is daunting. Although fracking has produced sizeable volumes of oil and gas in the US, there is no guarantee that a similar success will be met elsewhere, in part because the geology is different. Even in the US, it is the sweet spots that have been drilled, and the shale plays elsewhere across the continent are likely to prove less productive. The shale gas reserves in Poland have been revised down from 187 trillion cubic feet (tcf) to 12–27 tcf: at best, a mere 14% of the original estimate. Renewables do not provide a comparable substitute for crude oil and the liquid fuels that are refined from it. The potential contribution from biofuels is relatively minor. Replacing … oil-powered vehicles with electric versions is an unlikely proposition, given the limitations of time and resources such as rare earth metals. Mass transit is the more likely future for electric transport than personal cars. and may seed changes in the basic structure of our society.  Most of the world’s “easy oil” — the stuff … that comes gushing out of the ground whenever a drill is inserted — has already been consumed or is controlled by state-owned “national oil companies” (NOCs), including Saudi Aramco, the National Iranian Oil Company, and the Kuwait National Petroleum Company, among others. According to the IEA, such state companies control about 80 percent of the world’s known petroleum reserves, leaving relatively little for the “international oil companies” (IOCs) to exploit. Private oil companies have taken to employing advanced technologies to increase the output of the reservoirs under their control, extending the lifetime of existing fields through the use of what’s called “enhanced oil recovery,” or EOR. They’ve also used new methods to exploit fields once considered inaccessible in places like the Arctic and deep oceanic waters There is, (then), no physical limit to the global supply of oil so long as the energy industry is prepared to, and allowed to, apply its technological wizardry to the task of finding and producing more of it. This might be called techno-dynamism. Further, the International Energy Agency (IEA) identifies six other potential streams of petroleum liquids: natural gas liquids; tar sands and extra-heavy oil; kerogen oil (petroleum solids derived from shale that must be melted to become usable); shale oil; coal-to-liquids (CTL); and gas-to-liquids(GTL). Together, these “unconventional” streams could theoretically add several trillion barrels of potentially recoverable petroleum to the global supply, conceivably extending the Oil Age hundreds of years into the future (and in the process, via climate change, turning the planet into an uninhabitable desert). ***But (techno-dynamism has) serious limitations. At its core is a belief that rising world oil demand will continue to drive the increasingly costly investments in new technologies required to exploit the remaining hard-to-get petroleum resources. Principal challenges to the theory are these:
- Increasing Technology Costs: the cost of developing new petroleum resources will continually increase. The market may not be able to sustain higher price levels, putting … investments in doubt.
- Growing Political and Environmental Risk:Tough oil reserves are located in problematic areas. (An estimated 13 percent of the world’s undiscovered oil lies in the Arctic, along with 30 percent of its untapped natural gas.) The environmental risks associated with their … will quickly become more evident — and so, (we) expect a commensurate increase in political opposition to such drilling. In response to protests and other factors, oil firms are being forced to adopt increasingly stringent environmental protections, pumping up the cost of production further.
- Climate-Related Demand Reduction:As the effects of rampant climate change accelerate, more and more polities are likely to try to impose curbs of one sort or another on oil consumption, suppressing demand — and so discouraging investment. “Demand destruction” … is bound to impose a downward pressure on oil prices, diminishing the inclination of investors to finance costly new development projects.
Due to these three factors, a techno-peak is likely to occur when the “easy” sources of “tough” oil have been depleted, opponents of fracking and other objectionable forms of production have imposed strict (and costly) environmental regulations on drilling operations, and global demand has dropped below a level sufficient to justify investment in costly extractive operations. At that point, global oil production will decline even if supplies are “boundless” and technology is still capable of unlocking more oil every year.
It seems … probable that we will see a slow tapering of output over the next decade or two as costs of production rise and climate change … gains momentum. Eventually, the forces tending to reduce supply will overpower those favouring higher output, and a peak in production will indeed result, even if … the world’s petroleum base now appears virtually inexhaustible. In the latest edition of World Energy Outlook. the IEA’s experts lay out in three scenarios for the future. The first assumes no change in government policies over the next 25 years and sees world oil supply rising from 87 to 110 million barrels per day by 2035; the second assumes some effort to curb carbon emissions and so projects output reaching “only” 101 million barrels per day by the end of the survey period. The third trajectory, the “450 Scenario,” … assumes that momentum develops for a global drive to keep greenhouse gas emissions below 450 parts per million — the maximum level at which it might be possible to prevent global average temperatures from rising above 2 degrees Celsius (and so cause catastrophic climate effects). As a result, it foresees a peak in global oil output occurring around 2020 at about 91 million barrels per day, with a decline to 78 million barrels by 2035. At the moment, we are on a highway to hell that combines the IEA’s first two scenarios. But as the effects of climate change become more pronounced in our lives, count on one thing: the clamor for government action will grow more intense, and so eventually we’re likely to see some variation of the 450 Scenario take shape.
References: 1. http://www.huffingtonpost.com/michael-t-klare/peak-oil-is-dead_b_4567978.html (September 1st,2014)
2. http://www.rsc.org/chemistryworld/2014/02/peak-oil-not-myth-fracking (February 20th, 2014)
HAVE A DISCUSSION WITH SOMEONE ABOUT THE IDEA OF PEAK OIL. ??THE SOONER WE GET THERE, THE BETTER ??