How long will the world's oil last?
When the modern oil industry was born 145 years ago in Titusville, Pa., few people worried about just how long petroleum would keep flowing out of the ground. But since production peaked in the United States in 1970, a growing number of geologists, economists and industry analysts have been pondering the question of just how long worldwidesupplies will keep up with growing demand. And some are predicting that global production may peak as soon as next year.
The outlook is muddied by the data. Estimating oil reserves â how much is left in the ground â is a notoriously perilous endeavor. The task is complicated by the secrecy of OPEC producers, who are reluctant to dislose just how much oil theyâve found.
This year, global demand for oil â currently at more than 80 million barrels per day and climbing â has come closer than ever to exceeding the worldâs known production capacity. Disruptions in oil supply â due to wars or market forces like OPEC embargoes â are nothing new. But with producers pumping as fast as they can, there is little cushion for temporary supply interruptions or heightened demand from industrializing countries like China and India.
âWe really are close enough to the edge to have no excess capacity. Demand growth shows no sign of slowing and now it seems to be accelerating,â said Matt Simmons, a Houston-based investment banker. âItâs really important to know what the real story is â as bad as it may be.â
No more 'cheap' oil
Oil industry officials say there are still promising regions that have not been fully developed, including areas of Alaska and the Atlantic and Pacific coasts of the U.S. that are currently off limits. But they generally agree that the days of major new finds of cheap oil are over.
âThere is lots of oil out there,â said Karl Kurz, vice president of marketing and minerals for Anadarko Petroleum. âBut itâs a finite resource; we canât get around that. Eventually, youâre going to get to the point where thereâs not any more to find.â
"There are a lot of prospects that were not worth developing before which are worth developing now. And there are a whole lot of prospects which were not found before which are worth looking for and worth developing today.â
A lot depends, of course, on just how much oil remains underground. Many of those who fear a production peak is imminent base their forecast on estimates of what geologists call the âultimate recoverable resourceâ of about 2 trillion barrels of oil. But thereâs disagreement among geologists on that number. A comprehensive study by the U.S. Geological Survey in 2000 estimated that some 3 trillion barrels of oil will ultimately be produced. Adelman argues that the amount of oil left to be produced is âunknowable.â
Regardless of how much oil remains in the ground, says Deffeyes, the critical bottleneck is production capacity. âI canât drive into the filling station and say fill her up with reserves.â
Deffeyes argues that production capacity has grown more slowly than demand â based on production figures that are a lot more reliable than reserve data.
âProduction is a pretty firm number,â he said. âOil gets counted twice: once when it gets produced and once when it goes into the refinery. So we pretty much know how much is produced, and my Thanksgiving Day prediction is entirely based on production.â
In theory, higher oil prices should expand supplies, by bringing on line oil that just isnât profitable to produce at lower prices. But the recent surge in prices and continued growth in demand havenât been matched by a major boost in oil industry capital spending on exploration and production.
'Hard' landing or 'soft'?
The debate over oil reserve estimates and demand-production trends is not just academic; at stake is nothing less than the economic well-being of the world over the next few decades. There are numerous scenarios describing the transition from a global economy based on fossil fuels to whatever energy sources ultimately replace them. The most extreme pessimists â found on Web sites like dieoff.com â foresee a kind of global return to the Stone Age as a world deprived of energy is beset by anarchy and starvation.
And even the most optimistic scientists who believe oil production will soon peak warn that the transition to a post-petroleum world will require an enormous undertaking involving breakthrough technologies and massive amounts of capital.
âIf Iâm right about the time scale weâve got a problem,â said Deffeyes. âI donât think you could reverse the decline. In an ideal world you might stretch the time decline of the curve out about five years. â
In the meantime, many scientists are looking for those alternatives sources. Some have suggested that technologies promoting cleaner-burning coal -â still in plentiful supply in the U.S. -â will help bridge the oil gap. Others have suggested that nuclear power will become more attractive if oil production declines too rapidly. Wind power, more widely used outside the U.S., has a proven track record. More advanced technologies -â like the conversion of coal to hydrogen â- also show promise, but are years from commercial production.
Some are already beginning to sketch out what the worldâs energy infrastructure will look like later in this century. The so-called âhydrogenâ economy has been widely touted because it relied on an energy source that produces no carbon or other pollutants when burned. But hydrogen requires massive amounts of electricity to produce; itâs also difficult to transport and store in small quantities for use in, say, the family automobile.