Peak Oil News: Oil Peak 'Looms'

Friday, July 15, 2005

Oil Peak 'Looms'

RedNova News

Energy lobbyists want the Government to stop wasting money on new roads and put it into public transport as cheap oil dries up.

The Sustainable Energy Forum (SFE) says New Zealand is poorly prepared to meet the peak in the production of conventional light crude oil -- forecast to be 2007 by one energy group.

SEF is a group of individuals from the energy industry or with an interest in energy.

SEF's transport and peak oil group co-ordinator, Tim Jones, said the peak oil date is closer and more urgent than most politicians thought.

The Association for the Study of Peak Oil (Aspo) says oil production will peak in 2007. The New Zealand oil exploration industry disputes that.

The International Energy Agency predicts the peak some time between 2013 and 2037.

Jones said Aspo was an association of petroleum geologists who had worked for oil companies. When they did they were too constrained to publicise the urgency of oil production peaking and falling. The group was gaining more attention worldwide.

The peak in the production of light crude oil would cause a sharp and sustained rise in world oil prices and a physical shortages in oil might occur. Dirtier fossil fuels, which were harder to extract, would be used, but they had financial and environmental downsides.

An urgent need existed for the Government to launch a review of the New Zealand economy to investigate which sectors would be affected and how high the oil price would soar. The Treasury and Ministry of Economic Development needed to change how they forecast oil prices in the future because they were getting it wrong, Jones said.

The Government should put in vehicle fuel efficiency standards and stop importing gas-guzzling vehicles.

But the Petroleum Exploration Association of New Zealand executive director Mike Patrick said SEF's explanation was over- simplified and alarmist. "The critical thing is it's going to be the end of cheaper oil," he said.

But oil prices were still not as high as after the oil shocks of the 1970s when a barrel of oil was the equivalent of $US90 in today's prices.

"It's the end of light sweet crudes. There will come a time, it won't be 2007, there will come a time when those reserves will start declining," Patrick said.

Different sources of oil would become more economic to extract and refine with higher oil prices, such as oil from tar sands in Canada or heavy oils from Venezuela.

"The peak in world oil production including these heavy oils will be decades away." The oil industry suggested 30 to 50 years away.

Patrick said SEF did not factor in the tar sands and heavy oils being produced when they should not be dismissed. Dearer oil would be produced from these sources and the world economy would not crash and burn as a result.

Technologies would see diesel extracted from coal and natural gas. The technologies were proven but expensive. Other technologies would replace the use of oil gradually.

Eventually oil would be priced off the market and other technologies would emerge and be commercialised. Oil might not be used for power and transport in the future but was expected still to be used to make plastics and chemicals and medicines.


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