Peak Oil News: Some say Katrina's aftermath is glimpse of world's energy future

Sunday, September 11, 2005

Some say Katrina's aftermath is glimpse of world's energy future

By Mella McEwen, Oil Editor

Soaring energy prices, long lines at the gasoline pump and supply shortages in the wake of Hurricane Katrina should serve as a wake-up call about the nation's energy situation.

"This is really the squall line in front of the big storm," said Jeffrey Brown, a Dallas-area independent geologist. He visited Midland recently to address the Forum for Exploration, Production and Acquisitions to discuss "Peak Oil: It's Impact on the Oil Patch Economy and on the U.S. and World Economies."

Brown, who is helping Matt Simmons and James Kuntsler prepare a presentation on the topic to be given in Dallas in November, believes the world is at, near or perhaps just past its peak of sustainable oil production.

It took, he noted, a coordinated effort of release from the nation's Strategic Petroleum Reserve and from the European Union to calm markets after the hurricane hit, an indication that capacity has been reached.

"I use Texas as a model for the future of the world's oil production," Brown said, noting that Texas production peaked in 1972 and has been falling at a rate of 2 percent a year since.

He took the formula devised by Dr. Kenneth Deffeyes, a retired professor from Princeton who has written two books on the prospects of falling oil production and its impact on world economies. Applying Deffeyes' method to Texas production, Brown said, was accurate to within one or two years. Deffeyes' methodology, Brown said, showed Saudi Arabian oil production at its peak and world oil production near its peak.

"Texas peaked when it had produced 54 percent of its estimated ultimate cumulative oil production. Saudi Arabia has produced 55 percent of its estimated ultimate cumulative oil production; they're at the same point Texas was at in 1972," he said.

This leaves oil and gas producers with two exploration models: Searching for small pockets of overlooked reserves in existing fields and 'mining' in areas such as the Spraberry, Barnett Shale and Canada's tar sands.

"You're not going to have many more billion-barrel oil fields left," he said. "You have to bring unconventional sources to the marketplace."

Brown figures that the world consumes the equivalent of 1 billion barrels of oil -- nuclear and fossil fuels combined -- every five days and every 30 days consumes the equivalent of the entire reserves of the East Texas oil field. Such consumption levels, he stressed, is utterly unsustainable.

"People need to realize we're about to enter a terminal decline in oil production," he said, resulting in painfully high energy prices. While oil producers will benefit, economies will be hard-hit by those high prices.

That is why, he said, investments must be made in other sources of energy, particularly wind energy, which Brown said is the best economic potential of renewable energy sources.

Americans must also downscale their way of life, he said.

"We've got a low-density lifestyle dependent on cheap energy," he said, where Americans drive $50,000 Hummers 50 miles to work and back to their $500,000 home. Instead, he said, the country should adopt the high-density style of some other countries, with commercial, retail and residential spaces in close proximity to each other. Of course, he said, that could result in less stress caused by traffic delays while less time spent community to and from work is more time spent with family.

"This spread-out suburban lifestyle we have is doomed," Brown declared. "In my opinion, everyone will have to start downscaling their expectations and their energy use."

This is, unfortunately, he said, reality. No one, Brown said, can honestly expect to have a continued compounded rate of growth in use of a finite resource.

It is even showing up at the supermarket, he noted, with the United States this year becoming a net importer of food. One reason, he explained, is that prime farm land is being paved over for development. Secondly, soaring natural gas prices have made it hard for farmers to lock in fertilizer prices for next year at affordable levels.

While he paints a dark picture of the future, he said it is bright for energy producers, who will benefit from high prices. That is why, he said, "we have a moral obligation to warn the rest of the country. They may not listen, but we will have at least tried."


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