The Peak Oil Crisis: When Will Peak Oil Arrive?
By Tom Whipple
Nearly anyone who studies our world oil supply knows that someday production will peak and start its inexorable course downward. Moreover, everybody knows there are many events — hurricanes, wars, terrorism, regime changes, and proliferation squabbles to name a few — that could cause such a large and prolonged downturn in a country's or region's oil. By the time the cause of the interruption is remedied, the rest of the world's oil producing countries would be so far down the depletion curve, resumed production would not matter.
Thus, the issue comes down to one of a.) peak oil coming "naturally" as a result of the simple inability of the world's oil producers to continue to supply an increasing amount of oil, or b.) some outside force stopping a significant amount of production. This issue is hotly debated with some believing we may have already passed the year of peak oil, while others see worldwide production increasing by tens of million of barrels per day beyond the current 85 or so million.
Much of the reasoning behind the debate is political rather than scientific. No politician is eager to deal with the fallout from the widespread perception that we are about to run out of cheap gas. In recent days, the head of the International Energy Agency (IEA) has been running around Europe telling people peak oil is not an immediate problem. This, in turn, gives cover to political leaders who can point to the IEA as backing the claim that peak oil is not imminent. It is much easier to pretend the issue won't arise for decades when our grandchildren aided by some fortuitous technological breakthroughs, can deal with the unhappy occurrence in an orderly fashion.
Moreover, nations exporting oil certainly don't want to admit, or release data indicating their production is about to peak, for with decreasing oil production comes decreasing status and political stability.
Finally, there are people who genuinely believe high oil prices will bring forth increased oil production, from expensive-to-produce places, new exploration, or technological advances. Thus, those who believe the peak is decades away seem to be extreme optimists or have some sort of political ax to grind.
Last week, however, the Association for the Study of Peak Oil (ASPO), the oldest and most prestigious of the unbiased organizations studying peak oil, released a new estimate of the year in which peak oil will arrive. The new date, which is based on a reevaluation of the potential for further deepwater oil production, is now 2010 vs. the previous estimate of 2007. It should be noted that a few years back the ASPO moved the date back from 2010 to 2007 based on turmoil in the Middle East .
Until now, most independent observers have concluded that world oil production would peak within the next two or three years. We now have an authoritative estimate, which pushes the date to five years.
To get a better grip on this issue, let's reflect for a moment the variables going into determining the year oil will peak.
First, keep in mind that 85 million barrels are extracted from the earth each day, refined and sent on their way to the world's fuel tanks, factories, and electric power plants. Most of this oil comes from tens of thousands of wells drilled in hundreds of fields around the world (a small amount is mined and cooked from tar sands at great expense.)
Everyday, hundreds of these wells are depleted to a point where they are no longer worth keeping in production and are replaced by new wells to keep production up. When a country can no longer find places to drill new cost-effective wells, it is said to be in depletion. This means that no matter what it invests, it can no longer maintain or increase the rate of production it reached at its peak.
Fifteen years ago, only the US and Romania were in depletion. Now some 20 major oil producing countries and dozens of smaller ones are in the stage of declining national production. In the next couple of years, several others will join the ranks of countries in depletion.
While current world production from existing fields is dropping by somewhat over a million barrels per day each year, this depletion rate is soon expected to increase to something on the order of 2 million barrels per day each year. Now, these are serious numbers, for if we can't get replacement production from new fields going, in 10 years worldwide oil output will be down from 85 million barrels per day to something like 65 million— and a whole lot of things will have changed.
This is where deepwater oil comes in. Although a few countries still have some onshore and shallow water reserves, most of new growth to offset the decline from existing fields is expected to come from deepwater (below 400 meters) fields.
Twenty years ago, deepwater oil was looked on as the future of the oil business. Since that time, however, some 1,800 deepwater exploratory wells have been drilled offshore of 70 countries. The bottom line is, that while an estimated 50 billion barrels of oil have been found, economically exploitable deepwater fields have only been found in the Gulf of Mexico , and off of Nigeria , Angola , and Brazil .
Lest any of you be impressed by the prospects of some 50 billion barrels of new deepwater oil, you should keep in mind, we are currently pumping out 30 billion barrels a year. If no major new deepwater fields are found, deepwater oil will extend the cheap oil age by about 20 months.
Thus, while the ASPO projects "regular" (onshore and continental shelf) oil production to drop by 6 million barrels per day between now and 2010, the association also projects deepwater oil production will climb from the current 3.6 million barrels per day to some 11 million by 2010. After that, deepwater production will peak and drop to 5 million barrels per day by 2020.
I’m sure the folks at ASPO have done their arithmetic properly and that, should all go well, more oil might be coming out of the ground in 2010 than in 2005. But, it’s the "should all go well" that bothers me; for if one starts making a list of the events that might bring the cheap oil age to an abrupt end, it is frightening.
In a recent article on the energypulse.net web site, Ronald Cook lists some 18 assumptions that have to go right in the next five years in order for an increasing supply of oil to come out of the ground:
* Stability or prolonged civil war in Iraq ?
* Terrorists do or don't cause prolonged disruptions by blowing up infrastructure or governments up?
* OPEC really has the reserves they claim so that one or more major suppliers don't go into sudden depletion?
* Schedules are kept so that many multi-billion dollar projects come into production when they are supposed to. (Five years without disruptive hurricanes)?
* The price of oil stays at a level where people can afford it?
Recent history suggests that five years of tranquil growth for further oil production simply will not come to pass. As many have commented, our recent hurricanes alone will probably turn out to be enough to bring us to peak oil sooner rather than later.