Peak Oil News: End of the fossil fuel era?

Thursday, February 16, 2006

End of the fossil fuel era?

Harvard Gazette

By Alvin Powell

A car about to run out of gas can be traveling 70 mph until the moment the tank runs dry. Good thing cars have fuel gauges.

While the world economy is humming right along, the fuel gauge for oil production is broken and at least one oil industry expert believes we may be in for a rude shock.

Matthew Simmons, chairman of Simmons & Co. International and author of "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy," used the fuel-gauge analogy to illustrate his concerns about world energy supplies during a Feb. 8 talk in the Science Center.

Simmons said the energy industry is so large that its problems can affect all aspects of modern life. Overall, it is an $8 trillion to $9 trillion business, four to five times larger than the next-largest. The 20th century's explosion in technology and health care, as well as new ways of making war, were largely due to advances made possible by abundant, cheap energy, he said.

While Simmons said it's unlikely that the world will actually run out of oil, it's entirely possible that, contrary to assurances from the industry, we've already entered a period of peak production. That sets up a tug-of-war over limited resources between rapidly industrializing China and India and the continued demand increases in the West.

It also begs the question about how long peak production will continue before beginning its inevitable decline.

Among the troubling signs is the difficulty of finding new oil fields. Most of the fields found recently, Simmons said, are smaller fields that will reach peak production quickly.

Equally troubling is the unreliability of oil company and oil-producing countries' estimates of the reserves they have. Such reserve numbers are routinely inflated, Simmons said, providing a false picture of the global oil environment.

"Could we be entering a new energy era?" he asked. "How soon could peak oil and gas arrive? How long would they plateau? How fast would they decline? These are the most important questions we could ask."

Simmons' talk was the first in a new series sponsored by the Harvard Center for the Environment. Center Director Daniel Schrag, professor of Earth and planetary sciences, said the series, called "The Future of Energy," would run for two years.

Simmons said the conventional wisdom concerning oil is that supply will continue to grow to meet need. Conventional wisdom also says that the oil industry will discover new reserves and technology will allow the industry to come up with ways to wring oil out of places currently considered difficult or even impossible.

The problem with those assumptions, he added, is that the discovery of new reserves hasn't been growing as quickly as demand, and that the technology to get oil out of hard-to-reach places hasn't been proved.

With several of the world's top oil-producing regions already reaching peak production capacity, much of the burden of increasing production will fall on Saudi Arabia. The problem, Simmons noted, is that Saudi oil production numbers are shrouded in secrecy, making it difficult for anyone to see whether the country will be able to keep its assurances.

Simmons, for one, is skeptical. All of the major Saudi oil fields - while enormous - are old, he said, despite major efforts to discover new ones.

"Our energy road map is broken," Simmons said. "Our current energy data is inconsistent, misleading, and often useless."

As poor as the information regarding oil reserves is, Simmons said the information on natural gas is worse. Further, he said, 35 percent of natural gas is lost when converted to liquid natural gas for shipping. He said natural gas ought to be reserved for use as a heating fuel, since using it for energy-generation is less efficient.

Simmons recommended starting to work on alternative energy sources now, rather than waiting for an energy shock. He said a major restructuring of the way freight is carried would help, reducing the reliance on trucks in favor of more efficient trains and barges.

He recommended a push to grow more foods closer to home to eliminate the long-distance shipping and encouraged the use of technology that would allow more people to work from home, saving gasoline spent today on long commutes and hours stuck in traffic.

He also recommended letting oil's price rise to reflect its true value. Higher oil prices, he said, would not only encourage conservation, they would increase profits for the industry, encourage new investment in infrastructure and exploration to find new oil sources.

"High energy prices are salvation," he said. "Low energy prices are a curse. The sooner people understand that, the better off we'll all be."

In addition to those moves to change how oil and natural gas are used, Simmons said increased use of coal and nuclear power will be in our energy future. Wind and solar power will also be part of the mix, he said, with wind power already competitive price-wise with oil, and solar power heading in that direction.

"This is a very easy issue for people to be in denial about," Simmons said.


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