Is 2006 the year of peak oil? The latest figures are suggesting it could be...
World production of oil has peaked according to Dr Ali Samsam Bakhtiari, a former executive of the National Iranian Oil Company. He predicts a fall of 32% by 2020 as wells dry up and new discoveries become rarer, smaller and harder to extract...
(c) 2006, Leamy
Speaking at lecture in Sydney, hosted by the Financial Services Institute of Australasia, Dr Bakhtiari told those gathered that global oil production has reached it's peak. The latest figures put the level of global production at about 81 million barrels per day which is almost 4 million barrels lower than the International Energy Agency’s predictions.
He reported that OPEC is already producing as much as it can (31 million barrels per day) with major suppliers like Saudi Arabia and Kuwait finding it increasingly difficult to meet their extraction targets.
While Bakhairi is adament that global production has peaked, the publically expressed opinion from oil companies differes widely. Last month, Mark Finley, head of energy analysis for BPsaid there was no shortage of oil resources, a claim that doesn't tally with the 2.5% fall in the companys global production reported last week.
ExxonMobil are also in public denial. They recently published adverts in Australian newspapers dismissing the idea that peak oil is coming soon. “Oil is a finite resource, but because it is so incredibly large, a peak will not occur this year, next year or for decades to come", they said. The chief executive officer for Total, Thierry Desmarest, is only slightly less optimistic. He said in June that they weren't expecting global oil production to peak until 2020.
However, Dr Bakhiari claims that many oil producers have been providing inflated estimates of their reserves and output capacity which makes estimating remaining reserves very difficult. Looking at actual production figures, rather than claimed reserves, paints a less rosy picture. Some of the worlds biggest fields, the Burgan field in Kuwait, Cantarell in Mexico and Britian's and Norway's North Sea fields, are already in decline and Bakhiari believes that Russian oil production peaked in 2004.
Dr Bakhtiari also reported that new oil discoveries were small and no longer able to replace lost production. He predicted that we will soon experience a major economic impact to the massive fall off in output from the North Sea and Mexican oil fields.
"Crude oil is the master domino, when you tumble crude oil, all the other dominos tumble.", he said referring to the devisating consequences likely to be experienced by the world's economy as the post peak shortages and inflated prices set in.
Dr Bakhtiari said he could not predict how high the price of crude oil would have to go in order for demand to fall. However, reaching a high of $75.78 a barrel in New York on July 7, the threefold increase in crude prices within the last four years has apparently done little to effect the worlds thirst for oil. Global demand has been rising at around 2% per year.
There are just five years left to try to plan priorities for the use of crude oil according to Bakhiari, "The problem will become the day that you cannot optimise by price, you will have to optimise by availability, so there won't be oil for everyone.", he said
He is also predicting that the world’s natural gas production will probably peak around 2008 or 2009 and claims that the price may increase 800% compared to todays gas prices.
Dr Bakhiari is on a visit to Australia organised by the Association for the Study of Peak Oil (ASPO). During his visit he will give evidence to an Australian Senate inquiry into the future of the countries oil supplies.