Global Oil Output Won't Peak for 25 Years, Yergin's Group Says
By Joe Carroll
Global oil production will increase for at least the next 25 years as new drilling and refining techniques make it possible to tap heretofore untouchable reserves, according to Cambridge Energy Research Associates, the consulting firm run by Daniel Yergin.
The world probably has 3.7 trillion barrels of oil left, more than twice the estimates of geologists and analysts such as Matthew Simmons, of the investment bank Simmons & Co., who argue global output is close to a peak, said Peter Jackson, director of oil-industry research for the Cambridge, Massachusetts, firm.
``The peak-oil theory causes confusion and can lead to inappropriate actions and turn attention away from the real issues,'' Jackson said in remarks prepared for a conference call today with analysts, investors and reporters. ``Oil is too critical to the global economy to allow fear to replace careful analysis about the very real challenges.''
The late geologist M. King Hubbert, working for a unit of Royal Dutch Shell Plc, first put forward in 1956 the theory that output from a specific oil deposit or region would peak and then start to decline following a predictable curve. His ideas have gained currency as oil prices tripled in the past five years and producers struggled to keep pace with rising demand in China.
The theory is ``misleading'' and based on incomplete data, according to today's report from Cambridge Energy. Worldwide oil production will rise by more than 50 percent to about 130 million barrels a day around 2030 before output plateaus, the report said. Yergin, the firm's founder, wrote ``The Prize,'' a Pulitzer-winning history of the oil industry.
When global crude output begins to fall around 2050, the decline probably will be gradual, giving policy makers, industry and energy producers time to develop new alternatives to petroleum-based fuels, the report said.
Peak Oil Study Group
The Association for the Study of Peak Oil estimates the world has 1.46 trillion barrels of oil left and that production will peak in 2010, according to the group's November newsletter. The group's leaders include British geologist Colin Campbell, who helped popularize the peak-oil theory with his 1997 book, ``The Coming Oil Crisis.''
An August report from Cambridge Energy that took issue with the peak-oil theory was criticized by the President of the peak oil association, Kjell Aleklett, as a money-making vehicle based on proprietary data that the firm was unwilling to submit to impartial scientific review.
Aleklett said Cambridge Energy analysts were too optimistic about the ability of big producers including Saudi Arabia to increase output.
U.S. Representatives Roscoe Bartlett, a Maryland Republican, and Thomas Udall of New Mexico, formed the House Peak Oil Caucus to promote the theory among lawmakers. Bartlett and Udall endorse the peak oil association's prediction that output will start declining after 2010.
``There is not much time to act,'' Udall, a Democrat, told a House Energy and Commerce Committee panel in December. ``Since oil provides about 40 percent of the world's energy, a peak in global oil production will be a turning point in human history.''
Refiners have used about 1.08 trillion barrels of crude since the birth of the petroleum industry in Pennsylvania in 1859, according to Cambridge Energy.
Undiscovered fields probably hold 758 billion barrels, followed by 704 billion trapped inside a very hard type of rock known as shale, and 662 billion in the Middle East, according to the report. The rest of the firm's 3.7 trillion barrel total comes from untapped reserves in the deepest seas, the Arctic and places such as Canada's tar sands and Venezuela's Orinoco basin.
``This is the fifth time that the world is said to be running out of oil,'' Yergin said in an e-mailed statement. ``Each time -- whether it was the `gasoline famine' at the end of World War I or the `permanent shortage' of the 1970s -- technology and the opening of new frontier areas has banished the specter of decline.''
Oil prices have climbed 24 percent in the past two years and touched an all-time high of $78.40 a barrel in July. Economic growth in China, India and the U.S. has boosted demand while hurricanes and militant attacks crimped production in some regions, including the Gulf of Mexico and West Africa.
Cambridge Energy Research Associates, which advises governments, oil companies and financial institutions on energy issues, is not the only skeptic of the peak-oil theory.
Stuart McGill, a senior vice president who oversees Exxon Mobil Corp.'s oil and gas business, dismissed the peak theory in a Nov. 1 interview as being without merit. Irving, Texas-based Exxon is the world's biggest oil company, pumping more crude than every member of OPEC except Saudi Arabia and Iran.
To contact the reporter on this story: Joe Carroll in Chicago at email@example.com