Whatever happened to Peak Oil?
By David Ingham
Just one year ago, we were all beginning to think that the end of oil was fast approaching. According to a growing chorus of industry watchers, we either had or were about to reach something called ‘Peak Oil’, the point at which the amount of oil left in the ground is less than the amount that humankind has already extracted.
In other words, over half the oil that history left in the ground for us has been, or was about to be, consumed. Renewable energy was the phrase of the day and even the big oil majors were talking about a future after oil. Does anyone remember the following words?
“We need your help. There are many factors in the new energy equation, and we encourage you to consider all of them. We call upon scientists and educators, politicians and policymakers, environmentalists, leaders of industry and each one of you to be part of reshaping the next era of energy.”
This was none other than the voiceover from a Chevron Texaco ad campaign from just one year ago. So what happened? Have we just lost interest, or has the world suddenly discovered more oil that it didn’t know was there before. The way people talk, you might be tempted to think so. Kuwait, whose production has hovered around the 2.6 million bpd mark for a long time, is now talking about raising production to 4 million barrels per day.
Saudi Arabia, which may or may not still be the world’s largest producer, is supremely confident that it can boost daily output to 12 million barrels per day from the current figure of around 9 million bpd. It has even told us where it thinks most of the production is going to come from.
Saudi Aramco has also spoken before about the possibility of boosting production to 15 million barrels — through the utilisation of new recovery techniques and by searching for oil in previously unexplored areas of the enormous country.
Let us also not forget the oilsands of Canada’s Alberta province. Current estimates put the number of barrels there at a phenomenal 1.7 trillion, although only 200 billion are deemed ‘recoverable’ with current technology.
Just a few years ago, however, there was little interest at all in these deposits as the cost of recovery was deemed too great. Now, the area is booming as the cost of recovering oil from the Athabasca sands has plummeted and the price of a barrel has rocketed. Who is to say that all that ‘unrecoverable’ oil won’t become recoverable in the future as technology advances?
In fact, tar sands represent as much as 66% of the world’s total reserves of oil, when the 1.7 trillion barrels in the Athabasca sands and the 1.8 trillion barrels in the Venezuelan Orinoco sands are added up.
The last year has also seen growing interest in gas recovery. Qatar’s massive investment in its gas reserves has well been documented and has brought that small country unimaginable prosperity.
Egypt is pulling out the stops to develop its gas reserves, whose size has been constantly revised upwards, and is looking at ways of reducing domestic consumption so it can exploit the export potential of this new windfall. From a level of 36 trillion cubic feet (tcf) in 1999, ‘proven reserves’ have doubled up until now and could soon go past the 100 tcf mark.
Even Abu Dhabi, which is swimming in oil reserves and has massive investments abroad, believes it is time to begin commercial exploitation of its sour gas reserves. Natural gas reserves are currently estimated at around 200 trillion cubic feet and the key driver for their exploitation will be rocketing domestic demand.
Of course, all this extra exploration may be good for the world’s emerging economies, but it simply delays the inevitable truth that the world will one day run out of oil & gas. Peak Oil will happen eventually. It just may not happen as soon as we used to think it would. That inevitably means that the search for clean and cost effective alternatives to fossil fuel is likely to be delayed still further.