World not running out of oil, say experts
By Carl Mortished
Doom-laden forecasts that world oil supplies are poised to fall off the edge of a cliff are wide of the mark, according to leading oil industry experts who gave warning that human factors, not geology, will drive the oil market.
A landmark study of more than 800 oilfields by Cambridge Energy Research Associates (Cera) has concluded that rates of decline are only 4.5 per cent a year, almost half the rate previously believed, leading the consultancy to conclude that oil output will continue to rise over the next decade.
Peter Jackson, the report's author, said: “We will be able to grow supply to well over 100million barrels per day by 2017.” Current world oil output is in the region of 85million barrels a day.
The optimistic view of the world's oil resource was also given support by BP's chief economist, Peter Davies, who dismissed theories of “Peak Oil” as fallacious. Instead, he gave warning that world oil production would peak as demand weakened, because of political constraints, including taxation and government efforts to reduce greenhouse gas emissions.
Speaking to the All Party Parliamentary Group on Peak Oil, Mr Davies said that peaks in world production had been wrongly predicted throughout history but he agreed that oil might peak within a generation “as a result of a peaking of demand rather than supply”.
He said it was inconceivable that oil consumption would be unaffected by government policies to reduce carbon emissions. “There is a distinct possibilty that global oil consumption could peak as a result of such climate policies,” Mr Davies said.
The BP economist's remarks were echoed yesterday by Mr Jackson. “It is the above-ground risks that will influence the rate [of oil output],” he said.
Cera analysed the output of 811 oilfields, which produce 19 billion barrels a year, out of total world output of 32 billion. These included many of the giants, including Saudi Arabia's Ghawar, the largest known oilfield, which has been at the centre of the debate between peak oil analysts and their detractors.
In his book Twilight in the Desert, Matthew Simmons of Simmons & Co, the consultancy, said the big Saudi fields reached their peak output in 1981 but Cera yesterday said that Ghawar was not failing. “There is no technical evidence that Ghawar is about to decline,” said Mr Jackson.
Cera reckons that oil output, including unconventional oil, such as tar sands, could allow oil to peak at much higher levels of as much as 112 million barrels per day, with average rates of more than 100million bpd.
The Cera analysis targeted oilfields producing more than 10,000 barrels a day of conventional oil and concluded that overall output was declining at a rate of 4.5 per cent a year and that field decline rates were not increasing.
This is much lower than the 7 to 8percent average rate that is generally assumed in the industry. Typically, Peak Oil theorists believe that the output of oil reserves can be plotted on a graph as a bell curve, rising to a peak and then falling rapidly.
It was proposed in 1950 by M King Hubbert, a US geologist, who successfully predicted the peak of onshore oil production in the United States.
His analysis is disputed by many geologists today, who argue that technology has changed the equation, allowing oil companies to produce more oil from reservoirs than was previously possible.
Meanwhile, increases in the price of oil has made the extraction of difficult reserves economically viable.