‘Peak oil’ debate is no longer on hold
Put a group of oil experts under one roof for a while and their discussion is likely to drift to the subject of peak oil — a point in time when maximum oil production is reached, after which it goes into permanent decline.
The advent of peak oil has long been brushed aside by some because it seems like a far-fetched, if not a ridiculous, idea concocted by alarmists. This is despite deafening cries that it is a real and serious threat.
Even among those who agree that it will happen, views differ sharply on the date . Some, like author David Strahan, say it could be as soon as 2017.
Recent data show that the debate can no longer be dismissed as a figment of the imagination among peak oil “enthusiasts”.
According to the Washington, US-based Worldwatch Institute, oil production is in decline in 33 of the 48 largest oil-producing countries. The research organisation says most of these countries are past their oil production peaks. Iran peaked in 1974, Nigeria in 1979, Venezuela in 1970 and Mexico in 2004.
Saudi Arabia, the world’s largest oil exporter, is expected to reach its peak in 2014, while in Iraq this is estimated in 2018.
Last year’s study by professional services group Ernst & Young showed that in the period between 2003-07, oil production in the US remained flat at about 1,2-million barrels a day.
Oil companies had difficulty in finding investment and production opportunities, say Ernst & Young.
But not everyone is convinced about peak oil. BP chief economist Christof Rühl says the argument for peak oil is baseless. “Peak oil has been predicted for 150 years. It has never happened, and will stay this way,” Rühl has reportedly said. He says oil is about price and not about availability.
Economist Tony Twine of consultants Econometrix echoes the view that price is everything.
“All energy — gas, oil and coal — is exploitable at a given price. If the price falls below a particular price it becomes worthless to produce. That is why I say many of the peak oil arguments are not well based.
“They all assume an oil price at 30, 60 or 200 a barrel,” he says. What is known as “oil availability” differs at different oil prices, Twine says.
“The projections that are being made about peak oil are sensible in particular contexts. But whether they are universally true is another matter,” he says.
Even in 30-50 years’ time, if oil demand is greater than supply, oil prices will rise “and currently unexploitable deposits will become viable to exploit”, Twine says. O il wells now considered marginal will become profitable .
Twine says there is a tendency to look at oil in terms of its energy content. “But there is a range of products that come out of a barrel of oil — from fertiliser to solvents that end up in paints, washing powder and synthetic fibres. Almost anything that you can see and feel has a little bit of oil in it.
“As oil becomes scarce and more expensive, its use as a source of energy will diminish. But its use as a feedstock for the chemicals industry will take longer to disappear,” Twine says.
Richard Worthington, climate change programme manager for the World Wildlife Fund in SA, says the advent of peak oil should influence how hydrocarbons are used. “It highlights the need for greater efficiency,” he says. C limate change considerations have supers eded peak oil discussions.
Worthington says fears of peak oil should not be the main driver of the move away from fossil- based energy sources. At some stage fossils will be depleted, he says. “Now there is talk of peak oil, then it will be peak energy and then peak coal,” he says.
Indeed, depletion of gas and coal reserves is a double whammy. National oil and gas company PetroSA’s Mossel Bay gas-to- liquids refinery is set to run out of natural gas by 2011.
The offshore fields south of Mossel Bay will not be able to keep up the supply of 36000 barrels a day the refinery needs.
The dwindling gas reserves are to be expected, says Twine.
“Gas and oil fields in SA and Mozambique have always been known to be constrained in terms of reserves. They have always been marginal in terms of big investment spending,” Twine says.
H owever, he believes that the Mozambique gas fields will have a longer life span and are likely to fuel petrochemicals group Sasol for a longer time. Sasol’s synfuels plant in Secunda gets natural gas from Mozambique through an 865km-long pipeline.