Peak Oil News: Peak Oil: Even If The Optimists Are Right, Time Is Getting Tight

Tuesday, November 21, 2006

Peak Oil: Even If The Optimists Are Right, Time Is Getting Tight

By  Mike Byfield

Peak oil proponents and skeptics agree that world production will eventually crest. Also, both sides of this debate accept that the decline curve will be gradual rather than sudden (with a little luck). Their common ground, although limited and easily obscured by emotional intensity, is slowly growing.

Aptly illustrating this blend of acrimony and agreement was a report issued last week by Cambridge Energy Research Associates (CERA) - Why the Peak Oil Theory Falls Down: Myths, Legends, and the Future of Oil Resources - and the rebuttal from the Association for the Study of Peak Oil & Gas (ASPO).

Peter Jackson, CERA's director of oil industry activity, remarks acidly that the "peakist argument is not grounded in a credible systematic evaluation of available data." Randy Udall, a co-founder of ASPO, retorts that CERA is peddling "PetroProzac" which lulls attention away from urgently needed actions.

Even so, CERA and ASPO agree on a great deal. For example, they both think the world may very well wind up more dependent on oil from the Middle East. And they agree that available data on global oil and gas reserves remains incomplete, most worryingly for those massive but ageing oilfields of the Middle East.

CERA and ASPO accept that North America's wealth-making economy rose on a foundation of cheap energy. "North Americans are predisposed to failing the energy IQ test," says Udall. Drivers here cheerfully assume that relatively inexpensive gasoline will continue to flow from their neighbourhood pump more or less forever.

Plenty of other people would like to share that exuberant confidence in prosperity but cannot. Peakists and supply optimists alike recognize that billions in Africa, Latin America and Asia will only achieve a modern standard of living through dramatically greater energy supplies and better energy conservation.

CERA and ASPO believe that world demand could well outstrip conventional oil supplies within the relatively near future. And the analysts of both organizations accept that other forms of petroleum can be developed.

Jackson and Udall also agree that supply will become particularly tight if wars and unwise governments disrupt oil developments. Above-ground factors may be more limiting in the near term than geology.

So where do CERA and ASPO actually disagree?

* Udall thinks global oil flows will crest within a decade, possibly sooner. Jackson pegs the crest within 50 years and not before 2030.
* CERA believes alternative supplies can be brought on stream through oilsands, very deepwater reserves, condensate and gas liquids, and conversion of both natural gas and coal to liquid form. ASPO, while acknowledging that those resources are vast, questions how quickly they can be brought on production.

In terms of oil demand, the consensus seems quite clear. Since 1950, world consumption has increased eight-fold, and humanity will urgently require more energy in the near future.

In terms of supply, everyone agrees that oil and liquids supply will be likely be constrained but it's impossible to pinpoint when. Even optimists, however, think the deadline may fall within 30 years.

Three decades. To develop new world-scale supply technologies - whether for alternative types of petroleum or for other energy forms like sunlight and so forth - 30 years is not a long time. In fact, it's the near future.

For instance, Alberta's very first barrel of synthetic crude was produced four decades ago, and the oilsands have only now shown up as more than an insignificant blip on the world production map. Even CERA's limited optimism rides on improving that performance by a huge margin in future.

The international consulting agency guesstimates that the world's productive capacity can rise by 50% within 30 years but the increase depends entirely on non-conventional sources for oil. And even if the forecast prove correct, billions of people would apparently remain mired in poverty.

William Ramsay, deputy director of the International Energy Agency (IEA), warned a Toronto conference earlier this month that global energy numbers are not adding up well. "The way we are going, we are on course for an unstable, dirty and expensive energy future," he said.

Ramsay, a former American ambassador, handled energy and petrochemical issues when the North American Free Trade Agreement was negotiated. In Toronto, he made an impassioned appeal for aggressive government action on mandatory energy conservation.

Conservation, while excellent as far as it goes, at most buys time. An energy-rich world will require billions of dollars in research, trillions for development. It's probably worth remembering that the oilsands could not have been developed without efficient co-operation between governments and oil producers.