You say crisis. I say opportunity

If retired Calgary geologist and Canadian Hunter Exploration co-founder Jim Gray is correct, and I believe he is, increasing oil production will be a lot harder than G8 leaders expect, making the much-trumpeted goal of lowering global emissions a little easier. Mr. Gray is a legend in the oil and gas exploration industry, a champion of charitable works to improve the human condition from Canada to Africa to Pakistan, and a thoughtful observer of world affairs. In a recent Washington speech, he explains why “global peak oil production” may not be far off:
Sixty per cent of the 87 million barrels-per-day global oil production comes from countries where fields have already reached peak production, and decline rates in many of the world’s largest fields appear to be accelerating.

Four million barrels-per-day must be brought on each year just to sustain current output. This means that maintaining current production levels will require that half of global production will have to come from wells not on stream today. Growing production will require a much higher proportion of new wells.

It could take up to a decade to overcome technical and construction challenges before much ballyhooed new discoveries such as Brazil’s super-deep offshore finds can commence production.

Around 80 per cent of global oil production is from state-owned fields in countries having various combinations of political instability, social dysfunction or geopolitical power agendas.

In the face of these sobering supply realities, rising incomes and subsidized fuel prices, combined with population growth, continue to drive increased consumption in developing countries. China alone is putting nine million new cars a year on the road. The International Energy Agency predicts developing country oil-demand growth will drive world demand to over 100 million barrels a day in the next 20 years. Jim Gray says peak oil will occur well before that: “I believe that achieving … 100,000 barrels per day will be extremely difficult.” He’s not alone in this assessment. I share his view, and so do many of my colleagues who also spent careers working to find and develop energy supplies.

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