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Page added on May 7, 2012
World Oil: Aleklett’s new analysis of peak oil is refreshingly comprehensive
“Peak oil” is a concept that, in barely a decade, has gone from total obscurity to being a hot-button issue, rivaling global warming and sustainability. It is almost universally misunderstood and often misinterpreted. On one hand, many peak oil advocates are ideological extremists—Armageddonist back-to-nature types who seem to feel that living without oil is preferable (“life in the 15th century was really great”). On the other hand, the Pollyannas say, “not to worry,” since the world has an endless supply of affordable oil available for centuries.
It is thus refreshing to find a comprehensive, peak oil analysis that relies on rigorous scientific methods and empirical data. The just-published book, Peeking at Peak Oil, by Dr. Kjell Aleklett of Uppsala University in Sweden. Dr. Aleklett, a physicist, is a leading expert, and this book should be required reading for anyone seriously interested in the future world energy market and economy, especially politicians and policymakers.
Definitions. Peak oil does not imply that we are “running out of oil.” Rather, notes Dr. Aleklett, the term refers to the maximum oil production rate in any area, recognizing that it is a finite natural resource, subject to depletion. Further, it refers to conventional petroleum, which the USGS defines as “discrete fields with well-defined hydrocarbon-water contacts, where the hydrocarbons are buoyant on a column of water.” It is production of this conventional oil that has peaked and is on a plateau.
However, as many point out, the world is literally awash in hydrocarbons. So, what is the concern about future oil supply adequacy? Here, Dr. Aleklett’s work yields its greatest contribution. There is, indeed, no global hydrocarbon shortage, but the critical issue is whether liquid fuels derived from unconventional resources can be produced at rates, quantities and prices that can compensate for the inevitable decline of conventional oil output. Aleklett’s analysis is meticulous, his results are convincing, and the implications are sobering.
World conventional oil production is on an 82-million-bpd plateau. However, the real sleeper is the production decline rate in existing fields, about 4% to 6% annually. Thus, the total flow of oil from existing fields is decreasing about 4 million bpd every year, and new oil production—conventional and unconventional—must total at least this amount just to maintain current consumption.
It is a race between declining conventional oil and increasing unconventional oil. Can unconventional liquid fuels fill this gap soon? Aleklett’s work is enlightening. He uses the standard IEA definitions of “unconventional”: Bitumen and extra heavy oil from Canada’s oil sands, extra heavy oil from Venezuela’s Orinoco belt, oil produced from shale, coal-to-liquids, gas-to-liquids, ”refinery additives,” etc.
Potential for increase. After a painstaking, detailed analysis, he concludes that the maximum, incremental production increase from all unconventional sources, combined, is about 8 million bpd during the next 25 years. Since the total flow from fields already producing is decreasing 4 million bopd every year, unconventional output gains during the next 25 years can only compensate for a two-year decline in conventional production. More importantly, even if he has underestimated the possible, unconventional oil increases by 100%, this would still only compensate for four years of decline.
There is further concern. Aleklett and other analysts estimate that worldwide conventional oil production could begin declining within five years. Unconventional oil is expensive to develop and has long lead times. For example, Canada produces about 1.7 million bopd from oil sands, but it has taken the Canadians 40 years to achieve this output level. Thus, even if money was no object, and environmental and institutional constraints were minimal, there simply may not be enough time to develop sufficient, unconventional oil flows.
While oil demand is flat or declining in most OECD nations, total world oil demand is still increasing every year, driven by China, India and the rest of the world. One does not need a Ph.D. in economics to recognize that continually increasing oil demand, combined with flat or even decreasing supply, is a recipe for higher prices, price volatility and never-ending crises. This is the problem facing the world in the near future. And, yes, the world may be awash in hydrocarbon resources, but none can quickly replace the reliable conventional oil.
If Dr. Aleklett’s book only brought this stark reality into focus, it would be a valuable contribution. However, the book also contains a wealth of information on oil geology basics, oil production technologies, the distinction of oil field sizes, deepwater drilling, oil exports and consumption. This book has enough to interest both novices and oil industry veterans.
I do take issue with some material. His blanket acceptance of IPCC (Intergovernmental Panel on Climate Change) pronouncements on global warming is troubling. His proposed “Uppsala Protocol” for rationing available oil supplies is almost certainly unworkable.
However, this book’s biggest problem is implicit. Dr. Aleklett is a natural scientist, as are virtually all peak oil luminaries, and he has numerous references to “flat earth economists” throughout the book. Accordingly, he may not fully appreciate the determinate role of supply, demand and prices in driving markets, policies, technologies and resources.
Thus, world energy markets and economies may be in for a rough period ahead, as conventional and unconventional oil supplies fail to keep pace with world demand. To deny this is to ignore reality.
19 Comments on "World Oil: Aleklett’s new analysis of peak oil is refreshingly comprehensive"
luap simpson on Mon, 7th May 2012 10:22 pm
we know this already..only problem is nothing is changing..solar has been almost rejected by british goverment.Americans can`t seem to get out of their SUVs..America uses so much oil keeping their troops all over the world.
Humans are a plague on the planet,they do not co-exit,they do not have a natural equilibrium with the planet but just plunder every natural resoure until it is gone. Oil, fish ,soil, water.
Order will be restored but it will not be a peaceful one.
When things start to run out I just hope I`m not around to see the aftermath.
Good luck to the young they are going to need it.
What is the saying “we do not inherit from our parents we are stealing from our children”
BillT on Tue, 8th May 2012 1:19 am
WE are all loaded into our SUV’s, pedal to the metal and headed for a cliff over the ocean. We are not intelligent enough to hit the brakes and take the bumps as we slow down and revers our course. Instead, we will free-fall onto the rocks below, and be carried away in the tide.
Mother Nature doesn’t care what happens to humans. You cannot ‘negotiate’ with her. You cannot change her laws with the swipe of a pen. You cannot make something in months or years that took her millions of years and the energy of the sun to make. She will just wipe us out and move on with her plans.
SOS on Tue, 8th May 2012 2:16 am
I have no idea what he means by unconvential oil. North Dakota is pretty flat. Its not expensive to develop a big well. This oil is very easy to get, just like the natural gas. Peak oil is political not a real physical constraint.
What is needed are government policies supporting and promoting rapid and orderly development. This would assure ample supplies well into the future as well as maximization of wealth for the American people.
This wealth would be realized by both huge new governement revenues and reasonably priced energy in ample supply.
solarity on Tue, 8th May 2012 2:33 am
Aleklett states that the “decline rate in existing fields [is] about 4% to 6% annually.” He also mentions (without much discussion by the reviewer) increases from new drilling of conventional wells (i.e. ANWR). The net of these two will probably give a 1 to 2% real decline rate of conventional oil. This net decline rate means the world will be pumping more than 50 million bpd for the next 40 years.
BillT on Tue, 8th May 2012 4:31 am
solarity, you assume that that other peak will not take down the oil industry before that. What peak? Peak credit. We are balancing on the edge of the cliff of finance and the banksters are pushing hard. Each one of those hundreds of fraking wells cost at least $8 million. There will be a need for thousands of them over the next decade or so, with the cost continuing to grow at 5%+ rates meaning that in 10 years each well will cost at least $15 million or more. But, when the financial system collapses, so will oil imports / exports.
electrician on Tue, 8th May 2012 4:34 am
Interesting theory we will have oil for long time, the big question is how match is the cost to produce it and what price we will pay at the pump! Get ready for bumpy ride!
Bernz223 on Tue, 8th May 2012 4:34 am
Any you know freaking everything Bill right?
mike on Tue, 8th May 2012 10:59 am
nothing worse than someone who blames “guberment” for all their ills. SOS I’m looking at you. At least you make us all laugh with your conspiracy nonsense.
SOS on Tue, 8th May 2012 12:16 pm
Government policies need to promote orderly development of our resources. Right now government policies are promoting peak oil and the jokes on you through much higher prices and restricted supply.
Peak oil is a political constraint not a real physical constraint.
Children are starving because of the politics of peak oil. To promote peak oil is the same as killing children and it creates obscene oil profits.
If you want oil profits and prices down promote production not taxes and new regulations.
SOS on Tue, 8th May 2012 12:22 pm
By the way Mike it’s spelled government. LOL. Stop blaiming oil for all your problems. Read, learn be aware of the truth. Peak stupidity is taught in our schools. Peak oil is political. Together they create much higher prices and restrict supplies.
SOS on Tue, 8th May 2012 12:26 pm
2,600 BPD well is fully developed for about 4 million. That’s extremely cheap with very rapid cost recovery.
BillT on Tue, 8th May 2012 1:44 pm
SOS…mo one care what you think. It is obvious who’s payroll you are on.
BillT on Tue, 8th May 2012 1:46 pm
Yes,I did not read my comment so there are 2 mistypes, but if that is all you can pick on, you are losing. Give up and save face. Yours.
Ham on Tue, 8th May 2012 2:39 pm
What is missing is factoring in the export land model. To blame Governments is an erroneous idea. Decline is inevitable. Governments cannot control the media any more than they can manipulate banking ponzi finance. Currency war and protectionism will kill globalisation. Resource depletion is not some fantasy than can be rectified at all. It is because of geology and the limits of technology. We can only hope Politicians wake up and start to ameliorate the problem transitioning to something else: continual growth is failing and a road to nowhere.
simon on Tue, 8th May 2012 2:56 pm
Notice how SOS uses “killing children” to smear the geological FACT that is Peak Resource. Same as Robert Zubrin is usingit to denigrate bio-economists promoting humanity live within our ecological limits.
Pay attention. This will prove the berserker-whistle the puppeteers controlling Tea Partiers will use as their “drill-baby-drill” wetdreams come undone.
simon on Tue, 8th May 2012 3:09 pm
SOS states “I have no idea what he means by unconventional oil.”
SOS you moron, read the 3rd paragraph that starts with one single word: DEFINITIONS.
By your statements you simply show a sorry sack of protoplasmic waste is encased within your epidermis.
Donate your body to a medical school.
DO it now. RUN.
If the 2 neurons rubbing together in the emptiness of your brain cavity is mistook as sign of sentience, simply tell them to read your posts here, that ought to be good enough of a waiver.
Larry on Tue, 8th May 2012 4:47 pm
I’m in my 40’s and live in Wisconsin. All I have to do is scroll down to the comments every time an article appears that discusses our future oil supply to get the real idea about what our future will be like. I must say that I’m not disappointed that I don’t have any children.
Cabra1080 on Tue, 8th May 2012 6:10 pm
I noticed several things on the horizon:
1. The oil producing countries sharply increasing their domestic use of oil, curtailing exports just as their supplies are peaking, putting even more downward pressure on exports.
2. The price of oil going so high in the years ahead that a permanent state of economic recession is realized across most of the western world. This takes off line the ability of governments and businesses to finance alt energy technology including non-conventional hydrocarbons and wind/solar/geothermal.
3. Old nuke plants are decommissioned as funding to repair or replace them is increasingly unavailable. Due to constrained resources, some may not be taken off line properly or in a safe fashion and spent fuel may cause serious environmental problems or worse.
4. The built environment in the United States and several other western nations is based on personal automobile travel and this will not bode well when fuel costs go much higher, which they will (relative to wages and salaries). Wages and salaries will be held back or zeroed out by the persistent recessions. The suburban and exurban models will fare worse than mixed urban models which are few in the United States.
5. Agriculture and agribusiness will be hit the hardest and result in the biggest impact to society. They depend almost wholly on cheap fossil fuel inputs such as natural gas for fertilizer and oil for fuel and pesticides. Food shortages will be a serious game changer.
Kenz300 on Wed, 9th May 2012 4:14 pm
Too many people and too few resources….
Maybe endless population growth is the problem and reducing population growth is the solution.