An Update on Peak Oil

If you’ve been reading this blog regularly, you already know the basics about peak oil:

• It’s not a kooky conspiracy theory. The obsessively mainstream International Energy Agency, which refused to even acknowledge the possibility of peak oil for years, officially admitted it was real three years ago. Not only that, they even put a date on peak production of conventional oil: 2006. In other words, it’s already happened.
• The peak in conventional oil will be offset by new “unconventional” production: shale oil, tar sands, deepwater oil, and so forth. But that oil is both expensive and in limited supply. Shale oil has gotten immense publicity, but it’s unlikely to ever get much above a production rate of 1 million barrels per day. That’s 1 million out of a current global production of about 85 million (75 million barrels of crude oil and about 10 million barrels of petroleum liquids).
• Other unconventional sources will add more to this, but unless there’s some huge discovery of unconventional oil that we know nothing about, it’s likely that we’re already at or close to peak oil right now. New production of unconventional oil is only barely replacing declines in older, more mature fields, and decline rates in older fields are only going to get worse in the future.

Over at Wonkblog, Brad Plumer interviews energy analyst Chris Nelder about peak oil, and Nelder has this to say about unconventional oil:

BP: So what we’re seeing is that the world can no longer increase its production of “easy” oil — many of those older fields are stagnant or declining. Instead, we’re spending a lot of money to eke out additional production from hard, expensive sources like Alberta’s tar sands or tight oil in North Dakota.

CN: Right, and that’s entirely consistent with peak oil predictions, which said that extraction would plateau, that the decline in conventional oil fields would have to be made up by expensive unconventional oil. Right now, we’re struggling to keep up with declines in mature oil fields — and that pace of decline is accelerating.

Mature OPEC fields are now declining at 5 to 6 percent per year, and non-OPEC fields are declining at 8 to 9 percent per year. Unconventional oil can’t compensate for that decline rate for very long.

Even all the growth in U.S. tight oil from fracking, which has produced about 1 million barrels per day, hasn’t been enough to overcome declines elsewhere outside of OPEC. Non-OPEC oil has been on a bumpy plateau since 2004.

There’s more oil out there. But it’s hard to find; expensive to extract; declines quickly; and is usually disappointing in volume (Nelder: “Anticipated production growth for tar sands has consistently failed to meet expectations, year after year after year. Ten years ago, tar sands production today was expected to be twice what it actually is.”). We may or may not be quite at peak oil yet, but we’re either there already or else very, very close. And either way, production costs of unconventional oil make it unlikely that oil will ever get much below $100 per barrel again. This makes it a significant restraint on global economic growth, and unless and until we make a huge switch to renewable energy, this will continue permanently. Any time you see a medium or long-term forecast of global growth that doesn’t mention oil constraints, you should probably take it with a big grain of salt.

Mother Jones

4 Comments on "An Update on Peak Oil"

J-Gav on Sun, 14th Apr 2013 7:24 pm 



Charles T Hall put even a bigger damper on economic growth scenarios when he invented the concept of EROI some years back. A recent interview with him shows nothing has change, in fact it’s just all become more obvious that energy availability at affordable prices and economic growth won’t be strolling hand in hand down the aisle over the coming years.

econ101 on Sun, 14th Apr 2013 8:39 pm 



Any hook will do when looking for a fish. Eroei is such a hook. It is a concept but of what value and use? I think the term “invented the concept” is very appropriate because it is not something that was real waiting for discovery.

Useful energy out/useful energy in. Simple but very given over to exagerations.

To be anywhere near accurate a very good estimate of the worlds EUR must be made. Using the wrong data or using the data wrong, as we so often see in many of these articles, can alone make any estimate of eroei meaningless.

couple that sensitivity with the propensity to exagerate the energy inputs and eroei becomes even more manipulated to a desired outcome.

I estimate eroei of the oil coming out of the Bakken, and it should be up to 1 million barrels/day soon, to be in the range of 100:1 when accurately computed.

econ101 on Sun, 14th Apr 2013 8:47 pm 



Im not sure exactly how cheap the author thinks a barrel of oil should be but right now its about $90-$93. It would be a lot cheaper if the US were developing its vast federal resources. Right now the political coalition of peak oil politics that is keeping these lands off limits is valuing political power more than regretting high energy costs to society.

The advent of fracking and shale development is an unintended consequence of those peak oil politics. These huge supplies being unleashed on the world from the vast shale reserves found on every continent may change US policy.

It can no longer profit politically from the peak oil politics with ample reserves about so they will develop federal resources because they need the money.

BillT on Mon, 15th Apr 2013 1:15 am 



We have hit and passed the peak for oil. It’s obvious by the shear number of denials coming from so many places connected with the petroleum industry. Even some oil companies are finally admitting that it might be here or “soon”. All that is left is the dregs. Stuff we knew was there but was not practical (meaning it was not profitable) to recover. And most of it is still not practical and never will be.

It’s time to shut down the oil industry and cut our energy use. After all the US can cut it by 2/3 and still be at the world average. And the Philippines manages on 1/20 that of the US. All this crazy fraking greed needs to be shut down now, while we still have an earth that is livable. ALL of it.