Making ‘Shambles’ of ‘Oil Peak Myth’

In his presentation to Montana Energy 2012, Michael Economides told Montanans, “You are already a superpower in oil production. You have already defied the trends and once again showed the can-do attitude of this industry, smashing the myth of the ‘peak oil'”

“You have redefined and defied the trends suggesting strongly the future of energy is oil and gas and not solar and wind,” said Economides. Economides is professor at Cullen College of Engineering in Houston, consultant and author.

The reason places like Montana and Canada stand at the leading edge of the industry is because of conditions that exist in other countries, which are mostly hostile to the US. Many of these countries are “a shambles,” “corrupt,” and unstable. “It is hard to produce oil when people are shooting at you,” said Economides.

“You are making the whole myth of peak oil a shambles.”

People have been talking a supposed end in the availability of oil for years but supplies have always increased and continue to meet a demand that only grows as countries like China and India grow and increase their demand.

The reason is because of increases in price, said Economides. Economides expressed disappointment with the US Geological Survey and the degree to which they fail to take increasing prices into account in making their projections regarding supply. Increased prices increase the amount that producers can afford to invest, which puts into production resources that they previously considered uneconomical to recover.

Economides predicted that $100 a barrel oil is the new norm.

The price will be held because of the unprecedented demand for oil in China. The situation with China is “bizerk,” said Economides, “Never before has there been a country where their demand for oil increased 20 percent per year.”

Also OPEC, Russia and other oil producing countries love $100 barrel oil. “…they will try to keep it up there as long as they can.”

The amount of potential energy possible from such “alternative” sources as wind and solar, are so small that they “do not even register,” said Economides.

Economides pointed out that going back decades in the US, oil, gas and coal – the fossil fuels – have consistently contributed 87 percent of the fuel used in the country. He said that the day will come when his great, great grandchild “will stand here and tell you that 87 percent of the US fuels come from hydrocarbons,” said Economides, “There are no alternatives to oil and gas.”

And, that comes even with the increased demand for fossil fuels. In 1973, “the world energy demand was 60 percent of what it is today,” and in 2030 it will be 50 percent more than what it is today,” but still 87 percent will come from oil, gas and coal. Production from other energies may grow, but they will not be where the 87 percent is going to come from.

Nuclear energy is green and “it will have to play a role,” even though it “has yet to live down the bum rap,” it’s been given.

Energy from biomass is nothing new. One-third of the world’s population get their energy from biomass and it is the only source of fuel available to them.

Other “green energies” according to Economides, “simply can never cut the mustered from a physics point of view.”

He went on to criticize President Obama’s focus on solar and wind calling it a “never, never land.”  He called Obama’s rejection of the Keystone XL Pipeline as “despicable.”

“How can you have too much of a good thing?” he asked, pointing out the importance of Canada, as a friendly country, and a dependable source of oil for the US.

Economides questioned every alternative energy option as being an ineffective alternative to fossil fuels.

He called ethanol a scam, because it takes 1.6 gallons of gasoline to produce one gallon of ethanol – not to mention the negative impact on food prices.

He said that not a single country in which wind energy is used has closed a single coal-fired plant and in fact their demand for natural gas has increased.

He said that he is not a climate change expert, but pointed out that “China is going to use every drop of oil they can get.” That means that whether the US uses the fuel or not it will still get used on planet earth.

“The last refuge of the energy scoundrel is CO2 sequestraton,” said Economides. “It isn’t going to happen,” he said, and “a high school chemistry student can figure out why.” He said that one 1000-megawatt power plan will require a space the size of New Jersey in which to store sequestered CO2. “And we have 1000 power plants.”

Natural gas is the energy of the future, predicted Economides. “There is absolutely no doubt that NG will take over” during the next 30 – 40 years.

World demand for natural gas is increasing about 7.6 percent per year.

He pointed out that natural gas is abundant and that Russia “has the natural gas.” Russia will become energy dominant, predicted Economides.

The US will become an exporter of natural gas in the form of LNG – exporting it especially to Europe. In the US the Marcellus shale in Pennsylvania and New York, “could easily be the second largest gas field in the world.

Economides predicted that by 2014 -15 the price of gasoline will get to $8 and stay there, because of world demand, led by China.

“China is like no other county you have ever seen. They don’t have enough oil to meet their needs.” Their demand is being driven by a process of modernization which is driving rural residents into the city. In China’s cities, said Economides, “700 million now live where 200 million used to live.”

They too will be using natural gas. Right now the country gets 70 percent of their energy from coal, but they have decreed that by 2020 they will increase the amount of energy they get from natural gas by ten percent – using about 14 trillion cubic feet – that is half of what the US uses annually.

China is going all over the world buying up every energy resource they can find. They spent $200 billion last year. “China is buying everything, while we are talking about solar and wind.”

Economides, who has traveled the world extensively in his career, said that the two most common questions he gets from the Chinese is “What is the energy policy of the US?” and “Why are you guys letting us do this?”

China will probably lead economically in the future, said Economides, saying that he believes China has more in common with the US, than Europeans do. “They have adopted what we used to do,” he said.

Upon questioning, Economides said that in his presentations he doesn’t have enough time to fully explain his position regarding alternative energies. They all “have a clear place and use,” but he said, “Let’s not pretend that solar, wind or even geothermal are going to replace fossil fuels.”

Indicating that he believes the issue of climate change will eventually go away, coal will be used to a greater extent in the US and it will go “head to head” in competition with natural gas. And, that is good, he said. “There is not a single solution by any means” and “competition is good.”

He said that “peak oil may never happen. Natural gas will contribute a massive share of transportation fuel.

Big Sky Business Journal