Signs show oil production about to go into decline

Sun Newspapers

Those who hold a greater regard for oil demand have proclaimed March 16, 2005 as a day of infamy. I do not. Instead, it should be hailed as a day of great luck. It was a day when the world’s economic boats – especially the United States’, the world’s biggest consumer of oil – received the maritime equivalent of an iceberg warning to change course and slow down before colliding with the real thing at flank speed.

Sun Newspapers
Cleveland, OH
March 24, 2005

Title: Signs show oil production
about to go into decline
Columnist: Ken Prendergast
Column: Write of Way

March 16, 2005, is a date that should be remembered in the history books. It was the day when the market acknowledged that global demand for oil had outstripped the world’s ability to supply it. The Organization of Petroleum Exporting Countries raised oil production quotas on that day by nearly 2 percent, and was answered by per-barrel oil prices shattering record highs.

Those who hold a greater regard for oil demand have proclaimed March 16, 2005 as a day of infamy. I do not. Instead, it should be hailed as a day of great luck. It was a day when the world’s economic boats – especially the United States’, the world’s biggest consumer of oil – received the maritime equivalent of an iceberg warning to change course and slow down before colliding with the real thing at flank speed.

That iceberg is an unavoidable obstacle called Peak Oil. It was first charted in 1956 by Shell Oil Co. geologist Marion King Hubbert. Like global explorers of 400 years earlier, he was among those who charted the underworld seas of oil. Those were created over a span of 500 million years by a small fraction of animal and plant life getting trapped beneath Earthly upheavals before they could deteriorate into dust.

And, just like the mariners of the 16th century, petroleum geologists like Hubbert got pretty good at mapping the seas of oil. They got so good at it that, in recent years, discoveries of new oil reserves have dwindled to near zero. We know where the oil is and how much is left.

Governmental and industry records show the world’s economies have consumed about half of the 2 trillion barrels of recoverable, conventional (liquid) oil. The second half will be depleted at least twice as quickly as the first. Another 2-5 trillion barrels of non-conventional (oil shale, tar sands, liquefied coal) might be mined and refined at great expense. Most will never be recovered as they are below ocean floors.

Non-renewable fossil fuels have powered world economic growth in the 20th century as never before, enabling the global population to rise from 1 billion people in 1900 to 6 billion today.

Everything from clothing, to plastics to fertilizers are made from oil. According to Bloomberg News, 10 percent of the world’s annual oil production is burned by U.S. motorists who pay less for gasoline than they do for bottled water.

The wild card in the global inventory is Saudi Arabia, the world’s central bank of oil, which guards its reserves data as a state secret. That has troubled people like Matthew Simmons, a former energy advisor to the Bush Administration, who says Saudi Arabia’s oil fields are about to go into decline.

In his new book, “Twilight in the Desert,” he makes his case with lots of data. That includes the recent news that wells in the world’s largest oil field, Ghawar, sometime produce as much water as oil. If Simmons is right, the day of reckoning isn’t far off. How soon?

Oil supplies, be they global, national or individual fields, don’t suddenly dry up, Hubbert noted. Their productivity follows a bell-shaped curve, climbing slowly at first, then rising fast, only to crest before declining. Technology to increase productivity delays decline, but also makes the eventual drop more precipitous.

Hubbert correctly predicted in 1956 that U.S. oil production would decline after 1970. Had he lived to see the geopolitical oil shocks of the 1970s and their affects at temporarily dampening consumption, he probably would have revised his estimate of world oil supplies peaking in 1995. The Association for the Study of Peak Oil & Gas, following Hubbert’s analysis, revised his estimate, pegging the oil supply peak at 2008.

Only two things are certain – that Peak Oil is unavoidable, and that the ride up to the peak was a lot more fun than will be the ride back down. In fact, the ride up the peak was so fun that some nations, including ours, are willing to fight to preserve the wasteful lifestyle it fueled.

Mitigation includes a huge effort, like the Manhattan Project, to increase the efficiency and practicality of renewable fuels. None are “ready to go.” We’re already late in coming up with a Plan B.

Changes in Americans’ wasteful lifestyles will be needed to delay Peak Oil, such as reversing energy-intensive urban sprawl patterns, converting auto assembly lines to build more hybrid models, improving public transportation, constructing high-speed rail lines and fostering more locally grown, organic foods. We may not like all these options any more than a cancer patient enjoys chemotherapy, but there isn’t much choice until a better treatment is found.

America’s economy is not an unsinkable ship. Yet it keeps blindly speeding forth on an unwavering course, while its crew and passengers hope undeveloped technologies will enable it to avoid changing direction. And, just like the Titanic, there are not enough lifeboats to go around.

We’re in dangerous waters and nature always has the final say. We need to change course and slow down. The only difference from the Titanic is that Peak Oil is an iceberg that cannot be dodged forever. At least, on March 16, 2005, we were warned not to make the same mistake twice, when even more is at stake.

END

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