The Coming Boom in Oil Recovery

The peak oil theory is simple on the surface: Over the long haul, oil supplies will diminish. Production rates will reach a peak and then decline.

However, the simple Hubbert Curve doesn’t account for the addition of new hydrocarbon provinces (i.e. deep offshore, Kurdistan) or technology improvements. One only need to look at the North American natural-gas price to see a glaring example of how technological innovation (shale gas production) can disrupt supply forecasts.

Tony Hayward, BP’s (BP) chief executive, was quoted in the Telegraph this week as saying “proven natural gas reserves around the world have risen to 1.2 trillion barrels of oil equivalent, enough for 60 years’ supply — and rising fast.”

I believe that the peak oil argument has been oversimplified to the point that adherents can’t comprehend any outcome except for a disastrous global oil shortage. Ever-rising Chinese automobile sales might lead us down that path but I see some innovative solutions that don’t require much exploration.

MSN