Peak Oil is You
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Page added on April 24, 2016
The peak is back
An extensive new scientific analysis published in Wiley Interdisciplinary Reviews: Energy & Environment says that proved conventional oil reserves as detailed in industry sources are likely “overstated” by half.
According to standard sources like the Oil & Gas Journal, BP’s Annual Statistical Review of World Energy, and the US Energy Information Administration, the world contains 1.7 trillion barrels of proved conventional reserves.
However, according to the new study by Professor Michael Jefferson of the ESCP Europe Business School, a former chief economist at oil major Royal Dutch/Shell Group, this official figure which has helped justify massive investments in new exploration and development, is almost double the real size of world reserves.
Wiley Interdisciplinary Reviews (WIRES) is a series of high-quality peer-reviewed publications which runs authoritative reviews of the literature across relevant academic disciplines.
According to Professor Michael Jefferson, who spent nearly 20 years at Shell in various senior roles from head of planning in Europe to director of oil supply and trading, “the five major Middle East oil exporters altered the basis of their definition of ‘proved’ conventional oil reserves from a 90 percent probability down to a 50 percent probability from 1984. The result has been an apparent (but not real) increase in their ‘proved’ conventional oil reserves of some 435 billion barrels.”
Global reserves have been further inflated, he wrote in his study, by adding reserve figures from Venezuelan heavy oil and Canadian tar sands – despite the fact that they are “more difficult and costly to extract” and generally of “poorer quality” than conventional oil. This has brought up global reserve estimates by a further 440 billion barrels.
Jefferson’s conclusion is stark: “Put bluntly, the standard claim that the world has proved conventional oil reserves of nearly 1.7 trillion barrels is overstated by about 875 billion barrels. Thus, despite the fall in crude oil prices from a new peak in June, 2014, after that of July, 2008, the ‘peak oil’ issue remains with us.”
Currently editor of the leading Elsevier science journal, Energy Policy, Professor Jefferson was also for 10 years deputy secretary-general of the World Energy Council, a UN-accredited global energy body representing 3,000 member organisations in 90 countries, including governments and industry.
Earlier this year, Deloitte predicted that over 35 percent of independent oil companies worldwide are likely to declare bankruptcy, potentially followed by a further 30 percent next year – a total of 65 percent of oil firms around the world.
Already 50 North American oil producers have gone bankrupt since last year due to a crisis of profitability triggered by bottoming oil prices.
The industry is also under pressure due to the growing recognition that a large portion of fossil fuels are merely “stranded assets” that must be kept in the ground to avoid dangerous climate change.
The new study will place even more pressure on the oil industry with the confirmation from a former senior oil major executive that about half of global “proved” conventional reserves are not merely “stranded”, but do not even exist.
Asset values ‘vastly exaggerated’
The implication is that a vast quantity of investment into the oil industry will never be able to produce sufficient returns, as it has been justified by assets whose value is vastly exaggerated.
Contradicting the official position of most of the oil industry, Jefferson cites a number of recent scientific studies, according to which “the evidence suggests that the global production of conventional oil plateaued and may have begun to decline from 2005”.
Jefferson believes that a nominal economic recovery, combined with cutbacks in production as the industry reacts to its internal crises, will eventually put the current oil supply glut in reverse. This will pave the way for “further major oil price rises” in years to come.
However, by the time it takes for another oil price spike to arrive, the current spate of bankruptcies could escalate to the point that continued oil industry investment is no longer financially viable.
According to another peer-reviewed study released in March in Energy Policy by two scientists at Texas A&M University, “Non-renewable energy” – that is “fossil fuels and nuclear power” – “are projected to peak around mid-century”, with or without climate mitigation policies.
But the paper adds that to avoid a rise in global average temperatures of 2C, which would tip climate change into the danger zone, 50 percent or more of existing fossil fuel reserves must remain unused.
This will require renewable energy to supply more than 50 percent of total global energy by 2028, “a 37-fold increase in the annual rate of supplying renewable energy in only 13 years”.
The Texas A&M scientists conclude that by century’s end, the demise of fossil fuels is going to happen anyway, with or without considerations over climate risks:
“… the ‘ambitious’ end-of-century decarbonisation goals set by the G7 leaders will be achieved due to economic and geologic fossil fuel limitations within even the unconstrained scenario in which little-to-no pro-active commitment to decarbonise is required… Our model results indicate that, with or without climate considerations, RES [renewable energy sources] will comprise 87–94 percent of total energy demand by the end of the century.”
Planet solar ‘by 2030’
While a 37-fold annual rate of increase in the renewable energy supply seems herculean by any standard, some analysts believe the track record of solar power shows it could happen even faster.
To date, solar power has experienced an exponential growth rate, consistently outpacing conventional linear projections. While solar power generation has doubled every year for the last 20 years, with every doubling the production costs of solar photovoltaic (PV) has dropped by 22 percent.
Tony Seba, a lecturer in business entrepreneurship, disruption and clean energy at Stanford University, says that if this trend continues, the growth of solar is already on track to go global. With just eight more doublings, by 2030 solar power would be capable of supplying 100 percent of the world’s energy needs.
This means that even if Seba’s projections are overestimated by half, the target of 50 percent renewables by 2028 to avoid a 2C world appears to be achievable.
Nevertheless, a wealth of scientific data suggests that 2C is not a realistic safe target. As former NASA chief climate scientist James Hansen among others have warned, this level of warming could result in disintegration of polar ice sheets leading to “several metres” sea level rise within this century, putting cities like London and New York underwater.
Whether or not such warnings will be enough to spur investors to pull out of the fossil fuel industries, it is the bottom line: the latest revelations on the fundamentally uneconomic nature of these investments could accelerate the inevitable transition to our post-carbon future.
53 Comments on "The peak is back"
onlooker on Sun, 24th Apr 2016 11:08 am
Well, I think the best we can hope for is NOT to use the remaining accessible reserves for the sake of our now Destabilized Climate. It may be given now the lack profitability of extracting and producing remaining OIL and given the state of the World economy.
rockman on Sun, 24th Apr 2016 11:50 am
And just one more example of a writer that doesn’t understand what “peak oil” means (production rate) and what has zero bearing…reserve estimates. Needless to say if he can’t get that simplicity straight he has no chance of appreciation the POD…Peak Oil Dynamic.
JuanP on Sun, 24th Apr 2016 1:08 pm
I wonder who the wacko that wrote this shite is? What a load of bull. The two degrees, sea level rise, and irreversible Climate Change are already cooked in as a consequence of our past combustion.
I don’t really think it makes a difference whether we change our behavior as a species now or not, it is decades too late. The melting Arctic and the methane that is being released from there are a self feeding cycle. There is no stopping this now. It will get worse every year for the rest of our lives whether we swallow our farts or not. This goose is well done already.
Go Speed Racer on Sun, 24th Apr 2016 1:44 pm
Don’t buy waterfront.
Go Speed Racer on Sun, 24th Apr 2016 1:46 pm
Now that they put Aunt Jemima on the 20 bill, also we will put Ronald McDonald onto the 50 bill.
geopressure on Sun, 24th Apr 2016 3:22 pm
I think this author is high on drugs…
He has possibly been:
(A) smoking mushrooms like the kids do these days…
(B) mainlining paint-thinner or just straight acetone when/if available…
(C) huffing painkillers…
All three are a distinct possibility, but I just ate a fistful of disco-bisquits & turned the techno music on, so I have no idea…
peakyeast on Sun, 24th Apr 2016 3:27 pm
I often wonder how carefully they select those peers.
In this case it looks like they were very careful to choose the rights ones.
Plantagenet on Sun, 24th Apr 2016 4:05 pm
Harriet Tubman was a heroic anti-slavery activist.
Aunt Jemima is an imaginary advertising logo.
Learn the difference.
Cheers!
Apneaman on Sun, 24th Apr 2016 4:12 pm
Planty, but Nancy Green was real.
geopressure on Sun, 24th Apr 2016 4:18 pm
I thought they were going to pick Rosa Parks…
But I guess being in an Outkast song wasn’t enough to get recognized & put on the $20…
geopressure on Sun, 24th Apr 2016 4:20 pm
that’s a joke by the way…
I didn’t mean to downplay Rosa Parks’ achievements… It was arguably Outkast’s best song… It’s up there with B.O.B. (Bombs Over Baghdad)…
makati1 on Sun, 24th Apr 2016 6:06 pm
If we burn all of the hydrocarbons that are left, we will only speed up our demise. As Onlooker said, we have already doomed our species and most others to a slow death and extinction. The best thing for all of us is if those hydrocarbons stayed in the ground. Then our grand kids may have a life NOT short and brutal.
Go Speed Racer on Sun, 24th Apr 2016 6:23 pm
When they change the $20 bill to Tubman, it so t be worth as much. Only about $12.
Revi on Sun, 24th Apr 2016 7:25 pm
I think we are headed for a low carbon future, but not by choice. As a species we are bound for self destruction. The only thing that will save us is peak oil. We need to have limits or we will cook the planet. Fortunately we will see them and soon…
makati1 on Sun, 24th Apr 2016 7:54 pm
Revi, we have reached the peak ability to afford oil. How much oil is actually left is moot.
Harquebus on Sun, 24th Apr 2016 9:53 pm
Solar power had decreased in cost only because China pays low wages and dumps the toxic byproducts into the local environment. Factors not usually considered when calculating costs.
makati1 on Sun, 24th Apr 2016 11:03 pm
Harq, just collateral damage. Just what American factories did before the pollution laws. The remains are called Love Canal, etc.
rockman on Mon, 25th Apr 2016 6:43 am
Rvi – A “low carbon future”, eh? Given the world is currently consuming more fossil fuels then ever before when do you think we’ll start seeing the beginning of the “future”? LOL.
Not picking on you but the numbers are the numbers.
dooma on Mon, 25th Apr 2016 7:06 am
To me, aircraft are the real canary in the coal mine when it comes to peak oil.
Every member of this forum knows that although we have flirted with trying the BAU idea for cars, it is not the same case when it comes to commercial and military jets. Apart from some rare biofuel that would probably take 90 acres per flight, there are NO substitutes for aviation fuel.
We know that we will be peaking when air travel resorts back to the domain of the wealthy-the Jetset. And then it won’t take long until all aircraft are parked up against a fence…and the real pain will begin.
For the author to say “by 2030 solar power would be capable of supplying 100 percent of the world’s energy needs” is just (as already mentioned) the drugs talking.
dooma on Mon, 25th Apr 2016 7:16 am
geo: (A) smoking mushrooms like the kids do these days…
lol, I thought mushrooms went out in the 60’s.
I do volunteer work with young children in trouble with the law and they are all on meth. Many as young as 13!
I am not religious but if I was I would say that meth was designed by the devil.
It causes so much violence, psychosis and misery in these kid’s lives.
makati1 on Mon, 25th Apr 2016 7:46 am
dooma… “Barack Obama ended opium eradication efforts in Afghanistan in 2009, effectively green lighting Afghan opium production and the Afghan heroin trade. By 2010, all US efforts to eradicate Afghan opium ceased. It has been US policy to allow Afghan opium growing and the heroin trade since. US heroin deaths tripled from 3,036 in 2010 to 10,574 in 2014 as a result.”
He has to pay for all of the CIA’s work somehow.
http://www.globalresearch.ca/obama-gives-a-green-light-to-the-heroin-epidemic/5521412
Only one of the many drug epidemics in the Us these days. Glad I do not live there.
makati1 on Mon, 25th Apr 2016 7:48 am
Rockman, the day the economy finally collapses. That will end the consumption of hydrocarbons by most of the world’s population. Tomorrow? Next month? Next year? Who knows, but soon.
onlooker on Mon, 25th Apr 2016 8:01 am
I suspect it will be a synergistic effect, the problems of the Oil industry including affordability bringing down the economy and in turn the economy making the affordability of oil less and less to most. We are already seeing some of that.
onlooker on Mon, 25th Apr 2016 8:03 am
Rockman calls it the peak oil dynamic this interplay between the economy and the Oil industry and its status. That is a good term.
Davy on Mon, 25th Apr 2016 8:30 am
Makati bill sounds like you have a growing meth problem at the club med.
http://alcoholrehab.com/drug-addiction/drug-addiction-in-the-philippines/
GregT on Mon, 25th Apr 2016 9:45 am
Looks like Club Med has a little bit of catching up to do.
http://i.dailymail.co.uk/i/pix/2015/11/25/18/2ECE57EE00000578-3333877-This_chart_us_made_using_UNODC_data_It_shows_information_in_a_sl-a-99_1448476077439.jpg
onlooker on Mon, 25th Apr 2016 9:50 am
That is odd Greg your chart shows the Philippines uses more Meth than the US. Otherwise, yes the US ranks up there in all types of drugs.
PracticalMaina on Mon, 25th Apr 2016 9:56 am
Well seeings how the pharmaceutical industry in the US is powerful and massive. No wonder we have rampant drug abuse. Common ADD meds are very similar to methamphetamine, adderol=amphetamine salts. The heroin epidemic is in many ways a result of doctors and pharmaceutical reps pushing a treatment as a cure.
GregT on Mon, 25th Apr 2016 9:57 am
onlooker,
I believe that Makati said; “Only one of the many drug epidemics in the US these days.”
For sure it would appear that there is a ‘growing meth problem’ in the Ps, but that pales in comparison to the ‘many drug epidemics’ in the US of A.
Not even remotely close to being on the same scale.
PracticalMaina on Mon, 25th Apr 2016 10:03 am
Canada is going to legalize the devils lettuce in 2017, be careful up there Greg
PracticalMaina on Mon, 25th Apr 2016 10:04 am
🙂 Mexico is also considering legalizing medical marijuana, I wonder how great the implications of that would be on the border violence.
Davy on Mon, 25th Apr 2016 10:06 am
Right looker, good observation. This was not a comparison it was a reference. Mr Club Med and friends love to bash the US but when evidence surfaces of their own problems they quickly squawk like parrots….but…but BS. Stupid
GregT on Mon, 25th Apr 2016 10:12 am
There’s a bit more to be concerned about with the prohibition of the ‘devils lettuce’, than there is with the legalization of it Practical. IMO.
Get the shit out of the hands of organized crime and tax it. A win win for everyone, except for the criminal justice system.
PracticalMaina on Mon, 25th Apr 2016 10:13 am
True, and hemp is a hell of a carbon sequestering plant with thousands of uses.
onlooker on Mon, 25th Apr 2016 10:17 am
“Not even remotely close to being on the same scale.”
That is true Greg. Oh yes about legalizing, but alas poor dirty Banks, lawyers and law enforcement, CIA they’re cash cow would dry up. The real victims and the addicts treated like criminals when in fact they are just sick victims.
PracticalMaina on Mon, 25th Apr 2016 10:20 am
Hillary loves private prison money though so I am not too hopeful for here.
My states governor just signed a death certificate for many addicts by vetoing a bill that would open up access to heroine overdose antidote. How much medical attention does one receive for a medical condition such as addiction in prison…none.
GregT on Mon, 25th Apr 2016 10:20 am
So you consider factual information to be ‘bashing the US’ Davy? Do you not see the problem with this? Most countries have drug addiction problems, most just happen to pale in comparison to the US.
Credit given where credit is deserved, and all that. Your ‘reference’ does nothing to counter makati’s original statement.
GregT on Mon, 25th Apr 2016 10:22 am
“True, and hemp is a hell of a carbon sequestering plant with thousands of uses.”
If not for hemp, us Europeans never would have ‘conquered’ North America.
onlooker on Mon, 25th Apr 2016 10:25 am
Thanks Practical for bring up the Prison system and how that is raking in big bucks while forsaking inmates especially with drug problems. Of course some Americans can be blamed for supporting candidates who run on get tough with criminals, build prisons, tougher sentences etc. US as the highest per capita rate of imprisonment of any country in the world. Quite a distinction.
PracticalMaina on Mon, 25th Apr 2016 10:26 am
There is simply more money to be made for pharmaceuticals in the US. What other nation will pay a drug rep 6 figures usd. My state has a huge heroine problem, and it is almost all former pill addicts, many of whom were prescribed the drugs they became addicted to.
Davy on Mon, 25th Apr 2016 10:35 am
I consider your attitude poor Greg. You are always concerned about emphasizing the US is the worst at anything and everything. Pathetic. Makati Bills original statement is fine with no arguments here and mine is as well. It is your poor attitude that is the problem. Chill out everyone here knows how horrible the US is.
GregT on Mon, 25th Apr 2016 10:39 am
Not the US per se Davy, but the establishment. My attitude is just fine TYVM. I’m only interested in the truth. As pointed out to you numerous times before; I have no horse in this race.
GregT on Mon, 25th Apr 2016 10:44 am
“What other nation will pay a drug rep 6 figures usd.”
A trick question? How about Canada? US drug companies are working ‘real hard’ North of the Border, and they are gaining ground.
What happens in America doesn’t stay in America. Canada has always followed in the US’s footsteps. Usually about a decade behind.
Davy on Mon, 25th Apr 2016 10:53 am
Oh, sure Greg, yea, the truth and you are against horse racing. LMFAO
Apneaman on Mon, 25th Apr 2016 11:06 am
The US is a fucking shit hole and cesspool of greed and cruelty.
Food Banks Brace for Long Lines as Thousands Lose SNAP Benefits
http://www.cbpp.org/blog/food-banks-brace-for-long-lines-as-thousands-lose-snap-benefits
GregT on Mon, 25th Apr 2016 11:15 am
“Oh, sure Greg, yea, the truth and you are against horse racing. LMFAO”
Come on Davy. Rise up above your indoctrination and act like a man.
onlooker on Mon, 25th Apr 2016 11:20 am
Yeah AP, we should change the official moniker to American the Land of Opportunity to America a fucking shit hole and cesspool of greed and cruelty.
Davy on Mon, 25th Apr 2016 11:22 am
Oh, now the two Vancouverites show their colors
Spanky, says the US is a fucking shit hole. What’s new with that spanky. That was half hearted. Spank give us something bold and dramatic.
Gregger, talks about rising up, about manhood, and of course we can not end without indoctrination.
Canadians are such dumbasses. Glad I don’t live where men wear panties.
Apneaman on Mon, 25th Apr 2016 11:28 am
We do wear panties Davy.
Your Mom, wife and sister give them to us. Well actually they forget them on the floor when they leave.
Davy on Mon, 25th Apr 2016 11:40 am
Spank, do you like to sniff them too? I bet you use them as your wad cleaning rag.