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Page added on October 12, 2011
A Slippery Peak – The New Oil Equation
New discoveries have disproved the idea that the world is running out of oil
The idea of peak oil caught the world’s imagination a decade ago. Peak oil, the point in time when the maximum rate of global oil extraction is reached, after which the rate of production would get into terminal decline, was supposed to be sometime in 2007, 2008 or 2009 — depending on who you were talking to.
The most important fallout of the idea that the world was running out of oil was large investments in companies and technologies trying to make alternative energy sources viable. Oil was all but written off as a vestige of the last century.
Much of this has changed. Spectacular discoveries of conventional oil and gas in Brazil, Angola and Australia, and a huge growth in unconventional oil and gas have changed the equation on reserves. New studies released in the last two months reflect this.
Scottish oil research firm Wood Mackenzie, in a report, has valued the upstream (oil exploration and production) business globally at approximately $3.2 trillion, not including exploration acreage or assets owned by national oil companies and governments.
Iain Brown, Wood Mackenzie’s upstream manager, says the discussion has changed and expectations are that oil prices will stay high (over $70 a barrel). But Wood Mackenzie’s long-term oil supply forecast shows a slow, but steady shift towards heavier grades. This includes a major contribution from oil sands. Technology has also played a big role in adding to the reserves. This gives hope to energy-starved India, where exploration has been limited to a few basins. Unconventional gas, which made waves in the United States, is gaining in prominence in the rest of the world too.
Among those who still subscribe to the peak oil theory are geologist Colin Campbell and Jean Laherrère, a well-known petroleum engineer. In their book, The End of Cheap Oil, published in 1998, their main assertions were that no large oil provinces are left to be found and technology will not significantly increase the amount of oil ultimately recovered. Though Campbell’s prediction was off the mark, it is true that its extraction faces bigger challenges. Shale gas production is caught in litigation and the risks of taking oil out from deeper waters and unspoiled areas like the Arctic are yet to be addressed satisfactorily.
8 Comments on "A Slippery Peak – The New Oil Equation"
Alan Cain on Wed, 12th Oct 2011 10:17 pm
And where was peak oil disproved? Forbes India modified the time lines, and the definitions, but it is still the same animal; this is fluff.
Greenjamie on Wed, 12th Oct 2011 10:50 pm
How many times does the same tired old straw man keep coming up that were ‘running out of oil’? its not about running out of oil, it’s about running out of *cheap* oil. Jeez
Windmills on Thu, 13th Oct 2011 4:39 am
I always find it fascinating that these types of arguments often put forth that “it’s Ok that we’re running out of cheap oil because we’ll always have plenty of expensive oil to replace it!” A poorly written piece that unwittingly supports peak oil by various statements such as “long term oil supply forecast shows a slow, steady shift toward heavier grades.” In other words, we’re running out of cheap, high quality fuel and being forced to use more expensive, lower quality fuel.
DC on Thu, 13th Oct 2011 6:47 am
Wishful thinking aside, nothing has changed. No one ever asserted that ‘new’ oil would stop being discovered. Just that the finds would generally be smaller, harder and more expensive to get at. This general prediction and trend has been remarkably accurate. The finds they think are so great, are not really all that large. Pro-oil writers get excited if someone thinks they may have found a billion new barrels. A lot sure, but we use over 30bil a year a now. And no new super-giants have been discovered much less brough on-line in over 40 years. Angola, Brazil, Aus oil finds do little to alter this basic equation.
SilentRunning on Fri, 14th Oct 2011 2:55 am
Yawn. Exponential growth of both the human population and the model of endless economic growth will devour ANY finite amount of oil discovered.
At just a 1% growth rate, even if the entire planet was a gigantic oil tank – it would be tapped dry in less than 10 millenia.
Discoveries that prolong the peak will actually hurt in the long run, because the inevitable crash in population will be that much more severe, and the environmental degradation will be that much worse.
Kenz300 on Sat, 15th Oct 2011 2:50 pm
Forbes, Faux Noise, the WSJ……
Can you believe articles coming from agenda driven media? Should they be taken as legitimate news sources or should they be considered infomercials for their advertisers?
SOS on Sat, 15th Oct 2011 4:34 pm
Oil is high now because of restrictions in supply (blame false green politics), political uncertainty and world-wide high demand. New discoveries are always expensive to develop. As these fields are developed costs will plummet. In North Dakota the Bakken will be completely developed in about 20 years based on current well spacing. It will be cheaper and cheaper to produce and ship oil out of North Dakota because of the on going development of pipelines. Energy costs in general are high because of false green politics and the willingness to buy into the doom and gloom coming from those that benefit from that.
John on Sat, 15th Oct 2011 9:09 pm
All I know is that oil is now riding around $115, which is one hell of a jump from the 2001 price of around $25-30 a barrel. Even if this isn’t peak oil, it still burns like a MF! You don’t have to be a genius to see the connection between high energy prices and a troubled global economy. With climate change, water shortages, and all the problems associated with population growth becoming ever more apparent, there is no need for peak oil. We’ve got enough problems. So, who cares?