Posted on 11/15/2006 12:13:09 PM PST by E. Pluribus Unum
CAMBRIDGE, Mass., November 14, 2006 – In contrast to a widely discussed theory that world oil production will soon reach a peak and go into sharp decline, a new analysis of the subject by Cambridge Energy Research Associates (CERA) finds that the remaining global oil resource base is actually 3.74 trillion barrels -- three times as large as the 1.2 trillion barrels estimated by the theory’s proponents -- and that the “peak oil” argument is based on faulty analysis which could, if accepted, distort critical policy and investment decisions and cloud the debate over the energy future.
“The global resource base of conventional and unconventional oils, including historical production of 1.08 trillion barrels and yet-to-be-produced resources, is 4.82 trillion barrels and likely to grow,” CERA Director of Oil Industry Activity Peter M. Jackson writes in Why the Peak Oil Theory Falls Down: Myths, Legends, and the Future of Oil Resources. The CERA projection is based on the firm’s analysis of fields currently in production and those yet-to-be produced or discovered.
“The ‘peak oil’ theory causes confusion and can lead to inappropriate actions and turn attention away from the real issues,” Jackson observes. “Oil is too critical to the global economy to allow fear to replace careful analysis about the very real challenges with delivering liquid fuels to meet the needs of growing economies. This is a very important debate, and as such it deserves a rational and measured discourse.”
“This is the fifth time that the world is said to be running out of oil,” says CERA Chairman Daniel Yergin. “Each time -- whether it was the ‘gasoline famine’ at the end of WWI or the ‘permanent shortage’ of the 1970s -- technology and the opening of new frontier areas has banished the specter of decline. There’s no reason to think that technology is finished this time.”
The report emphasizes the importance of focusing on the critical issues. “It is not helpful to couch the debate in terms of a superficial analysis of reservoir constraints. It will be aboveground factors such as geopolitics, conflict, economics and technology that will dictate the outcome.” The report also points to such aboveground questions as timing and openness to investment, infrastructure development, and the impact of technological change on demand for oil.
Undulating Plateau
The new report describes CERA’s liquids supply outlook as “not a view of endless abundance.” However, based on a range of potential scenarios and field-by-field analysis, CERA finds that not only will world oil production not peak before 2030, but that the idea of a peak is itself “a dramatic but highly questionable image.”
Global production will eventually follow an “undulating plateau” for one or more decades before declining slowly. The global production profile will not be a simple logistic or bell curve postulated by geologist M. King Hubbert, but it will be asymmetrical – with the slope of decline more gradual and not mirroring the rapid rate of increase -- and strongly skewed past the geometric peak. It will be an undulating plateau that may well last for decades.
During the plateau period in later decades, according to the CERA analysis, demand growth will likely no longer be largely met by growth in available, commercially exploitable natural oil supplies. Non-traditional or unconventional liquid fuels such as production from heavy oil sands, gas-related liquids (condensate and natural gas liquids), gas-to-liquids (GTL), and coal-to-liquids (CTL) will need to fill the gap.
Critical Issue
CERA argues that understanding the difference between a plateau and a peak followed by a precipitous decline, as well as the timing of events, is critical to the global energy future. “Corporations, governments, and other groups, including nongovernmental organizations, need to have a coherent description of how and when the undulating plateau will evolve so that rational policy and investment choices can be made,” according to the report.
“It is likely that the situation will unfold in slow motion and that there are a number of decades to prepare for the start of the undulating plateau. This means that there is time to consider the best way to develop viable energy alternatives that would eventually provide the bulk of our transport energy needs and ensure that there is a useable production stream of conventional crude for some time to come,” CERA concludes.
Peak Theory Shortcomings
The CERA review also finds that current “peak oil” advocacy suffers from several problems:
Signposts
“It is no longer sensible to allow the issues about future supplies to be clouded in a debate grounded in a flawed technical argument,” the CERA report concludes. “There is general agreement that a peak or plateau of sorts will develop in the next 50 years, and it is not helpful to couch the debate in terms of a superficial analysis of reservoir constraints.” The report emphasizes the importance of the aboveground factors cited earlier.
“There is a need to identify the signposts that will herald the onset of the inevitable slowdown of production growth and ensure that policymakers outside the energy community have a clear understanding of possible outcomes and risks.”
Cambridge Energy Research Associates (CERA), an IHS company, is a leading advisor to energy companies, consumers, financial institutions, technology providers, and governments. CERA (www.cera.com) delivers strategic knowledge and independent analysis on energy markets, geopolitics, industry trends, and strategy. CERA is based in Cambridge, Massachusetts, and has offices in Bangkok; Beijing; Calgary; Dubai; Johannesburg; Mexico City; Moscow; Mumbai; Oslo; Paris; Rio de Janeiro; San Francisco; Tokyo; and Washington, DC.
For more information on CERA's Global Oil Advisory Service or our other service please visit our service offerings page or contact Michael Maddox at +1 617 866 5131. Obtain the report .
© 2006, Cambridge Energy Research Associates, Inc. All rights reserved. CERA and the CERA logo are registered trademarks of Cambridge Energy Research Associates, Inc.
http://www.ncpa.org/pub/bg/bg159/
Before the first U.S. oil well was drilled in Pennsylvania in 1859, petroleum supplies were limited to crude oil that oozed to the surface. In 1855, an advertisement for Kier’s Rock Oil advised consumers to "hurry, before this wonderful product is depleted from Nature’s laboratory."
In 1874, the state geologist of Pennsylvania, the nation’s leading oil-producing state, estimated that only enough U.S. oil remained to keep the nation’s kerosene lamps burning for four years.
In May 1920, the U.S. Geological Survey announced that the world’s total endowment of oil amounted to 60 billion barrels.
In 1950, geologists estimated the world’s total oil endowment at around 600 billion barrels.
From 1970 through 1990, their estimates increased to between 1,500 and 2,000 billion barrels.
In 1994, the U.S. Geological Survey raised the estimate to 2,400 billion barrels, and their most recent estimate (2000) was of a 3,000-billion-barrel endowment.
By the year 2000, a total of 900 billion barrels of oil had been produced. Total world oil production in 2000 was 25 billion barrels. If world oil consumption continues to increase at an average rate of 1.4 percent a year, and no further resources are discovered, the world’s oil supply will not be exhausted until the year 2056.
The estimates above do not include unconventional oil resources. Conventional oil refers to oil that is pumped out of the ground with minimal processing; unconventional oil resources consist largely of tar sands and oil shales that require processing to extract liquid petroleum. Unconventional oil resources are very large. In the future, new technologies that allow extraction of these unconventional resources likely will increase the world’s reserves.
Oil production from tar sands in Canada and South America would add about 600 billion barrels to the world’s supply.
Rocks found in the three western states of Colorado, Utah and Wyoming alone contain 1,500 billion barrels of oil.
Worldwide, the oil-shale resource base could easily be as large as 14,000 billion barrels — more than 500 years of oil supply at year 2000 production rates.
Unconventional oil resources are more expensive to extract and produce, but we can expect production costs to drop with time as improved technologies increase efficiency.
With every passing year it becomes possible to exploit oil resources that could not have been recovered with old technologies. The first American oil well drilled in 1859 by Colonel Edwin Drake in Titusville, Pa. — which was actually drilled by a local blacksmith known as Uncle Billy Smith — reached a total depth of 69 feet (21 meters).
Today’s drilling technology allows the completion of wells up to 30,000 feet (9,144 meters) deep.
The vast petroleum resources of the world’s submerged continental margins are accessible from offshore platforms that allow drilling in water depths to 9,000 feet (2,743 meters).
The amount of oil recoverable from a single well has greatly increased because new technologies allow the boring of multiple horizontal shafts from a single vertical shaft.
Four-dimensional seismic imaging enables engineers and geologists to see a subsurface petroleum reservoir drain over months to years, allowing them to increase the efficiency of its recovery.
New techniques and new technology have increased the efficiency of oil exploration. The success rate for exploratory petroleum wells has increased 50 percent over the past decade, according to energy economist Michael C. Lynch.
Using thermal depolymerization, we can manufacture as much oil as we could ever need, out of garbage, sewage, agriculture waste, etc. It's impossible for us to run out of oil.
There being nothing at all wrong with the hypothesis, we should take advantage of what extension we have before our demise as a commercial civilization to develop the alternatives we know of. While there are some gestures towards alternatives at this time, they are pitifully underfunded as serious developments. If the grace period passes and we find ourselves in the same questionable situation such as where terrorism could be a factor, then we don't deserve another extension just as we don't deserve this one. BTW, the Peak Oil hypothesis has nothing to do with running out of oil, so anybody who thinks the hypothesis is disproven simply doesn't understand the hypothesis and might better spend his time tracking down migratory Sasquatch.
Glad to see these researchers documenting it.
Wasn't there a thread a bit ago about the theory of how fossil fuels were made was flawed and actually it is a renewing source?
Why does anyone pay CERA fees for all of this great information?
If you had been in my eighth grade English class, Sister Lois would have had you diagramming sentences from now until Doomsday.
It's hilarious when know-it-alls like you reveal themselves to be nothing more than pompous illiterates.
"My fellow editors: Now since the evil GOP has lost, we need to push these stories like these so OIL prices come down and the new RAT congress gets credit."...
Thank you for your thoughtful comments. The world is NOT running out of oil. It IS running out of CHEAP oil. We can pay now or pay later. Now is better....
Hey, back off Sister Lois...
Got a comment on content?
Pardon me for not believing that you are clairvoyant.
I have faith in the free market system.
IF and WHEN we run out of "cheap oil," we will all be in the same economic boat and will learn to prosper in a world without it.
You are basically a socialist central-planner who hates the fact that people have freedom. You want to create an artificial economy based upon your personal economic and environmental superstitions.
No thanks. I prefer the real world to the one in your mind.
It's not written in English, so I have no idea what the content is.
Thank you. That is exactly the point of the Peak Oil hypothesis, yet that was not even mentioned in any of the Peak Oil threads the past couple days. There may be a dozen who actually understand this, which is about the same number that understand String Theory.
Oil isn't literally a limitless resource - but in practical terms, it is. Some is expensive to get at (for now), but there's lots of it there. The crust is filled with trillions upon trillions of barrels of the stuff, beyond our wildest imagination - and talk to the contrary is for one of 2 reasons: 1) to raise the price for those selling it now; or 2) for the envirowackos to convince us to give up cars. Color me a skeptic, but that's what I think.
Yes, you do, although you seem to have applied some political color to it. This is not a political matter at all.
The Lomonosov theory about the formation of oil is about as accurate and up to date as the geocentric view of the universe.
You're right. It's a matter of you're believing that you know what is best for everyone else.
As I said, I believe in the free market. If and when we run out of "cheap oil" we will all be in the same economic boat.
You want to create an artificial scarcity of oil by taxing the Hell out of it and using the proceeds for God knows what contingency plan.
What will really happen to it is that the boys in Washington will spread it out among themselves and we will be just as unprepared, but with lighter pocketbooks.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.