Report Blasts "Peak Oil" Theory 640
Rei writes "Today, the Cambridge Energy Research Associates released a report dismissing the Peak Oil theory, suggesting that world oil production will continue to increase for the next 24 years, and then only level into a plateau. The report, which suggests that world reserves are enough to last 122 years at our current rate of consumption, also blasts Peak Oil theorists for repeatedly making unscientific predictions and then shifting them whenever their predictions fail to materialize."
From the first link (Score:1, Informative)
What are the odds that said international energy companies occasionally write a check or two to this so-called leading advisor?
Re:OK... (Score:2, Informative)
But then how confident can we be in their assertion that Peak Oil is 24 years off?
Well, in the 1970s, PEAK OIL predicted we would be out of oil by the mid 1980s.
History... repetition... You do the math.
Well, let's take a look at the speakers (Score:5, Informative)
H.E. Mohamed Bin Dhaen Al Hamli, Minister of Energy, UAE and President of the OPEC Conference (2007), David Crane, President & CEO, NRG Energy, Incorporated, David J. O'Reilly, Chairman & CEO, Chevron Corporation
John G. Rice, Vice Chairman of GE, President & CEO, GE Infrastructure, John W. Rowe, Chairman, President & CEO, Exelon Corporation, Charles W. Shivery, Chairman, President & CEO, Northeast Utilities
Neil H. Smith, CEO, InterGen, Jeff Sterba, Chairman, President & CEO, PNM Resources, Rex W. Tillerson, Chairman and CEO, ExxonMobil Corporation
Jake S. Ulrich, Executive Director, Centrica plc, Don Voelte, Managing Director & CEO, Woodside Energy Ltd, Theo H. Walthie, Business Group President, Dow Chemical Company
Daniel Yergin, CERA Chairman
H.E. Mohamed Bin Dhaen Al Hamli, Minister of Energy, UAE and President of the OPEC Conference (2007), David Crane, President & CEO, NRG Energy, Incorporated
David J. O'Reilly, Chairman & CEO, Chevron Corporation, John G. Rice, Vice Chairman of GE, President & CEO, GE Infrastructure
John W. Rowe, Chairman, President & CEO, Exelon Corporation, Charles W. Shivery, Chairman, President & CEO, Northeast Utilities
Neil H. Smith, CEO, InterGen, Jeff Sterba, Chairman, President & CEO, PNM Resources, Rex W. Tillerson, Chairman and CEO, ExxonMobil Corporation, Jake S. Ulrich, Executive Director, Centrica plc, Don Voelte, Managing Director & CEO, Woodside Energy Ltd, Theo H. Walthie, Business Group President, Dow Chemical Company, Daniel Yergin, CERA ChairmanH.E. Mohamed Bin Dhaen Al Hamli, Minister of Energy, UAE and President of the OPEC Conference (2007)
David Crane, President & CEO, NRG Energy, Incorporated David J. O'Reilly, Chairman & CEO, Chevron Corporation John G. Rice, Vice Chairman of GE, President & CEO, GE Infrastructur John W. Rowe, Chairman, President & CEO, Exelon Corporation
Charles W. Shivery, Chairman, President & CEO, Northeast Utilities Neil H. Smith, CEO, InterGen Jeff Sterba, Chairman, President & CEO, PNM Resources Rex W. Tillerson, Chairman and CEO, ExxonMobil Corporation
Jake S. Ulrich, Executive Director, Centrica plc Don Voelte, Managing Director & CEO, Woodside Energy Ltd. Theo H. Walthie, Business Group President, Dow Chemical Company
Daniel Yergin, CERA Chairman
I'm detecting an air of possible bias there. Not just is there no-one on the speaker list with an environmentalist bent, but most of the speakers apart from those employed by CERA are heads/employees of major oil/chemical companies.
Re:OK... (Score:5, Informative)
They predict that the demand will outstrip the supply of cheap oil, forcing us to shift to more expensive supplies and creating shortages that drive the price beyond a reasonable means. They draw a standard set of supply and demand curves, and show where they cross. What's most interesting to me is that it's not the supply curve that's the issue -- it's the demand curve.
And they're less worried about cars than they are about what that steep rise in prices will do to all manufacturing and industry in the west.
Re:Who pays their bills? (Score:3, Informative)
Peter M. Jackson, one of the authors of the report, is (was?) a professor of economics at MIT... I believe it's the same Peter M. Jackson, anyway.
About CERA and Daniel Yergin (Score:2, Informative)
http://www.theoildrum.com/story/2006/8/17/11737/1
Wonder who's putting out this report? (Score:5, Informative)
"CERA was acquired by IHS Energy in 2004. . . . Some of the company's largest clients include international energy companies, governments, utilities, and financial institutions."
http://www.answers.com/topic/cambridge-energy-rese arch-associates [answers.com]
"IHS is one of the leading global providers of critical technical information, decision-support tools, and related services to customers in the energy, defense, aerospace, construction, electronics, and automotive industries. We have developed a comprehensive collection of technical information that is highly relevant to the industries we serve ."
http://www.ihs.com/About-IHS/ [ihs.com]
Re:No increase in oil demand? (Score:4, Informative)
Production will cope. It's in the report.
Oh, I see. They assume our demand for oil will never increase. The developing world's demand for oil will never increase. China's demand for oil will never increase.
No, they don't assume that. You're conflating their position. They make two seperate points:
1. That if our consumption levels remain flat, there's 122 years of conventional reserves left. They make this point for illustrative purposes to counter the 'peak oil' argument.
2. That consumption will rise (the "Asian Phoenix" scenario) but that total oil output (conventional and unconventional ; tar sands, new extraction techniques, etc) will rise to cope.
They're not idiots.
Re:OK... (Score:5, Informative)
There used to be a lot more, but they ran out of oil. In fact, take a look around Western PA to see what devastation running out of oil can wrought on communities. Oil City [wikipedia.org] is an aptly named example.
Re:OK... (Score:5, Informative)
Technologies that exist and are already economical at current oil prices:
* Coal liquifaction (we have several hundred years of coal in the US alone)
* Thermal depolymerization (~$70/barrel from almost any organic waste).
* Bitumen (huge Canadian deposits)
* Ethanol (both corn and sugarcane)
* Biodiesel (soybeans)
Borderline technologies or technologies that exist but require higher oil prices to be cost efficient:
* Cellulose-derived ethanol
* Farmed plankton biodiesel
* Oil shale
* Methane hydrates/clathrates
* Direct Fischer-Tropsh synthesis from any CO (or even CO2, indirectly more lossy), and H2 (which can come from H2O). I.e., as long as there is power (do you see any "peak electricity" theorists out there? Not many), there can be oil (prices vary depending on component sources). As for H2:
** Electrolysis from any electricity source
** Nuclear power thermolysis
** Direct solar H2 production
** Farmed bacterial H2 production
* Direct utilization of H2 (or other fuels produced from common ingredients + "power") in vehicles.
As for those who say, "Well, sure, there are alternatives, but we don't have time to switch," this isn't true either. It takes much less time to bring a new field or plant online than it takes to drain an oilfield. About the worst time to bring an oilfield online is about 10 years, in the case of a remote field in an inhospitable location with no existing infrastructure. Expanding an existing field into less economical deposits can be as little as a year or two.
Peak Oil is a nonsense theory, and deserves to be exposed for what it is. There've been dozens of predictions since Hubbert, and not a one has been correct.
Re:Unfullfilled predictions (Score:5, Informative)
Disruption of the gulf stream - not predicted to happen just yet, so this prediction hasn't been refuted.
Deep freeze in Europe - same. That's like saying that the theory about the sun gobbling up the earth when it becomes a red giant is wrong because it hasn't happened yet.
Desertification of the US midwest - underway. I live in Alberta (Canada), and we expect to run out of glacial runoff in the next 15-20 years, leaving our river and main source of water bone dry for half the year. On top of that, the climate is getting dryer, and the water shelf is dropping. These are known to most residents here.
US crop failures - we'll see. Technology is improving all the time to offset this. Its happened before, though.
More frequent/severe Atlantic hurricanes (were there any this year?) - Nope, but again they expect a trend towards stronger storms, and last year it was certainly evident.
Inundation of coastal cities - Once again this is something that will happen down the road. No one thought we'd be under water in 2006. And we aren't. So the predictions are correct thus far.
Decline of coral reefs - underway. Most of the reefs affected by El Nino (Belize's great barrier reef in particular) are almost completely dead. Scuba diving was a lot more interesting about 15 years ago.
Disruption of Antarctic ice shelves - underway. There has been massive breakups of ice shelves in the last few years. Actually the predictions were mostly wrong; this is happening faster than we thought.
Pandemic skin cancer outbreaks (remember the ozone crisis?) - are you disputing the ozone hole now? That's a separate issue, but one that governments at least took significant steps towards solving around 15 years ago. The hole is larger this year than ever before, btw.
Huge find in Utah (Score:3, Informative)
Also, remember when the price of oil is sufficiently high that other types of oil that are not as pure are viable for processing.
Even if we run out of the liquid stuff, we could turn to coal liquification. North America has huge reserves of coal. We could become the Middle East of coal liquification. We have enough to last quite a while. By this time I could hope that technology would advance enough to make alternative way to propel a car compelling and cheep.
We also need to understand where oil comes from. We have never been able to reproduce oil in a lab under the circumstances that we understand to be natural. Maybe our whole assumption on oil is wrong (see Abiogenic petroleum origin [wikipedia.org].
Re:Who pays their bills? (Score:4, Informative)
Well, instead of just saying "tough shit", and giving up, some of us have come up with better metrics to judge what "experts" say. (And given the nature of experthood, we can't evaluate their arguments independently without becoming experts ourselves).
One of the methods people use to evaluate the statements of experts (without becoming experts themselves) is to try to find out if they have an agenda beyond educating people about stuff. If they are paid by some organization, such as the catholic church (the earth is the center of the universe), the tobacco industry (smoking is healthy and makes you look good), the oil industry (burning fossil fuels is a long-term environmentally sustainable practice), or someone else with big money and questionable motives, many people rightfully become skeptical to the statements, even without having become experts enough to evaluate the science behind it themselves.
I'm sorry. The people who are not contributing, are the people who are getting paid to spread misinformation (i.e. lie). The people who try to find out if misinformation is spread, are meta-contributing. You and I are meta-meta-contributing.
Re:OK... (Score:2, Informative)
1. Once you consume the "sweet oil" which is the first thing you extract from the new well, and which is easier to refine and is more profitable, you are left with heavy oil at the bottom. This needs more infrastructure to extract, more energy to refine. Once you are spending one gallon of oil (or equivalent energy) to extract and refine one galon of oil, oil is not fuel any more.
2. Also there is a rate of oil production a oil well can sustain. If you try to extract oil faster, you end up damaging the well and end up at a point where the well has oil but still you cannot extract it. Many peole suspect that's what is going on in Saudi Arabia. They are pumping oil at more rate than their oil wells can sustain, just to make profit.
3. OPEC rule is if you have more reserves, you get rights to produce and sell more oil. So any country that furnishes estimates has reason to bloat it. Their information is as reliable as car salesman's information about the car. I would not bet my life on it.
4. When you are claiming that oil production technology will just get better and better, you are making lots of asssumptions. It will make progress if it is worth investing there. Oil exploration was starved for funding when Nasdaq was flirting with 5000. Because that's where you could make more money using your money. Also it is not true that more research will lead to more breakthroughs. Research on fuel injection systems has been effectively abondoned by all car companies. People have miliked the almost the last drop. Can you make improvements in fuel injection? Yes, but the improvement will be so small that it will not be worth millions you will have to spend.
Now add politics and crazy fundamentalist leaders and pollution and global warming to this picture.
You will immediately see that you will be better off with alternative energy, no matter how much oil is available in earth.
Should Have Previewed (Score:3, Informative)
Re:A festival of confusion (Score:3, Informative)
Regarding the Antarctic ice sheet: the article was from 2002.
More recently (March 2006): NASA Mission Detects Significant Antarctic Ice Mass Loss [nasa.gov]. "The researchers found Antarctica's ice sheet decreased by 152 (plus or minus 80) cubic kilometers of ice annually between April 2002 and August 2005."
Personally, what I find most convincing is graphs of current and historical CO2 levels [geocities.com].
Re:Peak oil has nothng to do with the environment (Score:5, Informative)
The way I see it, whether we suck the world's oil reserves dry quickly or we suck them dry slowly, we're still going to suck them dry. There's more profit associated with large demand than small demand, however. Indeed, for a fixed supply, the price vs. demand curve is anything but linear. Furthermore, the time value of money indicates that a given sum of money is more valuable the sooner you have it. If we proactively shift energy demand away from oil, this lengthens the timespan across which we'll deplete the world's oil reserves. This will reduce demand, reduce average prices, and the money will arrive later (and therefore not be as valuable).
Thus, oil companies have strong economic reasons for wanting to keep demand high. They want to maximize their total profit.
Peak oil and alternative energy proponents seek to move energy demand away from oil, either by increasing efficiency or by drawing energy from other sources. Either approach reduces the demand for oil, which is what the petroleum industry wants to avoid.
Re:Read the Hirsch Report (Score:4, Informative)
"It is important to recognize that oil production peaking is not 'running
out.' Peaking is a reservoir's maximum oil production rate, which typically occurs
after roughly half of the recoverable oil in a reservoir has been produced. In
many ways, what is likely to happen on a world scale is similar to what happens
to individual reservoirs, because world production is the sum total of production
from many different reservoirs."
And some information on CERA's past record:
"In 2001 Cambridge Energy Research Associates (CERA) stated 'The
rebound in North American gas supply has begun and is expected to be
maintained at least through 2005. In total, we expect a combination of US
lower-48 activity, growth in Canadian supply, and growth in LNG imports to
add 8.95 Bcf per day of production by 2005.'"
In 2005 CERA "now finds that 'The North American natural gas market is set for the
longest period of sustained high prices in its history, even adjusting for
inflation. Disappointing drilling results
outlook for North American supply downward
represent additional disappointing supply news, painting a more constrained
picture for continental supply. Gas production in the United States (excluding
Alaska) now appears to be in permanent decline, and modest gains in
Canadian supply will not overcome the US downturn.'"
For all the thoughful, deeply informed people who have dismissed peak oil with the claim that "the stupid enviros can never get it right, Club of Rome, blah blah blah...", I strongly suggest looking for the beam in your own eye before complaining about the mote in ours.
Peak oil theory is based on a very simple idea: the best first order measure of future oil supply using any technology at any price is the amount of oil still in the ground, and that amount can be estimated based on the amount already extracted. If this theory is true, then we expect the current production rate (P) divided by the cummulative production (Q) to be a straight line when plotted against the cummulative production.
It is an undisputed although often ignored fact P/Q vs Q is a straight line to a good approximation over the past fifty years, both in the continental United States and worldwide. It does not deviate in war or peace, in recession or oil crisis, by more than a small amount. The deviations are significant, but the undoubted fact remains that to first order we have an exceptionally good model for world oil production that is consistent with the past half century of extraction data.
If you want to deny peak oil, you have to claim either:
a) There is some other factor that dominates the first-order term in world oil production
or
b) The higher-order terms are at some point going to dominate.
Of the two, the latter is clearly the only really plausible move, and it is not really denying peak oil but rather accepting that economies will adapt to the very real fact of peak oil.
Oil sands, coal derviatives and non-geologic sources may both become significant factors at some future price with some additional technologies. My own favourite is algal biodeisel, which seems like just about the perfect source of liquid fuels, as it is essentially solar->liquid hydrocarbon conversion at very high efficiency. But there is very little investment going into it for some reason.
Valuable sources for futher reading. (Score:5, Informative)
http://www.theoildrum.com/ [theoildrum.com] and in particular: http://www.theoildrum.com/story/2006/11/14/18285/
Whether we will ever exceed current production levels is an entirely open and empirical question. Even if we do, that doesn't prove that "Peak Oil" is "wrong"... just that we haven't hit it yet. The evidence I read suggests we're approaching the top.
Read this too:
http://www.theoildrum.com/story/2006/11/2/204936/
http://www.energybulletin.net/22213.html [energybulletin.net]
Re:I will believe this .... (Score:3, Informative)
Re:Slashdot refused to print this story (Score:5, Informative)
Their study actually undermines itself (Score:2, Informative)
Sounds like their analysis is rather simplistic. They looked at the *current* consumption rates, assumed that consumption rates would be static for the next 122 years, and then said we've got plenty of oil for 122 years. Nevermind the fact that places like China and India are quickly increasing their oil consumption.
China's petroleum imports are expected to grow fourfold from 2003 to 2030 Source: http://www.eia.doe.gov/oiaf/ieo/oil.html [doe.gov]
World oil consumption rose by about 1.2 million barrels per day in 2005, after an increase of 2.6 million barrels per day in 2004. Source: http://www.eia.doe.gov/oiaf/ieo/oil.html [doe.gov]
Overall, global oil consumption is expected to grow by about 1.4 percent each year over the next 25 years - roughly a 40% increase. If those rates hold steady, we'll be using twice the oil in 50 years. Based on increasing oil consumption, that 122 years shrinks down to something like 80 years.
Further, their report assumed a bunch of new oil discoveries, and that we'll be extracting known, but expensive-to-extract oil deposits in shale and other places. Nevermind that these alternatives routinely rank in the $70-$100 per barrel range. Here's a graphic of their sources of oil: http://www.realcities.com/mld/krwashington//16012
It says:
1.08 trillion barrels already consumed
0.76 trillion barrels available from conventional sources
1.07 trillion barrels yet to be discovered
1.91 trillion barrels available from unconventional sources
In other words, of the 3.74 trillion barrels they're talking about, 30% is assumed to exist (we just haven't found it yet), and 50% is from unconventional sources (ranging from expensive to extremely expensive). Only 20% of their 3.74 trillion barrel estimate comes from known, economical sources! That means that known, conventional sources are expected to run out in 24 years - and that's according to current consumption rates, so 24 years is an overestimate. We'd better hope that lots of new oil is discovered and put into production before then (it takes about 10 years to get a new oil well up and running to full capacity), and we'll be switching to more and more expensive unconventional sources in the meantime.
Remember - peak oil doesn't say when the oil will run out, it talks about the interplay between cost, consumption, and economics.
Re:I will believe this .... (Score:3, Informative)
If an oil company did this - I'd think they'd gone stark frigging insane.
Why?
Because refineries are horribly capital intensive - it takes decades (under the best of circumstances) to repay the investment. Why would you do something that risky when you know that Americans aren't going suddenly to start driving 'x' times as much just because you refine 'y' times as much. (Ditto for the other uses of petrochemicals, fertilizers, drugs, plastics, etc... etc...) The market is pretty inelastic, the demand fairly steady, and the changes fairly predictable. (And its not just the refinery you have to upsize - its also your distribution network etc...) Even worse - any additional income comes after a decade or more of design, construction, and lawsuits from NIMBY's and greens.
Its nowhere near as simple as you seem to believe.
Re:More misunderstanding (Score:2, Informative)
There's definitely been discussion of the economic costs of trying to stabilize atmospheric CO2 at 550 ppm or so. (If we proceed with business as usual, it's predicted to hit 800 ppm by 2100; it's never been higher than 300 ppm at any time in the previous 800,000 years.) According to the Economist [economist.com]:
If you think climate change is just pseudoscience, you may want to take a look at Spencer Weart's The Discovery of Global Warming [aip.org].