Exploring Hydrocarbon Depletion
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QUOTE O’ THE DAY
"All we can do is analyze, aggregate, and synthesize bad news.
Page added on July 27, 2012
In late May, I participated in the tenth annual conference of the international Association for the Study of Peak Oil and Gas (Aspo), a network of scientists, scholars, industry experts and analysts who are exploring the nature and implications of global oil deple- tion. Aspo has formal affiliates in about 25 countries, including the US, China, Australia, New Zealand, South Africa and most major European countries.
This year’s conference was held in Vienna, Austria, which, incidentally, is home to the secretariat of the Organisation of the Petroleum Exporting Countries, which declined an invitation to attend. The conference was partially sponsored by the city and provincial governments. The programme included keynote presentations, panel debates and breakaway thematic sessions over two-and-a-half days. Videos and PDFs of all the presentations are available on the conference website (http://www.aspo2012.at/conference-presentations/).
Aspo president Professor Kjell Aleklett, of Sweden’s Uppsala University, kicked off proceedings by reflecting on the lessons learned in Aspo’s first decade. He noted that the term ‘peak oil’ was coined by himself and geologist Colin Campbell in 2002. It would have been ‘oil peak’, except that the acronym ASOP did not quite sound right. Aleklett, who launched his new book, Peeking at Peak Oil, provided a concise layperson’s guide to the key issues, nicely illustrated with colourful charts.
Peak oil is not about running out of oil. It refers to the fact that, since oil is a finite resource, the annual rate of production of oil must at some point reach an all-time maximum – a ‘peak’ – and then decline. This empirical phenomenon of peaking has already been observed in about two-thirds of oil producing countries as well as the regions of North America (peaked in 1985) and Europe (peaked in 2000). Global new oil discoveries have been declining since the 1960s and giant oilfields – accounting for some 60% of world supply – are declining at over 6% a year. Production of conventional oil has hardly risen since 2005, even though demand is burgeoning in developing countries.
The conference gave considerable attention to unconventional oil – resources like Canada’s tar sands, North Dakota’s shale oil and Vene- zuela’s heavy oil – which cannot be extracted or processed using conventional technologies. The consensus view was that unconventional resources are like a large barrel with a small tap, which means that the crucial flow rate of oil is constrained. Thus, unconventional oil will be unlikely to offset the 4.5% average annual decline rate of conventional oilfields for more than a few years. Moreover, prodigious amounts of energy and capital inputs are needed to extract and refine unconventional oil, which implies a low energy return on investment and a high economic cost – around $100/bl at present. In the words of Scottish geologist Euan Mearns, “peak oil is the game changer, and unconventional oil is the system response”.
Dr Robert Hirsch, an energy analyst who produced a seminal report for the US Depart- ment of Energy entitled ‘Peaking world oil production: impacts, mitigation and risk management’, delivered a sobering assessment of how our economies and societies might react to declining oil supplies. He argued that public reactions would likely be similar to responses to the 1970s oil shocks – namely panic, hoarding and long queues at filling stations. He expects oil decline to begin within one to four years and, given the world’s oil-dependent transport infrastructure worth $50-trillion to $100-trillion, electrification of mobility will not yield quick results. If the decline rate is 3% to 4%, Hirsch warns, the economic impact will be “catastrophic”.
A similarly disconcerting presen- tation on the geopolitics of oil and gas was given by Professor Michael Klare, the world’s pre-eminent authority on resource-driven conflicts. He noted that nothing has had a closer association to geopolitics than oil, which, for a century, has been crucial for military power. Klare argued that the US’s military strategy is now aimed increasingly at exploiting China’s growing reliance on oil imports, while the US itself enjoys a resurgence – albeit temporary – in domestic oil and gas production. Key hot spots for potential conflict are the Persian Gulf, the Caspian Sea region, the South China Sea and the Arctic.
In case you think it was all doom and gloom, some presenters gave bullish visions for a future powered by renewable energy. Europe has been leading the way and now has about 100 000 MW of installed wind power capacity. Jeremy Leggett, convenor of the UK Industry Task Force on Peak Oil and Energy Security, noted that the recent expansion of solar power capacity in the European Union exceeded that of all other new energy sources.
As the above snippets have, hopefully, conveyed, peak oil is anything but a ‘myth’. The sooner that citizens, businesspeople and politicians wake up to this reality, the better our chances of building resilience to oil shocks and transitioning to sustainable energy economies.