Dr. Campbell: Second Set of Replies

EnviroEngr

MissingLink e-mail 12-14-04

tkn317071 asked:

I know they published an argument as to why the USGS estimates for reserves are grossly overstated...my question is have they received a counter argument from the USGS defending their estimates or does the USGS accept Campbell's et al argument?

Dr. Colin J. Campbell:

The USGS has not so far as I know retracted or changed their estimate, although I think they are back tracking on "reserve growth". I think it is not exactly that they are wrong but misunderstood.

They simply tried to estimate how much is "available for discovery between 1995 and 2025" which is not the same as estimating how much would be found in the real world. By couching their estimates in subjective probability rankings subject to Monte Carlo simulation they effectively evaded putting their name to any estimate. Who can say that there is not a 5% probability of another Middle East awaiting discovery in East Greenland ? The derived Mean value is just as meaningless. At all events actual discovery almost 10 years into their study period has been running at less than half their annual average Mean - and declining.

Aaron asked:

The methodology for estimating potential discoveries of oil is expressed by the USGS in F5, F50, & F95 probabilities. Given the decline in significant new discoveries of oil in recent history, is averaging F5 & F95 predictions still a valid approach for determining the mean estimate?

Dr. Colin J. Campbell:

I am not expert in Probability Theory. They plot amount up the Y axis and assessed probability along the X axis. The area under the curve is the Mean value. There are also Mode and Median values. The system probably has merit in assessing an individual prospect where there are actual parameters of thickness, porosity etc to compare, but I am sceptical when guessing the number and size of fields to be found, especially in little known areas. A better approach is to extrapolate past discovery trends.

Soft Landing asked:

BP claims to be reporting P90 numbers in it's report. Then it proceeds to add these numbers. Is BP adding P90 numbers as it claims (and hence estimating world reserve extremely conservatively), or are they actually using P50 numbers?

Dr. Colin J. Campbell:

I think BP reports what it calls "Proved" (it previously simply reproduced Oil & Gas Journal numbers but now selects the source). Proved is a US financial term, which in the past was generally understated (as permitted under the rules which were primarily designed to prevent fraudulent exaggeration). The under-statement led to progressive upward revision giving a good image and saving tax. Most international reports are closer to Proved & Probable (save in OPEC countries, where they are probably Original Reserves without subtraction of production) or in other words "best estimates". I think this probability business confuses rather than clarifies.

dmtu asked:

If given 15 minutes to present peak oil to the G8 leaders, What would they (the experts at ASPO) say?

Dr. Colin J. Campbell:

1. Oil was formed but rarely in time and place in the geological past which means it is finite and subject to depletion

2. Production has to mirror discovery after a time lag

3. The best industry data of "Regular Oil" with revisions properly backdated to discovery as published by ExxonMobil shows that discovery has been in relentless decline since the 1960s despite a worldwide search always aimed at the biggest and best prospects, despite great advances in technology and knowledge, and despite a happy economic environment whereby most of the cost is written off against tax. It follows that if more could have been found it would have been, which means that there is no reason to expect this 40-year downward trend to change direction.

4. The peak of production comes close to the midpoint of depletion to respect the physics of the reservoir and the normal discovery pattern with the larger fields in any area being found first .

5. Based on #3 and #4 we can expect peak over the next few years followed by terminal and irreversible decline, as already experienced in mature countries such as the USA. But demand enters the equation, so if demand fell from deep recession, peak would be delayed. The entry of Non-Regular Oil (tarsands etc) will ameliorate the decline but have negligible impact on peak itself.

??? asked:

It's a given (here in the US) that most people either view peak as another conspiracy theory or unworthy news. What would they say to these people?

Dr. Colin J. Campbell:

The current US policy seems to be to try to control foreign oil by costly military means, presumably on the premise that the foreign countries are deliberately withholding production or access for political reasons, notwithstanding their sovereign right to do so. If it were recognised that those countries are also subject to natural depletion, that would be reason to refrain from costly military intervention and the massive related death toll. This would be a good justification for studying the issue properly. Depletion is an easy concept to grasp (we are born, pass middle age and die) and even if the public data are unreliable, anyone can easily understand the notion of peak oil. They need look no further than Texas to observe it. People who plan and prepare usually succeed better than those who don't, but it is naturally their option to do whatever they prefer and live with the consequences, even if their actions create more enemies than friends.