Credit: Emrah Elmasli/COSMOS
When will oil peak? A growing body of oil company geologists, oil executives and investment bankers, including American geologist L.F. Ivanhoe, see it happening by 2010. The U.S. Department of Energy (DOE) has given various estimates, ranging from 2016 to 2037. And yet, the official position of many oil companies is that they are sceptical it will ever happen at all, putting faith in higher prices and new technology (including horizontal drilling and 4-D exploration) spurring ever more productive exploration.
This would have to be very productive indeed to keep up with world demand, which the U.S. Defence Department's Energy Information Administration (EIA) believes will grow from 81 million barrels per day in 2004 to 118 million barrels in 2025.
But we are not likely to meet that growing demand, says a report by L.B. Magoon for the U.S. Geological Survey. "Technology is great, but it can't find what's not there," he says. "In the last five years, we consumed 27 billion barrels of oil a year, but the oil industry discovered only three billion barrels a year. So only one barrel was replaced for every nine we used." And annual oil discoveries have been declining since 1965.
Most oil peak proponents point to a theory of fossil fuel extraction and depletion known as the Hubbert Peak. It is named after American geophysicist Marion King Hubbert, who created a model of known reserves and proposed in 1956, in a paper he presented at a meeting of the American Petroleum Institute, that oil production in the continental United States would peak between 1965 and 1970. This was at a time when U.S. oil production was riding high, and Hubbert was widely ridiculed. But it arrived right on schedule, in 1970, when U.S. oil topped out at 9.4 million barrels of oil per day.
An extension of Hubbert's Peak to world oil production would put us right at the very top of an upturned finger, in sharp contrast to the continuing upward climb predicted by the EIA. By 2080, the curve sees world oil slowed to a relative trickle. Hubbert died in 1989, but not before he had predicted that global oil peak would occur between 1990 and 2000.
Might the oil peak have already been reached as Hubbert predicted? Some believe we have, or are on the verge of doing so. "We are reaching the limits of the planet very soon; we can't produce much more oil than [the 81 million barrels per day] we are producing today," said Iranian petrochemical engineer Ali Samsam Bakhtiari, a senior official of the National Iranian Oil Company. In an interview with Australia's ABC Radio in August 2004, he forecast supply would outstrip demand sometime in 2006 or 2007, and that prices at the Australian pump could jump from around A$1.10 per litre to between A$3 and A$4 per litre. Such a rise of between 272 per cent and 363 per cent would drive bowser prices in Britain to between £2.44 and £3.25 a litre, and in the United States to between US$6.40 and US$8.53 a gallon. "You will have a constant 'oil shock' after that. So everything is going to change."
Concurring is Robert Hirsch, whose résumé includes stints at oil companies Exxon and ARCO (Atlantic Richfield Company), and he's now senior energy program advisor at the Science Applications International Corporation. "The 'depletion' folks by and large are not exaggerating the problem, particularly when you add in the risk dimension," he said in an interview. "The oil reserves are very uncertain. Middle East politics and egos are in play, and the rest of the world is at great risk because there will be no quick fixes when depletion starts."
In a report for the Atlantic Council of the United States, a non-partisan think tank, Hirsch wrote that "the age of plentiful, low-cost petroleum is approaching an end," and that "unless mitigation is orchestrated on a timely basis, the economic damage to the world economy will be dire and long lasting." What's more, Hirsch says, we won't have much warning when oil peak is finally reached. Studying the examples of the U.S. (which reached peak oil production in 1970) and Great Britain (peak in 1999), Hirsch concludes that "it was not obvious that production was about to peak a year ahead of the event. In most cases, the peaks were sharp."
So it's business as usual, and many in denial, until we finally see the oil peak in the rear-view mirror. The huge challenge is that, as an analysis by the DOE in 2005 indicated, we risk a 20-year "severe liquid fuels problem" if we delay our planning for a post-petroleum energy economy until peak is actually reached. Even if we began a crisis program 10 years before the peak, the DOE report says we'll still have a decade of hardship.
