What is Peak oil?
"The term Peak Oil refers to the maximum rate of the production of oil in any area under consideration, recognising that it is a finite natural resource, subject to depletion."
ASPO-8: The 2009 International Peak Oil Conference in Denver
Submitted by Kjell Aleklett on Fri, 2009-10-16 14:48.
This year’s international ASPO conference in Denver was organized in collaboration with ASPO-USA and coincided with their national annual conference. Sunday’s parallel sessions held before the formal start of the conference offered interested Denver residents the opportunity to inform themselves about Peak Oil. Meanwhile, Peak Oil identities from around the world were given the opportunity to give presentations on their various activities and research results.
I was very happy to open the international proceedings on Sunday with a presentation on "The Peak of the Oil Age". Then we discussed renewable energy in Spain, methods to reduce Canada's CO2 footprint and Venezuela and the economic crisis. My Ph.D. student, Bengt Söderberg was given the opportunity to present part of his doctoral work concerning the future natural gas crisis in Europe. Professor Lee’s presentation on "Peak Oil in China" was an interesting run-through of the significance of this question at various levels. The international symposium concluded with a presentation based in Switzerland. It concerned EROI, i.e. how much energy is returned on invested energy. All the contributions were very interesting and I can only say that there are amazingly many areas where energy is high up on the agenda.
The main conference was given a political dimension through the presence of Denver’s Mayor John Hickenlooper who opened the conference. Also, Colorado’s Governor Bill Ritter Jr held the closing speech (to which I will return). For both these people Peak Oil is part of their political work. Detailed content from the conference can be found at ASPO-USA’S website. After paying a fee you can also listen to all the presentations from the conference. What follows are some personal reflections.
The opening session addressed future oil production. Chris Skrebowski discussed expected oil production to 2030. During an extended period he has collected information on various projects that are reckoned to begin production within the next few years. The recession has led to some projects being mothballed while others continue since they have already progressed quite far. If all goes to plan he sees a continued production plateau for some years and even possibly an increase over today’s production. However, the question is whether production can once more be forced up to 87 million barrels per day.
Jeremy Gilbert is one of the few in ASPO that has genuine experience in oil production. He has been, among other things, responsible for BP’s production at Prudhoe Bay in Alaska. The previous evening we had listened to a presentation by geologist Marcio Rocha Mello from Brazil. He asserted that immense volumes of oil remained to be discovered off Brazil’s coast, in the Amazonian jungle, in the Gulf of Mexico, off Africa’s west coast and in central Congo. A figure of 450 billion barrels was mentioned and he questioned whether we could really believe in Peak Oil in the light of this. He thought that this was so wonderful that he asserted that Jesus must be a Brazilian. That the volume of oil he discussed would only suffice for 15 years at current consumption rates came as a great surprise to him. Jeremy brought us back down to earth and discussed the reality gap that exists between an enthusiastic geologist and production from an oilfield. They will certainly find oil in some of the areas that were mentioned above and, by our calculations (Uppsala Global Systems Study Group), they will find on the order of 125 billion barrels in the years to 2030 but constant consumption during this time would amount to over 600 billion barrels.
When ASPO had its first conference in Uppsala in 2002 Matt Simmons presented his view on future natural gas production in the USA. The picture was fairly bleak and it was the future production of conventional natural gas that gave rise to this attitude. It is correct that conventional production has decreased but what has been surprising since then is the large increase in non-conventional natural gas production. Primarily it is gas from areas of where oil shales exist that has contributed to the increase in total gas production.
The president and managing director for Cirque Resources LP, Peter Dea, explained that such immense resources of non-conventional natural gas exist that the USA had no need to be concerned for the next 100 years when it comes to gas. The Barnett Shale is the field that has been in production for the longest period and Arthur Berman had studied the gas production from thousands of its wells in detail. The average production per well is lower than what they had expected and the everge production decline of 25% per year were greater than they had expected. Wells had an average productive lifetime of 8 years. Increased investment in, and dependence on, natural gas in the future can results in an increased need for increase of imports of liquid natural gas in the future. My conclusion is that salespeople that promote their wares are easy to find but that one also must deal with the reality and encourages to reflections.
The afternoon was dedicated to the “Great Recession and the Energy Markets” and “Energy and the Media”. There is no need to doubt that the USA is today’s superpower. However, what is interesting is what may happen in the future. If we look back in history we see that Great Britain, Holland and Spain have been superpowers that have lost their influence. Spain’s era as a great power was based on skillful seamen who could plunder gold and other treasures from the cultures of Central and South America. When supply of these treasures began to dwindle they went bankrupt and Spain’s time in the sun was over.
If we examine Holland’s era of power then technology and energy resources become part of the picture. They learned how to build dykes so that the area available for crops increased and it was wind energy (windmills) that provided the energy required for this expansion. When nature put a limit on this expansion while the economy required more the result was shortages and bankruptcy.
Great Britain’s era of power was based on steampower and coal. For the first time access to fossil energy became decisive. Fossil energy also created opportunities for weapon development and, with these in hand, they could conquer large areas of Africa and Asia. From these areas they then received cheap raw materials that created wealth in the homeland.
The Second World War changed the picture. Germany did not have access to oil, Japan did not have access to oil but the USA was the world’s leading oil producing nation. If Great Britain had had under its land surface the oil that was later found under the North Sea then the world’s political situation would probably have looked different today.
Up until 1970 the USA could increase its oil production. Then they reached Peak Oil. However, through various treaties and other means they succeeded in continuing to increase their consumption of oil and their influence continued to grow. Now they have come to the end of the road. To afford to buy the oil they need they have begun to borrow money. The problem with borrowing money is that one should also create the means to pay it back. At the moment they do not have the means. The solution that remains is to permit inflation. If the financial problems in the USA are not solved then they will fall heavily. Their saviour might be that no other nation has yet attained the strength to take over.
For “Energy and the Media” it was Peter Maass who was the star that shone most brightly. He presented his book “Crude Oil” that looks very interesting. I purchased a copy. Peter is a star reporter at the New York Times Magazine so I began to read his book with excitement. However, on page 13 I put a small question mark: ”Simmons reintroduced the world to a phenomenon known as “peak oil””. The reality is that it was Colin Campbell who introduced the term “Peak Oil” and Matt Simmons became familiar with the expression in 2002 when I organized the world’s first “Peak Oil” conference in Uppsala, Sweden. ASPO reintroduced the “Hubbert Peak” idea, with the added requirement that we need to include depletion (scientifically discussed in this paper). Matt was one of the invited speakers to Uppsala but, at that time, it was natural gas that interested him.
Although Peter Maass had been round the entire world as a journalist I got the impression that he mainly concentrated on American problems and Peak Oil. The reality is that 5% of the world’s population (the USA) cannot, in future, continue to use 25% of the world’s energy resources. That is “The Crude Reality”.
Day two was to be ASPO International’s day. The evening before, Matt Simmons had held one of his panel presentations and had emphasized the importance of giant fields. To my disappointment he had missed the research that we have done in Uppsala during the last two years. As moderator for the start of day two there was time for presentation of ASPO International and to introduce the global problems of Peak Oil. This gave me the possibility to add the scientific part of giant oilfields and Peak Oil.
The first speaker on Tuesday was Ray Leonard. When he spoke in Uppsala in 2002 he worked for Yukos in Russia. Since then he has passed through oil companies in Rumania and Kuwait and is now in Houston, Texas. With that background, the theme for his presentation was, as one might expect, the Middle East and Russia. Talking about Saudi Arabia’s reserves, Ray expressed the opinion that they are expecting to extract a greater proportion of the oil in the ground than is usual. The volume that they give as “oil in place” is 700 billion barrels. Russia’s reserves are also uncertain but, in Ray’s opinion, they should expect approximately 50 billion barrels more than BP gives in its statistics.
The rest of the morning was dedicated to reserves and resources around the world. Simon Ratcliffe presented on Africa’s reserves and resources, Michael Rodgers had Asia as his focus and, in particular, China. David Shields described the difference between political reality and what is really happening in Mexico and Rose Anne Franco had South America as her lot. The common thread was that production curves will be pointing downwards by 2030. For Mexico, the ongoing production crash is so severe that the question is whether they can export any oil at all within a few years. The bright point was Brazil and it is becoming all the more apparent that Brazil is a nation of the future. It is no coincidence that they also got to host the Olympic Games in 2016.
During the afternoon the theme was food and water and how we can continue to spread information on Peak Oil. The fact that all the speakers were Americans and that the rate of speech was increased occasionally made it difficult for us non-native English speakers to follow. It is a bit of a pity that they did not keep this in mind.
The exception was Robert Hirsch and there is an additional reason to mention his name. Every year ASPO-USA gives a M. King Hubbert award to an American who has, in a meritorious manner, spread information on Peak Oil. This year it was Robert Hirsch’s turn to receive this distinction.
Last up at the lectern before the summing up was Colorado’s Guvernor Bill Ritter. It was inspiring to listen to his enthusiastic view of the future of renewable energy. The investments in Colorado are creating jobs and more national and international companies are now choosing to establish themselves here. It felt as though Colorado would be a future success story of the USA.
Finally I would, of course, like to express my gratitude to everyone at ASPO-USA for doing such a fantastic job. I now feel that ASPO International truly is an international organization. We are now 25 chapters of ASPO International and I know that there will be more in the future.