Reply to NYT: Peak Oil is not a theory; Peak Oil is the reality of past and future oil production.

(On August 24, 2009, New York Times published an Op-Ed contribution by Michael Lynch with the title: ‘Peak Oil’ Is a Waste of Energy. Kjell Aleklett, president of ASPO International, has written an answer that NYT decided not to accept. ASPO International is now publishing this contribution.)

Kjell Aleklett, Professor in global energy systems at Uppsala University, Sweden (www.fysast.uu.se/ges) and president of ASPO International (www.peakoil.net).

Over the past five years, Mr. Michael Lynch and I have debated future global oil production at meetings in Gothenburg (Sweden), Paris and Shanghai. We have also conducted the debate through an exchange of emails published in the British journal Science and Public Affairs in December 2008. The arguments that Mr. Lynch advances are, therefore, well known to me. The fact that he is an economist and I am a natural scientist means that we see the future of oil production from two different perspectives, but are in agreement that access to oil is of great importance to the world economy and our future.

What has prompted Mr. Lynch to write his recent opinion piece in the New York Times appears to be a statement from Dr. Fatih Birol of the International Energy Agency (IEA) that Peak Oil is near. At the same time, Mr. Lynch attempts to discredit a number of dedicated and qualified people who work on the Peak Oil issue as well as ASPO, the Association for the Study of Peak Oil&Gas. To suggest that Dr. Birol would base his assertion on “anecdotal information” is astonishing. One wonders what secret information Mr. Lynch possesses and does not wish to share with the IEA.

Oil was formed millions of years ago. Now that the entire world (with the exception of some offshore regions) has been explored to assess its oil resources, we know quite well where the favorable geological structures are located in which oil might be found. We know also that oil resources are unevenly distributed and that more than half of the entire world’s original and its remaining oil is concentrated in the Middle East. Additionally, most of those nations that had lesser quantities of oil have already, at some point in their history, passed the point of peak production. Not even Mr. Lynch can deny that the USA’s year of peak oil production (1970) has come and gone. This fact means that Peak Oil is now reality for the USA. Examining oil production in most of the oil-producing nations outside of the Middle East shows that they have also passed their use-by-date, i.e. they have also experienced Peak Oil.

The claim that the few nations not yet at their maximum production could compensate for other nations’ declining production, while at the same time continuously increasing their own rate of production without reaching Peak Oil and thereby permitting global production to grow for the remainder of this century, is suspect at best. Those who believe this are, primarily, highly educated economists who assert that the peak oil reality that many nations have experienced is nothing but a theory without foundation. On the contrary, there are many well-grounded theoretical models that describe future oil production.

In his article, Mr. Lynch referred to what is known as the “Hubbert model”, a theoretical model that describes quite well the historical and probable future production of oil in the USA. This model characteristically predicts maximum production when half the oil reserves have been produced. For global oil production, there is general agreement that this model does not approximate reality. By studying the production from individual fields in detail, one can see that there are other parameters that have greater importance for the future rate of production. One of these is the proportion of reserves remaining in an oilfield that can be produced every year. We call this parameter “depletion of remaining reserves”. Different fields show different values for this parameter but, for the largest and most important fields, the depletion rate lies somewhere between 4 and 10 percent. When a field reaches a plateau or the maximum depletion rate for its field type, the field’s production thereafter declines by this percentage value year after year. Investments and new technology can slow this trend but the changes in production thus obtained are significantly less than the volumes produced by the field in its heyday.

Nowadays, new projects must be financed with capital from the international finance market, obtained on the basis of a detailed description of geological factors. The IEA, CERA (Cambridge Energy Research Associates) and we at Global Energy Systems (Uppsala University, Sweden), all agree that it is these new projects that will slow the decline in production from existing fields. Uncertainties in the data on old oil fields will not determine the future; rather it will be by the realities that apply when financing must be found for new production.

When is oil discovered in an oil field? At some point the first well must be drilled so that one can state that oil exists underground. Then, to map the total volume of oil, more wells must be drilled. When an oilfield is announced, the entire field is considered to have been discovered although its total structure is not understood. In the BP Statistical Review of World Energy (a publication used by many economists), revisions in the volume of proven reserves in old fields are reported as discoveries in the year the revisions are made, giving the impression that the greatest volume of oil was discovered during the 1980s. However, backdating these revisions to the date of discovery shows that the greatest volume of oil was discovered during the 1960s.

For those observers of this debate who do not understand the details of reserves and production, the arguments can seem chaotic. We at Global Energy Systems always attempt to support our assertions by publishing our scientific analyses in peer-reviewed journal articles. It is these articles that form the foundation for my assertion that Peak Oil is imminent. The current reality seems to be a production plateau with production varying within plus or minus 4% of 85 million barrels per day. The plateau began in 2005 and production may well decline from that point during the next five to ten years. This includes Dr. Birol’s peak oil date.