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Tuesday, 24 April 2007 e-mail:
A new report commissioned by the US government1
reviews recent forecasts for when global oil production will peak, and
concludes that only a handful of forecasts predict peak after 2020. Of 27
forecasts reviewed, 21 forecast peak between now and 2020, while only two
forecast peak post-2020. Four others see “No sign of peaking” (ExxonMobil), think
“Peak oil theory is garbage” (Cambridge Energy Research Associates, energy
consultants), suggest peak is “Impossible to predict” (J. Browne, BP CEO) or “Deny
peak oil theory” (OPEC). About half forecast peak in the range 2010-2015. That there
should be a cluster of forecasts in the 2010-2015 range should be of great
concern, since the report’s author,
From the current report’s Executive Summary:
As noted in previous
literature, peak oil presents the world with a risk management problem of
tremendous complexity and enormity. Prudent risk minimization requires the
implementation of mitigation measures roughly 20 years before peaking to avoid
a very damaging world liquid fuels shortfall.
The report also emphasizes warnings from the International
Energy Agency:
Because of the large
uncertainties, it is difficult to define an overriding geological basis for
accepting or rejecting any of the forecasts. However, the IEA recently warned
that worldwide investment in expanded oil production has been considerably less
than needed to continue world oil production that is adequate to meet expected
world demand. Thus, geological limits may be yielding to investment limitations…
"In short, we are on course for an energy system that will evolve from
crisis to crisis," according to Mandil… “Mr. Birol,
the IEA economist, said in an interview that he expects the oil industry's
production capacity will slightly outstrip demand through the end of this
decade ‘if all the projects see the light of day.’”
On OPEC, the report states:
It is noteworthy that
OPEC apparently denies that the peaking problem even exists. In the past, OPEC
has been reluctant to discuss such matters. It has been speculated that OPEC
may believe that it is in their self-interest to deny the peaking problem, lest
it undercut their near-term market control. Their denial cannot be physically
based, because it is well established that production from individual oil
fields reaches a peak and then goes into decline and that regions composed of
many oil fields behave similarly.
The report notes that three important
institutions and two noted individuals have expressed concerns about future
world oil production and the coming of peak oil:
|
|
“Already 54 of the
65 most important oilproducing countries have
declining production and the rate of discoveries of new reserves is less than
a third of the present rate of consumption.” |
|
IEA |
“By 2011 … global
growth will marginally exceed supplyside
expansions.” |
|
Raymond James
(Brokerage / Financial) |
“The peak in global
oil production, which we believe is approaching, will occur no matter what
the economic circumstance.” |
|
Schlesinger, J. R.
(Former Secretary of Energy, Secretary of Defense,
CIA Director, and AEC Chairman) |
“In the decades
ahead, we do not know precisely when, we shall reach a point, a plateau or
peak, beyond which we shall be unable further to increase production of
conventional oil worldwide. We need to understand that problem now and to
begin to prepare for that transition.” |
|
Greene, D. (Oak
Ridge National Laboratory energy analyst) |
“Peaking of
conventional oil production is almost certain to occur soon enough to deserve
immediate and serious attention.” |
The report concludes:
It is possible that
peaking may not occur for several decades, but it is also possible that peaking
may occur in the near future. We are thus faced with a daunting risk management
problem:
· On the one hand, mitigation
initiated soon would be premature if peaking is still several decades away.
· On the other hand,
if peaking is imminent, failure to initiate mitigation quickly will have
significant economic and social costs to the
The two risks are
asymmetric:
· Mitigation actions
initiated prematurely will be costly and could result in a poor use of
resources.
· Late initiation of
mitigation may result in severe consequences.
In summary, most forecasts predict a peak in
global oil production between now and 2020, with a cluster in the range
2010-2015. The International Energy Agency has been issuing multiple warnings
that there may be oil supply problems ahead, by 2010 if all the projects do not
see the light of day. It is time to take peak seriously.
Ends
Notes for editors:
1 ‘Peaking
of World Oil Production: Recent Forecasts’, Robert L. Hirsch, SAIC, Feb 5 2007.
Available at www.odac-info.org,
Assessments. A
slightly shorter version of the report was published by World Oil, April 2007, Peaking of world oil production:
Recent forecasts.
2. ‘Peaking
of World Oil Production: Impacts, Mitigation, & Risk Management’, Robert L.
Hirsch et al, SAIC, Feb 2005. Available at www.odac-info.org,
Assessments.
3.
The Oil Depletion Analysis Centre (ODAC) is a UK-registered educational
charity working to raise international public awareness and
promote better understanding of the world's oil and gas depletion problems. Further
information is available on its website.