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"My father rode a camel. I ride in a car. My son rides in an aeroplane. His son will ride a camel."
- oft-cited expression credited to Saudi oil industry insiders...
In other words, this is the mother-of-all issues...
Below is a primer on the topic, along with a list of reference material for the reader to use (including websites, books, official reports, scholarly reports, films, etc). Whilst the primer mainly discusses oil, the same concept applies to natural gas, coal, uranium, or any other non-renewable resource. See below for references for other resources.
The world is a finite place. It logically follows that the resources contained within the earth are also finite. Whilst some resources are essentially 'renewable' (wind, solar, hydro - tidal, wave, river, etc), the overwhelming majority of the world's energy resources are not. These finite resources cannot be extracted or used in ever-greater quantities until the original resource is gone. Instead, they reach a maximum rate of extraction and then production eventually declines until the resource is gone. This 'production profile' is the key focus of Peak Oil.
The concept of Peak Oil has been around for decades. The 'pioneer' of the topic was Marion King Hubbert, a Shell Oil geologist who modelled oil extraction in the lower-48 US states. In around 1956, he predicted that oil production in that region would reach its highest level - a peak - in the early 1970s, and then begin a steady decline. This prediction was based on a regional analysis of the amount of oil produced by thousands of different oil fields.
Hubbert found that the production in all of these fields followed a similar production profile - production increased from zero up to a maximum point and then decreased towards zero. At the time, the US produced much more oil than anywhere else in the world. Instead of saying the US was the contemporary 'Saudi Arabia of oil production', it's probably more fitting to say that today, Saudi Arabia is the 1956-version of the USA (although Russia produces as much if not more oil / day than Saudi Arabia).
Unsurprisingly, Hubbert was ridiculed, despite his pre-eminence in the geological community. People could not believe that the US would, nor could, reach a peak in their lifetimes, nor the lifetimes of their grandchildren. However, US oil production did reach a maximum (i.e. - peaked) in 1970/1971 and started a steady decline that continues to this day.
That was before the discovery and production of Alaskan oil reserves. That was before technology allowed for significant off-shore drilling (i.e. - the Gulf of Mexico). It was before the huge advances in technology that help find and produce oil in ever-more ingenious ways (including secondary and tertiary 'enhanced oil recovery').
Today, over 35 years later, despite hundreds of billions of dollars of investment in technology and on exploration / production, the US produces less oil now than it did in 1948. We are, quite clearly, well along the down-slope of the 'Hubbert Curve'. The +14-fold increase in price since 1998 has not changed this trend. There is an expression in the Texas oil-patch: "Fire the geologists and replace them with economists as the latter tend to find more oil".
Certainly, the incredibly higher prices might help incentivise more production of the stuff that previously wasn't economic, or even possible. But so far, it's not making a difference to the relentless decline. It might slow the decline or even increase production versus current levels, but we'll never produce the sorts of volumes we did in 1970.
This is not due to 'overly-aggressive' environmental legislation. This is not because the outer-continental shelf and ANWAR are off-limits (for now). We could open up the whole country to drilling - put a drill in every backyard, off the coast of every beach, under cemeteries and national monuments. We'd probably produce some more, but again, not 5 million barrels per day more. It's not OPEC's fault, though they certainly benefit. It's not 'Big Oil's' fault; whether they benefit or not is more open to debate, though most would argue they are going to be the losers (in comparison to National Oil Companies - NOCs, and in general as their production eventually starts to decline...it has been stagnant for around a decade).
It is geological reality; there is a finite amount of oil in the USA. We tend to find the easy-to-find-and-produce stuff first (the stuff that shoots out of the ground under its own pressure) and work our way down to stuff that has to be pumped out of the ground (the 'nodding donkeys' as they're known, that you might associate with oil fields) and continue down to sub-sea reserves that are miles below the floor of the ocean, then down to 'unconventional reserves' like oil shales that involve colossal expenditures of energy to get them out of the ground and turn them into something that resembles 'normal' crude oil.
US Outer-Continental Shelf Offshore Drilling and ANWAR
Much is made in the popular press in the USA about the potential of oil production from the US Outer-Continental Shelf (OCS) and and from the Alaskan National Wildlife Reserve (ANWAR) which are currently protected from drilling. Opening up access to these areas has been a hallmark of the Bush administration's response to concerns about oil price and security. This belief that America 'has plenty of oil' and can drill its way to energy independence if only we were allowed to, and in the abscence of mass conservation is common - though wrong. The argument and associated sums that get thrown about in the press often are not put in to any context as to the contribution they could make to US demand. While not negligible, it is certainly no panacea for our energy crises. Any serious analysis by people who are trying to gain from the drilling (or who aren't idealogically opposed to any drilling) should normally make this clear. In fact, the US Department of Energy's 'Energy Information Agency' (EIA) recently published a report about the potential of the OCS and its limited impacts on US oil supplies and price. Dr. Albert Bartlett's lecture also discusses the potential for ANWAR and OCS in the broader context of growth and production.
Historically, Democrats have challenged the actual contribution these efforts could make versus the potential environmental impacts (especially in ANWAR), or impacts to local tourist industries (like in Florida). Instead, they have focused on efforts at reducing America's demand for oil.
Public opinion has generally favoured the Democrats on this, with a majority of Americans supporting a moratorium on drilling in ANWAR and the OCS. However, with the huge increases in price - and frankly, a lot of disinformation about the potential benefits to their fuel bills - that support is being tested. The Pew Research Center released a study in July 2008 that showed public opinion moving towards supporting more exploration and production of oil within the US, rather than protecting the environment and regulating energy companies.
Researchers and pundits within the 'peak oil aware' crowd often differ on the cost / benefit of opening up the OCS and ANWAR. Some argue that whilst the contribution will still be 6+ years away at the earliest, and that the amount of possible production is unknown, the US should start exploration now so that the oil can come onstream as soon as possible. David Brower has referred to this policy as strength through exhaustion. Others have argued that the oil that is possibly there should be saved / conserved for future use, if it is ever used at all. One could arguably take the middle-ground perspective and support exploratory drilling to get a better view of what is actually there, but delay production into the future. However, this is not practical due to the shortage of oil rigs around the world, the significant costs involved in this sort of exploration (tens if not hundreds of millions of dollars) combined with the lack of incentive to do so.
There is still an awful lot of oil in the US; of that there is no question. But the US is a declining oil province, despite the sizeable investments and opportunities for some players. Any 'oilman' will know that.
"We Can Import, So Who Cares?"
Even though US oil production started to naturally decline in 1970/1971, our consumption has continued to increase. We went from being the biggest exporter in the world to the biggest importer (followed by Europe and now China) in under 30 years. Indeed, in the past, we've been able to feed our thirst for oil by ever-increasing imports from Canada, Mexico, Venezuela, west Africa, the Persian/Arabian Gulf, the North Sea, and others. Of course, this has had a lot of political and economic consequences. But let us come to those later (see Geopolitics of Energy: http://www.daukpan.org.uk/node/10 ).
NOTE: Canada is the largest exporter of oil to the US. For more on its production and planned growth, see the discussion below on 'Unconventionals'.
But crucially, some of the the other key suppliers to the US have peaked and are starting to decline as well. The North Sea peaked around 2000 and production has been dropping precipitously, as shown in chart below. This is of UK production but is indicative of the entire North Sea. This area that was a major exporter until recently is now importing oil. This fact is not lost on all within the UK government (see the All Parliamentary Party Goup on Peak Oil and Gas), even if publicly the leadership refuses to address the issue publicly.
Source: https://www.og.dti.gov.uk/pprs/full_production/monthly_oil_production/0.... Note that the decline in the 1990s was primarily due to 'above ground factors' such as low prices and the explosion at the Piper Alpha offshore platform which killed 167 workers. The rig accounted for 10% of offshore production. The decline since 2000 is due to geology and has happened despite the price for Brent crude oil going from $20 to +$135/bbl.
Mexico's production is also starting to decline as Cantarell, it' main oil field and (formerly) second largest producing field in the world, is declining precipitously. That, combined with its own growth in consumption means that Mexico will not be an exporting country for very long.
Venezuela does has a large unconventional supply of 'heavy oil', much like the Canadian Tar Sands, in what's known as the Orinoco Belt. But like the Canadian Tar Sands, the extraction rate of this source of energy is the constraint, not how much oil is theoretically in the ground. At the same time, their production of conventional crude has since peaked and Venezuela's relationship with the US is not good, to say the least.
Several countries in sub-Saharan Africa - such as Nigeria, Angola and a few others - have potential to grow their oil production significantly, though it is doubtful that these increases will offset the decline of other suppliers to the US.
'Opec's Call on Itself'
An idea often referred to as the 'Export Land Model' (see http://www.theoildrum.com/node/3018#more) lays out a relatively simple idea. If the domestic consumption of oil of producing countries grows at a faster rate than their production, their available net exports start to decline. Eventually, if domestic consumption exceeds domestic supply, then the exporters become importers - even with increasing production!
If production decreases, as happened in the US and is happening in Mexico and possibly Russia in the next few years, this process is accelerated.
Jeff Rubin, the Chief Economist of CIBC Global Markets gave a very clear presentation entitled 'OPEC's Call on Itself' in September 2007 that shows quite clearly that the growth in oil consumption by the main producing / exporting countries (OPEC + Mexico + Russia) is so high relative to their production growth that within 15 years, they will not
be able to export any oil. That is a profound statement that should not be ignored. His presentation is available here: http://www.aspo-ireland.org/contentfiles/ASPO6/2-3_ASPO6_JRubin.pdf
He also gave a good four-minute interview to CNBC on the topic which availabe here:
Peaking of Global Production
In fact, over 50 other countries in the world have passed their peak of production. It is becoming quite clear that only a few places left in the world are growing their oil output to any sizeable degree. Without that growth, world oil production would flatten out, and start to decline. Critically, though, the places that are 'post peak' don't just keep producing the same amount. They produce less and less as time goes on. That means that we have to add production each year just to replace what was 'lost' to natural decline. It's like running up an escalator. Eventually, the amount of decline overtakes the new production that comes online and the overall amount of production declines...THAT is peak oil (or coal, or natural gas, or uranium).
Historical global discovery and production of oil. Source data from EIA, ASPO and BP Statistical Review. Graph from http://www.theoildrum.com/files/growing_gap_old_fields.png
In fact, global production of conventional crude oil has not increased by any substantial amount since May 2005. In fact, January 2008 was the first time that crude production equalled or surpassed production since May 2005. Total liquids production (which includes 'conventional crude'+ liquids from natural gas + biofuels and some others) has been relatively flat since mid-2006, though recently passed the July 2006 levels owing to large increases in NGLs, or 'Natural Gas Liquids'. Whilst useful for many things, they aren't used to make transport fuels.
Source: EIA numbers, charted at http://www.theoildrum.com/node/3835#more
A huge debate is raging within the energy world whether this level will continue to stragnate, drop or whether it can be increased to any great degree for any significant length of time. Most estimates of when global peak oil will occur range from now (i.e. - it's already happened) to around 2015. The 'Hubbert Peak' of global oil production is now seen to be within the 'foreseeable future' (in fact, in around 1970, he predicted a global peak around the year 2000 but couldn't model the recession caused by the late 70s oil shocks that actually reduced demand for the only time in history...THUS FAR).
Previously the territory of a few industry insiders (and admittedly a few eccentrics), trying to understand the 'when' of global peak oil and what its implications will be for the world now are regularly discussed by the world's top geologists (again), oil company executives, intelligence and military leaders, heads of energy ministries, investors, academics, and many, many others. For example, see recent interviews with or papers by: CEO of Total (de Margerie), CEO of Royal Dutch Shell (van der Veer) and former Chairman of the Shell Board Lord Oxburgh’s presentation to the global Association for the Study of Peak Oil in Ireland, Chevron’s add campaign; US Army Corp of Engineers paper on peak oil, former CIA Director James Woolsley many presentations, professors at West Point, former US Secretary of Energy, Energy Investment Banker Matt Simmons’ books and presentations, CIBC Market Research’s Jeff Rubin’s presentations...to name a few.
Even the mainstream media, that previously derided anyone, no matter how qualified they were, for mentioning the topic for being 'Chicken Littles' is starting to appreciate that we have a BIG problem (CNBC, Reuters, CNN, Fox, BBC, etc).
Even the likes of Citigroup (see recent report - HAVE DOCUMENT, BUT NEED TO LINK) are starting to say that the onus is on organisations like CERA who say that oil production will grow for decades to come to prove their point.
Unconventionals - Tar Sands, Oil Shale and Heavy Oil
Many - especially the oil industry - have hailed 'unconventional' sources of oil as the solution or mitigant to the peak / decline of conventional crude oil. These unconventional sources include Canadian Tar Sands, US oil shales, Venezuelan 'Heavy Oil', natural gas-to-liquids (known as GTLs), biofuels and others. Biofuels are addressed on the 'Alternative and Renewable Energy' page.
Statements touting the collosal theoretical reserves of these resources are often shown as 'proof' that declining conventional crude oil reserves are not an issue. But these claims completely ignore three very important points:
Below, the example of Canada's oil sands production is discussed as it is indicative of the oil shale and heavy oil production. The environmental issues are left out as the issue of greenhouse gases are discussed in the section on Climate Change and Global Warming .
Canada is the largest exporter of oil to the US, and though its conventional crude oil production is not likely to grow in the future but continue to decline, it is a booming oil province at the moment, primarily due to what are known as Tar Sands. The oil industry prefers to call them 'Oil Sands' or unconventionals as it sounds better than 'tar'.
In the press, one will often hear statements such as 'there is more oil in the Athabasca Oil Sands in Alberta than there is anywhere in the world except Saudi Arabia'. Whilst true, it is a somewhat irrelevant statement. The limit to the Tar Sands is the rate at which the oil can be extracted. Tar Sands are not like other oil that is in liquid form that can be pumped to the surface and transported in pipelines. It is bitumenous 'tar' embedded in the soil that has to be dug up in vast open-pit mines, and separated from the soil using huge amounts of fresh water and 'upgraded' via heating using natural gas to make it into a useful substance. This huge input of precious resources - fresh water and natural gas - are likely to act as a limiting factor to future growth plans of the Tar Sands in Canada (See 'Oh Canada: Natural Gas the Future of Tar Sands Production' ).
There is another way to extract and use the Tar Sands, notably those that are too far underground to be mined. This process is often referred to as in-situ conversion and involves heating the Tar Sands underground via piping steam and effectively separating the oil from the soil and then pumping that separated oil to the surface.
Of course, where to get the steam becomes an issue. The energy requirements are big enough for this that proposals for on-site nuclear reactors to generate steam are being put forward.
Matt Simmons, a leading energy investment banker and rather prolific writer / speaker on peak oil issues has often likened this process (using all of this fresh water and natural gas and eventually nuclear power to convert tar into synthetic crude oil) to taking gold and turning it into lead.
That might be a bit harsh, but when one considers that very low energy return on energy invested (EROEI) of this process - which oil execs have told the author in public discussions ranges from around 5/1 - at best - to around 1.3 / 1 (i.e. - 5.0 or 1.3 units of energy gained for every 1 unit invested...incredibly low in comparison to conventional crude oil), and considers the significantly higher production costs relative to conventional crude oil, and the scarcity of fresh water and natural gas, his comments seem a bit more justified. And even if one excludes the resource constraints for production of Tar Sands, and ignores the massive cost inflation being experienced, one still must be cautious about seeing this unconventional production as a saviour for American oil needs.
Even the rather ambitious growth targets out to 2020 add on 'only' a few million barrels of production per day. In fact, the Canadian oil producer industry association has made several downward revisions to tar sands development due to the resource constraints in their production. That is not to say that this increase is not significant, but in order for the world consumption of oil to grow at 1-2% / annum out to 2020, the world would need to add on tens of millions of barrels / day of production, above and beyond those need to compensate for declining existing production. See the report from Sweden's Uppsala University entitled 'A Crash Program Scenario for the Canadian Oil Sands Industry' for a good discussion of this.
Again, it's the size of tap, not the size of the tank that matters.
The 'so what' question is a wonderful litmus test for most issues. Does it matter? Will it really affect me? If so, how? Who cares? Well, in answer to those questions: 'Yes', 'Yes', 'PROFOUNDLY' and 'sadly not enough people YET'.
Energy is the single most important factor in the modernised world. Everything around you is predicated upon having it, and cheaply: the food you eat, the clothes you wear, the heat in your house, the light by which you read, the computer you're sitting in front of, the chair you're sitting on, the medicines you take, the job you have (ANY job), etc.
And oil, more than any other source of energy, is critical due to its abundance, its high energy content, its [relatively] easily transportable form, its relatively low cost and its multiple uses (oil for transport and heating fuel, for plastics, chemicals, fertilisers, electricity production, etc). Its prevalence in our society is almost impossible to overstate.
Try and live a day without oil, and you WILL struggle....remember all the oil that went in to making the fabrics in your clothes and shoes, paving the roads (bitumen), the planting / growing / harvesting / processing / packaging / storing of your food, to making the toothpaste & brush / shampoo / mouthwash / soap / razor & shaving cream / etc that you use. And that excludes the transport fuels used in getting the raw materials to make them, and then transport them all over the world to your home. You'll find that a day without oil is essentially impossible.
Thankfully, PEAK OIL DOES NOT MEAN WE RUN OUT OF OIL IMMEDIATELY. Peak Oil simply means that, year on year, we have less and less of it. Whilst that might put your mind at ease, don't let it.
A paper commissioned by the US Dept of Energy and led by Robert Hirsch recently concluded that it would take 20 years BEFORE global Peak Oil at a crash-program level (think 'New Deal' or the Apollo mission) to prepare the United States for Peak Oil if we are to mitigate the worst effects and avoid another Depression-era economic shock (see report below).
Needless to say, Peak Oil is one of the key issues affecting much of what's going on in the world, even if it isn't something that politicians like to talk about openly. After all, can you blame them? Where's the 'feel good factor' in telling people that they will have to do with less?
Frankly stated, there are no easy solutions. There are no individual alternatives that can replace oil and allow the world (and especially the United States) to live as it has been. Most likely, there is no combination of alternatives that will allow the US (nor Canada, Australia and much of Europe) to maintain the lifestyle to which we have all become accustomed over the last 100 or so years.
That doesn't mean that we revert to being Medieval peasants, but it certainly means that when Dick Cheney stated that 'the American way of life is non-negotiable', he was not telling the truth...Dick Cheney is well aware of Peak Oil (see Geopolitics of Energy and note that some of the top writers on Peak Oil were part of his infamous 'Energy Task Force').
Indeed, there are many partial-solutions to the crisis of resource depletion that come in to either the demand side (energy conservation) and the supply side (alternative energy) of the equation. But there is certainly no one silver bullet, and the changes needed (or that will be forced upon us) are profound.
Geopolitics (see also 'Geopolitics: Energy & Environment' http://www.daukpan.org.uk/node/10)
But to be fair to Dick Cheney's statement that the American way of life is non-negotiatble, the likely reaction at first will indeed be to continue 'our way of life' at all costs. We will do everything we can to maintain our standards of living, even it means a lot of ugliness around the world. One can CERTAINLY frame much of the geopolitics of today in these terms. As stated above, resource decline doesn't necessarily mean that we go back to the Dark Ages. But as James Howard Kuntsler (a rather polemical writer on energy issues) has said, with Peak Oil there comes a lot of potential for darkness.
Peak-Oil Primers online
The readings below lay out much of the background on Peak Oil (and coal, natural gas, uranium, etc), as well as a myriad of discussions on its implications, timing, severity, how to prepare for and adapt to it.
Books / Reports / Studies
Tar Sands (or as the oil industry prefers them to be called, 'Oil Sands')
'There is more oil in the tar sands of Canada [or insert 'oil shale of Colorado' or 'heavy oil in Venezuela's Orinoco belt'] then there is in all of Saudi Arabia...so we don't need to worry about peaking or 'running out of oil'. When someone makes that statement they are likely either not that familiar with with these 'resources' or somehow benefitting from their exploitation.
The Athabasca tar sands of Canada, the oil shales of Colorado and the heavy oil of Venezuela's Orinoco belt indeed have an awful lot of hydrocarbons in them. There is no denying that. However, 'tar sands' and 'oil shale' are not conventional, liquid oil. The resources needed to get it out of the ground (mainly via mass strip mining) is closer to extracting coal than oil.
Resource Depletion and Climate Change
Films / DVDs
Feature Length Documentaries
Additional Resources There are numerous videos of lectures about peak oil, many available on YouTube and Google Video. There are also videos for sale of various talks, both by ASPO-USA and Community Solution. Colin Campbell, Richard Heinberg, and others have DVD's of their talks available for purchase online. Global Public Media hosts many talks on peak oil. Michael Ruppert's talk "Denial Stops Here" is available on Google video.
‘Worry about bread, not oil’ – Niall Ferguson (Harvard professor) http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2007/07/29/do...
Charts & Graphs
Source: https://www.og.dti.gov.uk/pprs/full_production/monthly_oil_production/0.htm Note that the decline in the early 1990s was primarily due to the explosion at the Piper Alpha offshore platform which killed 167 workers. The rig accounted for 10% of offshore production.