[OPE-L:8551] Fw: FROM NEW ZEALAND: PEAK OIL

From: Howard Engelskirchen (hengels@zoom-dsl.com)
Date: Wed Mar 05 2003 - 17:21:22 EST


Comment?


> Message: 1
>     Date: Mon, 03 Mar 2003 18:28:20 -0000
>     From: "Robert <robert@oilcrash.com>" <robert@oilcrash.com>
> Subject: NZ Listener march 8 2003
>
> FALLING OFF HUBBERT'S PEAK
> "Facts do not cease to exist because they are ignored" - Aldous
> Huxley
> In 1912, Winston Churchill, then First Lord of the Admiralty, made a
> fateful decision that oil, rather than coal, would thereafter fuel
> the ships of the Royal Navy.  This had far-reaching consequences
> because it meant a dependence on foreign oil supplies rather than
> Welsh coal.  It led, through government involvement, to the rapid
> growth of the Anglo-Persian oil company, later to become British
> Petroleum (BP).  The rest of the great powers rapidly followed
> suit.  Conventional, easily extractable oil now provides ~40% of the
> world's energy supply.  We depend on oil not only for most long-
> distant transport (cars, trucks, trains, ships, planes) but also as
> a chemical feedstock for plastics, and for fertilisers and
> pesticides integral to modern agriculture.  Economic growth
> involving increased industrial and agricultural production over the
> past century has been inextricably linked to increased oil usage.
> Growth through globalisation, in particular, depends on cheap long-
> haul transport which, in turn, is based on an enormous and complex
> world-wide infrastructure for extraction and distribution of oil.
> Within the developed world we have become particularly addicted to
> cheap air travel based on an abundant supply of conventional oil.
> In 1956 M.K. Hubbert, a petroleum geologist then working for Shell
> Oil, noted that exploitation within any oil province follows a
> predictable bell-curve trend when production is plotted against
> time - the biggest and easiest exploited oilfields are found early
> in the history of exploration while second order fields are
> developed as production from the big fields inevitably declines.  In
> the ascending part of the bell-curve, exploration and production is
> easy and cheap but in the descending portion of the curve it becomes
> progressively more difficult and expensive.  Ultimately, a limit is
> reached when the energy required for further exploitation exceeds
> that produced.  Against the wishes of his management and to general
> disbelief, Hubbert went on to predict that US domestic oil
> production would peak around 1970, about 40 years after the period
> of peak discovery around 1930, and would then irrevocably decline.
> US domestic production did indeed peak within a year of his
> prediction despite one of the largest original oil-gas endowments in
> the world.  The US now imports ~61% of its oil needs - this
> proportion is increasing at ~3% per year.  Similar patterns of peak
> production following peak discovery by a period of ~40 years or less
> have occurred throughout all the world's oilfields.  For example,
> production in the UK North Sea began in the early 1970's, peaked in
> 1999, and is now declining at ~6% per year.
> For the entire globe, oil discovery peaked in the mid-1960's.
> Approximately 80% of current production comes from fields discovered
> before 1973 and large discoveries are becoming increasingly rare,
> despite great advances in exploration and extraction technology, and
> better understanding of the geological conditions for oil formation
> and entrapment.  Many analysts believe that ~90% of the world's
> conventional oil resource has already been found - no more big
> elephants are believed to exist!  This is reflected by declining
> exploration activity world-wide, a lack of investment in new
> refinery facilities, and a recent series of mergers between the
> major companies (e.g. Exxon-Mobil, Chevron-Texaco, BP-Amoco,
> Phillips-Conoco).  Oil production outside the Middle East is
> estimated to have peaked in 1997 and is now in terminal decline.
> The Gulf States alone have the capacity to meet global demand which
> continues to rise at ~2% per year.  Saudi Arabia holds about 25% of
> remaining global reserves and Iraq about 11%.  Iraq has the greatest
> recognised potential for further exploration and increased
> production.  Also notable is the growing demand for Middle East oil
> from oil-poor Asia (China, India, Japan, Korea) which seems set to
> become the dominant consuming region by 2010.
> Put simply, across the Earth, we are currently burning more than 4
> barrels of oil for every new barrel discovered while demand
> continues to rise.  Independent analysts estimate that we have
> produced nearly 50% of the total global resource of recoverable
> conventional oil.  The global 'Hubbert Peak' for conventional oil
> production is predicted to occur in 2005±5 years, with the peak in
> gas production following shortly afterwards.  Beyond the global
> peak, oil price will escalate steeply as demand exceeds supply with
> the Gulf States no longer able to meet the increasing shortfall
> throughout the rest of the world.  Competition for a dwindling oil
> supply will become increasingly fierce.  The world resource of
> conventional oil, accumulated over several hundred million years of
> geological time, will effectively be dissipated only 200 years after
> the first oil wells were drilled in the mid 19th century.
> What alternatives exist?  There are very substantial reserves of non-
> conventional oil (tar sands, oil shale, etc.), but extraction will
> be energy intensive, expensive, slow, and very environmentally
> unfriendly!  Renewable energy sources (hydro, solar, wind,
> geothermal) along with coal and nuclear power may substitute for oil-
> gas in electricity and heat generation, but NO known substitutes for
> long-distance travel and transportation can supplant the oil
> infrastructure over a short time-frame.  Hydrogen-powered fuel cells
> are being looked at as a clean energy source for short-haul
> transport, but generation of hydrogen is itself energy intensive.
> Because of its reliance on cheap long-haul transportation, global
> trade at its present level seems unsustainable beyond peak oil.
> Massive disruption to the global economy seems likely by 2010-2015.
> Why is this enormous problem largely ignored (at least in public) by
> the world's leaders, and why do we hear so little about it?
> Principally because it is very bad news and nobody wants to hear it,
> especially politicians and shareholders in big oil companies.  But
> note that BP is now reinventing itself as 'Beyond Petroleum'.  Only
> the hugely influential US Geological Survey, for reasons of its own,
> is extrapolating to a more optimistic future - they estimate that
> the global endowment of recoverable oil is about 3 trillion barrels,
> about 50% above most other estimates.  On the other hand, there is
> good reason to believe that published reserve estimates for the OPEC
> countries, especially, were systematically exaggerated in the late
> 1980's to win a greater slice of the OPEC allocation cake.
> What are the implications for New Zealand?  The news for us is
> particularly bad because of our economic dependence on long-range
> exporting and on global tourism.  We may have to face up once more
> to the prospect of being an isolated island economy.  Self-
> sufficiency should predominate our thinking wherever possible.
> Mountaineers tell us that the ascent to a peak is often
> comparatively easy, it is the 'coming-down-safely' that is
> difficult - that is the lesson we should all take in as we cross the
> global Hubbert Peak.  We should also take note of a common saying in
> the oil business:
> "If you don't deal with reality, reality will deal with you".
>
> Reference Sources for this article include:
> "The Coming Global Oil Crisis" by Colin J. Campbell, Multi-Science
> Publishing & Petroconsultants S.A. (1997)
> "Hubbert's Peak: the Impending World Oil Shortage" by Kenneth S.
> Deffeyes, Princeton University Press (2001)
> "The Prize: the Epic Quest for Oil, Money, and Power" by Daniel
> Yergin, Simon Schuster, New York (1991)
>
> and websites linked to <http://www.oilcrisis.com/>
>
> Richard H. Sibson
> Department of Geology
> University of Otago
> 22/02/2003
>
> 214 Bard Hall
> Materials Science & Engineering
> Cornell University
> Ithaca, NY 14850
>
> (607) 255-9159
> jcs9@cornell.edu
>
>
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