Science magazine has a major “news focus” piece (subs. req’d) arguing the peak is nigh:
Even those who believe there’s plenty of oil left in the ground to meet rising demand are warning that the final crisis could come uncomfortably soon. Although price spikes and drops may recur for years, says [IEA] economist Fatih Birol, “we think the era of cheap oil is over.”
As noted earlier, the IEA report concludes Oil price to rebound to $100 when economy recovers, then soar to $200 by 2030.
It’s getting harder and harder to find an optimist” on the outlook for the world oil supply, says Beijing-based petroleum analyst Michael Rodgers of PFC Energy, a consulting company. Indeed, the IEA report as well as one coming from the U.S. Department of Energy’s Energy Information Administration (EIA, confusingly enough) see hints that the world’s oil production could plateau sometime about 2030 if the demand for oil continues to rise. Unless oil-consuming countries enact crash programs to slash demand, analysts say, 2030 could bring on a permanent global oil crunch that will make the recent squeeze look like a picnic.
That’s right — the IEA report thinks we won’t peak/plateua for over two decades. Needless to say, the peakists are disappointed that even the now-alarmist IEA isn’t sufficiently alarmist.
In a recent memo to fellow peakists, Robert Hirsch wrote “Many may be tempted to directly challenge the recent IEA World Energy Outlook. I am among those who were very disappointed” (see “Robert Hirsch: Peak-a-Boo, I don’t see you?“). Given the realities of rapidly depleting fields around the world and that we haven’t seen much of supply growth in the last few years, I tend to agree with Hirsch (see “Peak Oil? Bring it on!“).
Even the IEA recognizes that we need to find the equivalent of six Saudi Arabias in the next 22 years just to stave off the peak until 2030:
Signs of strain may already be emerging. Outside OPEC, oil production has not risen since 2004, even as prices soared. IEA sees no recovery in this non-OPEC production from conventional oil fields. Moreover, it projects that the plateau in conventional oil will turn into a decrease beginning in the middle of the next decade, accelerating through to 2030. Only the growth of production from expensive unconventional sources, such as mining tarry sands in Canada, will keep total non-OPEC production from falling during the next 20 years, according to IEA.
“Non-OPEC conventional production is definitely at a peak or plateau,” says Rodgers. “That’s starting to make people nervous. It’s not what even pessimistic people anticipated.”
Only massive expansion of climate-destroying unconventional sources like the tar sands can stop a serious decline in non-OPEC oil. Makes one sleep better.
A big part of any problem with slaking the world’s thirst for oil, according to IEA’s report (www.iea.org/Textbase/npsum/WEO2008SUM.pdf), is the rapid decline of production from fields past their prime. Any new field produces increasing volumes of oil each year as more and more wells are drilled, but production eventually peaks and, in time, begins to decline. IEA studied 800 fields around the world that had already passed their peak production to see how fast they are declining–a rather rapid 6.7% decline per year, it turns out. And that rate could increase to 8.6% by 2030, IEA says, as the industry turns more and more from waning giant onshore fields to smaller fields and offshore fields, both of which decline faster after peaking.
The decline rate “is a major challenge in itself,” says Birol. “We have found that if we want to stand still–that is, continue producing 85 million barrels per day–for the next 22 years, we need new production of 45 million barrels per day to compensate for the decline. That means four Saudi Arabias.” Add on a demand increase of the sort seen the past couple of decades–equivalent to another two Saudi Arabias–and the world will have to work that much harder to meet rising demand, Birol says.
So why isn’t the IEA even more alarmist? My guess is that the once-bland international energy institute is suffering a bit from the alarmist fatigue, what with the IEA being quite clear that peak oil is not even being the biggest energy problem we face (see “Must-read IEA report explains what must be done to avoid 6°C warming“).
Aren’t you so glad that Climate Progress has yet to show major signs of suffering from such a condition? [Note to readers: Do not talk to my family about this, as they may propose a different diagnosis.]
In its first look ever beyond 2030, the U.S. EIA is finding even less support for a rosy oil scenario than IEA is. Its report is yet to be released, but EIA’s Glen Sweetnam of the Washington, D.C., offices outlined preliminary results at an EIA conference in April (www.eia.doe.gov/conf_pdfs/Monday/Sweetnam_eia.pdf)….
Things look fine right through the rest of the century if, starting now, the whole world severely curbs its appetite for oil, the EIA analysis suggests. In this low-demand scenario, the lingering demand for oil could be met even if the nondemand factors were unfavorable.
The U.S. Energy Information Administration has been blander and more cautious than the IEA for many years now. If they are becoming more pessimistic, it is time to start hoarding!
The energy agencies “have done a good job of describing the fix we’re in,” says energy analyst David Greene of Oak Ridge National Laboratory in Knoxville, Tennessee. “They’re recognizing that the non-OPEC world won’t be able to increase production much if at all. The IEA correctly points out the massive investment required” to meet any increase in demand. In fact, it’s not clear to Greene or other analysts that OPEC has any intention of upping production to keep the price of oil relatively low, which would not be in its self-interest. Better to keep more oil in the ground, pinching supply, and sell that oil later at a higher price. And some OPEC countries, such as Iran and Iraq, may not be capable of making the required investment, even though they have the oil.
So where exactly are the six new Saudi Arabias going to come from?
The bottom line is we are going to peak/plateau before 2030.
- Will we see $3 gasoline before $5?
- Drop in U.S. driving last 8 months exceeds the 1970s’ total decline
- Note to media/Bush: Saudis/OPEC don’t control the price of oil any more!
- $12 – $15 gas? Not so fast. But we’ll soon be mad for $6 – $7
- Note to Bush, media: Opening ANWR cuts gas prices one penny in 2025
- Peak Oil? Bring it on!
- Thirsty oil-rich nations reduce exports
- Why I don’t agree with James Kunstler about the “end of suburbia”
- My 1996 warnings and predictions: “MidEast Oil Forever?” — Part I: Drifting Toward Disaster
- Plug-in hybrids and electric cars — a core climate solution