Saturday, September 26, 2009

"Peak Oil: Not enough oil for the G20 package," By Kjell Aleklett, Aleklett Energy Mix, Apil 3, 2009

The world’s wealthiest nations, the G20 group, have decided to light a fire but have forgotten a very important detail – to check whether there is sufficient fuel to enable the fire to burn. Historically we have never had global economic growth without a simultaneous increase in the use of energy. This means, primarily, an increase in the use of fossil fuels. For a few nations – China, USA, Russia, India, Australia and South Africa – coal is a very important fuel. However, the most important fuel for the world economy is oil. All nations of the world use oil.

When the economies of different nations are compared, one usually compares their GDP(PPP), Gross Domestic Product (Purchasing Power Parity) per capita. If one furthermore compares how much oil nations use one can see that, since the Second World War, all nations have had to increase their oil use to get economic growth. If we compare how much oil is needed per 1000 dollar GDP (PPP) per person we get a suitable figure for comparison. The amount of oil different nations use varies. In 1980 Sweden, together with the USA, was the worst in the world since we needed the most oil. Nuclear energy and increased use of biofuels have helped us in Sweden to improve but we are still not as good as, for example, France, Germany and the United Kingdom.

During the last 20 years we have had global economic growth of approximately 3% per annum. Fuel use in the form of oil has increased, on average, by half of this rate, i.e. 1.5% per annum. In the future prognoses made by the International Energy Agency, IEA, they believe that we can increase our efficiency of fuel use but we will still need more oil. The documents that resulted from the G20 meeting assume that this fuel will exist to allow future global growth.

To get an appreciation of the scale of the task we can examine the economic growth that the world experienced from 2003 until 2007. In 2003 oil consumption was 77 million barrels per day and in 2007 it was around 85 million barrels per day, i.e. an increase of 10 percent. At the moment consumption is around 84 million barrels per day. If the stimulus package that the G20 group decided on is to generate the same amount of growth as seen in the 2003 to 2007 period then we will need an increase of 8 to 9 million barrels per day during the next 5 years. Such an increase is not possible.

The Global Energy Systems group at Uppsala University has just published an article in the scientific journal Energy Policy (see article) in which we show that oil production from those fields that are currently in production will decrease by 6 percent per year during the next 5 years. This means a decrease in the rate of production by 18 million barrels per day after 5 years. The G20 nations want to increase oil use but the forces of Nature say that there will be a decrease. For the G20 nations to get what they want the world’s oil industry would need to bring online new production of 25 million barrels per day over the next 5 years.

The USA-based company CERA has studied all the projects that the oil industry currently plans to bring online in the coming years. Last summer they arrived at an optimistic estimate that saw 14 million barrels per day of new production. One week ago they revised this increase downwards by 7.6 million barrels per day since companies are now postponing projects.

The same nations that now require increased oil consumption will meet in December with the world’s other nations in Copenhagen. They will then discuss what measures they can take to reduce oil consumption. They do not discuss what volumes of renewable energy will be needed but we have made an initial preliminary estimate and we find that 30 million barrels of oil per day must be replaced with renewable fuels and electricity by 2030 to keep a GDP(PPP) growth rate of 3 percent. What the G20 group should discuss is what investments will be required for this transformation of the energy system to become reality.

Kjell Aleklett, Professor of Physics
Global Energy Systems, Uppsala University,
President of ASPO International, the International Association for the Study of Peak Oil & Gas,
Mobile: +70 425 0604

Original article available here

Tuesday, September 8, 2009

"The Stonewalling of Peak Oil," By Dr. Robert Hirsch, ASPO-USA, September 7, 2009

Dr. Robert L. Hirsch is the lead author of a seminal report, "Peaking of World Oil Production: Impacts, Mitigation & Risk Management," written for the U.S. Department of Energy’s National Energy Technology Laboratory (DOE-NETL) and released in early 2005.

"When the report was done, management at NETL really didn’t know what to do with it because it was so shocking and the implications were so significant. Finally, the NETL director decided that she would sign off on it because she was retiring and couldn’t be hurt, or so I was told. The report didn’t get widely publicized. It somehow was picked up by a high school someplace in California; eventually NETL put it on their website. The problem for people at NETL—and these are really good people—was that they were under a good deal of pressure to not be the bearers of bad news -- pressure from people in the hierarchy of the DOE. This was true in both Republican and Democratic administrations. There is, I think, ample evidence, and some people in DOE have gone so far as to say it specifically, that people in the hierarchy of DOE, under both administrations, understood that there was a problem and suppressed work in the area. Under President Bush, we were not only able to do the first study but also a follow-on study that looked at mitigation economics. After that, visibility apparently got so high that NETL was told to stop any further work on peak oil.

Yes, that was terrible. And it was strictly politics and political appointees—I have no idea how far up in either administration (the current one and previous one) these issues went or now go. People in the Clinton administration had talked about peak oil, including President Clinton and Vice President Gore, and the same thing is true in the Bush administration, and the same is true, to the best of my knowledge, in the Obama administration.

The peak oil story is definitely a bad news story. There’s just no way to sugar-coat it, other than maybe to do what I’ve done on occasion and that is to say that by 2050 we’ll have it right and we will have come through the peak oil recession—quite probably a very deep recession. At some point we’ll come out of this because we’re human beings, and we just don’t give up. And I have faith in people ultimately. But it’s a bad news story and anybody’s who’s going to stand up and talk about the bad news story and is in a position of responsibility in the government needs to then follow immediately and say “here’s what we’re going to do about it,” and no one seems prepared to do that.

Peak oil is a bigger issue than health care, than federal budget deficits, and so forth. We’re talking about something that, to take a middle of the road position—not the Armageddon extreme and not the la-la optimism of some people—is going to be extremely damaging to the U.S. and world economies for a very long period of time. There are no quick fixes."


Blog Comment: Dr. Hirsch says that "there’s just no way to sugar-coat [Peak Oil]," but that is what he does. There is no plan or technology for replacing oil, nor is there time or capital to do so. After listening to his speeches, it is clear that his beliefs in America, technology, and the human will distort his scientific analysis. Denial is way of avoiding the horror of the reality ahead.

"New Oil Discovery in the Gulf of Mexico," By Tom Whipple, ASPO-USA, September 7, 2009

"Last week, the news was dominated by BP’s announcement on Wednesday that it had made a “giant” oil field discovery called Tiber, 35,000 feet beneath the surface of the Gulf of Mexico. BP did not announce the size of the find, but said it was comparable to other discoveries in the area, leading to press speculation that the Tiber find was on the order of 1-3 billion barrels. Initially the announcement that oil could be found so far below the surface was greeted with much enthusiasm with some stories suggesting that a new era of finding oil was at hand and that exploration in the Gulf would revive.

Within a day reality set in as reporters learned that it was likely to take ten years of difficult and expensive drilling before any oil could be produced and even then less than a third of the oil, and possibly as little as 5 to 15 percent, can be recovered. Given that production from existing fields in the Gulf is likely to start declining rapidly in the next few years, oil from the deep water discoveries is unlikely to be sufficient to increase production from the Gulf.

Production in the Gulf of Mexico accounts for about a quarter of total U.S. oil production, or about 1.2 million barrels a day. Gulf production peaked in 2003 at 1.56 million b/d. Most Gulf production wells tend to hit their peak within a year or two, and then begin to drop steeply several years later. Oil production in federal waters of the U.S. Gulf fell 9.8 percent last year, to the lowest since 1997, as new finds failed to keep pace with declining output from fields discovered in the 1970s and 1980s."


Monday, September 7, 2009

"Simmons vs Yergin, Lynch et al on Peak Oil," By Kate Mackenzie, Financial Times, September 7, 2009

Kate Makenzie at the Financial Times is trying to inform readers about Peak Oil. She counter poses William Simmons with Daniel Yergen, Michael Lynch, and Ed Morse. Readers are left with questions about who is right. Here is my my published comment :

Global oil production peaked in 2008 and is now in terminal decline. The evidence is clear. During the period 2004 to 2008, as oil prices climbed, all oil producers were pumping at maximum effort with historically high oil prices. During this period, oil production remained flat, peaked a bit in July 2008 and then began to decline while oil prices were very high and before the October global economic collapse, as documented here. And the depletion picture is far worse than Simmons indicated, as explained here.

Sunday, September 6, 2009

"What the IEA Doesn't Want You to Know About Peak Oil," By Lionel Badal, Seeking Alpha, September 6, 2009

"It is not in the interest of some IEA member states, in particular its most powerful member, namely the USA, that the agency provides an honest assessment of the situation. Admitting Peak Oil is real also means that you acknowledge our current way of life is about to (radically) change. And not everyone wants the public to know that. Irresponsible, dishonest? Absolutely."


Blog Comment: Mr. Birol, Chief Economist at the International Energy Agency has misinformed the public by indicating that global oil production will peak in the in the long term future.

The global oil production plateau from 2004 to 2008 is clear evidence of the peak. As oil prices climbed during this period, oil production leveled off. For more detail, see:

And the situation is more dire than Mr. Birol indicates:

Friday, September 4, 2009

"Oil Spin: Ignore the Optimsts, Peak Oil is Real," By Matthew R. Simmons, Foreign Policy, Sepetmeber 4, 2009

"Last week, four of the world's most outspoken oil aficionados waded into the controversy of peak oil, publishing articles packed with myth and distortion. This "Gang of Four" all claimed the issue was silly, moot, or simply a myth. The four pieces were Pulitzer Prize-winning author Daniel Yergin's seven-page article in Foreign Policy, energy analyst Michael Lynch's three column op-ed in the New York Times, analyst Edward Morse's essay in Foreign Affairs, and scholar Amy Jaffe's paper published by the Baker Institute at Rice University.