CONFERENCE REVIEW: Living with Oil Depletion

The Energy Institute, October 24, 2008

At the distinguished Energy Institute off Regents street a room full of scientists, engineers, and other energy industry professionals discussed the depletion of world oil reserves. Although it will be essential to plan for depleting oil reserves and researchers at this conference claim that the peak oil will occur within the next few years, this information is not informing public policy.  No.10 and BERR presently present peak oil production as ‘not in sight’. Meanwhile, recently the International Energy Agency says an oil crunch is likely in 2012. That peak oil is happening now or very shortly was the dominant opinion at this conference. Furthermore, the peak for non-conventional oil (including coal) will occur before 2020. The discrepancy between the 'official' version at policy level and the figures presented by geologists and others in the industry is deeply problematic to say the least. This conference demonstrated the abysmal failure of government and business leaders to accept geo-physical constraints.

Several major companies including Arup, Yahoo and Virgin have created the UK Industry Taskforce on Peak Oil and Energy Security (ITPOES) and released a report, The Oil Crunch, available for download here

read more here.

Chris Skrebowski, a oil industry veteran for 38 years, presented other interesting figures and facts:

Latest BP statistics show Peaks are already happening
•OECD production peaked in 1997
•Non-Opec, non-FSU production peaked in 2002.
•North America/Mexico peaked in 1997
•North Sea -UK/Norway/Denmark peaked in 2000
•Around 28 significant producers in decline
•About 35% of global production from decliners
•Once 51% in decline we reach global peak oil

Peak Oil matters because oil dominates its markets
• 80-95% of all transport is fuelled by oil products
• 50-75% of all oil is used for transportation
• All petrochemicals are produced from oil
• 99% of all lubrication is done with oil products
• 95% of all goods in the shops get there using oil
• 99% of our food involves oil or gas for fertilisers, cultivation and transport
• Oil is the most important source of primary energy - accounting for 36% of all energy

Eight key pieces of evidence that we are close to Peak
1. Falling discovery rate, few large discoveries
2. Ever more countries in sustained depletion
3. Companies struggling to hold production
4. Non-geologic threats to future oil supply
5. The current lack of incremental flows
6. Few countries with real growth potential
7. The age of the largest fields
8. Sustained high oil prices
Economics isn’t working very well
Demand side
•Many governments subsidise fuels
•Gasoline costs from 20 cents to $9 a gallon
•Jet kerosene is not taxed
•Automobile half-life in the USA is 17 years
•Technology response 3-10 years
Supply side
•Producer governments
•Response times to changing price signals is very long
•Bottlenecks produce project inflation
•Projects take 6-9 years to get into production
•Engineers take up to 10 years to be fully trained
•Discovery rates have fallen to a third of consumption
This is treble demand growth!**
•More than tar sands, biofuels and heavy oil together.