Seven Myths Used To Debunk Peak Oil, Debunked
By Andrew McKay
06 May, 2012
Peak oil is a fact, not a theory.
From US conventional oil production peaking in 1970 to global conventional oil production peaking in 2006 the figures are indisputable. Even institutions such as the International Energy Agency (IEA) and publications like The Economist that are not known for alarmism have admitted that oil production from conventional sources has peaked.
So why are there still commentators who refuse to believe peak oil?
Similar to the phony global warming “debate,” many, but not all of the most vocal deniers are politically conservative, pro-business. And, by their refusal to take into account basic statistics, they’re anti-science. In terms of reduced energy use per capita, and the inevitable downsizing of the global economy, deniers are ideologically opposed to what happens now that we’re living in a post-peak world.
So what are their arguments, and why are they so wrong? The top seven are listed below:
1. Peak oilers say oil is running out, it’s not
At best this is a misunderstanding; at worst it’s a straw-man fabricated to cast doubt on the assertions of those concerned with the realities of peak oil.
No peak oiler worth their salt has ever argued that we’re running out of oil. Sure, there may have been a couple of fringe bloggers arguing the case alongside conspiracy theories about alien abduction cover-ups and laser guided death unicorns, but no one takes them seriously.
The issue isn’t when oil will run out. It’s about when conventional oil extraction peaks, which happened in 2006 according to the IEA’s 2010 World Energy Outlook. Unconventional oil has filled the gap for now (along with decreased use), but there’s much skepticism as to how long this can last.
2. Fracking will save us from peak oil
While it’s certainly true that the massive increase in hydraulic fracturing of natural gas was largely unforeseen by the peak oil-aware, it’s merely a game extender, not a game changer.
The small amount of oil that arises as a byproduct of fracking accounted for less than 5 percent of daily US consumption last year. This is even after a 750 percent increase in tight oil production since 2003. Clearly there would need to be an unprecedented increase in exploration and drilling for oil from fracking to even begin making a dent in the wider scale of things. But that’s before we consider damage to the environmental commons — land, air, and water — from the fracking process.
The other trouble with fracking is that production figures for individual wells commonly decline 60-80 percent in the first year followed by a more gradual decline. This means new wells must constantly be drilled to avoid production for a whole area dropping off very quickly.
The US Energy Information Administration (EIA) forecasts that domestic production of tight oil will max out at 1,325,000 barrels a day by 2030. This is only 7 percent of the current US daily consumption. No one seriously believes that the US economy can grow without increasing oil consumption. The numbers don’t stack up, it’s as simple as that.
3. The US is now, or will soon be, a net oil exporter
The rise of tight oil extracted through fracking has been hailed as a new era for US energy independence. Some have even gone as far as saying that the US is now a “net oil exporter.” The devil is in the details however. On a Btu basis the US imported 58 percent of the oil it consumed in 2011.
Now, it’s true that the US became a net “oil product” exporter in 2011 for the first time in over sixty years. This is, however, very different from being a net oil exporter proper.
Gasoline, diesel, and heating oil made up the majority of these products. But much of this oil was initially imported as crude from overseas, refined in the US and then exported back out. This doesn’t make the US a net oil exporter.
Total net crude and product imports did fall 11 percent in 2011 to 8.436 million barrels a day, the lowest point since 2005. And domestic oil output did rise 3.6 percent to 5.673 million barrels a day. But this still leaves a 48.7% difference between imports and domestic oil output, a huge gap that the IEA forecasts will not be closed as far out as 2035. Observant analysts don’t think it will happen ever.
4. Oil production is still increasing annually
Like many peak oil denier myths this old gem is true up to a point. But only if you include unconventional oil, natural gas liquids, and biofuels. Which means that when you take those figures away you get…that’s right…a peak in the production of oil from conventional sources.
And as we see from the example in the US, it’s highly unlikely that unconventional plays will be able to take up much of the slack.
5. Saudia Arabia will ramp up production to ease prices soon
Crude oil prices have been over US $100 a barrel since February 2011. This is after steadily climbing from a low of US $42 a barrel in December 2008, after the last recession killed demand.
The question is, With oil prices so high for so long, why hasn’t Saudi Arabia stepped in already to ease prices?
Saudi Arabia produced the highest amount in thirty years in November 2011 and then actually decreased output and exports the following month. The increased November output dropped prices by $3.00 per barrel to $107.97 for December 2011. The easing was short lived however, with average March 2012 prices sitting at $126.4 per barrel, the highest price since July 2008.
Production capacity figures for OPEC countries are notorious for being inflated and there’s increasing skepticism that Saudi Arabia couldn’t produce any more oil even if it wanted to.
6. East Africa is the new Middle East
Madagascar has been targeted by Exxon and Norway’s Statoil since 2005. Statoil found a billion barrels of oil equivalent. That may seem like a huge find but consider these points. First, world oil consumption is about 80 million barrels a day, give or take, making it the equivalent of about 12 days of oil.
Then compare the Madagascar finding to the largest conventional oil field in the world, Ghawar, in Saudi Arabia. It’s extracted 65 billion barrels of oil since 1951 from initial reserves of over 100 billion barrels. The Madagascar field extends down to Mozambique where Anadarko have found 1.3 billion barrels of oil. Further inland Tallow has found 1 billion barrels of proven reserves in the Ugandan Albert basin. Plenty of other African countries are now being explored by a number of interests but they have yet to show any major finds.
Oil pundits might be saying “game on” but really all there is to show is a lot of wishful thinking which, at the end of the day, won’t fill the gas tank. I should know, I tried that plenty of times in my student days.
The truth is that most of the new oil finds throughout the world are less than 2 billion barrels each. The global annual consumption is currently a little less than 33 billion barrels per year. There is a huge disconnect between the size of the fields currently being discovered and the predicted future demand for oil.
7. There’s always a new frontier
The question is, Why do we need new frontiers if oil production isn’t peaking?
It’s an odd concept that oil companies would spend millions of dollars in politically unstable countries and areas where the physical barriers are immense — such as the Arctic — just for the hell of it.
The truth is the low hanging fruit has been picked. All the easy to access oil has been found and developed. What we’re seeing now is increased exploration in increasingly economically dubious areas such as the Canadian tar sands, deepwater drilling, and fracking and horizontal drilling in tight oil plays.
It ‘s as if the pundits pushing this line have never seen a globe before. The world is round. There is a finite amount of land and ocean that can realistically be developed to economically extract and refine oil. From all the evidence collated over the last few years it appears that we’re pushing up against these limits right now.
The biggest oil find since the 1960s, the Kashagan oilfield in the Caspian Sea, has 13 billion barrels of proven reserves. Development of the field has, however, been plagued with funding problems after Shell shut its Caspian office in May last year. At this stage it’s unlikely this field will produce anything close to the original estimates due to ongoing delays with development.
After denial, acceptance
You have to give the deniers credit for being so tenacious about drumming up new magical thinking on how to outsmart Mother Nature. But in the end, their denial, especially as the lackeys of industry with their plutocratic ties to government, puts us at risk in terms of smart transitions to other ways to live and do business.
At some point, the “peak oil debate” needs to go the way of the phony “global warming debate.” Into the dustbin of history, where it belongs, so the rest of us can get on with civilization 2.0.
Andrew McKay writes Southern Limits, a blog on resource limits, energy, environment, peak oil and peak everything from a New Zealand perspective.
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