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Twilight For The Age Of Oil

By Jeff Berg

22 August, 2005

“Oil is like a gun, one’s perception of it is very much dependent on which end of the barrel one finds oneself.”-Juan G. Carbonel

Of all the points that swirl around the peak oil debate perhaps two of the most telling are made by Matt Simmons author of “Twilight in the Desert: The Coming Oil Shock and the World Economy” and CEO of Simmons International, one of the world's largest investment banks in the energy sector.

First: In December of 1970 the U.S. produced a then world record 10.2 mb/d (million barrels per day). If you look today at the productivity of the fields that created that 10.2 mb/d you find that they are producing just over 2 mb/d. [1]

This is an 80% reduction and if you add in every other producing field in the U.S. the reduction in production is still 30%. This despite the fact that the U.S. now has 4.5 times the number of wells that it took to produce the 10.2 mb/d in 1970. [2] This despite the fact that the U.S. was hit with an OPEC oil embargo in 1973-74 and an Iranian oil shock in 1979 and so had every incentive to use every possible means available to increase domestic production. This despite the fact that the U.S. has the most technologically mature and advanced economy and oil industry in the world and has available to it every oil extraction advance that has occurred over the last thirty years.

In other words, the U.S. has had every economic, political and technological incentive and ability imaginable for increasing their production in the fields that had made them the 'world-champion' producers of oil and still they experienced an 80% reduction in the fields that had brought so much wealth. The reason for this is very simple: oil is a non-renewable resource - it runs out.

Second: In 1979, the last year that Texaco, Chevron & Exxon/Mobil ran Aramco (Arabian American Oil Company)the U.S. Senate subpoenaed the oil industry. Their testimony indicated that the Saudis had 110 billion barrels of proven reserves (P1), 177 billion of proven and probable reserves (P2) and 245 billion proven, probable and possible reserves (P3).* They further stated that not only would the Saudis not be able to pump 20 to 25 mb/d out of these key fields as had been previously stated but that if they continued to pump at their maximum, 9.8 mb/d, these fields would go into irreversible decline by the early 1990s. [3]

*(As this example shows when looking at reserve estimates it is important to determine whether the study is referring to P1, P2 or P3 estimates as they will differ greatly in terms of total amount and in terms of their margin for error. The SEC only allows oil companies to book P1 estimates though there is talk of this changing likely motivated by a desire to benefit tar sand plays.)

These findings go a long way to explaining why in 1982 the Saudis undertook a massive conservation effort - ramping production down from 10 mb/d to just over 2 mb/d in order to let these fields rest while they attempted to wrestle with their major technical problems. To do otherwise could well have led to irreparable damage to the integrity of these fields and thereby substantially lowering their ultimate yield. Subsequent to these findings in the late 1980s despite no major finds of any kind the Saudis reclassified their proven reserves [P1] upwards to 260 billion barrels. When you take into account the absence of major finds and put this fact together with the fact that at that very same time OPEC adopted new quota rules which were based on the size of a member’s stated proven reserves then it becomes obvious that it was political and economic not geological reasons that led to this reclassification.

It is critically important to note that Mr. Simmons is very much not alone in making the case for an immanent peak: "Mr. Rodgers, the PFC senior director, says he is convinced that Dr. Campbell's criticism is valid. He says oil production is either reaching a plateau or declining in 33 of 48 major oil-producing countries, including six of the 11 OPEC countries."[4] A conclusion that has made its way on to Chevron’s newly launched web-site.

As to the many other projections that have been made over the decades by experts in the field of geophysics the following link provides a retrospective table of the number of peak projections analyses have been done in the last thirty odd years.
There you will find contrary to the common myth that geologists have not in fact been ‘crying wolf’ for decades claiming that we were about to run out of oil any day now. In fact the general consensus among them has been that the data shows that the peak for global oil production is most likely to occur sometime around the first decade of this century.

In any case, regardless of whether these conclusions turn out to be ‘pinpoint’ accurate or just ‘ballpark’ accurate nothing changes the fact that oil is finite. In the end this phenomena is a reflection of a very simple geological reality: there is only so much oil in any particular oil producing field, region or planet for that matter and when it is gone it is gone forever. Why such an easy to ascertain verity has been kept so far from common understanding is also very simple to understand: wealth, extraordinary wealth, historically unprecedented amounts of wealth, concentrated in the hands of so very, very few of the citizens of our world.

The very few who profit from the enormous wealth that the control of oil and gas reserves have generated have a vested interest in minimizing just how essential this extraordinarily important one time gift from Mother Nature is to our societies. E.g. A single barrel of oil contains the equivalent of 23,200 hours of human work [5] For if the collective we that have no oil stocks, no control over the profit derived from this hydrocarbon gift from Nature, were to understand to what degree our standard of living is dependent on oil and gas then like the residents of Cochabamba did with their water we would flex the might of public opinion to demand that the distribution and allocation of this irreplaceable resource be done through the public not the private sphere. That it be husbanded and rationally and equitably allocated, something that the market has so demonstrably failed to do. That it be saved for use on essential purposes and not for example for NASCAR and Formula One races. And most certainly not for SUVs and traffic jams. Even the airline industry despite our species virtually universal love for travel might well not be immune from the changes that this awareness would/will bring especially once it is more widely known just how much CO2 is created by the world's commercial airline companies and air forces. E.g. One year’s worth of cross-Atlantic jet crossings by a single commercial jet creates three times more CO2 than the massive planned Whinash wind farm in the U.K. is capable of saving in a year: 520,000 tonnes to 178,000 tonnes. [6]

The hydrocarbon molecule is not only capable of enormous work in a physical sense it is also extraordinarily malleable. Without it we would not recognize our pharmaceutical, technology and agricultural sectors. As such it is far more important that it be used for example to create computers for the classrooms of the third world than plastic gewgaws for the Wal-Mart shoppers of the first. It is far more important that it be used to power the seismic changes that ever decreasing oil supplies will necessitate in our agricultural, industrial, energy, technology and information sectors as they adapt to the reality of virtually oil-less centuries than it be used to power the war machines that threaten the very existence of our species simply so that we can continue a few more decades of business as usual for less than a billion of us. It is far more important that its enormous capacity to do work be used to bring water to the ever increasing number of nations that are falling below the essential ration of 1000 cubic meters per person per year. A problem that already affects a great number of the nations of our world and is guaranteed to happen to an ever increasing number of them unless enormous amounts of energy are expended on the infrastructure creation necessary to alter the facts underlying this potentially greatest of all humanitarian disasters: the absence of water. [7]

The Hirsch or SAIC Report: “Peaking of World Oil Production: Impacts, Mitigations and Risk Management” was prepared by the Science Applications International Corporation and authored principally by Robert L. Hirsch and it makes very clear what the stakes are and just how much lead time is needed if we are to avoid a being ‘end gamed’.

As any chess player will tell you it is critically important to plan as many moves ahead as possible if you wish to avoid ending in a position where the only moves left are losing ones. We had a wake-up call when the U.S. hit its peak in terms of oil production. We had a wake-up call thanks to those who participated in the creation of the 'Spirit of 72' and who researched and wrote about the natural limits that exist on this small world of ours. We had the oil shocks of ’73 and ’79 and President Carter's famous 'Cardigan Speech' fireside chat and “Had Congress acted on, and subsequent administrations heeded, the Carter initiatives on energy, it is likely that the United States would be much less dependent on foreign petroleum resources than in 1978. (rather than more)” [8] We have wasted very valuable time over the last 35 years and one can only hope, not know, that it is not too late. One can only hope, not know, that we can change the pattern that led to our failing to take advantage of the very best information that our species had to offer and accepted instead a business as usual approach that even further concentrated wealth and our economic dependence on fossil fuels.

Dr. M. King Hubbert (1903-1989), the grand-daddy of American geology and the father of the study of oil depletion, penned words that are just as valuable today as when he first penned them decades ago, "Our ignorance is not so vast as our inability to use what we know." We do have a choice as to what we reap from what we know, what we do not have a choice about is how much hydrocarbon energy that knowledge will have at its disposal. How we deal with this not so little fact will determine if our fate is to be written by the greatest minds and spirits among us for the betterment of us all or whether it is to be written by those men of mean spirit who would jeopardize all by daring to sow the whirlwind merely so that they can maintain privilege.

[1] Matt Simmons on ‘The Current’, CBC Radio, August 2, 2005

[2] Ibid

[3] Ibid

[4] Jeffrey Ball, 'Dire Prophecy', Wall Street Journal, September 21, 2004,

[5] George Monbiot, 'A different kind of revolution',, 26/4/2005

[6] LATOC website, link:

[7] Thomas Homer-Dixon, 'The Ingenuity Gap', (Vintage Canda:2000), page 345.

[8] The Literary Encyclopedia, Carter, Jimmy (1924-)











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