[ExI] THE END for fossil power

Eugen Leitl eugen at leitl.org
Fri Mar 25 16:21:48 UTC 2011

Science has been slow to embrace Peak Oil, but they're 
there now. (How long will it take for them to admit
Peak Coal?)

----- Forwarded message from Eugen Leitl <eugen at leitl.org> -----

From: Eugen Leitl <eugen at leitl.org>
Date: Fri, 25 Mar 2011 17:03:30 +0100
To: tt at postbiota.org
Subject: [tt] Peak Oil Production May Already Be Here
User-Agent: Mutt/1.5.18 (2008-05-17)


Science 25 March 2011:

Vol. 331 no. 6024 pp. 1510-1511

DOI: 10.1126/science.331.6024.1510

Energy Supplies

Peak Oil Production May Already Be Here

Richard A. Kerr

Outside of OPEC's vast resources, oil production has leveled off, and it's
looking like it may never rise again.

The hard way.

Depletion of conventional oil fields outside of OPEC is driving the mining of
oil sands in Alberta, Canada.  "CREDIT: NORM BETTS/LANDOV"

Five years ago, many oil experts saw trouble looming. In 10 years or so, they
said, oil producers outside the Organization of the Petroleum Exporting
Countries (OPEC) would likely be unable to pump oil any faster (Science, 18
November 2005, p. 1106). Non-OPEC oil production would peak, no matter the
effort applied. All the high-technology exploration and drilling, all the
frontier-pushing bravado of the oil industry would no longer stave off the
inevitable as OPEC gains an even stronger hand among the world's oil

Five years on, it appears those experts may have been unduly
optimistic—non-OPEC oil production may have been peaking as they spoke.
Despite a near tripling of world oil prices, non-OPEC production, which
accounts for 60% of world output, hasn't increased significantly since 2004.
And many of those same experts, as well as some major oil companies, don't
see it increasing again—ever. In their view, it's stuck on a flat-topped peak
or plateau at present levels of production for another decade or so before
starting to decline. “Stable [non-OPEC] production is the best we can hope
for,” says energy economist Robert Kaufmann of Boston University. “I have
trouble seeing it increase more. It's a wake-up call.”

Optimists remain. Some experts still see production from new frontiers, such
as Kazakhstan, the deep waters off Brazil, and the oil sands of Canada,
pushing production above the current plateau in the next few years. But
time's running out to prove that newly discovered fields and new technology
can more than compensate for flagging production from the rapidly aging
fields beyond OPEC.  Running to stay in place

There's no debate about the reality of the 6-year-and-counting plateau of
non-OPEC production. Output stagnated at about 40 million barrels a day
beginning in 2004 after rising from an earlier plateau in the early 1990s,
one induced by a low price for oil. But prices have been anything but low
lately. They have gone from about $35 a barrel early in the past decade to
double and nearly triple that. Normally, higher prices would encourage more
production, but not this time. Since 2004, “there's been a tremendous
increase in price, yet this is all we get for it, stable production,”
Kaufmann says. “It's quite stark.”

The problem up to this point, all agree, has been increasing difficulties
extracting conventional oil. That's the easiest oil to get at, oil that
freely flows out of a well of its own accord or with a minimum of
encouragement, such as pumping it out or pushing it out with water.
Production of conventional oil from any one well or field typically
increases, peaks, and then goes into decline. Larger producing regions behave
the same way. Production from the United States, once the world's largest oil
producer, peaked in 1970 as rising output from newly discovered fields failed
to compensate for declines in old fields. Mexico's production peaked in 2004
as its huge, aging Cantarell field went into steep decline. North Sea
production peaked in 1999, just 28 years after starting up.

The same pattern now seems to be emerging across much of the world. “We
believe—and pretty much everybody else believes—that non-OPEC [conventional]
production has plateaued,” says oil analyst Michael Rodgers, a partner with
PFC Energy in Kuala Lumpur. “Arguing that you're going to get continued and
sustained growth of conventional oil is a very hard case to make.” PFC Energy
has just done a complete reassessment of the prospects for non-OPEC
conventional production, he says. As in most oil outlooks, a
country-by-country or even field-by-field survey of what producers are
planning for the next 5 to 10 years was combined with an educated guess of
how much oil remains to be discovered in each region.

That forecast of added production is balanced against how fast production
from existing fields is declining. In the past decade, analysts have realized
that rather than the 2% to 3% per year decline once assumed, production from
existing fields is declining 4% to 5% per year. Some believe the depletion is
even faster. The balance between added and declining production, in the PFC
Energy assessment, is a plateau, though the plateau may undulate from year to
year. “You bring on a [new] 100,000-barrel-a-day field,” Rodgers says, “and
somewhere else you've lost a 100,000-barrel-a-day field.” Tough oil to the

But what about unconventional oil, the hard-to-get-at oil that's only
extractable using the latest in high technology? There's the oil beneath
kilometers of seawater far offshore of the U.S. Gulf Coast, Brazil, and West
Africa. It wasn't reachable until development of the necessary deep-water
drilling and production technology. There is also the oil—more like tar—that
is so viscous that steam must be piped underground to thin it before pumping
it out. In Alberta, Canada, huge shovels just dig up the “oil sands” so it
can be trucked to oil-extraction plants. And American drillers have lately
taken to drilling into rock formations that would normally only dribble oil
and fracturing the rock with high-pressure fluids in order to wrest
worthwhile amounts from the rock. That's how drillers have been “fracking”
stingy natural gas formations (Science, 25 June 2010, p. 1624).

Such unconventional oil is out there in abundance, everyone agrees, and more
will be produced than in the past. However, some major oil companies as well
as other analysts don't see unconventional oil boosting non-OPEC production
much in the next 20 years. In their most recent annual energy outlooks to
2030, both ExxonMobil and BP—two of the world's largest independent oil
companies—forecast that non-OPEC production will more or less hold its own,
no better. “It's quite an accomplishment to keep non-OPEC supply flat level,”
says analyst Kyle Countryman, who as a member of ExxonMobil's energy and
economics group in Dallas, Texas, helped put the outlook together. Adds his
colleague, group manager Robert Gardner: “We're not optimistic we'll see a
significant increase in unconventional liquids.”

The problem with unconventional oil is that, by definition, it is hard to
extract. “It's a matter of timing,” Gardner says. “It depends on the pace of
technology development.” And even after the essential technology is
developed, unconventional oil will still be difficult—as well as expensive—to
extract, limiting the rate at which it can be produced. All in all,
“technology matters, economics matters, but geology really does matter,” says
oil analyst David Greene of the U.S. Department of Energy's Oak Ridge
National Laboratory in Tennessee. “Progress in technology is not fast enough
to keep up with depletion” of oil reservoirs. Oil analyst Richard Nehring of
Nehring Associates in Colorado Springs, Colorado, is more optimistic about
prospects on oil's frontiers and how fast some kinds of unconventional oil
can be brought online, but he still finds that “non-OPEC will be stable or at
the very best slowly increasing” over the next couple of decades.

Running flat out.

An ExxonMobil outlook has non-OPEC oil (orange plus blue) plateauing. Natural
gas–derived liquids (green) and biofuels (yellow) will help, but OPEC
(purple) must pitch in.


Optimism not dead

“We're a little more bullish about non-OPEC than some others,” says Peter
Jackson of Cambridge Energy Research Associates (CERA) in London. Along with
the U.S. Energy Information Agency (EIA), CERA sees real promise in
underdeveloped oil provinces such as offshore Brazil and Kazakhstan.
Likewise, if prices stay high, unconventional oil will contribute
substantially, both find, especially the Canadian oil sands. Beyond the next
few years, “we're seeing a gradual increase in non-OPEC supply,” Jackson

Such optimism has not always served forecasters well. In 2005, Jackson and
his CERA colleague Robert Esser of the New York office predicted that “global
oil production capacity is actually set to increase dramatically” up to 2010.
It didn't; both OPEC and non-OPEC oil production remained steady. Likewise,
in its 2005 outlook, EIA projected a jump in non-OPEC production by 2010 if
prices were high, which they mostly were. But 2010 production was about 40
million barrels per day, right where it was in 2005.

So what if the pessimists turn out to be realists and non-OPEC producers
can't answer the call for more oil? Demand will increase in this decade,
mainly from developing countries like China and India as populations grow and
incomes rise. That rising demand might be met by several sources. In
decreasing order of reliability, production of another sort of petroleum
liquid, natural gas liquids (NGLs), is expected to increase. NGLs are the
lighter-weight hydrocarbons that condense from natural gas when it cools. The
expected increase in global natural gas production—at least half of which
would come from OPEC—would lead to increased production of NGLs.

A remaining hope.

Some analysts see untapped oil fields in frontier areas, such as offshore
Brazil (above), pushing up non-OPEC production.  "CREDIT: COURTESY GE ENERGY

OPEC would, it is fervently hoped outside of the cartel, be willing and able
to boost its output of conventional oil. ExxonMobil has OPEC production
rising from about 29 million barrels per day today to about 36 million
barrels per day in 2030. That would increase OPEC's share of oil production
even further, but Kaufmann, among others, expects that OPEC will see an
opportunity to make more money from its oil by curbing production and driving
prices up. That would tend to encourage production of liquid biofuels, but
whether output could be ramped up quickly enough to bring relief remains
unclear. The clearest outcome, according to Greene, is likely to be continued
or even greater volatility in the price of oil with all the economic
downsides that would entail.

Perhaps the most sobering outcome of a non-OPEC plateau might be reminding
everyone that even planet-scale resources have their limits. And that when
you are consuming them at close to 1000 gallons a second, the limits can
catch you unaware. The next 5 years, assuming oil prices remain on the high
side, should show who the realists are.

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tt at postbiota.org

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Eugen* Leitl <a href="http://leitl.org">leitl</a> http://leitl.org
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