Peak Oil May Be An Empty Concept, But Fossil Fuels Will Vanish Far Faster Than Most People Believe Nonetheless
A reader comments:
The problem that most concerns me is not the shortage of oil but its abundance. Saudi Aramco, the Saudi (state owned) oil company is the world’s largest corporation with over $30 trillion dollars in assets including oil reserves estimated at $20 trillion. All of this oil is very easily accessible and is of the highest quality for crude.
Canada’s tar sands are also one of the world’s largest reserves, but require a 25% to 50% energy and vast quantities of water to steam the oil out of the bitumen. That is why it is called dirty oil and pollutes a great deal more just to extract it.
This is not including undiscovered reserves, or oil from shale. In short, we have sufficient quantities of oil to power gas engines for many, many years, until the earth is made uninhabitable for us. Your thoughts, please.
Before he died unexpectedly, Matt Simmons was arguably the world’s top expert on peak oil. I placed the interview I conducted with him at the very beginning of my first book, as I agreed with what he had told me when we spoke: peak oil is the only thing that forces us to knock off our addiction to oil.
If Simmons were with us today however, I believe that he probably would have changed his viewpoint and agree with what you’ve said above. Yes, it’s becoming increasing difficult to access oil, but it certainly looks to me, for what it may be worth, that extraction technologies may be more than making up for that, meaning that peak oil a non-issue.
What’s going to render the oil companies and the whole fossil enterprise impotent is the plummeting costs of everything else. This is the essential message of my recent book Bullish on Renewable Energy, i.e., that the forces of pure market economics are in the process of making fossil fuel obsolete by making it unaffordable in comparison.
Someone commented earlier that he heard a shareholder group tell senior management at Shell that the only course available to the team, if it wanted to keep its job, was to maintain a steady course with respect to oil—regardless of the mounted evidence re: environmental damage, health/lung issues, fueling terrorism, etc.
Fortunately, it doesn’t matter how insensitive these people may be to the health and safety of the human race and how badly they behave; they won’t be doing it much longer. I’m reminded of the 1983 film “Trading Places”; we’re about to see a radical shift.
Craig,
Peak oil, or peak anything for that matter, is about production PEAKING, not about production running out.
There’s nothing uncertain in this, there’s just misunderstanding. Hubbert’s peak HAPPENED. That’s why North American crude production declined from the late 70’s through 2008. Peak oil HAPPENED (in 2005). That’s why the price of oil went through the roof between 2003 and 2008.
The thing is, any analysis which undergoes a Malthusian analysis is going to be limited to current production methods – which are limited by the market price. Conventional drilling was what we were referring to when we discussed peak oil. Then… when oil was market constrained, more expensive production methods were brought to bear: horizontal drilling and hydraulic fractiuring, gas-to-liquids (GTL), bitumen extraction from tar sands, deep sea drilling, and coal-to-liquids. (listed in likely least damaging to likely most damaging to the environment).
These methods all have price tags considerably higher than the $10-$20/bbl that was the market price during the time when the market could be satisfied by conventional drilling.
The price on these will steadily reduce since they’re now undergoing constant development and benefitting from experimentation, experience, and economy of scale, but they will NEVER be competitive below $60/bbl, and will likely be non-competitive below $70/bbl.
So this imposes a new market floor of ~$70/bbl. These production streams will be utilized and maximized for years, until they too experience a peak. Within 10-15 years, we’ll have another oil peak, which will force prices upwards again until new production methods can produce the additional supply needed to balance the world markets.
Those new production methods are – in my opinion – going to be Windfuels, EV’s, ICP extraction of bitumen from shale, and polar oil. Of those, only Windfuels is competitive at today’s prices, so if someone is enterprising enough to invest in that technology now, then they will see untold profits when the next oil peak occurs. But EV’s will expand past 1% of the market share during that time (possibly to ~33%), and WindFuels will expand aggressively – as it will offer a far lower price point than any other production option that is not utilized today, and there is no relevant limit to the production potential there. At that point, there will not be a plausible subsequent “peak” in the transportation market. However, we do also have to pay attention to peak gas (~30 years), peak uranium (~40-50 years), and peak coal (~80 years). If we don’t take different paths towards better technology, then those peaks will hit us pretty hard, and they will hit just as we’re starting to experience some serious accommodation costs from AGW.
Thanks for this. Please see: http://2greenenergy.com/2015/02/04/peak-oil-energy-picture/.