What is Peak Oil?
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Since most people have their own idea as to what peak oil actually is - it would be nice to pull our brains together and make our own wikistyle definition/description of Peak Oil. Since I (adam) personally do not know too much about this topic, I can offer my services of formatting the collaborative information.
Suggestion: As you write, please only use original works, no plagiarism please. Your observations are very helpful. However, if you are making statements dependant in real stats or historical events, please provide them (references) with an offsite link to validate your POV.
Please begin definition/description below.
I would simply start that "Peak Oil" is the moment when global conventional oil production reaches its apex. I believe that point to be somewhere around 84,000,000 barrels per day (bpd). The current annyal average for 2006 according to the Energy Information Administration (http://www.eia.doe.gov/emeu/international/oilproduction.html)
What this means is that roughly half of the recoverable oil in the ground has been pumped out and burned. From that point on, conventional crude production will be more difficult and expensive and will only decrease in quantity, at what rate this decrease proceeds remains to be seen.
Peak Oil
The recent rise in energy prices is assumed by some to be more of the same type of fluctuations we have seen over the past 30 years. Others say “not true” and offer a compelling argument as to why high oil prices are here to stay, and in fact, may go much, much higher, topping $105 per barrel within the next five years1.
Why is this spike in prices different than what we have seen in the past? Market forces are acting in typical fashion, and demand is outstripping supply. Does this mean we are running out of oil? No, just that demand is at records rates and increasing, and supply channels, oil fields, and refining capacity is aging, and many major oil producing fields are being depleted, and not able to produce as much oil as fast as they used to.
Further, in past periods of energy shortfalls, there have been those willing to “open the taps” and increase oil crude production. During the 1973 and 1979 shortages, oil from Norway and Great Britain was able to take up the slack. Furthermore, in 1973, oil imports to the US were only about 11% of domestic oil use. Today, 58% of domestic oil use is imported2.
World Oil Demand
According to the International Energy Agency, world demand for oil is currently at 85.5 million barrels per day (MBD) Current supply is 85.5 mpd. Demand from China is accelerating at a record pace. China is now the second largest oil importer in the world and is aggressively seeking to purchase larger and larger shares of the oil markets. From making arms for oil deals with Iran, to financing pipelines and refineries in Venezuela, China is investing heavily into securing agreements for oil flows in the future. This is in keeping with a modernization program that is similar to the US interstate Highway system developed in the 1950’s. At 6.7 mpd in oil imports and rising, China is the 800 pound gorilla who has the money to be a major player in the world oil markets. Anticipated demand will be over 84.6 MBD by year end 2005.
Currently the world is using approximately 4-6 barrels of oil for every one it discovers.
World Oil Supply
The OPEC oil ministers met Wednesday, June 22, and increased their total oil production by 500,000 bd. This is seen as legitimizing the already exceeded quotas, so real production increases are not anticipated. Current thinking is that OPEC has about 1.5 mpd capacity to increase production, but cannot sustain that for long, without costly improvements to oil production infrastructure. Actual sidelined capacity sits at about .5 MBD3. Aging infrastructure and a shortage of refining capacity, coupled with a surge in demand, combine to create a supply imbalance, and prices are likely to stay above $50 per barrel for the foreseeable future, and if any disruptions occur, could shoot much higher.
Oil supplies come to the US from about 15 different countries. Of the top seven importers, five have political systems in instability or have outright hostility toward the US. These include Saudi Arabia (#2 importer) Venezuela (#4), Nigeria (#5) Angola (#6) and Iraq (#7). Canada (#3) and Mexico (#1) are the only two that are stable, and friendly toward the US. Disruptions in any of these countries could cause oil prices in the US to spike upward. In the fall of 2004, hurricane Ivan wreaked havoc on the oil platforms in the Gulf of Mexico causing prices to spike upward.
Matt Simmons, a former energy advisor to the current President Bush, in his book, “Twilight in the Desert,” makes the case that Saudi Arabia is at or near its peak, and that the giant fields of Ghawar, Abqaiq, and Berri are all aging and in some cases well past their peak and near depletion. He has reviewed over 239 scientific peer reviewed papers on oil production worldwide, and concludes based on that review, that the supplies promised by OPEC are not achievable.
It is significant that the 2005 first quarter production of most of the major oil companies is falling : ExxonMobil -3%; Chevron -6% ; Shell -8% ; Repsol YPF -7%., while Phillips-Conoco maintained its level with BP at least reporting a 2% increase (see Petroleum Review, June 2005).
Reserves
Proven reserves of oil are usually closely held secrets by nationalized oil companies, and other who might know. Stated reserves are suspect. For political or economic reasons, oil companies and oil producing nations want to show they have ample reserves on hand to meet demand. A closer look at these numbers raises many serious and disturbing questions.
Following the oil shocks of 1973 and ’79, OPEC was able to control the market and keep prices high. When high prices of oil caused recessions in the US and Europe, demand fell and prices collapsed back to about $9 bbl, falling form highs of over $30 bbl. The OPEC nations agreed that reserves would dictate production quotas and within a year (1985) Venezuela, Iraq, Iran and the United Arab Emirates doubled their reserve estimates. Abu Dubai tripled theirs, and Saudi Arabia increased their reserves estimate by 50%. [1]
Furthermore, in many of the estimates put together by organizations such as the United States Geological Survey, Petroconsultants of Geneva, and others, these reserve estimates have not changed since 1985, even though 20 years of oil production has occurred since then.
Colin Campbell, Jean Leherrere and other people who are trying to figure out how much conventional oil is left in the known fields estimate the production since these reserves were published, and the veracity of the original claims, given that there was a very large incentive to inflate reserves to increase shares of production quotas. Their best estimates are that we are very close to having produced 50% of the known reserves of conventional oil. As this point approaches, production becomes more expensive on the second half of these reserves.
Geology
Oil exploration has covered most of the terrestrial globe. Oil geologists are able to look at geology and pinpoint with a high degree of accuracy the formations or “plays” oil is likely to reside. Offshore explorations have covered much of the continental shelves, and the only area on earth left for large scale exploration is deep ocean, which is inherently more expensive to produce.
Discoveries
Disoveries in the US peaked in the 1930's, and production peaked in 1971. Globally, discoveries peaked in 1964 and have declined precipitously since then.
While it is likely that there is oil yet to be discovered and in areas that are accessible, the steep declines in discoveries since the 1960’s means that production from these major fields is greater than the discovery of new fields. The world has pumped more each year than discoveries have offered, since 1983.
Stuart McGill, Senior Vice President of ExxonMobil, noted that world demand for oil and gas is expected to increase by 1.7 percent per year, while the world's oil and gas fields on average are declining in production at a rate of 4 to 6 percent per year. This base decline, coupled with the growing demand for oil and gas, means that the amount of new daily production needed in 2020 is nearly equivalent to replacing all of today's daily production.
If this is a case of Never Cry Wolf, there was a real wolf in that story. If we make our country more energy efficient, and peak oil is not happening soon, we increase our competitiveness, reduce our carbon dioxide output and decrease the warming our scientists say is taking place, especially in the arctic. If we fail to increase our efficiency, and peak oil happens this year or next, with prices rising dramatically as many predict, we are in for some tough times indeed.
1] Goldman Sachs March 31, 2005
The entire argument about peak oil, however, is academic, since we have to Kill Carbon as an energy source, and do it soon. Trying to figure out how to extract yet more destructive Carbon will only delay progress and increase the global environmental damage humans have caused by the extraction of Carbon.
Suggestion: As you write, please only use original works, no plagiarism please. Your observations are very helpful. However, if you are making statements dependant in real stats or historical events, please provide them (references) with an offsite link to validate your POV.
Please begin definition/description below.
I would simply start that "Peak Oil" is the moment when global conventional oil production reaches its apex. I believe that point to be somewhere around 84,000,000 barrels per day (bpd). The current annyal average for 2006 according to the Energy Information Administration (http://www.eia.doe.gov/emeu/international/oilproduction.html)
What this means is that roughly half of the recoverable oil in the ground has been pumped out and burned. From that point on, conventional crude production will be more difficult and expensive and will only decrease in quantity, at what rate this decrease proceeds remains to be seen.
Peak Oil
The recent rise in energy prices is assumed by some to be more of the same type of fluctuations we have seen over the past 30 years. Others say “not true” and offer a compelling argument as to why high oil prices are here to stay, and in fact, may go much, much higher, topping $105 per barrel within the next five years1.
Why is this spike in prices different than what we have seen in the past? Market forces are acting in typical fashion, and demand is outstripping supply. Does this mean we are running out of oil? No, just that demand is at records rates and increasing, and supply channels, oil fields, and refining capacity is aging, and many major oil producing fields are being depleted, and not able to produce as much oil as fast as they used to.
Further, in past periods of energy shortfalls, there have been those willing to “open the taps” and increase oil crude production. During the 1973 and 1979 shortages, oil from Norway and Great Britain was able to take up the slack. Furthermore, in 1973, oil imports to the US were only about 11% of domestic oil use. Today, 58% of domestic oil use is imported2.
World Oil Demand
According to the International Energy Agency, world demand for oil is currently at 85.5 million barrels per day (MBD) Current supply is 85.5 mpd. Demand from China is accelerating at a record pace. China is now the second largest oil importer in the world and is aggressively seeking to purchase larger and larger shares of the oil markets. From making arms for oil deals with Iran, to financing pipelines and refineries in Venezuela, China is investing heavily into securing agreements for oil flows in the future. This is in keeping with a modernization program that is similar to the US interstate Highway system developed in the 1950’s. At 6.7 mpd in oil imports and rising, China is the 800 pound gorilla who has the money to be a major player in the world oil markets. Anticipated demand will be over 84.6 MBD by year end 2005.
Currently the world is using approximately 4-6 barrels of oil for every one it discovers.
World Oil Supply
The OPEC oil ministers met Wednesday, June 22, and increased their total oil production by 500,000 bd. This is seen as legitimizing the already exceeded quotas, so real production increases are not anticipated. Current thinking is that OPEC has about 1.5 mpd capacity to increase production, but cannot sustain that for long, without costly improvements to oil production infrastructure. Actual sidelined capacity sits at about .5 MBD3. Aging infrastructure and a shortage of refining capacity, coupled with a surge in demand, combine to create a supply imbalance, and prices are likely to stay above $50 per barrel for the foreseeable future, and if any disruptions occur, could shoot much higher.
Oil supplies come to the US from about 15 different countries. Of the top seven importers, five have political systems in instability or have outright hostility toward the US. These include Saudi Arabia (#2 importer) Venezuela (#4), Nigeria (#5) Angola (#6) and Iraq (#7). Canada (#3) and Mexico (#1) are the only two that are stable, and friendly toward the US. Disruptions in any of these countries could cause oil prices in the US to spike upward. In the fall of 2004, hurricane Ivan wreaked havoc on the oil platforms in the Gulf of Mexico causing prices to spike upward.
Matt Simmons, a former energy advisor to the current President Bush, in his book, “Twilight in the Desert,” makes the case that Saudi Arabia is at or near its peak, and that the giant fields of Ghawar, Abqaiq, and Berri are all aging and in some cases well past their peak and near depletion. He has reviewed over 239 scientific peer reviewed papers on oil production worldwide, and concludes based on that review, that the supplies promised by OPEC are not achievable.
It is significant that the 2005 first quarter production of most of the major oil companies is falling : ExxonMobil -3%; Chevron -6% ; Shell -8% ; Repsol YPF -7%., while Phillips-Conoco maintained its level with BP at least reporting a 2% increase (see Petroleum Review, June 2005).
Reserves
Proven reserves of oil are usually closely held secrets by nationalized oil companies, and other who might know. Stated reserves are suspect. For political or economic reasons, oil companies and oil producing nations want to show they have ample reserves on hand to meet demand. A closer look at these numbers raises many serious and disturbing questions.
Following the oil shocks of 1973 and ’79, OPEC was able to control the market and keep prices high. When high prices of oil caused recessions in the US and Europe, demand fell and prices collapsed back to about $9 bbl, falling form highs of over $30 bbl. The OPEC nations agreed that reserves would dictate production quotas and within a year (1985) Venezuela, Iraq, Iran and the United Arab Emirates doubled their reserve estimates. Abu Dubai tripled theirs, and Saudi Arabia increased their reserves estimate by 50%. [1]
Furthermore, in many of the estimates put together by organizations such as the United States Geological Survey, Petroconsultants of Geneva, and others, these reserve estimates have not changed since 1985, even though 20 years of oil production has occurred since then.
Colin Campbell, Jean Leherrere and other people who are trying to figure out how much conventional oil is left in the known fields estimate the production since these reserves were published, and the veracity of the original claims, given that there was a very large incentive to inflate reserves to increase shares of production quotas. Their best estimates are that we are very close to having produced 50% of the known reserves of conventional oil. As this point approaches, production becomes more expensive on the second half of these reserves.
Geology
Oil exploration has covered most of the terrestrial globe. Oil geologists are able to look at geology and pinpoint with a high degree of accuracy the formations or “plays” oil is likely to reside. Offshore explorations have covered much of the continental shelves, and the only area on earth left for large scale exploration is deep ocean, which is inherently more expensive to produce.
Discoveries
Disoveries in the US peaked in the 1930's, and production peaked in 1971. Globally, discoveries peaked in 1964 and have declined precipitously since then.
While it is likely that there is oil yet to be discovered and in areas that are accessible, the steep declines in discoveries since the 1960’s means that production from these major fields is greater than the discovery of new fields. The world has pumped more each year than discoveries have offered, since 1983.
Stuart McGill, Senior Vice President of ExxonMobil, noted that world demand for oil and gas is expected to increase by 1.7 percent per year, while the world's oil and gas fields on average are declining in production at a rate of 4 to 6 percent per year. This base decline, coupled with the growing demand for oil and gas, means that the amount of new daily production needed in 2020 is nearly equivalent to replacing all of today's daily production.
If this is a case of Never Cry Wolf, there was a real wolf in that story. If we make our country more energy efficient, and peak oil is not happening soon, we increase our competitiveness, reduce our carbon dioxide output and decrease the warming our scientists say is taking place, especially in the arctic. If we fail to increase our efficiency, and peak oil happens this year or next, with prices rising dramatically as many predict, we are in for some tough times indeed.
1] Goldman Sachs March 31, 2005
2 USDOE Energy Information Agency
3 Platts Oilgram Price Report
4 US EIA CNN Money
5 Jan 2008 - David W. Potter (SustainableDavid)
I would add to the definition above based on production, that "peak oil" is based moreso on supply, and that affects the ability to produce the oil, and therefore its price. Everyone has probably seen the bell-shaped curve of oil supply and time, with the peak of the curve very close to the date we are right now. Exactly when is a pointless argument. All the area to the left represents oil that has already produced and used--used up. All the oil to the right is still in the ground, for the uncertain future.
What is not evident from the curve is the nature of that oil. This oil is heavier grade, deeper (in deeper water or strata), in more hostile physical environments, more environmentally destructive to produce, and/or belonging to governments who hate the Western consumers of oil. All these facts make the price for each additional unit of oil progressively more expensive.
The entire argument about peak oil, however, is academic, since we have to Kill Carbon as an energy source, and do it soon. Trying to figure out how to extract yet more destructive Carbon will only delay progress and increase the global environmental damage humans have caused by the extraction of Carbon.
-----------
Peak Oil -
Peak Oil
The recent rise in energy prices is assumed by some to be more of the same type of fluctuations we have seen over the past 30 years. Others say “not true” and offer a compelling argument as to why high oil prices are here to stay, and in fact, may go much, much higher, topping $105 per barrel within the next five years1.
Why is this spike in prices different than what we have seen in the past? Market forces are acting in typical fashion, and demand is outstripping supply. Does this mean we are running out of oil? No, just that demand is at records rates and increasing, and supply channels, oil fields, and refining capacity is aging, and many major oil producing fields are being depleted, and not able to produce as much oil as fast as they used to.
Further, in past periods of energy shortfalls, there have been those willing to “open the taps” and increase oil crude production. During the 1973 and 1979 shortages, oil from Norway and Great Britain was able to take up the slack. Furthermore, in 1973, oil imports to the US were only about 11% of domestic oil use. Today, 58% of domestic oil use is imported2.
World Oil Demand
According to the International Energy Agency, world demand for oil is currently at 85.5 million barrels per day (MBD) Current supply is 85.5 mpd. Demand from China is accelerating at a record pace. China is now the second largest oil importer in the world and is aggressively seeking to purchase larger and larger shares of the oil markets. From making arms for oil deals with Iran, to financing pipelines and refineries in Venezuela, China is investing heavily into securing agreements for oil flows in the future. This is in keeping with a modernization program that is similar to the US interstate Highway system developed in the 1950’s. At 6.7 mpd in oil imports and rising, China is the 800 pound gorilla who has the money to be a major player in the world oil markets. Anticipated demand will be over 84.6 MBD by year end 2005. 4
Currently the world is using approximately 4-6 barrels of oil for every one it discovers.
World Oil Supply
The OPEC oil ministers met Wednesday, June 22, and increased their total oil production by 500,000 bd. This is seen as legitimizing the already exceeded quotas, so real production increases are not anticipated. Current thinking is that OPEC has about 1.5 mpd capacity to increase production, but cannot sustain that for long, without costly improvements to oil production infrastructure. Actual sidelined capacity sits at about .5 MBD3. Aging infrastructure and a shortage of refining capacity, coupled with a surge in demand, combine to create a supply imbalance, and prices are likely to stay above $50 per barrel for the foreseeable future, and if any disruptions occur, could shoot much higher.
Oil supplies come to the US from about 15 different countries. Of the top seven importers, five have political systems in instability or have outright hostility toward the US. These include Saudi Arabia (#2 importer) Venezuela (#4), Nigeria (#5) Angola (#6) and Iraq (#7). Canada (#3) and Mexico (#1) are the only two that are stable, and friendly toward the US. Disruptions in any of these countries could cause oil prices in the US to spike upward. In the fall of 2004, hurricane Ivan wreaked havoc on the oil platforms in the Gulf of Mexico causing prices to spike upward.
Matt Simmons, a former energy advisor to the current President Bush, in his book, “Twilight in the Desert,” makes the case that Saudi Arabia is at or near its peak, and that the giant fields of Ghawar, Abqaiq, and Berri are all aging and in some cases well past their peak and near depletion. He has reviewed over 239 scientific peer reviewed papers on oil production worldwide, and concludes based on that review, that the supplies promised by OPEC are not achievable.
It is significant that the 2005 first quarter production of most of the major oil companies is falling : ExxonMobil -3%; Chevron -6% ; Shell -8% ; Repsol YPF -7%., while Phillips-Conoco maintained its level with BP at least reporting a 2% increase (see Petroleum Review, June 2005).
Reserves
Proven reserves of oil are usually closely held secrets by nationalized oil companies, and other who might know. Stated reserves are suspect. For political or economic reasons, oil companies and oil producing nations want to show they have ample reserves on hand to meet demand. A closer look at these numbers raises many serious and disturbing questions.
Following the oil shocks of 1973 and ’79, OPEC was able to control the market and keep prices high. When high prices of oil caused recessions in the US and Europe, demand fell and prices collapsed back to about $9 bbl, falling form highs of over $30 bbl. The OPEC nations agreed that reserves would dictate production quotas and within a year (1985) Venezuela, Iraq, Iran and the United Arab Emirates doubled their reserve estimates. Abu Dubai tripled theirs, and Saudi Arabia increased their reserves estimate by 50%. [1]
Furthermore, in many of the estimates put together by organizations such as the United States Geological Survey, Petroconsultants of Geneva, and others, these reserve estimates have not changed since 1985, even though 20 years of oil production has occurred since then.
Colin Campbell, Jean Leherrere and other people who are trying to figure out how much conventional oil is left in the known fields estimate the production since these reserves were published, and the veracity of the original claims, given that there was a very large incentive to inflate reserves to increase shares of production quotas. Their best estimates are that we are very close to having produced 50% of the known reserves of conventional oil. As this point approaches, production becomes more expensive on the second half of these reserves.
Geology
Oil exploration has covered most of the terrestrial globe. Oil geologists are able to look at geology and pinpoint with a high degree of accuracy the formations or “plays” oil is likely to reside. Offshore explorations have covered much of the continental shelves, and the only area on earth left for large scale exploration is deep ocean, which is inherently more expensive to produce.
Discoveries
The chart below shows discoveries of major oil fields by decade since the 1930’s.
While it is likely that there is oil yet to be discovered and in areas that are accessible, the steep declines in discoveries since the 1960’s means that production from these major fields is greater than the discovery of new fields.
Stuart McGill, Senior Vice President of ExxonMobil, noted that world demand for oil and gas is expected to increase by 1.7 percent per year, while the world's oil and gas fields on average are declining in production at a rate of 4 to 6 percent per year. This base decline, coupled with the growing demand for oil and gas, means that the amount of new daily production needed in 2020 is nearly equivalent to replacing all of today's daily production.
If this is a case of Never Cry Wolf, there was a real wolf in that story. If we make our country and Alaska more energy efficient, and peak oil is not happening soon, we increase our competitiveness, reduce our carbon dioxide output and decrease the warming our scientists say is taking place, especially in the arctic. If we fail to increase our efficiency, and peak oil happens this year or next, with prices rising dramatically as many predict, we are in for some tough times indeed.