Peak Oil -- And What Do We Do Now?

This group's purpose is to debate the “peak oil” phenomenon and its inevitable aftermath, and how we can help shape a post -petroleum future.    This is a global phenomenon and this is a global group.

Peak oil is the point in time at which the maximum global petroleum production rate is reached. After this point in time, the rate of production begins a terminal decline--and that point may have already been reached.  According to the Hubbert model, the production rate follows a roughly symmetrical bell-shaped curve--literally a "peak".

 

"This looks to be the biggest discovery in the United States in a generation, really since the discovery of Prudhoe Bay 38 years ago."  Daniel Yergin, chairman of the consulting firm Cambridge Energy Research Associates Inc, was referring to a field discovered in 2006 by a Chevron-led team in the deep waters of the Gulf of Mexico.  Chevron’s current conservative estimate for this field is around three billion barrels of recoverable oil.

    To put this discovery in perspective, this is equivalent to roughly five months of US consumption.  This example highlights the simple fact that oil consumption is far outpacing discovery; currently at a rate of three to one.  Once the world’s largest oil producer, US oil production has halved from its peak of ten million barrels per day (bpd) in the 1970’s.  This is more than just a US problem, this is a global problem.  Across the globe, major field discoveries have dwindled over the past decades.  We are surviving on discoveries made decades ago and future prospects for significant discoveries look bleak.  It remains to be seen how long global production can continue to increase while the rate of new discoveries continues to decrease.

    According to the International Energy Agency, global non-OPEC conventional oil production is expected to peak between 2010 and 2015.  The implications of a non-OPEC peak will be great.  With the majority of the world’s conventional reserves, OPEC will have to dramatically raise its output to fill the breach.  Contingent on this rise will be the capabilities of individual OPEC members, most importantly Saudi Arabia.  

    To meet the challenge, the Kingdom will have to increase its capacity significantly.  Representatives of the state petroleum company, Saudi ARAMCO, have frequently stated that the country is up to the task, and based on Saudi reserve claims, most of the world has been more than willing to tow this line.  The IEA currently predicts that Saudi Arabia will be able to increase its capacity from the current 10 million bpd, to over 18 million bpd by 2030.  It has been taken for granted that this level of production increase is possible, even though the Kingdom has not released verifiable reserve data for roughly thirty years.  With the global economy depending on this increased level of production, the implications for OPEC and Saudi Arabia not reaching this target would be extremely dire.