- The arguments are so one-sided, it's practically a given
that "peak oil" is real and threatening. Or is it? This article
examines both sides. It lets readers decide and deals only with supply
issues, not crucial environmental ones and the need to develop alternative
energy sources. First some background.
- The name most associated with "peak oil" is
M. King Hubbert. He became the world's best known geologist when he worked
for Houston-based Shell Oil Company from 1943 to 1964. His theory goes
something like this. Oil is a finite resource. Peak oil, or Hubbert's peak,
is the point at which maximum world production is reached, after which
its rate terminally declines.
- Hubbert first presented his theory in a February 4, 1949
Science magazine article called "Energy from Fossil Fuels." He
gained prominence, however, from his 1956 American Petroleum Institute
presentation titled "Nuclear Energy and the Fossil Fuels." In
it, he predicted that US production would peak between the mid-1960s and
early 1970s, and he was largely right (for the wrong reasons at the time)
about cheap or what's called light sweet oil.
- Most analysts believe US output peaked in 1970 and has
since declined. Others, like economist and author F. William Engdahl, disagree.
He's been researching oil issues since the early 1970s and believes US
output peaked at the time but not because of resource depletion. It's "because
Shell, Mobil, Texaco and the other partners of Saudi Aramco were flooding
the US market with dirt cheap Middle East imports, tariff free, (and) at
prices so low (that) many Texas domestic producers could not compete and"
had to shutter their operations.
- But Hubbert went further as well. He predicted a worldwide
peak in "about half a century" that would progress in bell-shaped
curve fashion, now called "Hubbert's curve." Here's how it works
for all fossil fuels. Hubbert theorized that after discovery, production
increases exponentially, but at some point peak output is reached, after
which an exponential decline ensues. Hubbert's curve is symmetrical, it
peaks when half of all oil (or other fossil fuel) has been produced, and
there's only a single peak after which output declines.
- Hubbert's analysis was at a time oil nominally cost under
$3 a barrel. Inflation-adjusted that's around $23 in 2008 dollars. Today
it's around $100, and some analysts see it heading much higher as the supply
of cheap oil declines in the face of growing demand. True or false will
only be known in the fullness of time, but consider what Hubbert, in fact,
said in his 1956 paper. He estimated:
- -- a "total ultimate potential reserve of 150 billion
barrels of crude oil for both land and offshore areas of the United States"
and acknowledged he was "in substantial agreement with Pratt's figure
of 170 billion barrels....;"and
- -- a potential of 1.250 trillion "barrels (for)
the whole world."
- So far, Hubbert was referring to what's called "light
sweet" or cheap oil. But he went further as well, yet his comments
have been largely ignored. He mentioned other type oils and estimated:
- -- "the oil obtainable from oil shales in the United
States" is one trillion barrels based on current (1956) US Geological
Survey figures; outside the US, he estimated oil shale potential in Brazil
at between 300 to 500 billion barrels with "negligible" amounts
present in other countries;
- -- the Athabaska tar sands in northeastern Alberta, Canada
are the "largest known deposit(s)....in the world;" its "extractable
oil content....is still not accurately known, but current estimates range
from about 300 to 500 billion barrels....;" and
- -- "other large (nonconventional oil) deposits of
uncertain magnitude exist in eastern Venezuela and in Mesopotamia (Iraq);"
these and others like them in the world "might be as much as (another)
800 billion barrels."
- Hubbert then stated: "....the culmination of world
(oil) production (of the cheap variety)....should occur within about half
a century (and within) the United States....within the next few decades."
However: "This does not necessarily imply that the United States or
other parts of the industrial world will soon become destitute of liquid
(oil) and gaseous fuels, because these can be produced from other fossil
fuels (including tar sands, heavy and extra-heavy oils and shale) which
occur in much greater abundance." In 1956, his and other estimates
of their amounts were far below today's figures. More on that below.
- Current Opposing Views on Peak Oil
- The German-based Energy Watch Group (EWG) believes peak
oil is real. It's an "international network of scientists and parliamentarians"
that published an October 2007 report with that view. It stated world oil
production peaked in 2006, output is now declining by several percent a
year, and by 2020 to 2030 global oil reserves will be substantially lower
than today and a supply gap will exist.
- Daniel Yergin's Cambridge Energy Research Associates
(CERA) disagrees. Its analysis finds that "the remaining global oil
resource base is actually 3.74 trillion barrels - three times as large
as the (claimed) 1.2 trillion barrels by (peak oil) proponents." CERA
argues further that peak oil reasoning is faulty and, "if accepted,
(may) distort critical policy and investment decisions and cloud the debate
over the energy future." It states as well that the "global resource
base of conventional and unconventional oils....is 4.82 trillion barrels
and likely to grow" and bases its analysis on fields now in production
and those "yet-to-be produced or discovered."
- Its chairman, Daniel Yergin, noted that: "This is
the fifth time that the world is said to be running out of oil. Each time....technology
and the opening of new frontier areas has banished the specter of decline.
There's no reason to think that technology is finished this time."
- The Paris-based International Energy Agency (AIE) agrees.
It's an energy policy advisor to its 27 member countries that was founded
by the OECD in 1974 in the wake of that period's oil crisis. It believes
peak oil notions are extreme, says there's "no shortage of available
oil and gas in the ground," but new technologies must be found to
curb "the world's thirst for them (and to) tap reserves" to increase
production. AIE believes as much as 10 trillion barrels of "oil equivalent"
conventional oil and gas exist and at least as much non-conventional oil.
- In a 2005 report it stated that: "The hydrocarbon
resources in place around the world are sufficiently abundant to sustain
likely growth in the global energy system for the foreseeable future. The
doomsayers are again conveying grim messages through (the media). The AIE
has long maintained that none of this is cause for concern."
- AIE considers all type oils - the easy to find and produce
"light sweet" kind that's likely running out plus potentially
huge untapped deposits of heavier oils that will become more important
when it does. With this in mind, the Middle East doesn't have two-thirds
of world oil reserves as many analysts, the industry, and US Department
of Energy claim. It has two-thirds of "proved" cheap oil reserves.
- The US Geological Survey (USGS) collects data on all
type oils and estimates their amounts. For the year 2000, the US Department
of Energy (DOE) and oil industry estimated remaining "proved"
light sweet reserves at slightly over one trillion barrels. USGS, however,
placed "identified" reserves at 1.1 trillion barrels and "recoverable"
reserves at nearly 2.3 trillion or more than double the industry and DOE
amounts. In addition, USGS estimates combined non-conventional heavy and
tar sands deposits at around 4.250 trillion barrels with about 3.6 trillion
of them in the two countries with most of them - Canada and Venezuela.
- Other "unconventional" oil estimates differ
widely, so take your choice on who to believe. Dutch economists Peter Odell
and Kenneth Rosing had an earlier view in their 1980 book "The Future
of Oil." They noted predictions of total world reserves ranged from
two to 11 trillion barrels and said three trillion was "the more realistic
figure" for conventional oil plus another two trillion from unconventional
heavy oil and tar sands.
- Petroleum Economist magazine calls itself "the authority
on energy." It says tar (or oil) sands reserves are huge, they occur
in over 70 countries, and Canada has most of them (around 81%) in four
regions: Athabasca, Wabasca, Cold lake and Peace River in areas covering
around 77,000 km. It estimates technically recoverable reserves at between
280 - 300 billion barrels with total non-recoverable (based on current
technology) amounts at between 1.7 - 2.5 trillion barrels. Other than shale,
USGS categorizes oil as light, heavy, extra-heavy and natural bitumen or
- Some analysts believe oil sands can replace conventional
oil when its supply runs out while others disagree. One of them is Richard
Heinberg, who's written extensively on ecological and peak oil issues.
He says that although estimated oil sands reserves equal or exceed all
conventional oil extracted to date, processing them reduces their potential
for reasons geologist Walter Youngquist explains: because "it takes
the equivalent of two out of each three barrels of oil recovered to pay
for all the energy and other costs involved in getting oil from the oil
- Then, there's the environmental cost. It takes two tons
of sand mined to yield one barrel of oil, and extracting it requires huge
amounts of natural gas and water. In addition, each barrel recovered yields
2.5 barrels of oily waste that must be disposed of. It's done by pumping
it into huge ponds, and Heinberg describes a Syncrude Canada Ltd. one that's
14 miles in circumference in which 20 feet of murky water floats on a 130-foot-thick
slurry of sand, silt, clay and unrecovered oil.
- It's nightmarish and so environmentally destructive that
northern Alberta residents want all oil sands plants shuttered because
they've displaced native people, destroyed boreal forests, caused livestock
deaths and increased the level of miscarriages. Moreover, Heinberg believes
it would take about 700 plants the size of a Syncrude Athabasca one to
process enough tar sands to replace conventional oil, and their environmental
damage would be unimaginable and too great a cost to bear.
- Another resource assessment comes from Petroleum Equities.
It's a management consulting firm specializing in oil and gas exploration
and production. It estimates combined heavy oil and tar sands worldwide
reserves at around 5.4 trillion barrels with 80% of them in the western
- For extra-heavy oil alone, the US Department of Energy
(on its web site) estimates Venezuela has 1.36 trillion barrels, or 90%
of the world total. That's more than all "proved" world reserves
combined and in addition to Venezuela's "proved" light sweet
resources of around 80 billion barrels that alone ranks it seventh in the
world behind the five largest Middle East producers and Canada.
- Potential Arctic Oil Reserves
- On its web site (arcticoag.com), the Arctic Oil and Gas
Corporation states it's "an oil exploration venture company that has
filed for the exclusive exploitation, development, marketing and extraction
rights to the oil and gas resources of the seafloor and subsurface contained
within the 'Arctic Claims.' " It calls the Arctic "the last giant
oil frontier on Earth (with its) vast reserves of untapped oil and natural
gas (that will) become accessible (when) new deep-sea drilling and hydrocarbons
production technology (is) available."
- In addition, it states that a preliminary USGS assessment
"suggests the Arctic seabed may hold as much as 25 per cent of the
world's undiscovered oil and natural gas reserves (or around 400 billion
barrels of oil alone.)" It further says that Arctic oil source rocks
may contain "untold billions of tons of organic sediments" and
calls the 80 million acre Arctic Ocean Commons Prospect Claim "the
world's largest (potential) material prize."
- Here's what USGS, in fact, said in October 2007. It called
the above claim "a reporter's mistake" but doesn't rule out that
it's true. It explained that the 25% figure came from an assessment of
seven oil and gas basins that weren't precisely in the Arctic. One of them
in East Siberia lies entirely south of it. Exclude it and what's left is
14%. However, because a 2000 USGS assessment didn't include undiscovered
resources from all north of the Arctic basins (numbering many more than
seven), the area's potential is vast but undetermined.
- USGS explained that it didn't fully assess the area in
2000 because it lacked enough data at the time. However, it's now investigating
all Arctic regions, using available geologic information and "a methodology
adapted to a general shortage of well and seismic data." USGS concludes
that the region's potential is vast, it's largely unexplored, its resources
are "poorly understood," and it can only produce a "broad
view" of the region's potential "because the (area's) geologic
uncertainties are very high and the technical uncertainties (of) oil and
gas extraction (feasibility) even higher."
- Two Notable Peak Oil Proponents
- There's no shortage of peak oil proponents, many are
prominent figures, two among them stand out, and one is a media regular
on his views, right or wrong. He's Matthew Simmons, chairman and CEO of
Simmons & Company, an industry-insider, close associate of Dick Cheney
and advisor and possible secret member of Cheney's Energy Task Force representing
Big Oil interests. He's also a major Republican donor and author of the
2005 book "Twilight in the Desert: The Coming Saudi Oil Shock and
the World Economy."
- In it, Simmons is alarmist about the world's largest
producing country, and he's widely heard and believed. Right or wrong,
he states that Saudi oil fields are "at or very near (their) peak
sustainable volume (and they'll) likely....go into decline in the very
foreseeable future." In addition, there's little chance of discovering
new fields to make up the difference. These views make headlines and move
markets. So with oil prices around $100 a barrel and Simmons an industry
insider and prominent doomsayer, consider the possibility there's something
rotten in the oil patch allowing Big Oil to profit hugely.
- Further confirmation comes from a February 28 Arabian
Business article. In it, Simmons calls $100 oil "cheap" because
"the supply is showing some very troubling signs that we might well
have already peaked and started (to slow) down....Demand on the other hand
shows absolutely no sign of slowing down," so oil prices could top
$300 a barrel within five years." Simmons repeats this view on US
- Geologist Colin Campbell is another peak oil proponent
and author of many papers on the subject. He's just as bleak in his outlook
and states it in "The Coming Oil Crisis and Oil Depletion - The Heart
of the Matter," that he wrote for The Association for the Study of
Peak Oil and Gas (ASPO). He's their founder, former president and currently
their honorary chairman.
- Campbell believes world output peaked, and in another
of his papers, "Peak Oil: an Outlook on Crude Oil Depletion,"
stated: Peak Oil "is a turning point for Mankind, which will affect
everyone....its discovery peaked in the 1960s....gas....will likely peak
around 2020....non-conventional oil delays peak only a few years....we're
not facing a re-run of the (1970s) Oil Shocks. They were like....tremors....we
now face (an) earthquake....It is not a temporary interruption but the
onset of a permanent new condition."
- Campbell also wrote "Understanding Peak Oil"
on APSO's web site in which he further says that debating the precise date
of peak oil "misses the point." What really matters is "the
long remorseless decline (that's) on the other side of it. The transition
to decline threatens to be a time of great international tension. Petroleum
Man will be virtually extinct this Century, and Homo sapiens faces a major
challenge in adapting to his loss. Peak Oil is by all means an important
subject." These type comments and more from Campbell's 2005 book "Oil
Crisis" can scare anyone. They also explain today's geopolitics, the
strategic importance of oil, the reason its price is so high, and why the
US is waging global wars "that won't end in our lifetime."
- A Peak Oil Contrarian
- F. William Engdahl once accepted peak oil analysis, but
no longer does. He explains why in his writing, and this section summarizes
his reasoning. It's based on the Russian-Ukrainian theory that oil originated
from deep carbon deposits dating as far back as the earth's formation.
It's not a fossil fuel or of biological origin, and its potential may be
far greater than current hydrocarbon estimates.
- According to Engdahl and others sharing this view, peak
oil adherents believe oil is a fossil fuel, its origin is biological, its
supply finite, and it's only found in areas where it was "geologically
trapped millions of years ago....in underground reservoirs (around) 4-6000
feet below the surface of the earth." At times, large amounts may
also be in shallow water offshore rock formations in places like the Gulf
of Mexico, North Sea or Gulf of Guinea. In any event, prevailing reasoning
is that it's running out, and it's a just a matter of deciding how much
is left and when it no longer will be available in amounts needed to sustain
world economies. Peak oil proponents believe the time is fast approaching.
- Petroleum science dates from the year 1757 when Russian
scholar Mikhailo Lomonosov hypothesized that oil's origin might be biological.
In the early 19th century, two scientists disagreed - German naturalist
and geologist Alexander von Humboldt and French chemist and thermodynamicist
Louis Joseph Gay-Lussac. Together they proposed that oil is primordial
matter, it erupted from deep within the earth, and it has no connection
to biological material nearer the surface. Later in the century, others
held similar views - most notably the Russian chemist Dmitri Mendeleev
(the father of the Periodic Table of chemical elements) and French chemist
Marcellin Berthelot. Mendeleev, in particular, believed that "petroleum
was born in the depths of the earth (called "deep faults"), and
it is only there that we must seek its origin."
- Modern petroleum science dates from the end of WW II
when the Cold War began and the former Soviet Union faced isolation from
the West. At the time, its scientists believed the country was in trouble.
It had limited reserves and was shut out of many parts of the world for
supply. It thus became imperative to find new deposits inside the country.
- So its scientists at the Institute of the Physics of
the Earth of the Russian Academy of Sciences and the Institute of Geological
Sciences of the Ukraine Academy of Sciences set out to do it. They studied
oil's origin, how reserves are generated, and the most effective exploration
methods to extract it.
- In 1951, Nikolai Kudryavtsev proposed the first modern
deep abiotic oil origins theory at the All-Union petroleum geology congress.
He discounted claims about oil's biological origin and was joined by other
Russian and Ukrainian geologists, including Vladimir Porfir'yev.
- In 1956, Porfir'yev announced their conclusions that
even now are largely unacknowledged in the West: that "Crude oil and
natural petroleum have no intrinsic connection with biological matter originating
near the surface of the earth." They're "primordial materials
which have been erupted from great depths," and believing their supply
is limited is a hoax to keep prices high at times like now.
- The theory rests on the abiotic origin of oil. It's mirror
opposite orthodox geology, and, if right, here's what it means - that available
oil is only limited by deep earth organic hydrocarbon constituents at the
time of the planet's formation, and technological advances will eventually
tap them in ultra-deep reservoirs and from old fields believed to be barren.
- The theory defies conventional science, but it's paying
off. It let Soviet Russia develop huge oil and gas fields in regions previously
thought unsuitable. In the 1990s, it was also successfully used in the
Dnieper-Donets Basin between Russia and Ukraine in areas considered barren.
Sixty-one wells were drilled of which 37 (60%) proved out. Engdahl compares
this to US wildcat drilling that produces 90% dry holes.
- Russia's success was largely unknown in the West until
Pentagon strategists, just recently, considered a disturbing possibility
- that the country's geophysicists might know "something of profound
strategic importance." If Russian energy know-how exceeds the West,
it holds "a strategic trump card of staggering geopolitical import."
It also explains why Washington surrounds the country with military bases
and targets it with anti-ballistic missiles and radar for offense, not
defense. It's "to cut her pipeline and port links to western Europe,
China and the rest of Eurasia" as part of a new millennium Great Game
to control the world's resources.
- In the 1990s, Russia extended its technology to the West,
but its offers were spurned and then withdrawn after the US attacked Iraq.
Nonetheless, ExxonMobil nearly got a $25 billion stake in Yukos Oil that
only unraveled after its chief executive Mikhail Khodorkovsky's arrest
and conviction quashed the deal. Had it gone through, Exxon would have
had access to the world's largest resource of abiotic-trained deep drilling
experts, now unavailable to their scientists and the West.
- It now comes down to this. Western technology is built
around fossil fuel development. If the future is abiotic, as Engdahl and
Russian scientists believe, "Moscow holds a massive energy trump card."
It also faces a hostile US and possible new Cold War confrontation for
its advantage and unwillingness to be accommodative the way Boris Yeltsin
was in the 1990s.
- If abiotic theory proves false or overrated, however,
and orthodox geology is right, then controlling world oil reserves is even
more important. It means peak oil is real, cheap oil is running out, heavier
oils are more important, and cornering what's left will be Priority One
for all major world powers.
- There you have it - peak oil or vast untapped amounts
of the abiotic kind awaiting new technology to access it. Readers can weigh
the evidence, find more on their own, and decide what's true or false.
In the fullness of time we'll know, but for now we must rely on our best
judgment with plenty of ammunition on both sides of the argument to consider.
- Stephen Lendman lives in Chicago and can be reached at
- Also visit his blog site at sjlendman.blogspot.com and
listen to The Global Research News Hour on RepublicBroadcasting.org Mondays
from 11AM to 1PM US Central time for cutting-edge discussions of major
world and national topics with distinguished guests.
- Here are a couple of key articles on 'Peak Oil' which
are well worth reading:
- Russia Proves 'Peak Oil' Is A Scam
- Oil Is NOT A 'Fossil' Fuel - It Is Abiotic