BP Economist, Arab Oil Producers Say No Peak Oil Any Time Soon

Posted by Kristin Miller

Peter Davies, former head economist at BP, says fears about peak oil production are “overstated and exaggerated.” (image: telegraph.co.uk)

An article in Emirates Business 24/7 this week announced new studies and figures aimed at proving that claims about peak oil are “exaggerated.” This latest round in the high-stakes game between oil producers and climate-change whistleblowers, however, isn’t exactly from the most neutral of sources. The primary claim reported was made by Peter Davies, a former chief economist for BP, while delivering a speech during a recent seminar held by the Saudi Association for Energy Economics (SAFE)–the article notably omits that Davies is no longer in BP’s employ. While paying lip service to the fact that global oil resources are, in fact, finite, Davies countered “theories” about peak oil by saying generally that technology and economics will find a way to stretch our oil resources much farther into the future than predicted:

Those who believe in peak oil tend to believe that technology and economics don’t matter, and I think this is false. The application of technology, the innovation of new technology and economic forces especially mean that recoverable oil resources can increase. If there is a peak in oil, it will come from the demand side. There are always fears, but these remain overstated and exaggerated.

BP’s estimates of word oil reserves (broken down by region) at the end of 2008. (image: bp.com)

This of course, would be a balm to the anxieties of any oil-producing nation, and the article goes on to cite statistics from the Organization of Arab Petroleum Exporting Countries (OAPEC),which appear to back up Davies’ statement. According to OAPEC, there are some 1,809 billion barrels of oil in the Gulf region beyond proved reserves, which cannot be extracted using current technology but which could be potentially tapped in the future. The article claims: “These quantities, if they can be extracted, will meet the world needs for 60 years.” But that is a rather large “if.” The figure falls as low as “enough oil for seven years” if only 10% of the deposits are usable and obtainable.

As we’ve reported previously, Colin Campbell, a former BP geologist and founder of Association for the Study of Peak Oil and Gas, has stated that peak oil occurred in 2008, and that numbers like OAPEC’s are based on poor reporting practices for oil reserves. It is apparently common in the industry for oil companies to report the minimum of reserves upon the discovery of a field, and then revise the public estimates upward during the course of its life, so that the true reserve numbers are based on research done at the outset and don’t reflect newly discovered oil. In addition, he believes that “conventional” reserves peaked in 2005, and that since that time, the shortfall between demand and what the world’s oil fields could put out has been met by oil from more expensive and difficult to extract locations such as the Canadian tar sands. By Campbell’s logic, we are already tapping the sort of resources that the Gulf is counting on for its future productivity, and that shift was largely responsible for the oil price spikes we saw in the winter of last year. Another peak-oil believer, Swedish physicist Kjell Aleklett, claims that overestimation of Gulf reserves by the International Energy Agency may be partially responsible for the current financial crisis in Dubai. The Emirates city-state is surprisingly poor in oil resources, and dependent on petro-fueled tourism from its wealthier neighbors and other parts of the world. So, if Akelett and Campbell are correct, Dubai’s problems may be a harbinger of things to come – a canary in the oil field, if you will – if petroleum energy use doesn’t shift in a more sustainable direction.

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