There is no harm in doubt and skepticism, for it is through these that new discoveries are made.

Richard Feynman
, Letter to Armando Garcia J, December 11, 1985
US educator & physicist (1918 - 1988)

I am somewhat sceptical about ‘Peak Oil’, specifically the notion that there will be a supply-side peak in oil production in this current decade.

I have four points:

1. There remains considerable scope for further oil discoveries. For example, the Arctic is effectively unexplored and is opening up, and there remain unexplored areas elsewhere, especially in deep water and onshore. Furthermore, the technology-driven successes in exploiting shale gas in the US should now be repeatable in shale oil.

2. Putting new discoveries to one side, globally only circa 10% of existing oil discovered volumes have been brought onto production so there remains a considerable resource to be exploited.

3. Considering fields that are already in production, average global recovery factors are relatively low. Some industry experts place the number as low as 22%, others in the low 30’s. In either case, there is a considerable prize to be won by the use of improved recovery and enhanced recovery techniques. Some numbers illustrate this:

• Shifting the average recovery factor offshore Norway from ~45% which is what it is today to their government’s target of 50% would add an extra 4 billion barrels or so.
  
• Enhanced Oil Recovery using CO2 is capable of raising recovery factors offshore the UK by from 4 to 12%, resulting in from almost 3 up to 8 billion barrels of technical reserves. This is 60 to 160 times the most exciting discovery made in the UKCS last year!
  
• An increase of 1% in the aforementioned global recovery factor would yield almost 90 billion barrels, equivalent to roughly 3 years consumption at current rates.

4. Some would argue that ‘Peak Oil’ will occur for economic reasons, specifically because the price of oil will rise so high that it will become too expensive to use.
[I think this is the “The Stone Age didn’t end because of a lack of stones” argument]
This will of course happen if the supply-demand balance remains tight and the cost of exploiting oil resources also rises.
However, neither of these outcomes is pre-ordained, especially in the geo-political cauldron of oil.
Consider that the impact of the discovery of large so-called unconventional gas resources in the USA has been to dramatically reduce gas prices in the USA, at the same time potentially removing the need for any imports. And the costs involved are related to the price that oil field service and construction companies can command for their services and products in an open market.

www.oilvoice.com/