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It has taken between 50-300 million years to form, and yet we have managed to burn roughly half of all global oil reserves in merely 125 years or so.
The world now consumes 85 million barrels of oil per day, or 40,000 gallons per second, and demand is growing exponentially.
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Oil production in 33 out of 48 out countries has now peaked, including Kuwait, Russia and Mexico. Global oil production is now also approaching an all time peak and can potentially end our Industrial Civilization. The most distinguished and prominent geologists, oil industry experts, energy analysts and organizations all agree that big trouble is brewing.
The world is not running out of oil itself, but rather its ability to produce high-quality cheap and economically extractable oil on demand. After more than fifty years of research and analysis on the subject by the most widely respected & rational scientists, it is now clear that the rate at which world oil producers can extract oil is reaching the maximum level possible. This is what is meant by Peak Oil. With great effort and expenditure, the current level of oil production can possibly be maintained for a few more years, but beyond that oil production must begin a permanent & irreversible decline. The Stone Age did not end because of the lack of stones, and the Oil Age won't end because of lack of oil. The issue is lack of further growth, followed by gradual, then steep decline. Dr King Hubbert correctly predicted peaking of USA oil production in the 1970's on this basis.
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It is now widely acknowledged by the world's leading petroleum geologists that more than 95 percent of all recoverable oil has now been found. We therefore know, within a reasonable degree of certainty, the total amount of oil available to us. Any oil well has roughly the same life cycle where the production rate peaks before it goes into terminal decline. This happens when about half of the oil has been recovered from the well. We have consumed approximately half of the world’s total reserve of about 2.5 trillion barrels of conventional oil in the ground when we started drilling the first well at a current rate of over 30 billion a year, meaning the world is nearing its production plateau.
Worldwide discovery of oil peaked in 1964 and has followed a steady decline since. According to industry consultants IHS Energy, 90% of all known reserves are now in production, suggesting that few major discoveries remain to be made. There have been no significant discoveries of new oil since 2002. In 2001 there were 8 large scale discoveries, and in 2002 there were 3 such discoveries. In 2003 there were no large scale discoveries of oil. Given geologists' sophisticated understanding of the characteristics that would indicate a major oil find, is is highly unlikely that any area large enough to be significant has eluded attention and no amount or kind of technology will alter that. Since 1981 we have consumed oil faster than we have found it, and the gap continues to widen. Developing an area such as the Artic National Wildlife Refuge in Alaska has a ten year lead time and would ultimately produce well under 1% of what the world currently consumes (IEA).
Oil is now being consumed four times faster than it is being discovered, and the situation is becoming critical.
"The consumption of a finite resource is simply a finite venture and the faster we use the quicker it peaks" (M. Simmons)
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Global oil production is rapidly approaching its peak, even if natural gas liquids and expensive, destructive, risky deepwater and polar oil are included. |
Recent Warnings:
"Peak oil is now." German Energy Watch Group –2008
"By 2012, surplus oil production capacity could entirely disappear..…" U.S. Department of Defense –2008 & 2010.
"A global peak is inevitable. The timing is uncertain, but the window is rapidly narrowing." UK Energy Research Centre -2009
"The next five years will see us face … the oil crunch." UK Industry Taskforce on Peak Oil and Energy Security –2009
The Saudi Arabia Case
With more than fifty oil-producing countries now in decline, focus on the oil-rich Middle East has sharpened dramatically. Countries of the Middle East have traditionally been able to relieve tight oil markets by increasing production, but, as the this region nears its own oil peak, any relief it can provide is limited and temporary.
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Saudi Arabia is a major oil producer with 73% of all incremental world demand being met by this country. The worrying fact is that 90% of their production comes from only 5 mega fields (one is the Ghawar field which is the biggest ever discovered), and are all at risk of unplanned production collapse. In 2004 there were warning signs of production falling into depletion. For years, Aramco, the Saudi national company, use secondary recovery techniques by injecting enormous amounts of seawater (7 million barrels daily) into their biggest field to boost production. These methods have only temporary effects, and lead to accelerated rates of depletion in the future.
Matt Simmons, long time energy analyst who studied energy for 34 years, in his book “Twilight in the Desert” effectively confronts the complacent belief that there are ample oil reserves in Saudi Arabia and has created a compelling case that Saudi Arabia production will soon reach a peak, after which its production will decline and the world will be confronted with a catastrophic oil shortage. The factual basis of the book is over 200 technical papers published over the last 20 years which individually detail problems with particular wells or particular fields, but which collectively demonstrate that the entire Saudi oil system is “old and fraying” with reserves deliberately vastly overestimated.
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Geologist Dr Colin Campbell in a 1998 article in Scientific American also details numerous discrepancies about estimates in Middle East reserves. The extent of reserves reported remained amazingly constant from year to year and then jumped dramatically. A similar unexplainable jump occurred in other countries in the Middle East, sometimes even in the total absence of exploration, strongly suggesting that OPEC's reserves are overstated.
Peak Oil Imminent
The only uncertainty about peak oil is the time scale, which is difficult to predict accurately. Over the years, accurate prediction of oil production was confronted by fluctuating ecological, economical, and political factors, which imposed many restrictions on its exploration, transportation, and supply and demand. At the end of 2009, the Kuwait university and the Kuwait Oil company collaborated in a study to predict the peak date using multicylic models, depending on the historical 2 oil production trend and known oil reserves of 47 major oil production countries, to overcome the limitations and restrictions associated with other previous models. Based on this model, world production is estimated to peak in 2014. Other experts, oil companies and analyst firm estimate the peak date between now and around 2020. What's certain is that the global production will go into a permanent decline within our generation.
"One of nature's biggest forces is exponential growth"
(Albert Einstein)
At a current average global consumption growth rate of 2% annually (1995-2005), by 2025 the world will need 50% more oil (120 mbd), and the International Energy Agency (IEA) admits that Saudi will have to double oil production to achieve this, which is not feasible in even the most optimistic scenario. And that's not even taking into account that 80% of the world is only just starting to use oil & gas. In recent years, energy demands from mostly emerging economies have increased dramatically in populous countries as their oil consumption per capita grows. The International Energy Agency estimates that 93% of all incremental demand comes from non-OECD countries. Therefore, in time oil prices will continue to rise.
Based on Simmon’s analysis, sudden and sharp oil production declines could happen at any time. Even under the most optimistic scenario, Saudi Arabia may be able to maintain current rates of production for several years, but will not be able to increase production enough to meet the expected increase in world demand. There is no likely scenario that some new frontier can replace Middle East oil declines.
From Wiki leaks it has emerged that Senior Saudi energy officials have privately warned US and European counterparts that Opec would have an “extremely difficult time” meeting demand and that the reserves of Saudi have been overstated by as much as 40%.
