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Energy Insights: Energy News: If Peak Oil Is Dead, Why Haven't Prices Dropped?

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If Peak Oil Is Dead, Why Haven't Prices Dropped?




BP's nearshore Endicott field in the Beaufort Sea is a manmade island linked to the mainland by a gravel causeway in order to prevent destructive ice flows from damaging the drilling equipment and support facilities.

If Peak Oil Is Dead, Why Haven't Prices Dropped?


ASPO USA's Steve Andrews Interview with Dr. Richard G. Miller

By Steve Andrews

Dr. Richard G. Miller, trained as a geologist, joined BP as a geochemist in 1985. He studied peak oil matters since 1991, when BP asked him the following year to devise a wholly new way to estimate global oil resources. In 2000, he was tasked with creating an in-house projection of global future oil demand and supply to 2030. The model he created was updated annually through 2008; then the effort was disbanded and he moved on to his present work consulting on peak oil. Most recently, Dr. Miller co-authored The Future of Oil Supply, which was published by The Royal Society (on-line December 2, 2013), in a thematic issue of Philosophical Transactions entirely devoted to future world oil supply; he also served as co-editor of that 12-article publication.

Steve Andrews touched base with him last week for the Peak Oil Review, a publication of the Association for the Study of Peak Oil & Gas, USA.

Q: Andrews: BP has recently said definitively that ďpeak oil is dead.Ē How does an oil super-major reach such a conclusion, at least for purposes of public policy dialogue?

Dr. Richard Miller: I canít shed any light on why theyíre saying that today because it hasnít been their consistent position in the past. A CEO like Lord John Browne clearly at least kept his options open on the idea; and he was the one who started to steer the company into alternative energy. The one who really didnít have any sympathy with peak oil was Tony Hayward; it was really sad to see him bring the companyís investments in photovoltaics and other non-conventional energy almost to a screeching halt, deciding that the company was going to become a pure hydrocarbons company. That did seem very short-sighted. Whatís odd of course is that heís a geologist, and a very good geologist. You would think that someone like that could at least see that peak oil is not only coming, itís quite probably here, in terms of conventional oil.

Q: The third-hand story from someone at the 2001 World Economic Forum is that Daniel Yergin was on a panel with Lord Browne and convinced him, right after his presentation, to doubt peak oil.

Miller: Daniel Yergin is a rubbish scientist. Heís a very good flak, heís a very good writer, heís very perceptive in many ways, but Iím not convinced that he has grasped the underlying science of anything. Iíve read The Prize cover to cover; itís a lovely history. But he seems to fall into this camp that says if youíve got over 50 years of reserves in the ground, at current supply rates, how could there possibly be a problem?

Q: In your paper, you mention the difficulties of accessing the relevant oil data, the unreliability of the data that are available, and the pervasive influence of powerful political and economic forces. How good or bad are the data?

Miller: At a national level, the data is reasonable in terms of production. There are some things that you canít hide. Even if you are a Saudi Arabia or Iran or Iraq and you donít want people to know too much about your industry, you still canít hide how many super tankers are moving out of your country. You know how much is being exported, and you can have a good stab at how much is being consumed internally, so the national production numbers are pretty good.

Where it falls down is looking at field-by-field data because this is how you see what is going on. Thatís important, thatís how you start to learn the reality and rate of decline. That data is frankly terrible. There are a few western countries that are quite open. The UK for example is entirely open. You can go online and find all that data, month by month and field by field. For most fields though, you have to turn to the commercial databases, and the biggest of those is IHS. If youíre looking for full access to that, youíre talking about a price, when I last looked, of well over a million just to study their field-by-field production data.

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