Peak oil - Oct 8
by Staff
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In Kazakhstan, petroleum engineers are braving wild temperature swings in the shallow waters of the Caspian Sea to tap the biggest oil discovery of the past 30 years. They are drilling wells six miles deep in the Gulf of Mexico. And on the island of Sakhalin, in eastern Russia, they have drilled horizontal wells through miles of rock to produce oil from a stretch of ocean beset by giant icebergs. But as the industry extends its reach, the quest is becoming more arduous. The cost of producing new oil and gas is rising fast, and companies are plagued by worsening delays. Drilling rigs are scarce. Engineers, geologists, and petroleum specialists are in critically short supply. And the politics of oil and gas are getting trickier, with hydrocarbon-rich countries demanding a bigger share of the revenues and growing angry about project delays that postpone their payments. Industry executives say their ability to keep up with global demand is badly strained. "We're facing bigger risks and bigger difficulties when we go into new frontier regions," said Odd Mosbergvik, a senior manager at the Norwegian state energy company, Statoil Hydro. "But this is why the oil industry is for big boys. It's a big gamble." The industry's new reach is shifting the economics of energy extraction. According to a recent study, discovery and development costs - a leading indicator for the industry - tripled between 1999 and 2006, to nearly $15 a barrel. Last year alone, companies spent $200 billion developing new energy projects worldwide, according to the study by two consulting firms, John Herold and Harrison Lovegrove. That sum is bigger than the economies of 147 countries. These higher costs mean the industry needs higher energy prices to finance new projects. They are also constraining its ability to expand quickly. "As the CEO of a major oil company told me, 'This is an industry in crisis masked by high prices,' " said J. Robinson West, chairman of PFC Energy, an oil industry consulting firm in Washington. "There are no easy barrels left. The only barrels are going to be the tough barrels." (8 October 2007) BA:
He retired last month as CEO of Calgary's Talisman Energy, one of Canada's biggest oil producers. His job went to John Manzoni, BP's former head of refining. Mr. Buckee, 61, talked to The Globe and Mail about his contrarian strategies and views, global warming, whether mighty Suncor will fall prey to foreign buyers and why Australia is in his future. ...Q: Do you think the world has reached peak oil production? A: I do - we're there or close to it. Mexico, the North Sea and possibly Ghawar [in Saudi Arabia, the world's largest conventional oil field] are all in decline. The truth is the world is producing 30 billion-plus barrels of oil a year and is finding less than 10 billion. This is the worry. Q: If we're close to peak oil, what is your price forecast? A: The price has to be high enough to hurt demand. It has to be rationed by price. There is no real demand destruction yet [with oil near $80 (U.S.) a barrel]. It'll have to be at $120 a barrel, I think, before you'll see that.
It’s a bad enough situation. But what is rarely discussed is that in less than a decade, the issue will not be the price of gasoline - it will be whether gasoline is available at the pump at all. The world is heading toward a “peak oil” situation. What this means is that in 2012, world consumption of oil will reach the peak capacity of existing oil resources. Available resources in the Gulf of Mexico already reached that peak in 2005. ...Recently, however, high-level government and industry reports have begun to suggest that the peak-oil theorists were far closer to the grim reality of global oil availability than industry analysts were willing to admit. Industry optimism regarding long-term energy supply prospects, these official reports indicate, has now given way to a deep-seated pessimism, even in the biggest of Big Oil corporate headquarters. ...What can we do today and tomorrow? There are a number of important things the United States should have done yesterday in order to avoid oil addiction. First, transfer energy production to nonfossil-fuel sources. Second, dramatically increase car efficiency. Third, make sure that every family and every business understands the necessity of saving energy. Fourth, forget the idea that ethanol and liquefied coal are reliable substitutes for oil. Fifth, government at each level - federal, state, county and city - must immediately start revitalizing downtown areas. BA: Good summary. Even though this article appears in the Opinion section, there is no author named. I wonder who wrote it? UPDATE (Oct 9). Contributor jzbarton points out that the Buffalo News had updated its page with the author's name.
Background In 2003 the UK government released the Energy White Paper 2003: Our Energy Future - Creating a Low Carbon Economy. As we all know, events in the energy world have moved fast since 2003, and faced by falling gas supplies from the North Sea and ageing nuclear power stations, the government launched another energy consultation in 2006, details of which are available online here. The result was another Energy White Paper, published in May 2007, this time with the subtitle Meeting the Energy Challenge. It seems to me that the change in the energy world over the intervening years can be seen from the change in the tone of the titles from 2003 to 2007! The purpose of the seminar was to bring together a range of academics to give a critique of the Energy White Paper - and they certainly were critical! So, without further ado, here are the key points form the speakers, with comments from me in italics where appropriate. The slides are available on the BIEE website here: www.biee.org/downloads.php Mike Pepler lives in Rye, UK, and works from home for the Ashden Awards for Sustainable Energy (www.ashdenawards.org). He is also one of the founding members of PowerSwitch (www.powerswitch.org.uk), and together with his wife Tracy manages eight acres of coppice woodland near Rye.
Net imports reached 108.2 million tonnes from January to August, Xinhua news agency said, quoting figures from the General Administration of Customs (GAC). The world's second-largest oil importer, China has seen its demand for energy rocket as a result of its explosive economic growth, which has been in double digits for four consecutive years. If China is importing a lot more oil, who is now importing a lot less?
Economy - UK and the US Dollar Shortage of Oil and Gas Workers Fourth Quarter 2007 Oil Supplies LNG Supplies Gas Supplies: Turkmenistan - Russia - Ukraine Saudi Arabia - Aluminium Smelter Development / Natural Gas Supplies US - Corn to Ethanol Octobers issue of ‘Energy’ from Press And Journal, Scotland |
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