Cambridge Energy Research Associates (CERA) is a widely touted US-based energy advisor firm. They bill themselves as a source to “help decision makers anticipate the energy future and formulate timely, successful plans in the face of rapid changes and uncertainty.” One aspect of our energy future about which CERA appears certain is the concept of peak oil.
"Peak Oil theory is garbage as far as we’re concerned", said Robert W. Esser, a geologist by training and CERA’s senior consultant/director of global oil and gas resources, according to Business Week online national correspondent Mark Morrison (Sept 7).
A wide range of very serious organizations are looking at and/or have commented upon the concept of peak oil, including the National Academy of Sciences (10/05), the US GAO (11/06), and the National Petroleum Council (2/07), working at the request of US Energy Secretary Samuel Bodman. Apparently, CERA thinks that’s all a waste of time and, in some cases, tax-payer money. By inference, CERA completely discounts the considered opinions of dozens of sober individuals and firms looking into the peak oil issue. Consider just this partial list of informed (mostly US-based) commentators:
1. Fellow industry analysts like PFC Energy; Groppe Long & Littell; and Petrie Parkman & Co. Last fall, Tom Petrie said he expected peak oil by around 2010 and that he would be “shocked” if world oil production didn’t peak by 2015. In PFC Energy’s 2004 presentation on peak oil, they show world oil production peaking in the 2014 time frame; their 2006 study, to be presented at the ASPO-USA conference next month, likely points to a slightly earlier date. Henry Groppe sees world petroleum liquids production peaking by 2010.
2. T. Boone Pickens, oil industry entrepreneur with a background in geology, has stated several times that peak oil may have already arrived.
3. The Hirsch Report: with funding from the National Energy Technology Laboratory, Robert L. Hirsch and Roger Bezdek were lead authors of a 70+-page report entitled “Peaking of World Oil Production: Impacts, Mitigation, & Risk Management.” The authors’ key concern: “Dealing with world oil production peaking will be extremely complex, involve literally trillions of dollars and require many years of intense effort.” Esser’s statement trivializes their report.
4. U.S. Congressmen Roscoe Bartlett (R-MD) and Tom Udall (D-NM) sound seriously concerned about peak oil, have been speaking out and writing about the issue, and have enlisted over a dozen colleagues to join them in the House Peak Oil Caucus. CERA would seem to be saying they’re wasting their time.
5. Denver Mayor John Hickenlooper, a former petroleum geologist, was recently quoted in a Bloomberg Markets article as saying, “I think the people most exuberant about peak oil underestimate how much unconventional sources of oil will help flatten the peak, but to say there is no peak is shortsighted.”
6. Former President Bill Clinton and Vice President Al Gore both recently referenced peak oil. First in June, Gore spent a minute talking it up on CNN’s Larry King Live. Then in early July, Clinton—in an interview with Atlantic Monthly—gave substantial credence to the peak oil concept. He also wondered why he had never received a peak oil briefing, given its strategic importance.
7. US cities large and small, from San Francisco and Portland (OR) to Willets and Sebastopol (CA), are leading the way in incorporating the eventual reality of peak oil in their long-term municipal planning processes.
8. Senior geologists like author Walter Youngquist (OR), Craig Hatfield (OH), Joe Riva (MD), and Jeffrey Brown (TX) have drawn attention to issues like long-term depletion, the limits to growth by unconventional oil sources, the problems with declining net-energy return, etc.
9. PhD academics like Dr. Al Bartlett (University of Colorado-Boulder) plus Robert Kaufmann and Cutler Cleveland (Boston University) have for at least two decades been pointing to upcoming problems associated with peak oil. By association, is their work “garbage?”
10. Financial analyst Jeffery Rubin—chief economist for the respected CIBC World Markets—foresees a peaking in world oil production between now and the end of the decade. Eric Sprott, Sprott Asset Management, has over $1 billion of his firm’s assets invested in areas that will benefit from peak oil.
11. Matt Simmons, chairman of Simmons & Co Int’l and author of “Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy,” speaks more frequently about the peak oil story than any other respected executive in the country.
12. James Mckenzie, in his work for World Resources Institute, published a study in 1996 showing a peaking in world oil production in 2014 (plus or minus about five years, given three different scenarios).
13. Editorials and features in newspapers and major magazine cover the peak oil story. If, as CERA asserts, that story is “garbage,” why did a respected publication like Bloomberg Markets devote eight pages to this story in their September issue?
14. Richard Rainwater, a Texas-based billionaire investor, made piles of money by foreseeing, back in the mid-1990s, that oil prices were eventually headed strongly up due to long-term limited production vs. demand. Now he worries in the pages of Fortune magazine about the potential social costs and consequences that he believes peak oil could precipitate.
15. Sadad al Husseini, Saudi Aramco’s former head of exploration and production, wrote last fall that world oil production would peak and plateau by 2015, at between 90 to 95 million barrels a day.
16. French oil firm Total’s CEO Thierry Desmarest has broken ranks with other CEO’s of major oil companies by forecasting a 2020 peaking for world oil production. (From 1996 – 2000, several BP players forecast a 2010 peak; since 2000 they no longer mention a peak.)
17. Chris Skrebowski, editor of Petroleum Review, uses an analytical technique similar to that of CERA—following production trends and projections vs. following stated reserves. He sees a peaking in world oil production around 2010-2011.
18. Pang Xiongqi, professor at China’s University of Petroleum in Beijing, expects Chinese production to peak in 2009 and world oil production to top out in 2012.
19. The Oil Drum, perhaps the most rigorous website covering the peak oil story, includes a host of writers and researchers who research and write timely commentaries.
20. ASPO-USA foresees a peak between now and 2015. We believe there are too many variables, especially growing non-geologic factors, to forecast a date. However, given the Hirsh Report’s warning about lag time for mitigating actions, we’re close enough to peaking that trying to pick a precise date is irrelevant.
There is a bottom line here for people trying spot the signal vs. the noise here. Ask whether the risk is greater if decision-makers act earlier based on the views of peak oil “concernists,” or if those decision-makers accept the notion that “peak oil theory is garbage” and defer action beyond granting oil companies access to resources and simply letting markets work.
Steve Andrews is a co-founder of ASPO-USA. He has followed the building peak oil story since the early 1980s.