BC: PEAK OIL HISTORICAL PERSPECTIVE
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Sometimes it is helpful to go back and look at history to see where we are making mistakes or where we are hitting the nail on the head. Recently we have been treated to a number of detailed discussions on the current state of affairs in Saudi Arabia and other countries in order to extrapolate out the most likely future for our oil supply. It has been an extremely interesting discourse with numerous short term flare ups of nit picking on specifics. While primarily an academic exercise, to be sure, it was nonetheless helpful in developing better consensus among the many lurking TOD personnel, including myself. But is looking at detail the only way to go? We tend to rapidly forget the History.
It’s 1954- M. King Hubbert stuns the oil patch with his proclamations that the U.S. would likely reach peak production in or around 1970. This was over 50 years ago folks and general consensus at the time and well into the middle of the seventies was that he was nuts. For all intense and purposes, he was right on the money. His later predictions had world production peaking in or around 2000. He had no way of knowing the incredible advances in technology which would expand both the areas of oil we could tap and the amounts we could extract from each area, or the effect politics might have on production. He also had no way of knowing the vast number of ways we would expand our utilization of the black gold. One seems to have somewhat cancelled the others and he probably was not very far off.
Mid 1990-s A group of petroleum savvy individuals expand on Hubbert’s work and bring to some level of public discourse the term “peak oil” The early people include Colin Campbell, Buzz Iverson, Richard Duncan, Robert Youngquist, Jean Laherrere, Cutler Cleveland, Albert Bartlett, Richard Heinberg, and Kenneth Deffeyes. Campbell and Laherrere joined up in early 1990’s to form a company called Petroconsultants in Geneva. The company bought and otherwise obtained as much geological data as they could acquire and sold it to prospective oil explorers. It was while they reviewed all this data they became convinced 1. there was not as much oil yet to be found as was conventionally believed, and 2. Discovery had peaked in the 1960’s. They started digging further while founding ASPO. This effort attracted other individuals including Kjell Aleklett and Samsam Bakhtiari who expanded their own writings on Peak Oil. The most notable prognostication of this group was that the North Sea would peak around 2000. The EIA, IEA and all of the companies working the North Sea disagreed vehemently. The North Sea peaked in 2000, and has been in a steep decline since then.
In the meantime, Matt Simmons, who owned and ran the largest oil and gas investment banking firm in the world, was writing and speaking about the apparent conundrum that while we needed to increase our oil infrastructure dramatically in order to continue to grow our economy, we were just not doing that. We were not building enough refineries, pipelines, tankers, and drilling rigs. We were also not training enough people. In 1997 or 98 he had a meeting with Campbell and, seemingly, at least partly as a result of that meeting, became a Peak Oil spokesman.
1999 T. Boone Pickens announces that peak oil is coming and starts an investment group based on that premise. He makes a ton of money in the next 7 years.
1999 - 2000- The EIA holds a meeting to discuss the future of natural gas in North America. 250 of the best and brightest minds associated with the gas industry. They issued a report in Jan of 2000 stating that the present production of 15 trillion cubic feet per year would grow to 30 trillion by 2015 and that the price would remain below $3.00 a therm. Only Matt Simmons and Joseph Riva would not sign this document. Riva had been the principal non partisan advisor to both houses of congress for 15 years. He had written 3 books and numerous articles on the state of our gas supplies. Simmons’ company had just completed a comprehensive review of gas production and rates of depletion in Texas. Both felt there was no way we would increase our supplies. One month after this report was released the price hit $10.00 a therm and $40. on the spot market. There has been no supply increase and the number of well completions required to maintain level production has tripled. Much of the fertilizer production in the U.S. has shut down. The treadmill seems to be reaching it’s limit this summer. All of the E&P people and large producers were certain those increases would happen, as was the EIA. Conventional wisdom fails again for the third major time.
Early 2000’s- Numerous people become aware of peak oil and begin to discuss it’s ramifications. Sites like TOD, the Energy Bulletin, Peak Oil .com etc. spring up and more and better analysis comes forward.
2001 spring- Simmons has a 1 hour meeting with Bush and a subsequent presentation to both houses of congress on peak oil. Kennedy announces about 5 minutes into the presentation that this was an issue of national security and it should be a closed session. The reporters are thrown out and Simmons finishes his presentation. Roscoe Bartlett appears to be the only one to listen.
The great Yibal field goes into precipitous decline. A shock to the owners and the company providing production expertise. It is the first obvious view of the decline rates of fields aggressively developed. It is predicted on numerous sites that Cantarell is about to peak. Kuwait announces that Burgan has peaked and is in decline. Richard Rainwater jumps on the bandwagon. Numerous books are written. Simmons breaks new ground by claiming the Saudis may not have as much as previously assumed and publishes a well researched book to support the claim.
2005- Cantarell peaks as seemingly does the world. At least there is no significant increase for the last two years. Deffeyes, Simmons, and Pickens all announce Peak oil is here. Kuwait cuts their reserve numbers in half.
2006 - Oil hits $78 a barrel and demand destruction begins to crush the third world. West Texas export land model theory comes true as Russia exports drop while supplies increase. Saudi production drops. Even at the present price of $60+ oil has risen an average of 22% per year since 1999. Try plugging that in for 5 more years!
2007- Looking back on all that, do we really want to listen to people like CERA, or the EIA or the IEA? |
