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Leaning Tower of Pisa,Italy
One of Italy's icons, the 'Leaning Tower of Pisa' seems emblematic of the gradual crisis of approaching peak oil production. Photo courtesy of Dick Lawrence.

Peak Oil Notes From Pisa

Report from the 2006 ASPO International Peak Oil Conference in Italy

By Dick Lawrence

Reprinted from the July 24, 2006 edition of ASPO USA's weekly email newsletter

The fifth annual international conference on oil and gas depletion, ASPO-2006, took place July 17-18 in Pisa, Italy. The conference venue was a large event tent in a park several kilometers west of this ancient city. Despite sweltering heat and humidity, the audience of several hundred stayed focused on the speakers and their message.

This year I noted a growing sense of community with the combined strength of some 19 or 20 countries now hosting national ASPO chapters. I also felt a growing sense of urgency, linking issues like "Oil and Gas Depletion", "Middle East Conflict", "Escalating Debt Burden", "Global Warming", and "World Food Supply". In complex ways, these issues are all connected. Even as we were meeting, new attacks and skirmishes were spreading across the Middle East, and the associated "fear factor" has driven the price of oil to new highs.

Across the spectrum of presentations this week, a few messages come through repeatedly: oil and gas depletion is real, it's here now, and it's worse than the naive optimists proclaim. While there are many estimates of when conventional oil, or all liquid fuels, will peak, actual dates are largely irrelevant. What's important is that we understand its imminence (+/- 4 years makes little difference, see Hirsch Report), the inability for technology to substitute effective alternatives in time or in sufficient quantities to offset depletion, and the impact it will have on every aspect of our industrialized civilization, including agriculture. With few exceptions (like Sweden), governments are not taking the issue seriously and in fact are largely in denial, disseminating bad information about reserves and future production rates. Kjell Alaklett points out that, for USGS projections of future discovery to come true, the rate of discovery (which peaked 40 years ago) must abruptly reverse from its present steady decline to a highly unlikely upward trajectory that doubles or triples present levels of discovery.

What follows are some key points made by eight lead speakers during the two-day event:

Colin Campbell, ASPO Ireland, stated that it's beyond dispute that we now face the second half of the Age of Oil, a time when there will be large international political and economic tensions. The exact date of Peak Oil is irrelevant; what matters more is to comprehend and anticipate the reality of a long and irreversible decline, at 2-3% per year or more, of liquid forms of energy. Soaring energy prices are now reflecting various capacity limits, not simply the increasing cost of obtaining that energy.

We are seeing a new geopolitics as energy issues strain old relationships and forge new alliances. Energy-rich Russia is on the ascent while depleted US and European nations struggle with decline and debt. The dollar hangs precariously, a faith-based high-wire act. Will energy scarcity trigger a world-wide second great depression? Will nations have the restraint not to turn to military solutions as their populations face declining standards of living, and politicians search for culprits?

We need to face reality:

• inform and educate people – most are blissfully unaware of how much energy they use;
• cut waste, increase efficiency – some form of energy rationing may be the only fair solution;
• move aggressively to renewable sources of energy.

Chris Skrebowski, with the UK's Energy Institute, expanded on his well-known and updated Megaprojects Review. His figures show that, at peak production, new production flows are more than offset by depletion. Of the world's 18 largest oil fields, 12 are in decline, 5 have potential to grow and one is underdeveloped. The important thing is flows; reserves are basically an academic concept. Consider Alaska: the industry is getting more oil out of Alaska than first estimated, but production—the daily flow—was capped due to limited pipeline capacity, and began its long decline in 1989.

Growth in production is slowing because we're not finding new oil nearly as fast as we produce it. There aren't enough skilled personnel to find and produce oil and the cost to develop oil is growing rapidly. Oil can only come out of a field at the rate it's developed. Developing new production is extremely slow process; Angola's large increases took 5 to 6 years to reach the market; the high Arctic takes longer. The conclusion: oil prices will remain high, supply will remain tight, and the world oil production peak is likely in late 2010 at 92 to 94 million barrels/day. If you read between the lines, the IEA says production will peak in 2011 at 93.7 mmb/day. We are still in denial. We have 1500 days to the peak.

Pierre-Rene Bauquis, formerly a top leader in France's petroleum industry: growth in oil production is only coming from outside OECD nations. The data about so-called proven reserves is not useful for predicting the timing of peak oil; publicly available numbers suggest no problem, but a closer look shows real cause for concern. Studies over the last 40 years are circling toward a consensus estimate of 2+ trillion recoverable barrels of conventional oil. Bauquis estimates a peak in 2020 (+/- 5 years) at ~100M bbl/day, but admits that Skrebowski's lower estimate could be right.

Jean-Marie Bourdaire, ASPO France, and 25 years at oil industry giant Total: We face a rising crisis. Non-Middle East oil production will peak in 2010. Then world oil peaks around 2013, because the Middle East won't be able to increase production rapidly. World GDP growth will soon slow and stop.

In his less-likely "pro-active scenario," world political consensus brings similar and converging policies. Subsidies are removed, ensure security of supply improves, and protecting the environment becomes more important. But the more likely "reactive scenario" has national policies in conflict, lots of wishful thinking putting off the hard decisions, so we make some spectacular but ineffective policy decisions.

Kjell Alaklett, president of ASPO: Money doesn't run the world; it buys energy, which runs the world. Our sources of energy are overwhelmingly fossil-fuel based. Renewable energy supplies from solar and wind are still infinitesimal, and in spite of high growth rates, it will be years before they can make a perceptible dent in fossil-fuel consumption. What are the prospects for accelerating development of alternatives to greatly exceed these projections?

We've covered the world searching for high-quality energy sources, and the good stuff is increasingly hard to find. If we look at expected demand and depletion in the OECD countries, they must increase their imports by 30M bbl/day in the next 20 years or so. That must be exported from somewhere – the equivalent of 3 more Saudi Arabias, or 3 more Russias. China's oil production is peaking now, will be in decline in 5 years or less. We can expect, from the U.S. and China, big increases in coal consumption as they try to fill the energy supply-demand gap. Where will new oil come from? The oil triangle in the Middle East contains 60% of the world's remaining reserves.

Rich Heinberg (writer, educator): Without a protocol to reduce consumption in alignment with production and depletion rates, we'll experience extreme price volatility, difficult planning and investing for our future, and increasing conflict over the remaining oil. Wars divert energy and other resources from better uses. Producing reservoirs at maximum rates will damage oil fields. We need a cooperative agreement—a protocol—to effectively ration remaining oil, avoid military conflict.

The proposed protocol, an idea first developed and introduced by Colin Campbell, would apply to regular conventional oil, excluding deepwater and polar oil, the tar sands, gas-to-liquids, etc. Signatory nations would agree to reduce consumption and imports by at least the depletion rate.

Robert Hirsch, SAIC: Peak oil is no longer a fringe subject in the U.S. Government. Last fall, the National Academy of Science sponsored a workshop on peak oil, US Dept. of Energy Secretary Samuel Bodman talked about limits to supply and then he asked the National Petroleum Council to conduct a study on peak oil. Our earlier study—"Peaking of World Oil Production: Impacts, Mitigation and Risk Management"—is unchallenged. Experience shows that peaking could come with little warning, followed by sharp declines in supply.

Charlie Hall, State University of New York: He pointed out that net energy (or Energy Returned on Energy Invested) for oil discovery and production, while still highly positive, has been plunging from stratospheric ~100:1 levels (e.g. Spindletop, TX) to under 20:1 for US domestic oil. Therefore, while there is undoubtedly more oil under the ground that we don't know about, there is less (energetic) point in exploring for it in North America.

Dennis Meadows, world resources modeler: Population and industrial growth are growing exponentially; they can hit limits surprisingly fast. In 1972 (Limits to Growth) we showed that global society will most likely adjust to limits by overshoot and collapse, if society continues on a "business as usual" basis. We didn't model oil depletion explicitly. Climate may already be past some tipping point. Global food production will peak by 2020, and the timing of water production's peak will be similar; thus oil is just one of several impending resource peaks facing us.

Dick Lawrence, a platform engineer with Intel Corp., is a co-founder of ASPO-USA. He has attended all five ASPO events in Europe and led a discussion on modeling world oil at the 2004 event. Since the mid-1980s, he has followed the peak oil debate and contributed to the discussion.

Times Article Viewed: 6813
Published: 26-Jul-2006

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