Friday, June 10, 2011


Peak Oil has been around a long time and has been consistently in error for a number of reasons, some known and some unknown.

First the unknown: Peak Oil assumes a biogenic origin of hydrocarbons. Here is a link that questions that assumption: 
and another link to a more accessible article on the subject: .
The Russians embraced Thomas Gold's theory of abiotic origins of oil early on and began drilling very deep oil wells greatly increasing reserves and production. It seems possible that there is more than one way that Nature produces hydrocarbons and we are mistaken to look for a single answer.
Data Source: EIA - US Energy Information Administration
Peak Oil, also assumes a zero sum game in terms of known reserves and values reserves based on current production methods. As a result, not so long ago, the Peak Oil theory failed to assign value to shale oils known to reside in formations like the Barnett Shale, the Eagle Ford and Marcellus shales . The application of directional drilling combined with hydraulic fracking promises to reduce domestic imports by a third within 5-10 years with production in these very formations, considered worthless just a few years ago.

All that being said, we should be developing new oil and gas resources and solar, wind, wave and geothermal sources of energy. I am not a fan of using food crops (corn ethanol) as fuel and driving up world food prices while reducing exports to poorer nations.

The development of alternate technologies to replace oil will likely require technical breakthroughs that are unimaginable at this point in the process. The Whipstock for directional drilling was first developed (in Houston, TX) in the 30's and evolved from that beginning into today's horizontal drilling techniques over a period of +/- 75 years. The first oil well in Pennsylvania was drilled in 1859. It has taken over 150 years to become an oil economy. It is likely to take as long to replace it with something else.

Here is a useful link to the Energy Information Administration: and another to the EIA spreadsheet of World Proved Crude Oil Reserves (WPCOR) (1980-2009):  
Some interesting highlights: Since 1980 WPCOR has increased 697.27 Bn bbls or 108.12%, an average of 2.71% (year over year) for 29 years. Only 5 of 29 years have shown declines in WPCOR. 

Here is a corresponding link to historical oil consumption from the EIA. 
and some interesting tidbits for the same period (apples to apples) since 1980: 24 of the 29 years show increases in oil consumption. Only 5 years show decreases (1981, 1982, 1983, 2008 & 2009). All are recession years. 

If one calculates Consumption Years Remaining (CYR) by simply dividing WPCOR by Annual Consumption it appears that CYR is increasing annually and is up 55.74% since 1980. This may seem counter intuitive but increasing reserves is not simply a function of exploration. Production methods, technological innovation and the steadily advancing science of exploration and extraction all contribute. 

There is no doubt that it is important to develop alternate energy resources and technologies. And if one considers historical fact, there can be no doubt that it is going to take time. Therefore, as a nation, or if you are a “citizen of the world”, as humankind, we must pursue oil and gas exploration and production which, if the theory of abiotic genesis proves to be correct, will never deplete and; if the theory is not correct, provides a bridge, at full production, to its replacement.  We should also simultaneously pursue other “green” alternatives being careful not to damage or destroy the existing oil and gas business in the process.  There currently is no replacement. 

No comments:

Post a Comment