Friday, May 06, 2005

The 'dean' of peak oil explains the illusion of plenty

Colin Campbell, a retired petroleum geologist most readily known for his tireless efforts at publicizing the concept of peak oil, spoke recently at a conference in Scotland about its causes and consequences. Perhaps one of the most contentious issues between those (mostly economists) who believe a peak in world oil production is 30 years hence and geologists like Campbell who believe it is imminent is technology. The optimists say that new technology will allow us to withdraw far greater amounts of oil from existing reservoirs of oil. Campbell has a different view laid out in this summary of his remarks:

A widely held myth proclaims that technology will deliver more, when its main impact has been to hold production higher for longer, accelerating depletion. The observed growth in reserves has been an artefact of reporting, not technology, save in special cases.
The second contention made by Campbell--and he knows this from personal experience in the oil industry--is that so-called "reserve growth" is a chimera. Reserve growth refers to the growth of oil reserves in existing fields. This supposedly occurs as more of the field is drilled and explored. Campbell knows firsthand that reserve growth has more to do with Wall Street than drill bits. Oil companies report increasing reserves each year to satisfy financial markets; but, all they are actually doing is stretching out the reporting of previously discovered oil. That's good for stock prices, and it is perfectly legal. But, it doesn't really give the world an accurate picture of discovery rates.

Thus, reserve growth doesn't represent newly discovered oil. When we tally numbers for new discovery, we find that only 1 barrel is currently being discovered for every 4 consumed (7 or 8 billion barrels for every 30 billion consumed per year). That's unsustainable, and it's a sign that we are coming close to a peak, according the Campbell. It's simply getting harder and harder to find the oil that's left.

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