Peak oil lives

The Guardian has an article on the misplaced belief that peak oil is dead - Peak oil lives, but will kill the economy.

Last Monday's BBC News at Ten broadcast a report by science editor David Shukman arguing that concerns "about oil supplies running dry are receding." Shukman interviewed a range of industry experts talking up the idea that a "peak" in oil production has been "moved to the backburner" - but he obfuscated compelling evidence in his own report contradicting this view.

"There's still plenty of oil - we just haven't got all of it out of the ground yet. There's not a real danger of there being no fossil fuel," one oil company executive told the BBC. "There's enough oil in this country for another 100 years with our present technology and there's more around the world to be found yet."

Following a chorus of industry hype on the wonders of shale gas and fracking, Shukman finally referred in passing to a new scientific paper published by Eos, Transactions - the newsletter of the American Geophysical Union - saying that the paper "supports the assertion that a peak in oil production is 'a myth' but argues that the rising cost of extraction could itself provide a limit, and may act as a brake on economic growth." He then closed his report with the following quote from a leading industry figure: "The era of cheap oil is over, but we're a long way from peak oil - costs will go up but the technology will respond."

The thrust of the message was that peak oil is a myth because we're not running out of oil. Even if costs go up, this will automatically spur the technological innovation that will make continued extraction of expensive oil viable.

But Shukman's characterisation of the new Eos paper is a combination of falsehood and half-truth. Far from describing peak oil as a myth, the paper's conclusions are far more nuanced, and point to an overwhelming body of evidence contradicting the industry hype that the rest of his report parrots uncritically.

"Peak oil is not about oil reserves or resources, neither of which translates directly into production rate", the Eos paper points out. "Peak oil is not about running out of oil but about its peak in production...

"So is the idea of peak oil a myth? If readers are expecting an abrupt decrease in oil production, then it is. But if they understand that the manifestation of peak oil is a struggle between supply and demand that is resolved through global oil markets, they will understand that the data shows that peak oil can originate from economic as well as geological factors."

Indeed, peak oil does not suggest we are 'running out of oil', but that a peak in conventional oil production will create an increasing reliance on more expensive, unconventional forms of oil and gas which have a far lower energy output. According to the Eos paper, we seem to be arriving at that point:

"Global production of crude oil and condensates... has essentially remained on a plateau of about 75 million barrels per day (mb/d) since 2005 in spite of a large increase in the price of oil. Even more important, the global net oil exports from oil-exporting countries (oil production minus internal consumption) have peaked and are in decline."

The Eos paper goes on to point out that while "total oil production has plateaued, production of oil from older existing fields has been in decline, dropping roughly 5% annually, corresponding to a loss of 3-4 mb/d." Although production from unconventional oil and gas has balanced this decline, they are "difficult and expensive" with "very low energy return on investment (EROI)." In simpler terms, "it takes energy to get energy, and more is required to produce energy from unconventional sources."