Re: Peak Oil Poll & Discussion
The good old peak oil theory raises its head again, and appears to be still misunderstood. I voted option 3 because I believe that we are close to reaching the highest historical production due to a lack of exploration and technology investment between 1995 and 2005, which slowed down technical progress. However, I think we are far away from any sharp decline in global oil (and gas) production as unconventional resources are hardly drained and only slowly kicking in.
Just a few words on the history of peak oil:
- in 1956, Hubbert proposed that within a confined geological theme (a field/reservoir or a play, or a basin) the ultimate recovery can be estimated by extrapolation of the production profile. The highest point in the production profile was thus called the Hubbert peak. Hubbert's theory was closely related to the creaming curve method, and assumed that creaming would happen with largest volumes explored and developed first, and that all volumes would be accessible to the producer from an early point onwards (no new major reservoirs or plays to be discovered later). Hubbert further assumed that price and technology would remain unchanged or small in impact.
- in the early 70s, the Club of Rome applied Hubbert's theory to world resources for minerals, and thus came to the conclusion that we will run out of natural resources in near future. Their report "Limits to Growth" made a real hype and influenced major political decisions, such as the creation of national oil companies to ensure the nation has its share of the shrinking reserves and profits. The report was of course a load of rubbish as it assumed no further progress in technology or science would happen. In reality, we have by now produced the proposed remaining reserves several times over, and we are still left with more reserves than predicted by the Club of Rome.
- By the late 70s the North Sea and other major areas had been discovered and it was obvious that reserves were not declining, but rather increasing. In an interview with a large popular science paper, my professor at the time therefore published his opinion that we will never technically run out of oil, but only reach a point at which production costs will exceed the costs of alternative fuels and thus oil (and gas) will be substituted. This theory is still valid today, but needs to be refined to account for the subsequent rise of the spot market for oil, which makes it very difficult to predict for decision makers when substitution is profitable and investment should be re-directed into other resources.
- In the early 90s, when Campbell published his book about peak production, he used the same method as Hubbert and the Club of Rome and thus fell back into the mistake that the Club of Rome made by assuming that historical production and technology are a sign for things to come. Unconventional resources as well as changes to price and technology (and with it changes to recovery factors) were insufficiently accounted for.
At the end, Hubbert was completely right but, like creaming curves, Hubbert peaks can only applied to well defined geological themes and not used to predict world oil as a whole, at least not now when unconventional resources are outclassing conventional resources by a huge margin.