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We were wrong on peak oil

A boom in oil production has made a mockery of our predictions

Gulf News

The facts have changed, now we must change too.

For the past 10 years, an unlikely coalition of geologists, oil drillers, bankers, military strategists and environmentalists has been warning that peak oil and the decline of global supplies are just around the corner. We had some strong reasons for believing so: Production had slowed, price had risen sharply, depletion was widespread and appeared to be escalating. The first of the great resource crunches seemed about to strike.

Among environmentalists, it was never clear, even to ourselves, whether or not we wanted it to happen. It had the potential both to shock the world into economic transformation, averting future catastrophes, and to generate catastrophes of its own, including a shift into even more damaging technologies, such as biofuels and petrol made from coal. Even so, peak oil was a powerful lever. Governments, businesses and voters who seemed impervious to the moral case for cutting the use of fossil fuels might, we hoped, respond to the economic case.

Some of us made vague predictions, others were more specific. In all cases we were wrong.

In 1975, M.K. Hubbert, a geoscientist working for Shell who had correctly predicted the decline in US oil production, suggested that global supplies could peak in 1995. In 1997, the petroleum geologist, Colin Campbell, estimated that it would happen before 2010. In 2003, the geophysicist Kenneth Deffeyes said he was “99 per cent confident” that peak oil would occur in 2004. In 2004, the Texas tycoon, T. Boone Pickens, predicted that “never again will we pump more than 82 million barrels” per day of liquid fuel. (Average daily supply in May 2012 was 91 million.) In 2005, the investment banker, Matthew Simmons, maintained that “Saudi Arabia cannot materially grow its oil production”. (Since then, its output has risen from 9 million barrels a day to 10 million, and it has another 1.5 million in spare capacity.)

Peak oil has not happened and it is unlikely to happen for a very long time.

A report by the oil executive, Leonardo Maugeri, published by Harvard University, provides compelling evidence that a new oil boom has begun. The constraints on oil supply over the past 10 years appear to have had more to do with money than geology. The low prices before 2003 had discouraged investors from developing difficult fields. The high prices of the past few years have changed that.

Maugeri’s analysis of projects in 23 countries suggests that global oil supplies are likely to rise by a net 17 million barrels per day (to 110 million) by 2020. This, he says, is “the largest potential addition to the world’s oil supply capacity since the 1980s”. The investments required to make this boom happen depend on a long-term price of $70 (Dh257.46) a barrel. The current cost of Brent crude is $95. Money is now flooding into new oil: A trillion dollars has been spent in the past two years; a record $600 billion is lined up for 2012.

The country in which production is likely to rise most is Iraq, into which multinational companies are now sinking their money — and their claws. But the bigger surprise is that the other great boom is likely to happen in the US. Hubbert’s peak, the famous bell-shaped graph depicting the rise and fall of American oil, is set to become Hubbert’s Rollercoaster.

Investment in the US will concentrate on unconventional oil, especially shale oil (which, confusingly, is not the same as oil shale). Shale oil is high-quality crude trapped in rocks through which it does not flow naturally.

There are, we now know, monstrous deposits in the US. One estimate suggests that the Bakken shales in North Dakota contain almost as much oil as Saudi Arabia (though less of it is extractable). And this is one of 20 such formations in the US. Extracting shale oil requires horizontal drilling and fracking: a combination of high prices and technological refinements has made them economically viable. Already production in North Dakota has risen from 100,000 barrels a day in 2005 to 550,000 in January.

So this is where we are. The automatic correction resource depletion destroying the machine that was driving it, that many environmentalists foresaw, is not going to happen. The problem we face is not that there is too little oil, but that there is too much.

We have confused threats to the living planet with threats to industrial civilisation. They are not, in the first instance, the same thing. Industry and consumer capitalism, powered by abundant oil supplies, are more resilient than many of the natural systems they threaten. The great profusion of life in the past, fossilised in the form of flammable carbon, now jeopardises the great profusion of life in the present.

There is enough oil in the ground to deep-fry the lot of us and no obvious means to prevail upon governments and industry to leave it in the ground. Twenty years of efforts to prevent climate breakdown through moral persuasion have failed, with the collapse of the multilateral process at Rio de Janeiro last month. The world’s most powerful nation is again becoming an oil state and if the political transformation of its northern neighbour is anything to go by, the results will not be pretty.

Humanity seems to be like the girl in Guillermo del Toro’s masterpiece ‘Pan’s Labyrinth’: She knows that if she eats the exquisite feast laid out in front of her, she too will be consumed, but she cannot help herself. I don’t like raising problems when I cannot see a solution. But right now, I’m not sure how I can look my children in the eye.

— Guardian News & Media Ltd

George Monbiot is the author of the bestselling books The Age of Consent: A Manifesto for a New World Order and Captive State: The Corporate Takeover of Britain, as well as the investigative travel books Poisoned Arrows, Amazon Watershed and No Man’s Land. His latests books are Heat: how to stop the planet burning and Bring on the Apocalypse?

 

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