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Peak oil is the future time and place where the maximum rate of global petroleum extraction has been reached, after which the rate of production enters terminal decline and from where, it is said, the world implodes into global crisis, war and probably the eventual death of the planet.
Peak oil theorists, meanwhile, are infinitely more dangerous: generally mad, scaremongering types or representatives of hopelessly conflicted vested interest.
So this month's report from a Government think-tank of leading academics and technocrats, entitled Global Oil Depletion, was not only scary but also scarily under-reported.
The view of the Imperial College-based UK Energy Research Centre (Ukerc) is that there is “significant risk” that peak oil will hit not sometime in the distant future — a problem for our children's children — but during the next decade, before 2020.
Ukerc says there are two schools of thought.
You either believe a near-term peak in production and subsequent terminal decline will be offset by rising oil prices stimulating exploration and discovery, enhanced recovery of existing resources and investment in expensive, unconventional sources like oil sands and shale gas. Result: happiness.
Or you believe peak oil and then sharp decline will lead to “substantial economic dislocation” because alternative sources — unconventionals or renewables like wind farms — fail to fill the energy gap. Result: misery.
Ukerc has crunched the global stats and it is leaning toward the misery side of the equation.
The report says:
¬Reserve estimates are generally dodgy with many of the upwardly reported reserve forecasts coming not from new finds but on revised estimates due to better technology, geological knowledge and enhanced recovery techniques. Phrases such as “ultimately recoverable resources” are often meaningless.
¬Oil production is already peaking in an increasing number of regions around the world.
¬ The world is very reliant on very few giant fields — 25 fields account for 25% of global production, 100 fields for 50% and 500 for 66%, with the other one third coming from another 69,500 fields. Most of the giants are old and already past peak production.
¬The general rate of output decline is reckoned to be at least 6.5%. That means three million barrels a day of new capacity needs to be added each year to maintain current production levels, the equivalent of a new Saudi Arabia coming on stream every three years. Or to put it another way: two thirds of current production will need to be completely replaced during the next 20 years just to stop production rates falling.
¬There may be enough conventional oil to fill the gap but the lack of investment in recent years means there is little chance of potential new finds coming on stream in time.
The conclusion is this: “Despite much popular attention, the growing debate on peak oil' has had relatively little influence on energy and climate policy. Most governments exhibit little concern about oil depletion, several oil companies have been publicly dismissive and the majority of energy analysts remain sceptical.
“The timing of a future peak (or plateau) in conventional oil production has been a focus of debate. What appears equally important is the rate at which production may be expected to decline following the peak and hence the rate at which demand reduction and alternative sources of supply may be required.
“Investment in large-scale mitigation efforts will be inhibited by oil price uncertainty and volatility and seems unlikely to occur without significant [Government] policy support.
“We consider that forecasts that delay the peak of conventional oil production until after 2030 rest upon several assumptions that are at best optimistic and at worst implausible.
“On the basis of current evidence, we suggest that a peak of conventional oil production before 2030 appears likely and there is a significant risk of a peak before 2020.”
The messages are there for all to see. Big Oil is struggling to replace its reserves while the crude price, despite falling global consumption, is above $80 a barrel again. Peak oil theory is in danger of going mainstream.
