By Mike Jonas,
A lot has been written about Peak Oil recently – perhaps more in comments than in WUWT articles themselves – and the “Not to Peak”-ers seem to be in the ascendancy. In other words, the opinions that “Peak Oil” is a fantasy and/or oil production will keep increasing for a century or more seem to be dominant.
But just how realistic are the “Not to Peak”-ers?
I had a look back at my article of 4 years ago (Peak Oil Re-visited), and I’m pretty comfortable with what I said back then. NB. I defined “Peak Oil” as When the rate of oil production reaches its maximum. With this definition, Peak Oil is not when we run out of oil, and it is not when we can’t increase the rate of oil production. If you want to use one of those other definitions then different rules apply. And I’m only talking about oil, not about oil and gas, and not about fossil fuels generally.
What I said in 2015 was:
- The reason for oil production reaching its maximum is not specified.
- Peak Oil is not necessarily a disaster, it could even be a positive.
- One idea which surely is not open to argument is the fact that oil production will peak.
- Predicting Peak Oil has always been an unrewarding exercise. People have predicted Peak Oil for over a century and have been wrong every time.
- The principal factors affecting oil supply are: Geology, Politics, Demand, Price, Technology.
- In spite of economic booms and busts, oil demand has been relatively inelastic.
- Although Peak Oil may occur after say 2040, it could well be much earlier.
The third bullet above (oil production will peak) was justified by this graph, which looked at past and likely future oil production on a scale of thousands of years:
Figure 1. World Total Fossil Fuel Consumption, past and predicted – the long view.
The BP Energy Outlook 2019, produced 4 years on from my 2015 article, has a chart on page 80 which shows (their forecast of) oil demand peaking around 2035, maybe a bit later but before 2040.
Unfortunately, the BP report is corrupted by various bits of political correctness (“PC”). Could they really seriously believe for example that the PC attack on single-use plastics (“Single-use plastics refers to plastic packaging and other single uses, such as plastic straws and cups“) can ever have any noticeable effect on oil demand?? I suppose it’s in line with the grovelling in their June 2018 Statistical Review of World Energy: “At first blush, some of last year’s data might seem a little disappointing. Growth in overall energy demand is up; gains in energy intensity are down. Coal consumption grew for the first time in four years. And, perhaps most striking of all, carbon emissions are up after three consecutive years of little or no growth.“. Who the h*ll do they think they are, thinking that improvements in one of the main foundations of prosperity are “disappointing“?
But I digress. Their opinion is clear: they expect oil demand to peak by 2040.
Well, I confess it’s quite encouraging when someone as big as BP seems to agree now with something I wrote 4 years ago, but just how realistic is it? BP themselves say that the value of their Outlook is not in trying to predict the future – any such attempt is doomed to fail.
BP’s definition of oil includes gas liquids: Oil unless noted otherwise includes: crude; natural gas liquids (NGLs); gas-to-liquids (GTLs); coal-to-liquids (CTLs); condensates; and refinery gains. I’m happy to use that definition.
BP refer to …
- expanding middle classes in Asia accounting for much of the growth in global GDP and energy consumption (world GDP more than doubles by 2040 driven by increasing prosperity in fast-growing developing economies; this improvement in living standards causes energy demand to increase by around a third over the Outlook, driven by India, China and Other Asia which together account for two-thirds of the increase.)
- the shale revolution catapulting the US to pole position as the world’s largest producer of oil and gas
- the way in which energy is consumed is changing, as the world electrifies
… which suggests that oil demand will continue increasing quite strongly, and therefore oil supply will too for as long as it is cost-effective. [BTW, I’m not convinced that the world will electrify enough to change the oil picture much]. But BP also say …
- US liquids supply will likely peak around 2030 [chart p.87]
- significant levels of investment are required for there to be sufficient supplies of oil to meet demand in 2040
- closing the gap between supply and demand would require many trillions of dollars of investment over the next 20 years
… which suggests that it really is going to be challenging to keep oil supply increasing past 2040.
In my 2015 article, I pointed out that M King Hubbert’s prediction for US oil production was remarkably accurate for 50 years after he made it …
… and that predictions that are that accurate over 50 years are quite rare. [A severe understatement?]. So it’s reasonable to suppose that Hubbert was getting something right. The big mistake he made was to assume that the US’s tight oil deposits [I think that’s what he called them], which he did know about, were so difficult to produce that they would stay in the ground. Given that he himself had acknowledged the role that technological advance could play, that was a serious and rather surprising error.
But if we update the oil resource with what we know now, and re-apply Hubbert’s rule of thumb that oil production would peak when about half of the resource had been extracted, we can get some sort of check on BP’s forecast. I did a swift calculation, and with the numbers I used, the halfway mark occurs in 2042. There are so many different ways of doing it that if you wanted to get the peak further out I’m sure you could do it, but the further out you try for, the harder it gets. The numbers I used were:
- Past oil production: 1600 Bbbl
- Initial total resource: 5000 Bbbl
- 2019 oil production: 34.5 Bbbl
- Avg annual prodn increase until peak: 1%
Maybe the initial total resource number is far too low? (Another trillion barrels would push the peak past 2050). Maybe peak will be way after the half-way mark? (2/3 would take it to nearly 2060). Your guess is as good as mine. Try your own numbers and see what you get.
The takeaway message from all of this, to my mind, is that yes there will be a peak in oil production, maybe a bit after 2040, but it depends on how things actually happen. It should feel more like a plateau than a peak, and there certainly won’t be a sudden end to all oil production (unless a Nicolás Maduro or an Alexandria Ocasio-Cortez takes over the world).
As I said above, Peak Oil is not necessarily a bad thing. It could be something to celebrate. By that I mean that if oil demand stops increasing because something better and cheaper comes along to replace it, or some of it, then that would be truly positive.
If, on the other hand, some nutcase tries to force the end of oil usage, or to replace it with wind, say, then … Venezuela, here we come.