March 6, 2008 at 05:17:51

Peak Oil - True or False

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By Stephen Lendman (about the author) Page 2 of 4 page(s)

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The German-based Energy Watch Group (EWG) believes peak oil is real. It's an "international network of scientists and parliamentarians" that published an October 2007 report with that view. It stated world oil production peaked in 2006, output is now declining by several percent a year, and by 2020 to 2030 global oil reserves will be substantially lower than today and a supply gap will exist.

Daniel Yergin's Cambridge Energy Research Associates (CERA) disagrees. Its analysis finds that "the remaining global oil resource base is actually 3.74 trillion barrels - three times as large as the (claimed) 1.2 trillion barrels by (peak oil) proponents." CERA argues further that peak oil reasoning is faulty and, "if accepted, (may) distort critical policy and investment decisions and cloud the debate over the energy future." It states as well that the "global resource base of conventional and unconventional oils....is 4.82 trillion barrels and likely to grow" and bases its analysis on fields now in production and those "yet-to-be produced or discovered."

Its chairman, Daniel Yergin, noted that: "This is the fifth time that the world is said to be running out of oil. Each time....technology and the opening of new frontier areas has banished the specter of decline. There's no reason to think that technology is finished this time."

The Paris-based International Energy Agency (AIE) agrees. It's an energy policy advisor to its 27 member countries that was founded by the OECD in 1974 in the wake of that period's oil crisis. It believes peak oil notions are extreme, says there's "no shortage of available oil and gas in the ground," but new technologies must be found to curb "the world's thirst for them (and to) tap reserves" to increase production. AIE believes as much as 10 trillion barrels of "oil equivalent" conventional oil and gas exist and at least as much non-conventional oil.

In a 2005 report it stated that: "The hydrocarbon resources in place around the world are sufficiently abundant to sustain likely growth in the global energy system for the foreseeable future. The doomsayers are again conveying grim messages through (the media). The AIE has long maintained that none of this is cause for concern."

AIE considers all type oils - the easy to find and produce "light sweet" kind that's likely running out plus potentially huge untapped deposits of heavier oils that will become more important when it does. With this in mind, the Middle East doesn't have two-thirds of world oil reserves as many analysts, the industry, and US Department of Energy claim. It has two-thirds of "proved" cheap oil reserves.

The US Geological Survey (USGS) collects data on all type oils and estimates their amounts. For the year 2000, the US Department of Energy (DOE) and oil industry estimated remaining "proved" light sweet reserves at slightly over one trillion barrels. USGS, however, placed "identified" reserves at 1.1 trillion barrels and "recoverable" reserves at nearly 2.3 trillion or more than double the industry and DOE amounts. In addition, USGS estimates combined non-conventional heavy and tar sands deposits at around 4.250 trillion barrels with about 3.6 trillion of them in the two countries with most of them - Canada and Venezuela.

Other "unconventional" oil estimates differ widely, so take your choice on who to believe. Dutch economists Peter Odell and Kenneth Rosing had an earlier view in their 1980 book "The Future of Oil." They noted predictions of total world reserves ranged from two to 11 trillion barrels and said three trillion was "the more realistic figure" for conventional oil plus another two trillion from unconventional heavy oil and tar sands.

Petroleum Economist magazine calls itself "the authority on energy." It says tar (or oil) sands reserves are huge, they occur in over 70 countries, and Canada has most of them (around 81%) in four regions: Athabasca, Wabasca, Cold lake and Peace River in areas covering around 77,000 km. It estimates technically recoverable reserves at between 280 - 300 billion barrels with total non-recoverable (based on current technology) amounts at between 1.7 - 2.5 trillion barrels. Other than shale, USGS categorizes oil as light, heavy, extra-heavy and natural bitumen or tar/oil sands.

Some analysts believe oil sands can replace conventional oil when its supply runs out while others disagree. One of them is Richard Heinberg, who's written extensively on ecological and peak oil issues. He says that although estimated oil sands reserves equal or exceed all conventional oil extracted to date, processing them reduces their potential for reasons geologist Walter Youngquist explains: because "it takes the equivalent of two out of each three barrels of oil recovered to pay for all the energy and other costs involved in getting oil from the oil sands."

Then, there's the environmental cost. It takes two tons of sand mined to yield one barrel of oil, and extracting it requires huge amounts of natural gas and water. In addition, each barrel recovered yields 2.5 barrels of oily waste that must be disposed of. It's done by pumping it into huge ponds, and Heinberg describes a Syncrude Canada Ltd. one that's 14 miles in circumference in which 20 feet of murky water floats on a 130-foot-thick slurry of sand, silt, clay and unrecovered oil.

It's nightmarish and so environmentally destructive that northern Alberta residents want all oil sands plants shuttered because they've displaced native people, destroyed boreal forests, caused livestock deaths and increased the level of miscarriages. Moreover, Heinberg believes it would take about 700 plants the size of a Syncrude Athabasca one to process enough tar sands to replace conventional oil, and their environmental damage would be unimaginable and too great a cost to bear.

Another resource assessment comes from Petroleum Equities. It's a management consulting firm specializing in oil and gas exploration and production. It estimates combined heavy oil and tar sands worldwide reserves at around 5.4 trillion barrels with 80% of them in the western hemisphere.

For extra-heavy oil alone, the US Department of Energy (on its web site) estimates Venezuela has 1.36 trillion barrels, or 90% of the world total. That's more than all "proved" world reserves combined and in addition to Venezuela's "proved" light sweet resources of around 80 billion barrels that alone ranks it seventh in the world behind the five largest Middle East producers and Canada.

Potential Arctic Oil Reserves

On its web site (arcticoag.com), the Arctic Oil and Gas Corporation states it's "an oil exploration venture company that has filed for the exclusive exploitation, development, marketing and extraction rights to the oil and gas resources of the seafloor and subsurface contained within the 'Arctic Claims.' " It calls the Arctic "the last giant oil frontier on Earth (with its) vast reserves of untapped oil and natural gas (that will) become accessible (when) new deep-sea drilling and hydrocarbons production technology (is) available."

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I am a 72 year old, retired, progressive small businessman concerned about all the major national and world issues, committed to speak out and write about them.

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