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Peak Oil: The Reality

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Richard Turcotte
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There are certain realities about the recent spike in U.S. fossil fuel production which can be masked or misrepresented in only so many ways. Tight oil production generated from hydraulic fracturing [fracking] has shown itself to be more expensive and not as energy "dense" or efficient, for starters. [No one can dispute what an impressive effort it proved itself to be in the past few years, of course.]

But current production and cost issues call into question the level of short-term production spikes we might expect from fracking efforts in the next few years. Fracking is a more expensive, time-consuming process. The production rate of fracked wells declines very quickly, so more and more wells must be drilled to keep pace. Prime locations are not infinite, so that limitation must be factored in. It requires high prices in order to supply the needed investment and effort. Low prices are good news for consumers, but there's a price to be paid there, too.

The decline in investment capital and the reduction in prices means the oil industry simply cannot afford to produce as it has been. Not rocket science. As has been duly reported elsewhere, suspension or cancellation of future projects means that in the not-too-distant future, the current oversupply will dwindle and few projects will then be in place to make up for what has been lost. Then the fun begins.

What the burst of unconventional production from the US has done is to mask the underlying reality of peak oil. This will become apparent as the tight oil potential itself proves limited in time.

Fracking is not a process which resumes at full speed with the flick of a switch or two. The logistics alone of getting all of the equipment and the skilled personnel [assuming they are still in the employ of oil producers] back in place and ready to go--hardly a given in this climate of cutbacks and curtailed production--is not a one-afternoon project.

The number of U.S. oil-drilling rigs, viewed as a proxy for activity in the sector, has fallen sharply since oil prices began to fall. But it hasn't fallen enough to relieve the global glut of crude. There are now about 72% fewer rigs of all kinds since a peak of 1,609 in October 2014.

Cutbacks in personnel, funding, exploration, and the equipment necessary to actually provide fossil fuels for public consumption does not--at least when reality is considered--nonetheless magically lead to increased production at affordable prices as and when needed and in amounts necessary to meet demand. Difficult to pretend a 72% reduction in needed drilling equipment isn't at least a wee bit of problem. Not that complicated".

And while all of this is happening, just as is the case on a daily basis, the conventional crude oil supply continues to be drawn down to meet the needs and demands of fossil fuel consumers across the globe. No one is making any more of it, so even with a decrease in worldwide demand, an already finite resource being tapped on a daily basis to meet current demand will not magically replenish itself. Basic math kicks in.

Assuming the production of tight oil resumes soon enough and at reasonable levels, the high decline rates characteristic of shale production aren't going to change. More effort and more production [meaning more expense, among other necessities] will be needed just to keep pace, let alone increase production rates or totals to any great degree. And did we mention that the conventional crude oil supply [still finite] responsible for the technological and industrial marvels of the past century or so, is still being drawn down?

And so on and so on.

No matter what the choice of words or how diligent the spin, the energy supply we've all relied upon to conduct our modern lives [almost always without any consideration at all as to how this happened] is no longer what it once was. While it serves a convenient narrative to characterize those of us concerned about future energy supply as doom-and-gloomers, or alarmists, or whatever other snarky nonsense passes for critical analysis from industry cheerleaders, the juvenile name-calling doesn't change the reality of what we're sharing.

The sooner we all not only recognize our dependency and the need to make wiser choices about how to proceed into a future with a diminishing supply of our planet's most astonishing [finite] resource, but the more honest information we receive from those who know, the better our chances of managing a reasonable transition to that different future.

No guarantees, to be sure. But denying the issue exists at all is a tremendous disservice to the public, and that's the kindest conclusion I can offer.

[Adapted from a recent blog post of mine.]
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