Near-term peak unlikely to happen
Method used to calculate global peak oil is erroneous, says experts
By Karen Remo-Listana
Posted: 20 November 2006
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A peak in global oil production is unlikely to occur in the next 25 or even 300 years, oil and gas experts told a conference in Abu Dhabi .
The demand for petroleum liquids is forecast to increase from approximately 85 million barrels per day (mbd) in 2006 to 115 mbd in 2030, according to ExxonMobil estimates. This demand growth raises questions on whether the petroleum resource base is adequate to satisfy long-term demand.
 Some geologists believe that even taking into account the best exploration efforts and thee discovery of new fields like the Gulf of Mexico and other finds, sometime between 2010 and 2020, the gush of oil from wells around the world will peak at 95-110 million barrels per day then begin a steady, inevitable decline.
Matthew Simmons, Chairman of Simmons & Company International, said last month that global oil production may have peaked in December 2005, though cautions that further monitoring of production is required to determine if a peak has actually occurred.
But all these near-term peak oil arguments were dismissed by experts during the Energy 2030 conference last month.
Dr Richard Vierbuchen, vice president, Caspian/Middle East region, Exxon Mobil, said that supply can adequately meet the increasing demand. He said estimates of the liquids resource base have been increased over the last 50-100 years and are likely to continue to do so.
"Forecasts of an imminent peak in global production appear to underestimate major sources of growth in the resource base, particularly improved recovery and resources made economic by new capabilities," Vierbuchen said.
"Furthermore, Hubbert"s method, made famous by his correct prediction in 1956 that US Lower-48 oil production would peak in the late 1960s or early 1970s, is not readily applicable to forecasting global liquids production."
The Hubbert Peak theory is based on the observation that the amount of oil under the ground is finite. It posits that for any given geographical area, from an individual oil field to the planet as a whole, the rate of oil production tends to follow a bell-shaped curve, and shows how to calculate the point of maximum production in advance based on discovery rates, production rates and cumulative production.
Early in the bell-shaped curve (pre-peak), the production rate increases due to the discovery rate and the addition of infrastructure. Late in the curve (post-peak), production declines due to resource depletion. The theory is named after American geophysicist Marion King Hubbert, who created a method of modeling known oil reserves and production rates.
Based on his theory, in a paper he presented to the American Petroleum Institute in 1956, Hubbert correctly predicted that production of oil from conventional sources would peak in the continental United States around 1965-1970 (actual peak was 1971).
Hubbert further predicted a worldwide peak at "about half a century" from publication. Many observers such as Kenneth S. Deffeyes, Matthew Simmons, and James Howard Kunstler believe that because of the high dependence of most modern industrial nations on inexpensive oil, the impending post-peak production decline and resulting severe price increases will herald grim implications for the future global economic outlook.
But the Hubbert"s method cannot be the basis for calculating peak oil because it does not encompass the timing or the volume of future increases in the resource base, Vierbuchen said.
He said: "Many previous predictions of a peak in global production, based on Hubbert"s method, dating back to Hubbert"s own prediction have been proven wrong.
"Although annual global production has exceeded annual discoveries since the early 1980s, annual global reserve additions still exceed annual production because of reserve growth in existing fields.
"Advances in technology are increasing recovery, opening new producing areas, lowering thresholds and thereby changing estimates of the resource base and production outlook. Opec and non-Opec supplies are highly likely to continue to grow, based on projects underway or planned."
According to Vierbuchen, the Hubbert"s method had also overlooked other conventional sources other than crude oil, such as condensate, NGL and GTL; as well as unconventional sources such as very heavy oil, bitumen and shale.
Although oil and gas resources will eventually peak, peaking will not happen for at least the next three centuries, said Michael Economides, professor at the University of Houston and a managing partner of a petroleum consulting firm.
Natural gas outlook is even more optimistic, he said, adding that even without taking into account the enormous volume of gas hydrates, the world"s natural gas supply will last for several centuries more.
Economides said the Hubbert"s peak oil production - albeit a fact - may never come to fruition. "It implies that all potential oil in place is active. This is not and has never been true in the United States , the most mature petroleum environment of all and an obvious laboratory for such studies.
" Alaska , starting in 1976, managed to provide a huge upward trend from Hubbert"s presumed earlier decline. But what should be expected in the future, with the obvious contribution from ultra-deep offshore, the bell-shaped curve of Hubbert"s theory becomes a series of prolonged peaks, a so-called "fractal" distribution.
"It will take a very long time en route to the final decline as long as new areas such as deep and ultra deep offshore are added.
"Not only these additions to oil reserves will dampen and dull Hubbert"s peak but also the ongoing, economy-shaping and technology-generating transition to natural gas," he said.
The interactions among supply, demand and especially the high oil price are helping to shift peak oil into an indefinite future, professors from Petroleum Institute in Abu Dhabi indicated.
According to Powel Nawrocki and Dalton Garis, oil will never run out, not because oil reserves are unlimited but because rising oil prices has powerful influence on supplies: new technology becomes affordable thereby increasing conventional and unconventional reserves.
Three currently used technologies are helping drive this boost in reserves, they said. Aided by supercomputers, explorers are using the latest 3D seismic surveying to identify likely oil-containing geologic structures, yielding a sharp picture of potential oil reservoirs.
A second technology involves first drilling down and then sideways, punching horizontally through a reservoir so as to reduce the number of wells needed, and therefore the expense, by a factor of 10.The third is the technology that allows wells to be operated on the sea floor.
The high price will also cause demand to slow down and bring on new sources of supply, Vierbuchen said. "Clearly, the current tightness in liquid supplies results from rapid demand growth and "interruptions" to supply and not from a "decrease" in supply." |
