Top IEA Economist: Peak Oil by 2020 15 comments
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By Michael Kanellos
Peak oil – the moment when global oil production reaches its maximum and then begins a gradual, yet inevitable decline – could be here already, according to some analysts. Or it could be decades away, as most of the world's top government energy agencies say.
Now Fatih Birol, the chief economist at the International Energy Agency, is saying that the globe will see oil production peak in 2020 – about a decade earlier than most official government predictions.
British newspaper The Independent published an interview with Birol on Monday that laid out that prediction, along with statistics that show that the world's 800 largest oil fields are seeing a 6.7 annual decline in production, worse than the 3.7 percent decline the agency estimated in 2007.
The prospect of peak oil is a critical one for the modern global economy, since almost all transportation fuel needs, and a good part of the rest of society's energy demands, are filled by petroleum products.
While a peak in production doesn't imply that the oil will run out at that time, it does imply that increasing demand won't be able to be met by increased production, which could lead to a drastic spike in the price of oil.
That could stall or even reverse any upturn for the global economy, Birol said, given that the alternative – to find "the equivalent of four Saudi Arabias" in new oil supplies – seems unlikely.
"Many people think there will be a recovery in a few years' time but it will be a slow recovery and a fragile recovery and we will have the risk that the recovery will be strangled with higher oil prices," he told The Independent.
It isn't the first time Birol has brought these facts, including his prediction that peak oil production will occur in 2020, to the media's attention. He presented similar information in an interview with the Guardian newspaper in December.
In that interview, he also predicted that oil production from countries that aren't part of OPEC – the Organization of Petroleum Exporting Countries – will plateau and decline in the next three to four years, leaving OPEC nations, primarily those in the Middle East, in increasing control of the world's oil supplies.
Birol isn't the only highly placed energy watcher worried about shrinking future global oil production. The U.S. Department of Energy's Energy Information Administration has downscaled its projections for how much oil the world will produce in 2030 in its most recent report on the subject, according to a June article in The Nation magazine.
The agency's most recent International Energy Outlook report for 2009 predicts that global production of conventional oil will reach 93.1 million barrels per day in 2030, a drop from its 2007 prediction of 107.2 million barrels per day by 2030, that article states. The world produced 81.5 million barrels per day in 2006.
That would leave "unconventional" sources of oil, such as the oil sands of Canada and Venezuela, oil shale deposits in the Western United States and "ultra-deep" offshore oil deposits like one slated for development off the coast of Brazil, to make up the difference.
Biofuels could help ease a shortfall as well, but so far they make up only a tiny fraction of the world's fuel supply. Production of so-called "next generation" biofuels made from non-food sources like grasses, agriculture and wood waste and municipal garbage has so far failed to meet expectations for growth in the United States (see U.S. Won't Meet Its Own Biofuel Mandate).
Critics of peak oil predictions say that they fail to take into account more optimistic estimates of the oil remaining in the earth, as well as the potential for technology to improve oil recovery from existing fields and to discover new ones.
(For a sample of these counter-arguments, read this Green Light post relaying some comments ExxonMobil (XOM) CEO Rex Tillerson made in February at Stanford University. )
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It will happen, and we can argue about when, but the real issue is what will happen.
Prices will rise, but how rapidly? How quickly can alternatives take their place? My belief is that the process will be slow and we will have time to adjust, however, governments that do not take steps to make their economies more energy efficient are taking huge risks.
1.Fake Peak Oil: where the binding constraint on oil production capacity and actual production is Bad Government in many parts of the world(Venezueala, Mexico, Nigeria,Russia the US are the most notable examples) not resource constraints. Indeed, the global oil resource and hence potential future reserve base, has never been higher.
Predictions about fake peak oil are assesments of geostrategic risk caused by Bad Government. Those who say fake peak oil is already here are,in effect, predicting, that Bad Government will be the norm in the major oil provinces of the world in ,at least, the first half of the 21st century. What happens if we start getting Good Government?
2. True Peak Oil : where the binding constraint is the resource itself. This means that human creativity no longer suffices to discover either discover new resources or is unable to render coomercial known but currently unproducible resources because the technolgies to produce this oil for less than, say $125/bbl to $150/bbl do not exist. We cannot make predictions about true peak oil because we cannot predict what the state of human knowledge or course of human creativity will be over the next 50 years.
Regrettably, we do not have 50 years to wait, I think historians will confirm that Oil effectively Peaked in 2005!
Those same histroians will ask, "did they just burn all that oil".
They also don't do a good job of factoring in what usage will be for a given demand ie a downard sloping demand curve.
I'd love to see if any oil models from 5 years ago or even 2 years ago predicted lower prices and lower consumption and I highly doubt any did.
Now this man comes with a prediction that the world oil supply will peak in 2020. But Total - the French 'major' - says that more than 100 mb/d will never be produced. Exactly who in the ____ are we to believe? Total has also said that the peak will come in 2013.
Well for starters I would never believe Birol, and so I guess that means that I believe Total. Matthew Simmons doesn't believe that we will reach 100 mb/d, and the peak might be just around the corner. Of course, the leading academic energy economist in the world - MY GOOD SELF - claims that that the peak is no longer important. If the oil price continues to move up after this macroeconomic mess is cleaned up, and can exceed $100/b, then what difference does it make where the peak is.
Apparently there are some oil people who do not believe in the peak. One of my students in Bangkok mentioned one of them, and I told him that if he wanted a failing grade he should mention that gentleman again. But I don't blame these oil 'people' for trying to retail nonsense. For instance, OPEC developed their 'speculator' argument because they - like the oil people - know that if the decision makers in the importing countries come to believe that the oil price can go into orbit, they will stop fooling around and find a replacement for oil.
> jack
1. Would You Believe Someone Who Worked for OPEC?
2. Peak Oil is propaganda to justify high prices in crude.
3. Who makes the most money by yelling "The Sky is Falling, the sky is fallin?"
It's unbecoming of a world leader to keep referencing his status.
It is possible that the volume pumped may remain stable. However, the figures being used include all liquid hydrocarbons, including those recovered from the refining process.
If the IEA is already conceding 2020 as 'peak', we have a serious problem.
A good site to keep up with this is theoildrum.com. That site has many links to other relevant materials, some of it alarmist, some of it good scientific input.
The 'experts are a joke. Oil production peaked in spring, 08 and I don't think it will ever reach that again. Just where is all this oil going to come from?
Next yr Mexico will stop exporting and a couple more yrs the North sea will slow to a trickle and field after field will slow and dry up. Alaska is dropping in production. It was 2million bbls/day now 800k/day and most fields dropping 6%/yr. OPEC is lying about their reserves and we are finding just 1bbl for every 4bbls we use. Even if we found more oil we don't have the rigs to produce it.
Already refineries are shutting down, most forever as they know oil use will never again be as high as in 08.
What will really kill it will be next yr when oil hits $4-5/gal and the world will finally start switching to much more eff cars, plug in hybrids and EV's. Semi's will switch to NG and F-T biofuels will ramp up. Sadly that will throw the world back into recession because people, pols can't see the writing on the wall.
Read Hubbert's Peak to see the facts well laid out, it's not a pretty picture.
My daily driver EV's I had to build myself because no car company would get 250 and 600mpg equivalent for my 2 seat sportwagon and 3wh MC EV's so it doesn't matter much to me. But then I've always been way ahead of the curve..
Anybody who says otherwise probably has a political agenda, or just hasn't studied the facts. IEA has an excellent record, but Faith Birol is an ECONOMIST, and we know how right they've been recently.
Anybody who thinks oil companies haven't looked someplace obvious for oil is nuts. Otherwise why would they be drilling 20,000 ft under 7000 ft of water for unknown amounts of oil?
Over the last 20-30 years the industry began exploiting offshore oil. These fields are turing out to deplete very rapidly. The latest fields in North Dakota Bakken are in tight formations and are also depleting very rapidly.
Peak oil is sometimes called the end of cheap oil, so that even if we can produce 74 Mbpd, it will be much more expensive per barrel, and more expensive to refine. Either way the price goes up.