{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Oil+Scare+or+Scarce - II‘Pek Oil’ Is Wst of Energy I...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: II‘Pek Oil’ Is Wst of Energy I. QSSSQS iififlbfl By Michael Lynch AMHERST, Mass. EMEMBER “peak oil”? It’s the theory that geological ‘ scarcity will at some point maize it impossible for global petroleum production to avoid falling, heralding the end of the oil age and, potentially, economic catastro- phe. Well, just when we thought that the collapse' 1n oil prices since last summer had put an end to such talk, along comes Fatih Birol, the top economist at the International Energy Agency, to in- sist that we‘ll reach the peak moment in 10 years, a decade sooner than most previous predictions (although a- few ar- dent pessimists believe the moment of no return hasalready come and gone). Like many Malthusian beliefs, peak oil theory has been promoted by a moti- vated group of scientists and laymen who base their conclusions on_ poor- analyses of data and misinterpretations of technical material. But because the news media and prominent figures like James Schlesingelg. a ionn'er secretary of energy, and the bilman T Boone Pick- ens have taken peak oil seriously, the public isunderstandably alarmed. A careful examination of the facts shows that most arguments about peak oil are based on anecdotal luformation, vague references-and ignorance of how theoil indusny gees about finding fields and extracting petroleum. And this has been demonstrated over and over again: the founder of the Association for ' the Study of Peak Oil first claimed in 1989 that the peak had already been reached, and Mr. Schlesinger argued a decade earlier that production was um likely to ever go much higher. ' Mr. Birol isn’t the only one still wor- rying. One leading proponent of peak oil, thewriter Paul Roberts, recently ex— pressed shock to discover that the liquid Scare talk about dWindling reserves ignores the facts. coming out of the Ghawar Fieldin Saudi Arabia, the World’s largest known de- posit, is around 35 percent water and rising. But this is hardly a concern -— the buildup is caused by the Saudis pumping seawater into the field to keep pressure up and make extraction easier. The global average for water in oil field yields is estimated to be as high as 75 percent. ' ' only go up — even though they had hey- e‘r done so historically Prices instead proceeded to slide for two decades, rather as the tide ignored King Capote. Just as,.in the 19705, it was the Arab oil embargo and the Iranian Revolution, today it is the invader; of Iraq and insta- bility in Venezuela and Nigeria. But the solution, as ever, is for the industry to shift irwestr'nent into new regions, and that’s what it isfidoing. Yet peak-oil ad- vocates take advantage of the inevitable delay in bringing this new production on line to claim that global production IS on an irreversible decline. in the end, perhaps the most mis- leading. claim of the peakaoil advocates” is that the earth was endowed with only 2 trillion barrels of “recoverable” oil. Actually, the consensus among geolo- gists is that there are some 10 trillion barrels out there. A cenmry ago, only 10 percent of it was considered recover— able, but improvements in technoldgy should allow us to recover some 35 per— cent —— another 2.5 trillion. barrels— in an economically viable way. And this doesn’t even include such potential sources as tar sands, which in time We may be able to efficiently tap Oil remains abundant, and the. price will likely come downwcloser to the his: toricai level of $30 a'barr'el as new sup— plies come forward in the deep waters off West Africa and Latin America, in East Africa,_-and perhaps in the Bakken ' oil shale fields of Montana and North- Dakota. But that may- not keep the Chicken Littles from convihcing policy- makers in Washington and elsewhere that oil, being finite, must increase in- _ price. (That‘s the logic that led'th'e Car- ter administration to create the Syn- thetic Fuels Corporation, a $3 billion boondoggle that never produced a gal- lon of useable fu'élt) This is not to Say that we shouldn’t keep looking. for other cqst-effecfive, low-pollution 'energy sources — why not broaden our options? But we can’t let the false threat of disappearing oil lead 'the'. government to throw money away on harebrain‘ed renewable energy schemes. or impose mnecessary and expensive. conservation measures on a public already struggling through tough - economic times. 'Xnother critic, a prominent consult— antand investor named Matthew Sim- .m’ons, has raised concerns over oil engi- neers using “fuzzy logic” to estimate reservoir holdings. But fuzzy logic is a programming method that has been .9599. since was endangered in situations where the factors arehazy and variable — everything from phys— ical science to international relations — " and its track record in oil geology has \erqguite good. Bu ose are just the latest argu- ments — most part the peak-oil crowd rests its (Edam major claims: that the world is discovering only one barrel for every three or four produced; that political instability in oil- producing countries puts us at an un- precedented risk of having the spigots turned off; and that we have already used half of the two trillion barrels of oil that the earth contained. Let’s take the rate-of—discovery argu- ment first: it is a statement that reflects ignorance of industry terminology. When a new field is found, it is given a size estimate that indicates how much is thought to be recoverable at that point in time. But as years pass, the estimate is almost always revised upward, either because more pockets of oil are found in the field or because new technology makes it possible to extract oil that was previously unreachable. Yet because petroleum geologists don’t report that additional recoverable oil as “newly dis- covered,” the peak oil advocates tend to ignore it. In truth, the combination of new discoveries and revisions tb size estimates of older fields-has been keep— ,' ing pace with production for many. years. A related argument — that the “easy < oil” is gone and that extraction can only become more difficult and cost-ineffec- tiver— should be recognized as vague and irrelevant. Drillers in Persia a cen- tury ago certainly didn’t consider their work easy, and the mechanized, com- puterized industry of today is a far sight , from 19th-century mule-drawn rigs. Hundreds of fields that produce “easy oil” today were once thought techno- logicallyunreachable. _ The-latest acorn in the discm'rery de- bate is a recent increase in the overall estimated rate at which production is declining in large oil fields. This is as- sumed to be the result of'the “super- straw” technologies that have become dominant over the past decade, which can drain fields faster than ever. True, ' because quicker extraction causes the fluid preseure in the field to drop rap- idly, the Wells become less and less pro-, ductive over time. But this declining re- turn on individual wells doesn’t neces— sarily mean that whole fields are being cleaned out. As the Saudis have proved Michael Lynch, the former director for Asian energy and security at the Center" for International Studies at the Mas- sachusetts Institute of Technology, is an energy consultant. ' TED MCGRATl-l o in recent years at Ghawar, additional in- vestment — to find new deposits and drill new wells — can keep a field’s overallproduction from falling. When their shaky claims on geology are exposed, the peak-oil advocates tend to argue that today's geopolitical instability needs to be taken into consid- eration. But political risk is hardly new: a leading Communist labor organizer in the Baku oil industry in the early 19003 would later be known to the world as J o- sef Stalin. When the large supply disruptions of 1973 and 1979 led to skyrocketing prices, nearly all oil experts said the underly- ing cause was resource scarcity and that prices would go ever higher in the future. The oil: companies. diversified their investments — Mobil even started buying up department stores! — and President Jimmy Carter pushed for the development of synthetic fuels like shale oil, arguing that markets were too myopic to realize the imminent need for substitutes. All sorts of policy wonks, energy consultants and Nobel-prize- winning economists jumped on the bandwagon to explain that prices would ...
View Full Document

{[ snackBarMessage ]}