70% of cheap recoverable oil left, is in the middle east.

[Oceans11]

When the last oil well runs dry

By Alex Kirby
BBC News Online environment correspondent



Sunset industry? Oil production could soon peak
Just as certain as death and taxes is the knowledge that we shall one day be forced to learn to live without oil.
Exactly when that day will dawn nobody knows, but people in middle age today can probably expect to be here for it.

Long before it arrives we shall have had to commit ourselves to one or more of several possible energy futures.

And the momentous decisions we take in the next few years will determine whether our heirs thank or curse us for the energy choices we bequeath to them.

Industry's lifeblood

There will always be some oil somewhere, but it may soon cost too much to extract and burn it. It may be too technically difficult, too expensive compared with other fuels, or too polluting.


Who holds the world's oil - and how long will it last?


At-a-glance

An article in Scientific American in March 1998 by Dr Colin Campbell and Jean Laherrere concluded: "The world is not running out of oil - at least not yet.

"What our society does face, and soon, is the end of the abundant and cheap oil on which all industrial nations depend."

They suggested there were perhaps 1,000 billion barrels of conventional oil still to be produced, though the US Geological Survey's World Petroleum Assessment 2000 put the figure at about 3,000 billion barrels.

Too good to burn

The world is now producing about 75 million barrels per day (bpd). Conservative (for which read pessimistic) analysts say global oil production from all possible sources, including shale, bitumen and deep-water wells, will peak at around 2015 at about 90 million bpd, allowing a fairly modest increase in consumption.

Peaking is at hand, not years away... If I'm right, the unforeseen consequences are devastating

Matthew Simmons, former US government adviser
On Campbell and Laherrere's downbeat estimate, that should last about 30 years at 90 million bpd, so drastic change could be necessary soon after 2030.

And it would be drastic: 90% of the world's transport depends on oil, for a start.

Most of the chemical and plastic trappings of life which we scarcely notice - furniture, pharmaceuticals, communications - need oil as a feedstock.

The real pessimists want us to stop using oil for transport immediately and keep it for irreplaceable purposes like these.

In May 2003 the Association for the Study of Peak Oil and Gas (Aspo), founded by Colin Campbell, held a workshop on oil depletion in Paris.

Changed priorities

One of the speakers was an investment banker, Matthew Simmons, a former adviser to President Bush's administration.

From The Wilderness Publications reported him as saying: "Any serious analysis now shows solid evidence that the non-FSU [former Soviet Union], non-Opec [Organisation of Petroleum Exporting Countries] oil has certainly petered out and has probably peaked...


No cheap oil, no cheap food
"I think basically that peaking of oil will never be accurately predicted until after the fact. But the event will occur, and my analysis is... that peaking is at hand, not years away.

"If I'm right, the unforeseen consequences are devastating... If the world's oil supply does peak, the world's issues start to look very different.

"There really aren't any good energy solutions for bridges, to buy some time, from oil and gas to the alternatives. The only alternative right now is to shrink our economies."

Planning pays off

Aspo suggests the key date is not when the oil runs out, but when production peaks, meaning supplies decline. It believes the peak may come by about 2010.

Fundamental change may be closing on us fast. And even if the oil is there, we may do better to leave it untouched.

Many scientists are arguing for cuts in emissions of the main greenhouse gas we produce, carbon dioxide, by at least 60% by mid-century, to try to avoid runaway climate change.

That would mean burning far less oil than today, not looking for more. There are other forms of energy, and many are falling fast in price and will soon compete with oil on cost, if not for convenience.

So there is every reason to plan for the post-oil age. Does it have to be devastating? Different, yes - but our forebears lived without oil and thought themselves none the worse.

We shall have to do the same, so we might as well make the best of it. And the best might even be an improvement on today.

http://news.bbc.co.uk/1/hi/sci/tech/3623549.stm

 

[WildBill]

If oil keeps up over $30/barrel then a lot of resources will become worthy of production in the next few years. Canada and Russia have huge reserves that are too expensive to take out of the ground under normal market conditions. Engineers are working on ways to bring those costs down, but if the price stays over $30/barrel for good then they won't need to as that is enough to make it economic to take it out today. Most economists aren't expecting over $30/barrel though, so nothing much is done about it.

One of my friends had a great play on this. Most of this oil is in Alberta, he is buying up real estate in Edmonton as an investment. Edmonton has the biggest boom in Canada right now and along with Calgary is seeing pretty solid migration rates. Now you gotta figure the economy must be on a tear to get people to move up to Edmonton considering the climate where there is snow from September to June!

 

[DarrylParsons]

WildBill,

Not to diminish any of your very good points, but isn't the Alberta oil included in the 49.9 billion figure in eek's chart?

 

[Shotgun]

My grandparents had a few wells pumping on their farm back when it was profitable. They took them out when the plunge hit, but the oil is still there.

As Bill says, when the price gets too high, alternative sources will emerge. Supply and demand is awesome.

 

[angusr]

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by Darryl Parsons:
WildBill,

Not to diminish any of your very good points, but isn't the Alberta oil included in the 49.9 billion figure in eek's chart?<HR></BLOCKQUOTE>

I doubt it. Alberta has huuuuge oil deposits located in the so-called tar sands. It's quite difficult to extract oil from these tar sands, but as Bill points out - if the price is right then their potential will be developed.

 

[WildBill]

I haven't been covering the oil industry for awhile, but I know back in the late 90s the tar sands of Alberta had a cost of almost $20/barrel to get it out of the ground and into a poor quality crude while places like Saudi pay about $2/barrel for premium crude to do it. And this was when oil went for about $9/barrel so it wasn't even a consideration. People kept thinking technology would get that price down to $10-12 by 2005, not sure if that is where it is now but with the high prices I am guessing a lot of money is being pumped into research for it.

Still most projects aren't worth an investment if the margin isn't at least $12-13/barrel because oil companies spend hundreds of millions just to get the first drop out. That is why I marvel at the Republican push for the Alaskan drilling, the area is so remote and the reserves so relatively unproven that there is no guarantee that an oil company could even make much of a return up there. In typical fashion they would open it up for drilling and then none of the majors would even want to do it calling the investment too expensive for an uncertain return and who knows what actions from courts down the road. Then they would have to give them fat tax breaks and front some investment money to finally get it done. If it turned out to be a modest field and nothing more there would be backlash for generations. In the end all that money could have been spent in Alberta yielding a surer thing and over time as more was invested, better methods could be discovered making it more economically sound. But in our "self-sufficiency" drive and nationalistic ways, blowing money in Alaska has more value than investing more prudently in Canada.