[A-List] Destructive destruction: Oil

[Sabri Oncu <soncu@xxxxxxxxxxx>]

May 28:  Energy Risk - Oil Supplies To Decline After 2010
Location: Houston
Author: Tim Jones, RiskCenter Correspondent
Date: Tuesday, May 28, 2002

Global supplies of crude oil will peak as early as 2010 and then
start to decline, ushering in an era of soaring energy prices and
economic upheaval, according to an international group of
petroleum specialists.

They hope to persuade oil-dependent countries like the United
States to stop what they view as a squandering the planet's
finite bounty of fossil fuels. Americans, as the biggest
consumers of energy, could suffer a particularly harsh impact on
their lifestyle, warned participants in the two-day conference on
oil depletion that began Thursday at Uppsala University in
Uppsala, Sweden.

"There is no factual data to support the general sense that the
world will be awash in cheap oil forever," said Matthew Simmons,
an investment banker who helped advise President Bush's campaign
on energy policy. "We desperately need to find a new form of
energy."

Colin Campbell, a retired geologist who helped organize the
conference, argued that governments are too caught up in
short-term issues to focus on the long-term threat of depleted
oil reserves. Oil companies prefer not to talk about it for fear
of upsetting their investors, he said. Their warning defies the
more commonly held view that global crude reserves will remain
plentiful for decades. Critics say similar predictions of
scarcity at the time of the 1973-74 Arab oil embargo didn't come
true.

"There's a lot of phony baloney in there," said economist Michael
Lynch of the U.S. business forecasting firm DRI-WEFA. "A lot of
prominent geologists just laugh at this. There are wolves out
there, but if you keep crying wolf and no wolves show up, you
start to lose credibility," Lynch said.

The dispute centers on the precise timing of what is variously
described as "peak oil" or "the big rollover" ? the predicted
date when existing oil production, together with new discoveries
of crude, can no longer replenish the world's reserves as quickly
as consuming countries are depleting them.

Roger Bentley, head of The Oil Depletion Analysis Center in
London, insisted that the predictions made in the 1970s were
basically correct. About 50 countries, including the United
States, have already passed their point of peak oil output, he
said.

The world's total reserves of crude, excluding oil found in shale
and tar sands, are estimated to exceed 3 trillion barrels,
according to the U.S. Geological Survey and other conventional
sources of data.

Campbell insisted the true figure for reserves is closer to 2
trillion barrels, due partly to what he described as overstated
reserves reported by Saudi Arabia and other OPEC nations.

He played down the significance of new oil discoveries in the
Caspian Sea region of central Asia and in deep waters off the
coasts of Brazil and West Africa and in the Gulf of Mexico. Now
that geologists have effectively surveyed the globe for crude,
Campbell and others at the conference said they doubted that any
giant new oil fields still await discovery.

Also, unlike Lynch, Campbell believes that improvements in the
technologies used to explore and drill for oil will increase
production by only modest amounts.

As a result, Campbell forecast that oil output would peak by
2010 ? at least 26 years sooner than the rollover point predicted
in a U.S. government study prepared in 2000.

"It's not a cataclysmic event," he said. "But oil will become
scarcer and more expensive. That's undeniable." Campbell
estimates peak-year production at about 87 million barrels a day,
compared to daily output last month of 74.5 million barrels, as
calculated by the International Energy Agency, a watchdog agency
for the world's wealthiest nations.

Simmons, the banker, predicted that the United States would
suffer an energy scare even sooner, due to a 10 percent decrease
he foresees in U.S. production of natural gas this year.

"If it's only 10 percent, we've dodged a bullet," he said. "And
10 percent is a disaster. It could be 20 percent." Simmons said
Americans will have to embrace coal and even nuclear power once
fossil fuels pass their global peak in production. Higher and
more volatile prices are sure to accompany the transition period,
he said.

"You couldn't get serious people focusing on this issue, and
we're going to pay dearly for it."

Full at:
http://www.riskcenter.com/cgi-bin/article.pl?id=4922