More on Hubbert

[Louis Proyect <lnp3@xxxxxxxxx>]

NY Press, June 2, 2004
THE COMING ENERGY CRUNCH
A $2 gallon of gas is just the beginning.
By Aaron Naparstek

(clip)

IN 1956, a Shell Oil geologist named M. King Hubbert stood up before a 
meeting of the American Petroleum Institute and, much to the chagrin of 
his bosses, predicted that oil production in the continental United 
States would peak and begin to decline starting in the early 1970s.

According to his colleague and author of the book, Hubbert's Peak, Ken 
Deffeyes, "Almost everyone inside and outside the oil industry rejected 
Hubbert's analysis." They simply didn't want to hear it. The 1960s was 
the greatest decade of global oil discovery ever. Vast new reserves were 
found all over the world. Soon all but a faithful few simply forgot 
about Hubbert's forecast.

Hubbert arrived at his prediction through an analysis of oil-field 
discoveries. By 1956, after drilling tens of thousands of holes across 
the continental United States, some oilmen had a pretty solid idea of 
what was in the ground. The discovery of new reserves in the lower 48 
had peaked in the 1930s and had been in decline ever since. Hubbert 
noted that, when plotted over time, the rate of discovery formed a 
nearly perfect bell-curve. He theorized that the annual rate of oil 
production would form a similar bell curve, more than a few decades 
later. The highest point of this second curve would be the year that the 
U.S. produced more oil than it ever had before and ever would again. 
That would be the "oil peak."

As Deffeyes is quick to tell you, "Old Hubbert was right." America never 
again produced as much as it did in 1970, despite a drilling boom that 
produced four times more oil wells each year. Since then, oil production 
has been in steady, rapid decline—the downhill side of Hubbert's bell 
curve. Today, we extract about 3.4 million barrels per day from the 
lower 48, about one-third of what we were getting at peak.

In recent years, scientists have built on Hubbert's techniques in an 
effort to discover how close we are to global oil peak. Though the 
estimates vary, everyone agrees that the question of global peak is not 
"if" it will occur, but "when." Based on 65 studies published over the 
last 50 years, the UK-based Oil Depletion Analysis Center estimates the 
world's original endowment of sweet, crude "conventional" oil to be 
somewhere between 2000- and 2400-billion barrels. As of today, humanity 
has consumed close to half that total.

The consequences of this are hard to overstate. Oil fuels 95 percent of 
all transportation and a significant portion of global food production. 
Industrial societies are dependent on a vast, steady flow of inexpensive 
petroleum for just about everything we make and do. Disrupt this flow, 
and modern society as we know it is inconceivable.

Global demand for oil has increased sevenfold over the past 50 years. In 
1986 human beings consumed about 54 million barrels of oil each day. 
Today we use about 82 million. Though Americans make up only 5 percent 
of the world's total population, we consume more than one-quarter of 
this energy—about three gallons per person each day. U.S. oil demand 
sets a new record every few months.

The developing world, led by China, is catching up to us. In the last 
decade, Chinese oil consumption has doubled, while Chinese car ownership 
has jumped from 700,000 to seven million.

"There are basically six and a half billion people on earth today and 
five billion of them barely use energy. They all aspire to," says Matt 
Simmons, chief executive of Simmons & Company, the world's biggest 
energy-industry investment bank.

Yet new sources of oil are becoming increasingly difficult to find and 
more expensive to develop. Global discovery peaked in 1964 and has 
declined ever since. In 2000, there were 16 discoveries of oil 
"mega-fields." In 2001, we found eight, and in 2002 only three such 
discoveries were made. Today, we consume about six barrels of oil for 
every one new barrel discovered.

The U.S. Dept. of Energy estimates that the world will require 120 
million barrels a day by 2025. To meet that demand we must find the 
equivalent of 10 new North Sea oil fields within a decade. These fields, 
before peaking at the end of the 90s, were producing close to six 
million barrels of oil per day. Today, we are hard-pressed to discover 
one new mega-field, let alone 10 reserves equaling the size of the North 
Sea, which is now in serious decline. This year, 11 new mega-projects 
came online; next year, 18 will start producing. But by 2008 only three 
big new fields are scheduled to start flowing, with no new projects on 
track for 2009 or 2010.

According to Dr. Colin Campbell, a former exploration geologist and oil 
company executive who is generally considered to be the dean of global 
oil depletion experts, "there is no way on Earth" that level of demand 
predicted by the U.S. government and many oil industry analysts "can be 
fulfilled."

Just as Hubbert predicted for the U.S., a decline in discovery presages 
a decline in production. Says Campbell: "If you add it all together, you 
get a peak of what I call ordinary oil in 2005 and a peak of 
unconventional oil in around 2007. By 2010 volatility comes to an end. 
Then, terminal decline."

Campbell's oil peak prediction is right in line with no fewer than 12 
recent studies, using a variety of different assumptions and demand 
projections. They all foresee accelerating decline in global oil 
production within the coming decade. Even the most conservative studies, 
using highly optimistic estimates of future oil discoveries and low 
estimates of future demand, predict a global oil peak by 2020. No matter 
how you slice it, global oil supply will soon begin a steep, permanent, 
irreversible decline.

full: http://www.nypress.com/17/22/news&columns/AaronNaparstek.cfm

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