[Series] Those who argue that there will never be a final "oil crisis" fail to recognize resource limits.This is Part 2 in a three-part series focusing on fossil-fuel dependence and the intersection of energy and the environment. Part 1 discussed our dependence on fossil fuels to meet our energy needs due to its unmatched efficiency as an energy source. Part 2 discusses the finite nature of oil and gas, and what that means for the future of our energy economy.
The petroleum age began with some large discoveries of oil made in Texas in the early 20th century, coinciding with the appearance of affordable motorcars. Demand has always been larger in the United States than anywhere else, and consumption there overtook the rate of domestic discovery and supply in the 1970s. Since the 1930s, the world has increasingly depended on supplies from giant and super-giant fields in the Middle East and places such as Nigeria and Venezuela. In 1956, M. King Hubbert, a geologist with Shell Oil, predicted that global demand would begin to exceed supply in the year 2000.That this did not happen is largely because of the stream of sources that could not have been predicted in the 1950s, including oil and gas from deep offshore and unconventional sources such as the oil sands. But such sources are not infinite, and current estimates place the moment of “peak oil” – when demand finally begins to outstrip supply – in the middle of this century.
There are those that doubt the “peak oil” hypothesis, suggesting that increasingly expensive sources (such as from the Arctic) will be funded by rising prices, to the point that other energy sources, including renewables, will become more economic and widely used. Under these conditions, they argue, there will never be a final “oil crisis.” However, this ignores the limits to renewable sources and the finite nature of all Earth materials. Eventually, we will just run out. Some specialists suggest that some of the great fields in Saudi Arabia are already showing signs of depletion, including the presence of water in the produced oil (which occurs when groundwater rises to replace oil as it is pumped from the top of a pool). When it becomes clear that this is indeed happening, we can expect a rapid increase in the world oil price, which could damage global economies, and will not help with the necessary orderly transition to other energy sources.
News of discoveries in the Gulf of Mexico, offshore Brazil, and the far eastern provinces of Russia, tends to suggest that there is a lot of oil left to be found. But we are running out of new places to look. The Arctic has been described as a vast energy storehouse, with some estimates placing reserves at 90 billion barrels of oil. But this represents only about 1,000 days’ worth of global consumption, and at least half of it lies within the territorial limits of Russia, whose government is quite willing to use oil as a political weapon. In fact, only about seven per cent of predicted remaining reserves are located in areas open to development by the international oil giants. The remainder is controlled by sovereign oil companies, many of whom (such as Iran) are hostile to the West.
What about the deep offshore? For one thing, it is extremely expensive to explore there, with the cost of drilling a single well often reaching $100 million. Furthermore, the thick blanket of sedimentary rocks from which petroleum is derived typically thins to nothing a few tens of kilometres offshore – oil will not be found in the middle of the world’s oceans.
What about the so-called unconventional resources, including the oil sands and shale gas? Canada’s oil-sands production is expected to reach 3.5 million barrels per day by 2025 (after intensive and expensive engineering development), yet this is equivalent to only four per cent of daily global needs (global daily oil consumption averages 87.4 million barrels/day according to the annual statistical review published by www.bp.com). The oil-sands industry is of huge importance to Canada, positioning this country as a major exporter to the United States and/or Asia, but globally, it is not going to make a very big difference (Saudi Arabia has been producing 10 million barrels a day for decades).
Shale gas is still something of an unknown quantity. It is being promoted by an excited gas industry, but, as development proceeds, it is becoming evident that the geology is not always as favourable as expected, and there are serious environmental concerns.
The response to these discomforting facts should be to conserve and ration. Suburban sprawl and inadequate urban transit combine to generate some of the most wasteful uses of petroleum – while there is substantial potential for high-speed rail transport for intercity travel in North America, the majority of commuters are still travelling by car. We need rational discussion of public investments, taxes, road tolls, and congestion charges – all part of the holistic approach that we need to adopt as we approach the end of the petroleum era. Stay tuned for a discussion of the important environmental implications of our energy future in part 3 of this series.
Original Article
Source: the Mark
Author: Andrew Miall
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