Whatever happened to peak oil?

Where did it all go wrong for peak-oil alarmists?

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Plenty to go around
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Peter C. Glover
On 15 August 2012 11:44

Why are peak oil-ers like Jehovah’s Witnesses? Answer: When the definitive JW prediction of the ‘Day of Wrath’ failed in 1914, they did what false prophets have done in every generation: shifted the goalposts (to 1975 in the case of JW’s – and wrong again).

It’s what false prophets do to save face, enabling them to keep fleecing the inherently gullible. Peak-oilers do likewise.

Having written their headline-grabbing, money-making blockbusters predicting the imminent collapse of an oil-driven industrial world, peak-oilers like to maintain a ‘fluid’ approach to their predictions. In the case of oil, however, that’s becoming a tougher proposition, as their ignorance of energy, economics and the sheer ingenuity of man is increasingly revealed in the looming global oil boom.

The "new Middle East"

When John Fogerty sang about coming home to Green River, the incentive was hardly a 200 year supply of oil. But that’s the reality of the world’s largest shale oil deposit at the Green River Formation (GRF).

The USGS estimates the GRF holds 3 trillion barrels of oil, around half of which is deemed recoverable. That’s equivalent to the total of the world’s proven oil reserves.

At current levels of US consumption – 19.5 million barrels per day (bpd) – Green River on its own could supply domestic US needs for the next 200 years.

Then there are the Bakken and Eagle Ford shale plays. The former alone is on a par with big Persian Gulf producing countries. Eagle Ford may even match the hydrocarbon endowment of the Bakken/Three Forks play in North Dakota and Montana. To date, shale or tight oil has added about 700,000 bpd to US oil production.

No wonder North America is being talked about in oil terms as ‘the new Middle East’. But the Bakken and Eagle Ford plays aside, there are a further 18 plays with plenty of energy potential across the United States. And I haven’t even touched on the granddaddy of North American oil plays: Canada’s huge Athabasca oil sands development.

Just for good measure, a report by Citigroup analysts estimates that America’s “reindustrialization”, driven by its conventional energy (oil and gas) sector, could see the creation of a whopping 3.6 million new jobs and add a full 3 percent to national GDP.

Deepwater and beyond

A USGS report of 171 global regions in 2012 further estimates that the world’s undiscovered conventional and technically recoverable oil resources, much of it in deepwater, stands at 565 billion barrels of oil (BBO). That’s a figure that only represents known conventional resources. But it pales in significance when unconventional resources, such as heavy oil, oil sands and shale oil, are taken into consideration.

As the USGS reports, the mean estimate for recoverable heavy oil from the Orinoco Oil Belt in Venezuela alone stands at a mammoth 513 BBO. The shale oil potential of Russia’s Bazhenov Formation in Western Siberia may well prove to be 80 times larger than America’s Bakken Formation.

At present six of the world’s largest oil fields in Ghana, Mexico, Kazakhstan, Iraq, Brazil and Venezuela (the Orinoco Field) all still await development – the last directly due directly to President Chavez’s anti-West politics.

A recent study by Leonardo Maugeri, a former senior executive with Italian giant ENI, confirms the global prognosis. Such is the positive nature of exploration, the impact of new technologies and the sheer weight of finds and prospective new resources, Maugeri states:

“Contrary to what most people believe, oil supply capacity is growing worldwide at such an unprecedented level that it might outpace consumption. This could lead to a glut of overproduction and a steep dip in oil prices.”

Maugeri further suggests that capacity exists to increase the world’s 2011 production of 93 million barrels a day by as much as half, hitting, by 2020, around 111 million barrels a day – and rising.

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