The bulk of the world's oil production comes from a relatively small number of very large
fields discovered decades go. Most of these very large fields now show declining
production. The total rate of world oil production has only been maintained at current
levels by finding and bringing online, an increasing number of smaller fields. The
financial cost, and the energy required to find and develop these new, smaller fields is
constantly increasing. In 2008 the IEA looked at the production from all current fields
and how rapidly it would decline. They also predicted how much oil would be produced in
future years from as yet undeveloped fields and fields that might yet be discovered. The
result? They saw less future oil production than their previous estimates but,
nevertheless, oil production in 2030 would be higher than today, so there was a little
room for economic growth.
But was the IEA correct? This is where the story gets very interesting and Professor
Aleklett in Uppsala re-enters the picture. Professor Aleklett heads a group of research
scientists called the Global Energy Systems group at the Angstrom Laboratory of Uppsala
University. In recent years these scientists have been developing mathematical models of
oil production from individual oil fields. They re-analysed the numbers in the IEA's
field-by-field bottom-up analysis. They found that they could agree with most of what the
IEA predicted - namely the decline rate of existing fields and the volumes of accessible
oil in known but undeveloped fields and in fields that might yet be discovered. However,
they found a glaring error. The IEA had predicted future rates of oil production from
undeveloped and yet-to-be-discovered fields that were far, far too high. When they took
the IEA's data and imposed rational but nevertheless extremely optimistic limits on future
production rates, they saw to their astonishment, that the maximum rate of oil production
that the world would ever achieve was in 2008. That's right - the so-called 'peak' of oil
production was actually two years ago and we have now begun the long downward trend in oil
production that will characterise the second half of humanity's oil era.
The re-analysis of the IEA's own data by the Global Energy Systems group showing that we
have passed the peak of oil production is the scientific equivalent of a 'slam dunk'. It
is a beautiful piece of work and I have been privileged to help them prepare it for
publication. I find it fascinating to see other analyses are also giving similar results.
Indeed, an analysis by Australia's own Macquarie Bank, not of actual oil production but of
oil production capacity, predicted declining capacity after last year, 2009.
Since the IEA produced its bottom-up analysis the financial crisis has hit the oil
industry hard. Much oil exploration and oilfield development has been cancelled and this
will accelerate the decline in world oil production. The implication is that, when or if
the world economy tries to grow out of its current slump, we will see demand exceed supply
and oil prices will spike to a level that will, once again, cause an economic fall.
Unfortunately, unless alternative sources of energy are found and developed, and quickly,
the importance of oil to the world economy means that economic growth will follow the
declining production of oil downwards for many years and probably decades. From a
scientific point of view, there can be no return to the long and heady days of economic
growth seen earlier this decade, no matter what leading economists of heads of reserve
banks may think to the contrary. As a scientist, and with my two young children in mind, I
think we need to be looking urgently at the implications of energy decline for the most
important things in life. This is especially true for food production which, in
industrialised nations, is highly dependent upon abundant supplies of oil.
We can no longer afford to sit around discussing whether or not we have passed the peak
of oil production. We cannot wait, complacently, for price signals to stimulate the
development of alternative sources of energy since oil prices will fluctuate wildly. Every
time the economy tries to grow, oil demand will exceed supply, causing the oil price to
spike up. This will strangle the economy, reduce oil demand and cause the price to fall.
Oil companies cannot invest in the face of these wild fluctuations in price. Most
importantly, we must remember that to do anything at all requires energy. So, while oil is
still relatively abundant, we must invest as much as we can to develop the energy sources
of the future. Once the oil supply starts to decrease significantly, we will be too busy
just trying to keep food production and essential services running to have any energy left
over for building expensive high-tech alternative energy infrastructure.
The peak of oil production was two years ago. For the sake of my children, and your
children, we need to just accept that fact and deal with it. When it comes to investing in
energy alternatives, do it now, because it will not be possible later......
....................................
Now....put your fingers in your ears and go....la...la...la...la...la...la...la...la...la...la...la...la...
I didn't see no peak oil go by!
