[Peakoil-announce] The Independent: World oil supplies to run out faster than expected

[Alex Pollard]

http://news.independent.co.uk/sci_tech/article2656034.ece

World oil supplies are set to run out faster than expected, warn scientists
 
Scientists challenge major review of global reserves and warn that supplies 
will start to run out in four years' time 
By Daniel Howden 
Published: 14 June 2007 

Scientists have criticised a major review of the world's remaining oil 
reserves, warning that the end of oil is coming sooner than governments and 
oil companies are prepared to admit. 

BP's Statistical Review of World Energy, published yesterday, appears to 
show that the world still has enough "proven" reserves to provide 40 years 
of consumption at current rates. The assessment, based on officially 
reported figures, has once again pushed back the estimate of when the world 
will run dry. 

However, scientists led by the London-based Oil Depletion Analysis Centre, 
say that global production of oil is set to peak in the next four years 
before entering a steepening decline which will have massive consequences 
for the world economy and the way that we live our lives. 

According to "peak oil" theory our consumption of oil will catch, then 
outstrip our discovery of new reserves and we will begin to deplete known 
reserves. 

Colin Campbell, the head of the depletion centre, said: "It's quite a 
simple theory and one that any beer drinker understands. The glass starts 
full and ends empty and the faster you drink it the quicker it's gone." 

Dr Campbell, is a former chief geologist and vice-president at a string of 
oil majors including BP, Shell, Fina, Exxon and ChevronTexaco. He explains 
that the peak of regular oil - the cheap and easy to extract stuff - has 
already come and gone in 2005. Even when you factor in the more difficult 
to extract heavy oil, deep sea reserves, polar regions and liquid taken 
from gas, the peak will come as soon as 2011, he says. 

This scenario is flatly denied by BP, whose chief economist Peter Davies 
has dismissed the arguments of "peak oil" theorists. 

"We don't believe there is an absolute resource constraint. When peak oil 
comes, it is just as likely to come from consumption peaking, perhaps 
because of climate change policies as from production peaking." 

In recent years the once-considerable gap between demand and supply has 
narrowed. Last year that gap all but disappeared. The consequences of a 
shortfall would be immense. If consumption begins to exceed production by 
even the smallest amount, the price of oil could soar above $100 a barrel. 
A global recession would follow. 

Jeremy Leggett, like Dr Campbell, is a geologist-turned conservationist 
whose book Half Gone: Oil, Gas, Hot Air and the Global Energy Crisis 
brought " peak oil" theory to a wider audience. He compares industry and 
government reluctance to face up to the impending end of oil, to climate 
change denial. 

"It reminds me of the way no one would listen for years to scientists 
warning about global warming," he says. "We were predicting things pretty 
much exactly as they have played out. Then as now we were wondering what it 
would take to get people to listen." 

In 1999, Britain's oil reserves in the North Sea peaked, but for two years 
after this became apparent, Mr Leggett claims, it was heresy for anyone in 
official circles to say so. "Not meeting demand is not an option. In fact, 
it is an act of treason," he says. 

One thing most oil analysts agree on is that depletion of oil fields 
follows a predictable bell curve. This has not changed since the Shell 
geologist M King Hubbert made a mathematical model in 1956 to predict what 
would happen to US petroleum production. The Hubbert Curveshows that at the 
beginning production from any oil field rises sharply, then reaches a 
plateau before falling into a terminal decline. His prediction that US 
production would peak in 1969 was ridiculed by those who claimed it could 
increase indefinitely. In the event it peaked in 1970 and has been in 
decline ever since. 

In the 1970s Chris Skrebowski was a long-term planner for BP. Today he 
edits the Petroleum Review and is one of a growing number of industry 
insiders converting to peak theory. "I was extremely sceptical to start 
with," he now admits. "We have enough capacity coming online for the next 
two-and-a-half years. After that the situation deteriorates." 

What no one, not even BP, disagrees with is that demand is surging. The 
rapid growth of China and India matched with the developed world's 
dependence on oil, mean that a lot more oil will have to come from 
somewhere. BP's review shows that world demand for oil has grown faster in 
the past five years than in the second half of the 1990s. Today we consume 
an average of 85 million barrels daily. According to the most conservative 
estimates from the International Energy Agency that figure will rise to 113 
million barrels by 2030. 

Two-thirds of the world's oil reserves lie in the Middle East and 
increasing demand will have to be met with massive increases in supply from 
this region. 

BP's Statistical Review is the most widely used estimate of world oil 
reserves but as Dr Campbell points out it is only a summary of highly 
political estimates supplied by governments and oil companies. 

As Dr Campbell explains: "When I was the boss of an oil company I would 
never tell the truth. It's not part of the game." 

A survey of the four countries with the biggest reported reserves - Saudi 
Arabia, Iran, Iraq and Kuwait - reveals major concerns. In Kuwait last 
year, a journalist found documents suggesting the country's real reserves 
were half of what was reported. Iran this year became the first major oil 
producer to introduce oil rationing - an indication of the administration's 
view on which way oil reserves are going. 

Sadad al-Huseini knows more about Saudi Arabia's oil reserves than perhaps 
anyone else. He retired as chief executive of the kingdom's oil corporation 
two years ago, and his view on how much Saudi production can be increased 
is sobering. "The problem is that you go from 79 million barrels a day in 
2002 to 84.5 million in 2004. You're leaping by two to three million 
[barrels a day]" each year, he told The New York Times. "That's like a 
whole new Saudi Arabia every couple of years. It can't be done 
indefinitely." 

The importance of black gold 

* A reduction of as little as 10 to 15 per cent could cripple oil-dependent 
industrial economies. In the 1970s, a reduction of just 5 per cent caused a 
price increase of more than 400 per cent. 

* Most farming equipment is either built in oil-powered plants or uses 
diesel as fuel. Nearly all pesticides and many fertilisers are made from 
oil. 

* Most plastics, used in everything from computers and mobile phones to 
pipelines, clothing and carpets, are made from oil-based substances. 

* Manufacturing requires huge amounts of fossil fuels. The construction of 
a single car in the US requires, on average, at least 20 barrels of oil. 

* Most renewable energy equipment requires large amounts of oil to produce. 

* Metal production - particularly aluminium - cosmetics, hair dye, ink and 
many common painkillers all rely on oil. 

Alternative sources of power 

Coal 

There are still an estimated 909 billion tonnes of proven coal reserves 
worldwide, enough to last at least 155 years. But coal is a fossil fuel and 
a dirty energy source that will only add to global warming. 

Natural gas 

The natural gas fields in Siberia, Alaska and the Middle East should last 
20 years longer than the world's oil reserves but, although cleaner than 
oil, natural gas is still a fossil fuel that emits pollutants. It is also 
expensive to extract and transport as it has to be liquefied. 

Hydrogen fuel cells 

Hydrogen fuel cells would provide us with a permanent, renewable, clean 
energy source as they combine hydrogen and oxygen chemically to produce 
electricity, water and heat. The difficulty, however, is that there isn't 
enough hydrogen to go round and the few clean ways of producing it are 
expensive. 

Biofuels 

Ethanol from corn and maize has become a popular alternative to oil. 
However, studies suggest ethanol production has a negative effect on energy 
investment and the environment because of the space required to grow what 
we need. 

Renewable energy 

Oil-dependent nations are turning to renewable energy sources such as 
hydroelectric, solar and wind power to provide an alternative to oil but 
the likelihood of renewable sources providing enough energy is slim. 

Nuclear 

Fears of the world's uranium supply running out have been allayed by 
improved reactors and the possibility of using thorium as a nuclear fuel. 
But an increase in the number of reactors across the globe would increase 
the chance of a disaster and the risk of dangerous substances getting into 
the hands of terrorists