[Peakoil] Unconventional oil in perspective

[Keith]

The article below puts unconventional oil in perspective. See the fourth-last paragraph for tar sand production.
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Keith Thomas
myrmecia at gmail.com
074 2929 4146
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THE STRUGGLE TO GET A MESSAGE OUT
http://www.postpeakliving.com/blog/prepared-peak-july-04-2012

 

As anyone who has worked in any kind of activism knows, there are days when the message seems to be getting out and days when it seems that years of progress have been lost.

That's happening right now with the peak oil message. I believe that the science is solid behind all total production declining this decade. Jeremy Leggett, who helped convene the UK Industry Task Force on Peak Oil, notes in a piece today that, despite George Monbiot's recent apostasy, he believes that peak oil is still on track by 2015.

Leggett points out that the recent increase of unconventional oil from certain places, notably the U.S., are convincing people that peak oil is a myth. Nothing could be further from the truth. This is a case of people looking for any bright spot and latching onto it without stepping back and looking at the core reasons for peak oil objectively.

In fact, well-designed studies have taken into account the possible increase from unconventional oil production and include them in their estimates. In the paper I co-authored last year ("Global Oil Risks in the Early 21st Century," Energy Policy, Dec. 2011), we presented a well-balanced overview of all of the factors that play a role in declining oil production: geology, economics and politics. Our conclusion, which was similar to the conclusion of several other notable institutions (like the U.S. Joint Chiefs of Staff), was that oil declining was unavoidable and we appeared to be on track for that happening this decade.

First of all, Monbiot, like many other commentators, gets the basic concept wrong. Like many others, he confuses the amount of oil left with the rate at which it can be extracted. This is the key distinction when discussing peak oil, and many people writing now (including Monbiot) again miss this distinction.

Let me say this plainly: there is plenty of oil left. The problem is that the oil remaining is difficult and expensive to extract, which means that the rate the current fields are depleting will eventually overcome the rate that new fields come online.

In our paper, we used the work of the UK Industry Task Force on Peak Oil as our basis for when oil would start to decline. Implicit in that assumption was that the economy and debt crisis didn't shrink the economy first, thus hiding the peak.

What is the biggest driver of the decline, regardless of the price of oil? It turns out to be the amount of oil that is currently being extracted from giant and supergiant oil fields. In fact, 60% of the oil currently being pumped comes from these giant oil fields — about 500 fields in total. Just 20 of the largest fields alone are responsible for nearly 25% of all conventional oil production.

Most supergiant fields were discovered decades ago and the most recent ones, like Kashagan (in the centre of the north Caspian Sea), have presented mountains of difficulty getting production going. When the current crop of giant fields start declining, unconventional oil cannot match the amount of oil that will come off the market. A good estimate, put out by the International Energy Agency, is that oil fields in their decline phase lose production at an average rate of 6.7% per year.

Here is an example of the mismatch. The most the tar sand production increased in one year is about 250,000 barrels per day. Thus, we can count on tar sands to make up for the loss of production of three or four giant oil fields. What about the other 497? What is going to make up for the decline of those?

The best estimate is that there is nothing that can make up for their decline whether one includes Brazil, Argentina's heavy crude or the untapped fields in Iraq or Saudi Arabia. Contrary to many people's belief, this really has all been taken into account.

Don't be fooled by unconventional oil. It's the giant and supergiant oil fields that we have to monitor closely. When enough of them enter decline, unconventional oil simply cannot make up the loss of production. If the world economy contracts then the peak may be hidden but it will still happen and the best estimate is that it will happen this decade.

If you'd like to learn more about the decline rate of giant and supergiant oil fields, read my colleague's paper, "Giant Oil Field Decline Rates and their Influence on World Oil Production", Energy Policy. Richard Heinberg has another good summary in his piece, Peak Denial.

— André