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<P><B><FONT size=+1>Oil Peak Could Catch United States Unprepared
</FONT></B>
<P><B>WASHINGTON, DC</B>, March 30, 2007 (ENS) -
<!--Body starts here -->The U.S. government needs a strategy to coordinate
and prioritize federal agency efforts to reduce uncertainty about the
timing of an oil peak and to advise Congress on how best to mitigate
consequences, finds a new report by the Government Accountability Office,
GAO, the investigative branch of Congress.
<P>The oil peak is that point when global production reaches its maximum
and then can only decline.
<P>The GAO report, published Thursday, says most studies estimate that oil
production will peak sometime between now and 2040. But today, a Swedish
scientist warned that the peak could come as early as next year.
<P>Fredrik Robelius in the Department of Nuclear and Particle Physics at
Uppsala University published his doctoral thesis today in which he says
the rate of extraction from giant oil fields is a better indicator of the
peak than oil prices.
<P>"The reliability of the oil price as a single parameter can be
questioned, as earlier times of high prices have occurred without having
anything to do with a lack of oil," said Robelius.
<P>"Instead," he said, "giant oil fields, the largest oil fields in the
world, can be used as a parameter."
<P>Future demand for oil is expected to increase annually by 1.4 to 1.7
percent, Robelius says.
<P>"A worst-case scenario sees a peak in 2008, and the best-case scenario,
following a 1.4 percent demand growth, peaks in 2018," Robelius predicts.
<BR><IMG height=334 alt=workers hspace=5
src="http://www.ens-newswire.com/ens/mar2007/20070330_oilworkers.jpg"
width=227 align=right vspace=5>
<H5>Texaco oil workers drill a vertical compound well. <SMALL>(Photo
courtesy <A href="http://www.nasa.gov/"
target=_blank>NASA</A>)</SMALL></H5>The GAO says the range of estimates it
found for the date of peak oil is wide because the timing of the peak
depends on "multiple, uncertain factors" that will help determine how
quickly the oil remaining in the ground is used.
<P>These factors include the amount of oil still in the ground; how much
of that oil can ultimately be produced given technological, cost, and
environmental challenges as well as potentially unfavorable political and
investment conditions in some countries where oil is located; and future
global demand for oil.
<P>Demand for oil will, in turn, be influenced by global economic growth
and may be affected by government policies on the environment and climate
change and consumer choices about conservation, the GAO said.
<P>In any case, the GAO said, the federal government is not well prepared
at this time. Federal efforts are spread across multiple agencies and are
not focused explicitly on peak oil.
<P>A giant oil field contains at least 500 million barrels of recoverable
oil. Only one percent - 507 out of some 47,500 oil fields in the world -
are giants, and the majority are found in the countries surrounding the
Persian Gulf.
<P><IMG height=156 alt=Robelius hspace=5
src="http://www.ens-newswire.com/ens/mar2007/20070330_robeliusfredrik.jpg"
width=110 align=left vspace=5>
<H5>Fredrik Robelius is a PhD student in the Uppsala Hydrocarbon Depletion
Study Group at Sweden's Uppsala University. <SMALL>(Photo courtesy <A
href="http://www.uu.se/" target=_blank>Uppsala
University</A>)</SMALL></H5>Over 60 percent of the 2005 production and
about 65 percent of the global ultimate recoverable reserve is from giant
fields, says Robelius.
<P>But giant fields are things of the past, the Swedish researcher says,
since a majority of the largest giant fields are over 50 years old, many
have begun to decline, and the discovery trend of fewer giant fields with
smaller volumes is clear.
<P>Robelius developed a model, based on past annual production and the
ultimate recoverable reserve, to forecast future production from giant
fields.
<P>"In all scenarios," Robelius says, "peak oil occurs at about the same
time as the giant fields peak."
<P>The world's four largest oil fields are - Ghawar in Saudi Arabia, which
produces 4.5 million barrels per day, Cantarell in Mexico, which produces
nearly two million barrels per day, Burgan in Kuwait which produces 1.7
million barrels per day and Da Qing in China which produces one million
barrels per day. <BR><IMG height=227 alt=rig hspace=5
src="http://www.ens-newswire.com/ens/mar2007/20070330_oilrigla.jpg"
width=250 align=right vspace=5>
<H5>Oil rig in the Gulf of Mexico off the coast of Louisiana <SMALL>(Photo
courtesy <A href="http://www.noaa.gov/"
target=_blank>NOAA</A>)</SMALL></H5>The most mature oil region, the
continental United States, peaked in 1970, while the latest oil region
discovered, the North Sea, peaked in 2001. Both regions continue to
decline despite strong demand and high oil prices, which motivates high
production rates, Robelius says.
<P>"The declining trend in giant field discoveries suggests the good
prospects are already drilled," he says.
<P>In the United States, alternative fuels and transportation technologies
face challenges that could impede their ability to mitigate the
consequences of a peak and decline in oil production, unless sufficient
time and effort are brought to bear, the GAO said in its report.
<P>"Although corn ethanol production is technically feasible, it is more
expensive to produce than gasoline and will require costly investments in
infrastructure, such as pipelines and storage tanks, before it can become
widely available as a primary fuel," the GAO said.
<P>Key alternative technologies currently supply the equivalent of only
about one percent of U.S. consumption of petroleum products, and the
Department of Energy projects that even by 2015, they could displace only
the equivalent of four percent of projected U.S. annual consumption.
<P>In such circumstances, the GAO said, "an imminent peak and sharp
decline in oil production could cause a worldwide recession."
<P><IMG height=241 alt=rig hspace=5
src="http://www.ens-newswire.com/ens/mar2007/20070330_oilrigsaudi.jpg"
width=311 align=left vspace=5>
<H5>Oil rig off the coast of Saudi Arabia <SMALL>(Photo courtesy Saudi
Embassy in Washington, DC)</SMALL></H5>But if the peak is delayed, these
technologies have a greater potential to mitigate the consequences, the
GAO said.
<P>To better prepare for a peak in oil production, GAO recommends that the
Secretary of Energy work with other agencies to establish a strategy. In
letters to the GAO, the Energy Department and Department of the Interior
agreed with most aspects of the report.
<P>The Department of Energy projects that the technologies could displace
up to 34 percent of U.S. consumption in the 2025 through 2030 time frame,
if the challenges are met.
<P>"The level of effort dedicated to overcoming challenges will depend in
part on sustained high oil prices to encourage sufficient investment in
and demand for alternatives," the GAO said.
<P>In its letter to members of Congress who requested the report, the GAO
writes that U.S. consumers paid $38 billion more for gasoline in the first
six months of 2006 than they paid in the same period of 2005, and $57
billion more than they paid in the same period of 2004, in large part
because of rising oil prices, which reached a 24 year high in 2006 when
adjusted for inflation.
<P>Robelius writes that new oil discoveries are not likely to help ease
consumers over the peak oil point.
<P>"Although contributions from new field developments and deepwater is
large, production from the 333 giant oil fields still dominates," says
Robelius. "Despite optimistic production forecasts of the undoubtedly
large resources of Orinoco and Alberta, their contribution is not enough
to offset peak oil."
<P>The Robelius study, "Giant Oil Fields - The Highway to Oil: Giant Oil
Fields and their Importance for Future Oil Production," is online <A
href="http://publications.uu.se/abstract.xsql?dbid=7625"
target=_blank>here</A>. </P></TD></TR></TBODY></TABLE></FONT></DIV>
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