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| A panel of experts discussing ‘Peak Oil’ at a WPC roundtable |
A number of experts at the World Petroleum Congress (WPC) yesterday said that peak oil production will not be reached any time in the near future, but demand for oil and gas must decline in the coming decades if energy prices and population sustainability are to remain stable.
The peak oil theory, developed by geoscientist Marion King Hubbert, says that oil production roughly follows a bell curve, and that once oil production reaches its peak, it will shortly begin a terminal decline down the other side of the curve as dwindling resources are consumed.
At many points in the last century peak production has been estimated to be only decades away, however new discoveries and technological innovations have shifted the curve further down the axis.
Marco Rasi, Vice President, Asia Pacific/Established Areas, ExxonMobile Development Company, said: “Many of the assumptions that underlie peak oil theory in its many forms are really unfounded because they do not take into account the role of technology.
“Technology makes it easier to afford and more economically viable to find and produce hydrocarbons. Estimates of global endowments of hydrocarbons are around 4tn barrels of oil, of which three are conventional oil and 1tn is in heavy oil and oil shale. Since the beginning of the industry, only 1tn barrels have been produced.”
On the question of whether or not peak oil will arrive in the coming years, the response of Total CEO Christophe de Margerie was simple: “There will be sufficient oil and gas and energy as a whole to cover the demand. That’s all”
He said that what is important is how we view the future of the energy mix, including nuclear and renewable energy sources, as well as environmental conservation.
“Even using pessimistic assumptions, I cannot see how energy demand will grow less than 25% in twenty years time. Today we have roughly the oil equivalent of 260mn barrels per day (in total energy production), and our expectation for 2030 is 325mn bpd,” de Margerie said.
He estimates that fossil fuels will continue to make up 76% of the energy supply by 2050. “We have plenty of resources, the problem is how to extract the resources in an acceptable manner, being accepted by people, because today a lot of things are not acceptable.”
The challenge is to find a way that is acceptable rather than simply ruling it out, whether it is using nuclear technology or exploiting oil and gas resources in environmentally sensitive areas.
De Margerie said that if unconventional sources of oil, including heavy oil and oil shale, are exploited, there will be sufficient oil to meet today’s consumption for up to 100 years, and for gas the rough estimate is 135 years.
Qatar Petroleum International CEO Nasser al-Jaidah said that between 2007 and 2009, for every barrel of oil produced, 1.6 barrels have been added to reserves, although another expert earlier pointed out that oil is being consumed four times faster than the rate of discovery.
The experts were clear on the fact that technology has an important role to play in accessing hydrocarbon reserves, fully exploiting available resources and improving the efficiency of current fossil fuel use.
Rasi explained that deepwater drilling was considered too expensive and technologically challenging a few decades ago, but now it is a major source of oil and gas as companies look to exploit deepwater reserves in the Arctic region.
Al-Jaidah pointed out that digitalised exploration and management of oil fields can help recover almost 9% more of the world’s deposits.
Advances in LNG, shale gas, oil shale, enhanced oil recovery and in oil sands exploitation will also make similar contributions to overall production, although at greater cost and possibly environmental damage due to the relative difficulty of extraction.
Frontier Basin Oil and Natural Gas Corporation general manager Narendra K Verma said: “In the middle of the 19th century, 50 barrels were produced per barrel used for extraction, now only five barrels are produced. Obviously, lower ratios for production costs mean that extraction would no longer be economically viable.”
Rasi said that innovation also improves energy efficiency to “make our barrels go farther. Projections around energy efficiency say that the growth in consumption of hydrocarbons over the next three or four decades will be less than half of the growth in global gross domestic output because of advances in energy efficiency.”
However, de Margerie pointed to an International Energy Agency estimate that said investment of $100bn is required per year to keep Opec countries producing at current levels, and that approximately 40mn barrels per day of new production will be required to meet demand by 2030.
Around 20% of oil reserves are unconventional reserves, while for gas the figure is around 49%, which means that higher costs are to be expected to for production, as well as higher degrees of unacceptability for people due to environmental considerations.
De Margerie said that while there are plenty of reserves to meet demand, demand for oil and gas must be replaced by alternative energy sources in order to prevent high energy costs and the inevitable volatility and instability that come with it.
“Government can play a key role in helping industry meet future energy demand by allowing access to new resources, by enacting sound policies and by creating stable and reliable environments for investment which will attract new investment capital,” said Rasi.
He sited Qatar as an example of “a government that has implemented marketplace strategies that have led to sustained growth and investment in capital projects that are transforming the energy markets and are promising to transform the lives of millions of people, both in Qatar and around the world.”
He said that the challenge is not scarcity but commitment to investment and partnerships between stakeholders.
