Wednesday, April 27, 2005

The Oil Drum

I have been very reluctant to talk at all, if ever, about Peak Oil. Anybody who is serious about oil knows that conventional oil production will peak soon. Soon depending upon definition, because while the most pessimistic estimates suggest that peak oil is here NOW, the most optimistic estimates suggest that the peak is probably thirty years away. Most reasonable estimates, in my opinion, indicate that sometime during 2015-2020 period, we will reach a plato in terms of out production at around 95-105 million barrels per day of oil, before some decline in production could be expected. Remember that the current production levels are at around 83 +/- 2 million barrels a day.
The Oil Drum has started to blog about the peak oil issue in a much more serious way.
Unlike some, I do not believe that peak oil is going to be the end of the world as we know it, but it is a fact that we cannot ignore either. Business planning for the long term must realise that. Where will the rest of our "oil" supplies come from? Tar sands in Alberta? Heavy oil in Venezuela? Oil shale in the US? At what cost hurdle does it make sense for producers to ramp up the investment in unconventional oil? Will they do so in time? What will be the effect of carbon pricing on this? Will options that did not seem very attractive until recently, will suddenly start to appear as decent long term bets? What is the time scale in which we can turn over the stock of the existing transportation energy supplies? These are not trivial questions; they do not have easy, simple answers, but I believe that they deserve our attention. Of course, I believe that the best course of action is to start paying attention towards reducing the rate of growth of our demand, but that will not solve the problem and we will have to supply side options as well.


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