Peak Oil Chat

The leakage of millions of barrels of crude oil in the Gulf of Mexico, reportedly caused by something as simple as defective instrumentation, is an admonition to the “Peak Oil” situation. With drilling companies going after such deep oil reserves, it sheds light onto what kind of reserves we really have left to exploit. Now, the focus of this article is to answer the question, what does the term “peak oil” mean? And how is it going to affect the world population?

Peak oil is a theoretical point in time that refers to the maximum global oil extraction. The concept can be shown graphically by plotting crude oil production against the respective time variable and extrapolated with exploration data and known reserves, then the maximum point shown on this curve will predict the date where production will begin to fall, and this will be the true “peak oil”.  According to Marion King Hubbert’s famous “Peak Theory” production of non rerenewable energy sources all must follow such a bell shaped curve.
 
In 1958, Hubbert extrapolated the data he had on hand, and came to two dates for such an event to occur. The dates were provided by M. King Hubbert in his paper published at a conference held by the American Petroleum Institute, in Texas, indicted that the world may in fact reach a global peak around the year 2000. Although he was not very accurate in this prediction, he did accurately predict the United State’s peak in production to occur in 1970.

There are some misconceptions regarding the phrase “peak oil”. Peak oil does not mean a total annihilation of all petroleum from the world; rather it refers to a situation that will be immediately followed by rapidly dwindling reserves, and global oil production will be in a continual declining oil production stage. On the upslope of the curve, oil is easy to find and extract. On the downslope, oil is scarce, expensive and difficult to extract.

In view of the current economic booming in Asian countries such as China and India, where insatiable consumption of crude oil has increased the global demand and price per barrel many times will only cause the peak oil situation to occur much earlier than predicted by economists and geologists.

To fully understand the gravity of the situation, we should observe the current situation of oil reserves throughout the world. According to energy experts, approximately 90-92% of the world’s oil reserves have been found already. For the remainder of the undiscovered wells, many intense searching operations are going on. In the year 2000, there were 8 “giant” fields discovered. However, only one was an oil field, the rest were gas producers. Therefore, with each year’s passing, the chance of finding of new oil wells to replace those that have been depleted is getting smaller and smaller. In 2003, oil companies had invested $8 billion in exploration, to which the outcome was merely $4 billion of oil reserves. Furthermore, the yearly increment in expenditure of oil expedition and new oil production establishment has increased to nearly 15%. So far, with present equipment, one can expect to extract about 40% of a field’s proven reserve from a well. However, the current economic meltdown and oil price hikes are further threatening the production rate of oil producers.

Saudi Arabia is the largest oil producing nation in the world, with 73% efficiency in recovering oil from their reserves. Due to their large production volume, Saudi Arabia always acts as an instant supplier of oil in acute demand situations. This is why they are known as a “swing” producer. However, most of the oil extracted in Saudi Arabia comes from 5 mega oil wells. The data published in over 200 research papers over the last two decades on the condition of their different oil fields indicates a suspicion of their reserves are declining, and are no longer able to supply the oil needed in such high demand situations to keep the oil price in check. To cope with dwindling reserves, the Saudi authorities are using different short term techniques such as pumping huge amounts of sea water in the wells, but this will only deteriorate the condition further in the near future.

Oil Reserves and Economic Growth
Recent research has revealed a yearly 3% decline in global oil production. In a situation like war, or natural disaster this can increase to 10%. With this kind of huge deficit, any oil based economy cannot sustain itself much longer. As maintained earlier, the massive economic growth in countries like India and China consumption of oil is increasing nearly day by day. Population is another factor that vastly contributes to oil consumption rates. If the current 4% growth rate of the world’s population continues with no change in living standards, in nearly 60 years a 100 fold increase in economic growth will be observed. This, combined with already depleting oil  reserves, one is left pondering how such economic growth could be attained, and it is a difficult question to answer. As a matter of consequence of oil depletion, a huge rise in inflation will be observed. An enormous difference between supply and demand in every sector of life like food, medicine, shelter, water, electricity, household goods, etc will have a huge negative impact on economic growth. As a result, it will be expected that a significant slide in stock markets downward, closing of banks, massive layoffs and closure of landmark companies will occur, to start. Hence, the bottom-line is, with such scarcity of conventional oil, and the dependence not only of industry, but even more importantly, that of agriculture; the ability to feed the planet will be effectively destroyed due to its utter dependence on cheap, plentiful oil. The whole of humanity are poised to be plunged in deep trouble.

Potential short term solutions to mitigate Peak Oil
Oil, being a fossil fuel, there is no way of recharging the oil wells. The use of alternative sources of energy or oil extracted from other means, is the best possible option to cope with such a situation. However, the production of oil from unconventional sources is quite laborious, significantly costlier, and generally hazardous from environmental point of view. Moreover, the calorific value of that oil is also not so high, as well as the energy returned on energy invested is also lower, so the use of unconventional energy sources is counter-productive from both an economic and environmental viewpoint.

Coal, which is also a fossil fuel supposes to be the best substitute of crude oil as a short term solution. It’s abundance in various types with different calorific value is quite satisfactory. Although the burning of coal hugely contributes to air pollution, no one will ignore coal as a potential replacement for the decline in petroleum production.
Natural gas is already widespread in use as energy source, but the limited availability of it is a significant drawback. Nuclear power resources are now contributing only 3% of total energy supply of the US. It’s main problem is its high cost and an initial phase of 10 years of initiation on new power plants. There are also various safety measures needed to set up an atomic reactor for the production of such energy, and many more to safely dispose and store the nuclear waste generated from such facilities.

Solar power produces a decent amount of energy. Photovoltaic cells convert the photons of solar resources into energy, but for large scale energy production, a significant improvement in efficiency is needed. Even if such efficiencies were attained, building such panels are incredibly energy-intensive, and also dependant on other very limited natural resources. Solar panels could simply not scale up to the needed amount.
“Green” energy derived from biodegradable sources, or from wind, hydroelectric are recent additions in the alternative sources of energy. Biodiesel derived from biodegraded materials has a high calorific value, almost 2 times higher than ethanol. But the technology used in current automobiles does not allow use of biodiesel as fuel supplement.

Summary
Because most of the world’s oil production is on the verge of peaking and going into terminal decline, the careful and wise use of petroleum must be undertaken to restrict the inevitable situation to some extent. If oil consumption is left unchecked, at such a time when oil peaks, practical research on the usages of alternative energies will be far too late and nothing will be able to mitigate the collapse of civilization because of its utter dependence on fossil fuel.