re-Hubbert's Peak

From: Kenneth Piers <>
Date: Fri May 28 2004 - 13:50:38 EDT

A colleague on sabbatical shared with me the following message:

In case you have not seen this, there is a good article in the latest issue of
Science. The writer argues the case against the Hubbert analysis.
Hope all is well with you

I thought I would share my response to him with the ASA list: (the article
referred to is the de Maugeri Policy Forum "Never Cry Wolf..," Science May 21,

Hi Roger: Yes, thanks, I have seen this piece and others like it. I have also
read quite extensively the USGS 2000 predictions (they are really 50%
probability guesstimates of oil reserves). Maybe all of this is true. If it is
true that there remains 200% more oil to be recovered than we have already
extracted, the key question is where is it? The USGS points to about 650 Bbbl
of "reserve growth" from existing fields, which I think is very optimistic.
This guess is based on the experience in US fields, where fields have produced
significantly more (on average about 40% more) oil than was first estimated.
The improved recovery is largely due to better technology - improved seismology
so we can find smaller pools of oil, and secondary/tertiary recovery methods
which were nowhere on the horizon when the US fields were initially put into
production. It seems unlikely to me that more recently discovered fields in
other parts of the world will have the same "reserve growth" experience,
largely because they already have been the beneficiaries of most of the newer
technologies - for example the Ghawar field in Saudi Arabia - the KING of all
oil fields, now into its 6th decade of production - is well into its secondary
recovery phase to sustain sufficient pressure to produce oil.
The USGS also predicted that an additional 700 Bbbl of new oil is discoverable
in the 30 year interval form 1995-2025. We would need to average discoveries of
about 25 Bbbl of new oil per year to find this much. Assuming that we would be
smart enough to look in the most likely places first, we might expect that the
early years of this 30-year cycle would feature the bulk of the discoveries.
But from 1995 to the present new discoveries have averaged less than 10
Bbbl/year. So where is this new oil? Either we are not looking (which de
Maugeri seems to believe) although, at current prices, it seems hard to believe
that US companies would not be looking if such oil fields exist somewhere as
USGS alleges; or we are looking in mainly the wrong places which is hard to
believe given current seismographic knowledge; or we are looking but not
finding much - which seems most likely to me. No one has found a super-giant
oil field or even a giant oil field (a giant field is capable of producing a
Mbbl/day or more) for over 20 years.( Possibly ANWR has a giant field).
So now suppose that the USGS is correct and all this reserve growth is
possible and new oil will be discovered at the rate it claims. Does that mean
oil supplies are plentiful? I think not for several reasons. First, oil demand
is expected to grow significantly into the future, especially as China and
India realize that the way to grow an economy is on the foundation of available
energy on not on human labor. Today the world uses oil at the rate of about 27
Bbbl/yr; by 2020 the estimates (US-EIA) are that demand will be about 40-45
Bbbl/yr. So we not only have keep up current production (which already seems
challenging) but we have to grow production by about 3% per year for the next
16 years. Second, there is a problem with physics when it comes to reserve
growth oil production . Reserve growth will come from old fields that have had
nearly all of the "easy" oil removed. Recovering the reserve oil must
necessarily take place at a much lower rate than the early oil in order to
preserve sufficient well pressure. In secondary recovery efforts generally some
kind of fluid (usually water) is pumped back into the well to replace the oil
that is withdrawn in order to maintain well pressure. As more and more oil is
replaced by water, a greater fraction of the fluid that is pumped up is not oil
but water - eventually you are pumping mostly water and the well needs to be
shut down (apparently in the Ghawar field in Saudi about 30% of the fluid now
being pumped out of the ground is water) So there is a serious question of
whether we can produce reserve-growth oil at a sufficient rate so as to avoid a
peak in world oil production, especially in a regime of rising demand. I think
it will be very difficult to actually achieve this.
What about new oil? Some of this will come from Middle East and Caspian
fields, no doubt, although whether we will still have access to these resources
remains to be seen given the rising level of hatred toward the US worldwide and
especially in the Middle East. And although the claim is that these regions
have many new fields that have already been discovered but are not in
production, that claim is open to question. No one knows really how much oil is
producible from such alleged fields. Matt Simmons
( has published a study of the
Saudi Arabian oil picture and it raises real questions about whether Saudi
actually can produce as much oil for as long as it claims to be able to. It is
almost certainly true that nearly all of these fields will be smaller ones -
not super giants for sure and maybe not even giants. Still such oil will no
doubt be welcome.
The USGS expects other new oil to come from more difficult and inaccessible
places (the deep ocean bottom - 0.5-3 miles below the surface instead of the
coastal shelf; places like the Arctic (ANWR, Siberia); off the NE coast of
Greenland, etc. Such places will inevitably require the input of a great deal
of capital and energy in order to produce the oil -assuming that it is there.
At this point the EROEI (energy return over energy invested) question becomes
crucial. As the oil industry becomes more and more mature this ratio has been
declining steadily. In the US the ratio is now about 2/1 for the lower-48 oil
fields. Extracting oil from these difficult places will undoubtedly have a
relatively low EROEI even in their most productive phases and this ratio is
likely to fall to near one rather quickly. So if we are using oil energy to
produce the oil from such places, you have to wonder how long it will be before
we need to quit producing oil simply because the EROEI is one or less than one.
This same issue looms for unconventional oil sources such as the Alberta tar
sands, oil shale and Venezuelan heavy oil. I have read that the EROEI for oil
now being produced from the tar sands in Alberta is less than 2/1 - closer to
1.5/1. If that be true (and I don't doubt that it might very well be true)
then, unless there is a tremendous break through in tar sands technology, such
resources will never be a very significant oil resource for the world - maybe
not even for Canada. The 300 Bbbl of so-called recoverable reserves that exist
there all of a sudden become only 100 Bbbl of net oil. And again the question
of rate of production becomes very significant - currently only about 750
Kbbl/day I believe. Can this oil be produced rapidly enough to be a significant
player on the world picture? None of this even addresses the question of water
demand and environmental devastation that mining and processing the tar sands
entail. And as far as we know there is no reasonable commercial process for
obtaining oil from the US oil shales. So I am not sanguine about relying on the
existence of such resources for our future energy supply. And talking about the
tremendous amount of petroleum such resources contain is, in my humble opinion,
 simple throwing dust into the air to keep us from seeing the real picture in
world petroleum.
I realize that simple application of Hubbert's method to the world oil
situation does not work well for many reasons. But this does not imply that
future oil supply is not a problem. I think it will be the central problem that
drives American and World issues in the next decade. And pretending that it is
not a problem, as de Maugeri, Adelman, and others do, does not make it less of
a problem either. The question is "what is real"? And the answer to that is
"only time will tell". In the meantime we need to do our best to read the signs
of the times - which is what I am trying to do as best I can.
All of the foregoing does not even touch on the supply problems that the US
faces with respect to natural gas, which in some regards are even more critical
than those of oil. But that is another story.
Sorry for the long rant.
I hope you are doing well - and I am eager to see you back in our department.

Ken Piers

"[We are all creatures of faith. As such] we must either choose to be
religious or superstitious; to believe in things that cannot
be proved or to believe in things that can be disproved."
Wendell Berry

Received on Fri May 28 16:07:29 2004

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