|By Perry Arnett|
There must be a way of knowing how much oil currently exists in the world. The technical answer is long and convoluted, but here is a somewhat straightforward explanation.
Natural resource discovery values are reported as statistical probabilities. For example, I could say there is a "P5 chance" that you have one barrel of oil in your bathtub -- and that could be a true statement; or I could also say there is a "P95 chance" that you have 1,000 barrels of oil in your bathtub -- and that could be taken to be a false statement; or I could say there is a "P50 chance" that you have between one and three barrels of oil in your bathtub -- and that could be either true or false, depending upon the facts.
The point is: which P number does the geologist report to his boss? And which P number does his boss report to his boss?
They will usually say something like "there is a 95 per cent probability of there being one barrel of oil in this new discovery; and there is a 5 per cent probability of there being 789 gazillion barrels of oil in this discovery, and there is a 50 per cent probability of there being 100,000 barrels of oil in this discovery."
What happens is, a geologist finds the oil; he reports it to his boss and inflates the projected size of the discovery by some small percentage to make himself look good (just human nature). The boss then passes the geologist's findings up the ladder, adding a small percentage to make himself look good; and so it goes, being repeated until the numbers are published by the oil company, which is hoping to sell more stock, so the ad agency inflates the numbers some more. On the other hand, for some strategic reason, they may report numbers as less than they really are.
Following that through the line of reporting and fudging and reporting and fudging, which aggregate number is it that got reported in the text books we all read in high school?
At this point, with perhaps 100 years worth of fudging, no one knows how much oil really is there to be extracted. Witness the recent announcement by Royal Dutch Shell Group that they had been telling the world (forever) that they had 20 per cent more oil reserves than they now admit they really have; and a more recent announcement by El Paso Gas of a 41 per cent reduction (no less!) in its proven reserves.
So the only way to really know how much oil there really is, is to backdate the production numbers from each and every well and sum the totals.
The problem with that is that all companies, and all nations, fudge the numbers (up or down) for various reasons: competitive advantage, national security, finance, stock sales, etc.
So, the lesson is that no one knows how much oil there ever really was in the ground, and no one knows how much oil has been taken out of the ground, so no one knows how much oil is left in the ground! There are numerous estimates, but no hard facts.
What most everyone does seem to agree with, however, are these assumptions:
1) Oil is a finite resource.
2) As oil is extracted from the earth there is less of it remaining.
3) The earth's crust can only contain so much oil.
4) The geology of how oil is formed and where it is trapped suggests that most of the oil in the earth's crust has already been found.
5) Oil began to be exploited, generally, in about 1860.
6) Taking all the best guesses since that time, about half of the assumed oil in the earth has been used, leaving about half the oil in the earth yet to be extracted.
7) The problem with #6 is that the world's oil-consuming population is increasing so fast (e.g. China and it's associated auto industry) that the half remaining will be used in roughly one-fifth to one-eighth the time it took to use the first half. So while the slope going up was difficult, but gentle; we can expect the slope going down to be steep and torturous.
8) There are folks all around the world who glean every report from every oil company and government and wildcatters and roughnecks, trying to put one more decimal place to the numbers. So while it can be stated fairly accurately that no one knows how much oil there was, or is, or remains, the best informed estimates (because they are so diverse) are probably not too far from reality.
9) If you then throw in factors like Iraq, where no one knows how much oil was extracted during the past 15 years or so, and no one really knows how much oil there was to begin with there, it makes the suppositions of some begin to ring true that there may have been far less oil under Iraq than most originally thought, and that more of it may have already been exploited than most originally thought; so you may find (in the future), that Iraqi oil was not worth the war to get it!
10) The extraction/production of most natural resources can be generally plotted by imagining a standard parabolic curve where initial extraction begins at zero on the left, gently rises over time to the right until reaching a "peak", then gently falling over time until reaching zero again. This is called the "Hubbert Curve" or "Hubbert Peak" after the geologist who discovered it. If it looked as I have described it, it would be symmetrical. But in the real world it is not. Rather, it is up and down as extraction activities rise and fall. Thus, one definition of the peak of oil production is that time when about half the oil that there is has been extracted, leaving about half the oil remaining to be extracted.
Why this is so important to examine
While new discoveries and increasing production were possible, growth was possible. When energy resource discoveries peter out and production tops out and begins to decline, everything else in life dependant upon energy has to decline with it. So "peak oil" is a point that takes on an importance barely understood by most. That's why its placement in time is so eagerly sought after.
It is the opinion of some of us that we passed "peak" by 1999/2000; some say 2000; others say 2003; others say 2007; the USGS says 2030. The most optimistic estimates are dire, so the least optimistic estimates are perceived as being cataclysmic. Take your pick.
When I see what I see on the international economic scene, I am left with no sense other than that the peak of world oil production has probably already passed. I seem to be in pretty good company since such knowledgeable people in the field as Deffeyes and Heinberg and Goldstein and Duncan and Simmons and Bahktiari all seem to have the same view.
But the point of peak oil is not so much when it occurs, but rather the effects on our lives after it occurs. For example, my granddaughter is one year old. She would normally graduate from high school in, say, 2020 (16 years from now).
The natural gas "cliff" will hit 2007-2010. Because natural gas production is largely self-pressurized in the well, when a natural gas (NG) well quits, it is usually sudden and without any previous signals -- unlike an oil well where there are signs in advance of its depletion that it is beginning to "go dry". Thus the end of NG is described as being a "cliff" rather than a "peak".
As the NG cliff is reached, electricity generation will be the first to be affected. And with that will go primary industries like mining, smelting, metal fabrication and the like. Witness the shutting down already of aluminum smelters in the Pacific northwest, and fertilizer and ammonia production facilities all over the world -- due to electricity costs/availability.
The first major effects of oil peak will have occurred, some of us deem, by about 2012 -- just a few years after the NG cliff. The availability of electricity in the U.S. will soon be on a par with electricity availability in, say, China or Ukraine now: spotty, rationed, rolling blackouts, and less and less of it each month, until, some day soon, say 2010 to 2015 or so, the Internet will go down and never come back up. Some time after that, about 2015 to 2020, the U.S. electrical grid will go down and never come back up.
As soon as those two events occur, life as we know it will have been changed forever.
All chemical processing, petroleum refining, mining, agriculture, auto manufacturing, all telcom-driven international credit, finance and banking will cease. (By "all", I mean such a large percentage of the existing activity as to call it "all" for our purpose here.) Auto manufacturing will have ceased by about 2012-2015 (there being either or both no gasoline with which to drive them and little electricity with which to make them). Used SUVs may be selling for a loaf of bread or a pound of sugar by about 2015. By about that same time, there will probably be no air travel except for very high muckymucks in government and planes in the sky will become such a rare sight, people will step outside and point up at them again.
Most schools and universities will have closed by about 2017-2020 -- no heat, no lights, no money for teachers, no internet, no need. Roads and freeways will have been so unmaintained that by about 2013-2016 they will be effectively useless.
Elevators in most buildings will have stopped running by about 2012-2115, making commerce, insurance, banking, pensions, annuities, bond, commodity and equity markets dysfunctional.
I've left out the obvious "resource wars" (oil, NG, water, chrome, molybdenum, etc.) currently, and soon to be "coming to a theater near you".
Y2k was the perfect reverse analog to the future. Why? Because all the stuff that might have happened didn't. And this is the reverse of what lies ahead. Why is that? Y2k didn't happen, largely, because things were fixed or remediated in time. But there is no remediation for a dry oil well. There is no remediation for a dry natural gas well. There is no remediation for the loss of the cheap, readily available, high content energy sources the world has been living off for the past 150 years. When they are gone, they're gone. And most of our lifestyles with them.
So what should my daughter be teaching her daughter as skills necessary for survival, and a high quality of life, for life after 2020?
|Perry Arnett is a semi-retired inventor/musician/machine designer/manufacturing consultant who studies the current threat to the world from his home in Cedar City, Utah.|