Robin Mills, writing in the European Energy Review, explains why the "peak oil" debate has lost its relevance. The hydraulic fracturing and horizontal drilling techniques, which brought us the shale gas revolution, can now also be applied in oil exploration. There is now more than enough of "unconventional" oil to fill the needs in growing markets:
It's widely believed nowadays that global oil production is running up against
its limits. "The days of easy oil are over", we are told and we should brace
ourselves for an age of relative oil scarcity. The reality, however, is very
different. As more and more people within the oil industry have come to realize
in recent years, the world has plenty of oil that can be produced at competitive
prices for a long, long time to come. This means the world does not
face inevitable "energy poverty" and there is no reason to be afraid of
unavoidable "energy wars".
Antonio Brufau, the CEO of Spanish oil producer Repsol, told the World Petroleum
Congress in Doha in December, "The speed at which technology changes and its
consequences have taken us largely by surprise. The peak oil debate, for
example, has lost a great deal of its relevance in the past three years".
The key issue driving Brufau's confidence was the extension of hydraulic
fracturing and horizontal drilling techniques, the cornerstone of the US’s shale
gas revolution, into 'tight' oil production. With these technologies it is
possible to exploit low-permeability reservoirs which would otherwise not flow
oil at commercial rates.
It has been clear for many years that
'unconventional' oil from a variety of sources greatly outweighs 'conventional'
oil in volume. The issues have been cost, speed and environmental impacts.
Reuters columnist John Kemp observes that "As a practical matter, the supply of liquid
transportation fuels is unlimited at prices of $100 per barrel", pointing
to the potential of gas- and coal-to-liquids.
The US was the largest contributor to global supply growth in 2011 - an
additional 320,000 bpd outweighed the whole of OPEC. Canada came second. The
Energy Information Administration (EIA) in the US projects this pattern will be
repeated in 2012. Jim Hackett, chairman and CEO of sAnadarko Petroleum, has
suggested that North American oil output could double over the next 25 years –
probably an over-ambitious goal but one which would make the continent at least
self-sufficient. Citigroup estimates that by 2022, the US could be producing 3.5
mbpd and observes that, "The concept of peak oil is being buried in
North Dakota...We expect industry expectations to lag behind reality, just as
they did with shale gas for many years".
The doomsday prophets were wrong again. There is plenty of good, affordable oil and shale gas available to cover the world´s energy needs. Taxpayers´ money should not be wasted on ineffective, unreliable and expensive wind turbines or solar power. Their time may come, maybe 100 years from now, when they hopefully have reached the technical level that makes them competitive.