Yesterday National pollster David Farrar excitedly quoted from a George Monbiot article saying peak oil isn’t happening. Two problems: 1) Farrar omitted to quote the bits of the article, including the title, saying that the flipside of no peak oil would be runaway climate change. 2) the report Monbiot’s article is based on is a load of shit that basically predicts Iraq will stumble on endless cheap oil and we’ll all live happily ever after.
Monbiot’s article is based on the observation that, as a species, we have proven quite incapable of facing up to the fact of climate change, which is already upon us, and have failed to take measures to adequately reduce our carbon emissions. Indeed, 40 years after people started talking about climate change caused by human-caused greenhouse gas emissions and 20 years after we signed a treaty to get them under control, they’re still increasing!
The only, slim hope (if you can call it that) is that resource depletion will lead to rising prices so that the remaining hydrocarbons become too expensive to burn and research into clean fuels is spurred, eventually becoming the more economic choice. Either we ruin our climate, environment, and economy through climate change, or we run out of the cheap oil that drives our economy. Not exactly appealing alternatives but we’ve squandered our opportunity to choose differently.
Monbiot says that ‘hope’ that peak oil will ‘save’ us has been dashed by a report from an oil executive that says production will increase by 17 million barrels a day to 110 mbd in 2020 (the executive uses a wide definition of oil including stuff with low net energy density to say we’re currently producing 93mbd, when most sources, including the authoritative BP statistical review of world energy say 83mbd, really narrow definitions say 73mbd). This Monbiot, concludes, means that runaway climate change is inevitable because peak oil won’t ‘save’ us.
But wait one minute, who was the author of that report again? An oil executive? In fact, Leonardo Maugeri is a senior manager at Italian oil giant, ENI. Might he have a conflict of interest? Might it be exactly what you would expect to hear from an oil executive: ‘don’t worry, there’s plenty of oil! No need to go researching alternatives!’
Indeed, when you dig into Maugeri’s report, it’s a load of shit. The primary conclusion is that, despite world oil production having been flat for 6 years, barely budging in response to the biggest price signals for increased demand in history with oil price spikes every two years since 2008 (and one in 2005), we’re going to see a 20% increase in the next 8 years.
Now, the funny thing about oil production is it takes a long time to come on-stream. You have to find the stuff, starting with seismic and geological surveys, then exploratory wells. You have to get your production wells set up. You have to create some way of getting your product from the well to a refinery and then to market – pipelines, harbours, refineries. All this means that the oil explored for today won’t be coming into the market for 5-10 years.
So, we should have a good idea already of where all the oil is that is going to make up this massive ramping up in production over the coming 8 years. And it is a massive ramping up. 17mbd is more extra production than was added between 1988 and 2006 … and this is supposed to happen in 8 years … after output has flatlined for half a decade.
The biggest source of the increase is supposed to be Iraq, which is meant to triple output. OK, Iraq has, after 9 years, regained pre-war production levels, but to think that it could triple output in 8 years is just stupid. The amount of capital investment in such a short time that would be needed is off the charts. Even if the country remains stable-ish. And where are they going to get the skilled labour?
The other big increase is supposed to by 4mbd more from the US. This is based on the shale oil in the midwest (shale oil, also called tight oil, is little drops of oil solid in rock, shale, that can’t move unless the rock is fractured – hence fracking) . Yes, production from this source has increased sharply from virtually nothing to 500,000bd in recent years – but that’s not going to grow to 4.5mbd. There’s lots of oil in the shale but it won’t move easily and the fracking they use is only so effective. They get an average of 130 barrels a day per well. And the output from wells declines rapidly as the oil in the immediate vicinity is pulled out, meaning you have to dig lots and lots of wells ust to replace the exhuasted ones. It’s already soaking up all the US’s rigs and oil workers and clogging the pipelines that weren’t built with production in the midwest in mind. To increase production ten-fold in 8 years is just dreaming.
And isn’t it a sign of how hard oil is getting to come by that the one new source of oil to really open up in the last few years of record price spikes is this expensive, low-flow shale oil.
Both the Iraq and US shale oil examples point to a central realisation of the peak oil problem. It’s not that the oil doesn’t exist, it’s that it is too expensive (ie uses too much energy) to extract and the capital – including human capital – required to get evermore oil out of ever smaller and harder to access places just isn’t there.
So, the report is nonsense from a man with a conflict of interest. But the issue Monbiot raises is valid. There is still enough cheap hydrocarbon in the form of coal and gas that we can afford to fry ourselves before it becomes more economic in the capitalist model to switch to clean alternatives.
That’s why we need government leadership on emissions reduction. And why it’s a crime that our government, instead, is supporting Solid Energy’s plans to increase our emissions by 50% by burning dirty coal.
Finally, going back to Farrar. I just want to point out two logical disconnects.
First, Farrar says that “As the price of oil and petrol rises, it will both lead to investment in alternative technologies and lead to greater drilling in previously unprofitable areas.” – he says this after just quoting at length an article supposedly saying that peak oil, the cause of rising oil prices, isn’t happening (btw, saying peak oil isn’t happening is like saying you’re not going to die – it’s an inevitable fact of the system, only the timing is in question).
Second, if investment in alternative technologies is desirable it’s to mitigate climate change and Farrar claims to accept climate science (he just doesn’t think we should do anything about it because it will cost the rich money in the short-run). If you accept climate change and that, therefore, we’ve got to stop using hydrocarbons, how can you then turn around and enthusiastically endorse the Government’s pro-drilling policies?
I guess it requires not thinking about it too hard.