Peak Oil, Not

Do you remember the many predictions in past years that oil production has peaked world-wide and we will soon deplete this natural resource? M. King Hubbert, a petroleum engineer with the Shell Research Lab, developed his theory of Peak Oil  in 1956, predicting U.S. production of oil would peak between 1965 and 1970 and thereafter continue to drop. The Oil Crisis of the early 1970s gathered many followers of Peak Oil and many true believers remain today as the many website that support the theory attest.

Peak Oil aficionados have produced a series of new predictions over the years, each failing to produce useful results for two obvious reasons. First, the supply of oil (and thus the price) is often manipulated for political purposes. No surprise there. Second, the theory fails to take into consideration advances in technology. New drilling techniques allow recovery of petroleum and natural gas that were previously inconceivable and will continue to do so. The steadily increasing amount of oil being produced today demonstrates the uselessness of the peak oil theory.

The Peak Oil lobby still has quite a lot of political power. As late as 2011, UK ministers were (over)reacting to predictions that a drastic reduction in oil production was coming soon and the UK economy would tank by 2015. In the U.S., A study released in mid-November by the University of Maryland made the news with its dire prediction that U.S. oil production has a “significant” risk of peaking as soon as 2020 and a “production peak for conventional oil [is] likely before 2030.” A closer look at any of the persons or groups that produce these dire predictions finds the presupposition that burning oil is something we shouldn’t do, for any number of reasons. Instead of predictions, let’s look at some facts about U.S. oil production.

The U.S. Energy Information Administration (EIA) reported on U.S. oil reserves in August of this year. Since 2008, the “proven reserves” of petroleum rose from 20.6 billion barrels to 29 billion in 2011. Proven reserves are those that is economically recoverable at current prices using current technology. As technology improves, so will the recoverable oil reserve estimates.

Rising reserves are found globally. A recent report (late October 2013) by the World Energy Congress concluded that “there is a greater abundance of energy resources in the world today than at any other time, and if properly managed, the reserves are sufficient to meet even a significant upturn in demand for decades to come.” The report states that global crude oil reserves today are almost 25% larger than in 1993 even with the 20% increase in production that has occurred. The reserves “could be quadrupled if unconventional resources such as oil shale, oil sands, extra heavy oil, and natural bitumen are taken into account.” Tapping these resources is more a political problem than a technology problem.

Reserves are rising and so is production. In the U.S., the EIA announced in early November that petroleum production averaged 7.7 million barrels per day and that net oil imports had dropped to the lowest level since 1991. The EIA also predicted that oil production is expected to rise to 8.5 million barrels per day in 2014.  North Dakota’s Bakken field alone is expected to hit the 1 million barrel per day milestone in December. A decade ago, North Dakota was an economic also-ran. Today, the state’s gross domestic product exceeds the national average by 29%.  At the rate petroleum production is rising, the U.S. should become completely self-sufficient in 20 years.

The EIA predictions are all the more amazing because of the roadblocks the federal government has placed on oil production during the past few years. The Congressional Research Service, in March, reported that the boom in oil production was the result of production on private land. “All of the increase from fiscal 2007 to fiscal 2013 took place on non-federal lands, and the federal share of total U.S. crude oil production fell by seven percentage points.” In North Dakota, a drilling permit can be obtained in about 10 days, on federal land, between 2006 and 2011, the time increased from 218 days to 307 days.

The benefit of oil and gas exploration and production to the economy of the U.S. by the end of 2013 is predicted to reach one billion dollars a day, rising 1,300 percent, from $70 million per day in January 2010 to $900 million in April 2013. .

With the dropping price of gasoline at the pump, the White House couldn’t resist taking credit where none is due. Dan Utech, the White House global warming czar said, “The actions that the President Obama and his administration have taken to reduce our reliance on foreign oil play a significant role in this story [dropping gasoline prices].” I suppose this political “gas” is just another petroleum production byproduct.

–Dr. Robert Peltier, PE is POWER’s consulting editor