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| World Marketplace |
Fuel Fossils
Matthew Simmons with additional reporting by Daniel DelRe
08/01/2005
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As the federal government lurches toward a national energy policy, the debate
over if, how and where to drill for oil is quickly becoming futile. Politics
cannot change the natural lifecycle of oil fields, which mature and deteriorate
like a human body. The troubling reality is that many of the world’s primary
sources of oil are drying up. The Alaskan oil field of Prudhoe Bay, for example,
reached a peak level of production in 1979, only 12 years after starting
operations. Since then, Prudhoe’s oil production has declined steadily from
roughly 1.5 million barrels per day to 300,000, despite the intense use of gas
injections to force remaining oil to the surface.
This scenario is playing
out in parts of the world where the oil supply was once considered limitless. In
their prime, the North Sea’s largest oil fields—EkoFisk, Brent, Forties,
Statfjord, Gullfaks, Heidrun and Oseberg—each had a daily oil production
exceeding 400,000 barrels. But they have all peaked and are now in decline.
Forties and Brent, which peaked in the early 1980s, now struggle to produce 10
percent of their onetime maximum output.
| Peak oil threatens everyone, not just the most
highly industrialized societies that are most dependent on the
petrochemical industry. |
A Slippery Slope
The term “peak
oil” describes the point at which an oil field reaches its maximum level of
production. Once peak oil is reached, production in a given field may plateau
for a period of years or it may begin an immediate, terminal decline. Prudhoe
Bay, for example, maintained a peak production level for almost eight years. By
contrast, the Slaughter field in Texas began a precipitous decline in production
shortly after it peaked in 1973. Within seven years, its production had fallen
by 38 percent, or 500,000 barrels per day.
The problem of peak oil becomes
particularly clear when one considers that little more than 100 oil fields make
up almost half of the world’s supply. Within this group, the top 14 fields
account for 20 percent of the world’s oil supply, and on average, are more than
50 years old. Most of these fields are already in decline, and soon the rest
will be. In simple terms, oil consumption is rising dramatically just as the
energy industry’s ability to produce oil is peaking or even in decline, a
situation that will inevitably have a detrimental impact on global economic
growth.
Faced with declining production, energy analysts are gradually
awakening to the reality that global demand will continue unabated. In the past
five years alone, worldwide demand for oil increased at the same rate as in the
previous two decades—12 percent. This demonstrates that efforts at conservation
and fuel efficiency cannot suppress oil consumption. According to the
International Energy Agency, average global consumption will reach 86 million
barrels per day by the fourth quarter of 2005. Demand is expected to top 90
million barrels per day in 2006. The agency also forecasts a 13 percent demand
growth throughout the second half of this decade, with demand growth slowing
between 2010 and 2030.
Peak oil threatens everyone, not just the most highly
industrialized societies that are most dependent on the petrochemical industry.
In 2004, developing countries in Asia, Latin America, Europe and Africa nearly
matched the developed world’s daily consumption of oil. These countries
consumed, on average, 32.9 million barrels of oil per day, compared to 49.5 in
the 30 developed countries of the Organization of Economic Cooperation and
Development. Demand, it seems, is rising on all sides.
Unfortunately, without
better data, energy analysts cannot forecast the likelihood of an oil field
peaking. Consequently, energy industry leaders and policymakers will be unable
to predict the sequence of oil supply shocks that will inevitably rattle across
the globe.
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