"Peaking of World Oil Production:
Impacts, Mitigation, and Risk Management" now referred to as
the Hirsch Report was sponsored by the National Energy Technology
Laboratory of the Department of Energy. Robert Hirsch is the
Project Leader for the Science Applications International Corp.
Also read a second report published in Oct 05 by Robert Hirsch and
sponsored by DOE titled "The Inevitable Peaking of World Oil
Production"
Here is the link for the full report.
http://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf
Click Here for Oct 2005 Hirsch report titled "The
Inevitable Peaking of World Oil Production" Very Important
Report and worth reading. This is a shorter version of the
report published in the Bulletin of the Atlantic Council
Click Here for Flash version of Dr. Hirsch presentation
Following is a summary of the
report:
"Peaking" is the point where
production reaches its max and begins to decline, whether we are
describing a single oil field or the world's oil fields as a whole.
Peaking is a reservoir's maximum oil production rate, which typically
occurs after roughly half of the recoverable oil in a reservoir has
been produced. This concept is important because satisfying
increasing oil demand not only requires continuing to produce older
oil reservoirs with their declining production, it also requires
finding new ones, but we have declining finds for the past 30plus
years.
- The peaking of world oil production
presents the U.S. and the world with an unprecedented risk management
problem.
- To manage the problem we face we need
10-20 years of accelerated efforts including conservation.
- Peaking will result in dramatically
higher oil prices
- Time table of peaking is unknown but
many studies and experts believe we are in the decade that will see
"peaking", some predicting peaking before 2010.
- The problem of the peaking of world
conventional oil production is unlike any yet faced by modern
industrial society. The challenges and uncertainties need to be
much better understood. Timely, aggressive risk management will
be essential.
The Hirsch Report asks the following
question: With a history of failed forecasts, why revisit the issue
now of world oil shortages. Here is their answer.
- Extensive drilling for oil and gas
has provided a massive worldwide database that is much more
extensive than in years past.
- Seismic and other exploration
technologies have advanced dramatically, nevertheless oil reserves
discovered per exploratory well began dropping worldwide over a
decade ago. (see charts at bottom of page)
- Many credible analysts have become
much more pessimistic about the possibility of finding the huge
reserves needed to meet world demand.
- Because oil prices have been high
for the past decade oil companies have conducted extensive
exploration, yet results have been disappointing. This is but
one of a number of trends that suggest the world is fast approaching
the inevitable peaking of oil production.
Following is a summary of what the
Hirsch Report has to say about Natural Gas.
A dramatic example of the risks of over-reliance on geological
resource projections is our experience with Natural Gas. N. Gas
supplies roughly 20% of the US energy demand and was plentiful at real
prices of roughly $2/Mcf for almost two decades. It is now at
$14/Mcf.
As recently as 2001 credible groups,
(National Petroleum Council (NPC), Cambridge Energy Research
Associates (CERA), and the US DOE Information Administration, were
predicting huge increases in Natural Gas Production over the next decade.
But 5 years later these groups and others have changed their
predictions dramatically.
- CERA now is saying because of
disappointing drilling results they have revised their numbers.
Gas production in the US now appears to be in permanent decline
- Raymond James & Associates finds
that "natural gas production continues to drop despite a 20%
increase in drilling activity since April of 2003.
- Lesson Learned? - High prices do
not a priori lead to greater production. Geology is the
limiting factor.
The Hirsch Report has a large section
devoted to Mitigation Options & Issues.
Conservation
is at the top of the list of options.
Following are three charts that lend
credence to the idea that Cheap Oil is a thing of the past. The
first chart represents Oil discoveries in billions of barrels.
The second chart from the Hirsch Report overlays production with
discoveries and as you can see we began producing more oil than was
being discovered in the mid 1980's. The last chart shows that
the decline in discoveries continued even though there was
unprecedented drilling during the 1980's. I (James) added the
first and last chart to clarify the second chart found in the Hirsch
Report. These charts
represent a very sobering view of world oil production.
Oil Discoveries in
Billions of Barrels 1930-2005
This chart, not part of the Hirsch Report but available on many oil
statistic websites shows the oil discoveries in Billions of Barrels
over the past 75 years. The big spikes are: late 30's
Texas, late 40's Saudi Arabia, last tall spike in early 70's is the
North Sea.
Oil Discoveries minus Production, we started using more that we
discovered in the mid 80's
This chart, from the Hirsch Report and
found on many oil statistics websites, shows production and consumption
combined. As the chart shows for years the worlds oil companies
found more oil than they were producing. But the picture goes into
the red in the mid 80's. From that time to present we are using
more oil than oil being discovered.
Same chart with Drilling Overlay, Yellow line = drilling.
More
drilling worldwide did not stop the negative numbers. This is the
same chart as above but also showing the feet of wildcat drilling for
oil. This chart is used by many to show that more exploration
world wide did not stop the numbers from remaining n the red. This
chart is used by many experts to validate the notion that we have passed
the era of cheap oil.
