Where 'Peak Oil' Meets Climate Change
AAPG, IEA, KPMG And Shell
All Issue Global Energy Warnings
www.nlpwessex.org/docs/energyjuly07.htm
World Risks Turning To Higher Intensity CO2 Fuel Sources
As Conventional Oil Fields Enter Decline And Iraq Invasion Fails To Deliver

"The chief executive of Royal Dutch Shell today calls for a 'reality check'. Writing in The Times, Jeroen van der Veer takes issue with the widespread public opinion that green energy can replace fossil fuels. Shell’s chief gives warning that supplies of conventional oil and gas will struggle to keep pace with rising energy demand and he calls for greater investment in energy efficiency. Instead of a great conversion to wind power and solar power, Mr van der Veer predicts, the world will be forced into greater use of coal and much higher CO2 emissions, 'possibly to levels we deem unacceptable'.....Mr van der Veer casts doubt today on the oil and gas industry’s ability to keep up with accelerating demand. 'Just when energy demand is surging, many of the world’s conventional oilfields are going into decline,' he writes. Although there is no shortage of oil and gas in the ground, Mr van der Veer says, the industry currently lacks the technology to recover even half of that resource."
Energy crisis cannot be solved by renewables, oil chiefs say
London Times, 25 June 2007

"We all know that global demand for energy is growing, but the reality of how fast hasn’t really sunk in. The first hard truth is that demand is accelerating. Energy use in 2050 may be twice as high as it is today, or higher still.... Last year, China enlarged its electricity capacity by roughly the equivalent of Great Britain’s entire stock of power stations.....The second hard truth is that the growth rate of supplies of 'easy oil', conventional oil and natural gas that are relatively easy to extract, will struggle to keep up with accelerating demand. Just when energy demand is surging, many of the world’s conventional oilfields are going into decline.... The world now produces 135 million barrels oil equivalent a day of oil and natural gas. We could still raise that number with new technologies, but only gradually and certainly not indefinitely....The world’s energy system is entering a turbulent phase, and the only question is: how turbulent? A cooperative world will respond more effectively than a fragmented one... The alternative is a global market failure, and future generations would pay the price."
Jeroen van der Veer, Chief executive of Royal Dutch Shell
High hopes and hard truths dictate future
London Times, 25 June 2007

"In our battle against greenhouse gas emissions, taking the CO2 out of fossil fuels, especially coal, is crucial. It will be a huge challenge...Time is short: it will take a decade to test the [carbon capture] technology in pilot projects before we can move to larger-scale projects.... opinion polls show that most Americans and Europeans believe – that renewable energy will have replaced most fossil energy by 2050. As the hard truths make clear, this simply isn’t going to happen. That is why energy efficiency is so important. More than half the energy we generate every day is wasted. In an average car, about 20 per cent of every unit of petrol goes into moving a car forward, the rest is lost as heat."
Jeroen van der Veer, Chief executive of Royal Dutch Shell
High hopes and hard truths dictate future
London Times, 25 June 2007

"The world is consuming oil at a rate that will result in oil production peaking in 15 to 25 years, a group of geoscientists told the American Association of Petroleum Geologists' annual convention in Long Beach, Calif. When world oil production reaches the peak by 2020-30, the rate will be 90-100 million b/d, only 10-20% higher than it was in 2005. Depending on the level of world oil resources, which is highly uncertain, that peak is likely to last 20-30 years before production begins its ultimate decline. The estimates are released for the first time following an AAPG Hedberg Research Conference held in November 2006 in Colorado Springs.... Unconventional resources-tar sands and extra-heavy oil, oil shale, and oil from mature source rocks-provide a massive in-place resource. Each is known to have at least 3-4 trillion bbl. The problem with these unconventional resources is recoverability. Each faces a major challenge, whether poor quality oil (extra-heavy oil), poor quality reservoirs (oil from source rocks), or both (oil shale). Production of extra heavy oils and oil shale also requires substantial energy, enough so that oil shale production may be severely constrained by being mostly uneconomic due to a low net energy gain. The 75 Hedberg conference participants came from 18 countries on all six populated continents. "
World oil production to peak in 15-25 years, AAPG told
Oil And Gas Journal, 4 April 2007

"With global oil production virtually stalled in recent years, controversial predictions that the world is fast approaching maximum petroleum output are looking a bit less controversial.... Alternatives are still a decade away from meeting incremental demand for oil. With nothing to fill the gap, global economic growth would slow, stop, and then reverse; international tensions would soar as nations seek access to diminishing supplies, enriching autocratic rulers in unstable oil states; and, unless other sources of energy could be ramped up with extreme haste, the world could plunge into a new Dark Age. Even as faltering economies burned less oil, carbon loading of the atmosphere might accelerate as countries turn to vastly dirtier coal..... recognizing that nations will turn to cheap coal (recently, 80% of growth in coal use has come from China), more work is needed to defang this fuel, which produces more carbon dioxide per ton than any other energy source. Even if the peakists are wrong, we would still be better off taking these actions. And if they're right, major efforts right now may be the only way to avert a new Dark Age in an overheated world."
From Peak Oil To Dark Age?
Business Week, 25 June 2007

Two items from the business section of the London Times, 25 June 2007, are posted below as follows:

1. "Energy crisis cannot be solved by renewables, oil chiefs say" - Times Editorial
2. "High hopes and hard truths dictate future" - Jeroen van der Veer, Chief Executive of Royal Dutch Shell

It is a measure of the stark nature of the anticipated energy challenges that now lie ahead that the CEO of a major oil and gas multi-national has become an advocate of energy efficiency in a bid to constrain growing demand for oil and gas - a demand which he does not expect the industry to be able to meet from conventional sources.

The alternative, spelt out by the chief executive of Shell, is oil production from unconventional solid deposits such as tar sands and coal, which will produce even greater outputs of CO2 per unit of energy than existing oil and gas supplies (always assuming these much more difficult resources can be exploited sufficiently quickly in a desperate scramble to match growing global demand).

This is where the 'peak oil' debate meets the climate change issue. And, to make matters worse, if the unconventional path is pursued, it will all be much more expensive.

The peak of global conventional oil production is expected to occur when half the available resource has been used. The question is, what will be the economic and environmental consequences of that?

On 12 June the British Government's Chief Scientific Adviser, Professor Sir David King, told the House of Commons Environmental Audit Committee:"The planet is finite and the amount of oil on it is, therefore, a finite amount. We are probably approaching having used about half of it. The implication of that is that there must be a peak in oil production at some point. The economics means that the oil price will go up as demand exceeds supply and at that point we will turn to less likely sources of oil, such as the tar sands, but eventually we will reach a point where converting coal to the usual oil products, such as chemicals and gasoline, will be a more economically viable route. We are pretty close to that right now. What I am referring to is the process that was developed in South Africa, the so-called Sasol process, for taking coal and converting it into perfectly useable, very good petrol product.... and if we convert all of that coal, and therefore burn it, without capturing the carbon dioxide we would probably be able to raise the carbon dioxide level ultimately to around 1,500 parts per million. The classic warm period level is 270 parts per million, so we would be returning the planet to the state it was in 50 million years ago when there was no more ice left."

The International Energy Agency had already spelt out the consequences of this kind of thing last November at the launch of its 2006 World Energy Outlook report. It warned of the worst of both worlds, confirming that "The world is facing twin energy-related threats: that of not having adequate and secure supplies of energy at affordable prices and that of environmental harm caused by consuming too much of it... ".

IEA Chief Executive, Claude Mandil, described the situation as 'urgent'. The Chief Economist at the IEA has now warned that the continuing chaos in Iraq is adding to the urgency.

For those that have ears the chorus is getting deafening.

Even a meeting of the American Association Of Petroleum Geologists (reported by the Oil and Gas Journal in April) has now predicted that global oil production is due to peak at between 90-100 million barrels per day.

We are already consuming around 86 million barrels per day, while the IEA currently forecasts growth in demand for 2007 of 1.8%, or 1.5 million bpd. At that rate it doesn't take long to get to 90 million bpd (i.e. far earlier than the possible 2020 date actually indicated in the Oil and Gas Journal report).

The AAPG meeting appears to have concluded that unconventional resources will come on stream too slowly to pre-empt this peak. Whilst we will be using more of those high intensity CO2 resources they will not be sufficient to off-set the decline in the less environmentally damaging conventional supplies.

So the choice is this.

Either we assume that the AAPG is wrong and try to bring on the unconventionals resources in large quantities, and then be faced with 'global warming ultra'. Or we accept that such a project is too difficult to do in time, and face a ceiling on global supply at a point when competition for oil has never been more intense.

In the case of the latter it would then be down to energy conservation and renewables, even if Jeroen van der Veer is primarily advocating the first of those (on the broader energy front there simply isn't enough available uranium ready for a rapid expansion of nuclear).

Meanwhile a recent survey of over 500 oil and gas industry executives by KPMG reveals the majority view "that the trend of declining oil reserves is irreversible" and that "government involvement in supporting the development of renewable energy sources is necessary".

So, if that's what the industry is thinking in private (the KPMG survey presumably preserves anonymity of response), why aren't governments talking about it in public?

No one wants to upset stock markets of course (although with less time left to take mitigating action the longer you avoid open discussion, which ultimately can't be avoided indefinitely, the worse any upset is likely to be). But one other likely reason is that to do so would risk precipitating further examination of the reasons behind the otherwise inexplicable behaviour towards Iraq during the period of the George W. Bush administration.

This, however, is not an issue that can be kept hidden for ever.

The onset of a supply crunch is becoming increasingly undeniable, and US General John Abizaid has already told a congressional committee that the US needs permanent military bases in Iraq to maintain access to Gulf oil.

Quitting Iraq?

The attitude of Vice President Dick Cheney can only be expected to be one of 'over my dead body'. And, as for the whole of the last six years, he is the man that still currently matters.

Cheney, as the US editor of the London Times put it on 29 June, "has actually used the very vagueness and general ethereality of the vice-president’s role and turned it into the freedom to roam the institutions of American government untrammelled by legal or political constraints and always in total secrecy. He has, to use the infamous description of the vice-president’s role by one of his predecessors, taken the pitcher of warm spit and turned it into a vial of liquid kryptonite.... Dick Cheney used it to become the Dr Strangelove of the Bush Administration."

And, unfortunately for the rest of the world, when it comes to 'energy security', Dick 'Strangelove' Cheney has no coherent 'plan B'.

"For the world as a whole, oil companies are expected to keep finding and developing enough oil to offset our seventy one million plus barrel a day of oil depletion, but also to meet new demand. By some estimates there will be an average of two per cent annual growth in global oil demand over the years ahead along with conservatively a three per cent natural decline in production from existing reserves. That means by 2010 we will need on the order of an additional fifty million barrels a day. So where is the oil going to come from? Governments and the national oil companies are obviously in control of about ninety per cent of the assets. Oil remains fundamentally a government business. While many regions of the world offer great oil opportunities, the Middle East with two thirds of the world's oil and the lowest cost, is still where the prize ultimately lies, even though companies are anxious for greater access there, progress continues to be slow."
Dick Cheney, Chief Executive of Halliburton, now Vice President of the United States
Speech at London Institute of Petroleum, Autumn Lunch 1999

"The scarcity of energy supplies and the energy imbalance between nations is a threat to our prosperity and national security. As resources contract, oil-hungry economies will compete for dwindling supplies of hydrocarbons. Competition for fossil fuels will increase.... Energy resources have long been a major strategic concern: access to secure sources, control over supply lines: these are issues of national security.... The energy challenge is now more pressing than ever.... Global oil production is apparently nearing its peak.... current estimates seem to be converging on some point between 2010 and 2020.... [there] are five factors which are changing the energy landscape: rising demand; dwindling supply; greater concentration of resource in the hands of a few; limited spare capacity; and the environmental impacts of energy use.....This is not a problem that can wait ten years."
Sir David Manning, British Ambassador to the United States of America, and Foreign Policy adviser to Tony Blair 2001 - 2003
Speech at Standford University, 13 March 2006

"The International Energy Agency called on governments to curb growth in energy demand and greenhouse gases as it warned Tuesday that the world’s energy supply is rapidly running out.... 'On current trends, we are on course for a dirty, expensive and unsustainable energy future,' agency executive director Claude Mandil said at the report’s launch in London. 'In response, urgent government action is required. The key word is urgent.'”
World’s energy forecast: Dire
Associated Press, 8 November 2006

"All the world’s extra oil supply is likely to come from expensive and environmentally damaging unconventional sources within 15 years, according to a detailed study.This will mean increasing reliance on hard-to-develop sources of energy such as the Canadian oil sands and Venezuela’s Orinoco tar belt. A report from Wood Mackenzie, the Edinburgh-based consultancy... makes clear the shift could come sooner than many people in the industry had expected, even though some major conventional oil fields will still be increasing their production in 2020. Those increases will not be enough to offset the decline at other fields.... the challenge is huge, said Matthew Simmons, an industry banker who sent shock waves through the oil world when he questioned whether Saudi Arabia, the most important oil source, would be able to continue to expand production. 'The ability to extract this heavy oil in significant volumes is still non-existent,' he said in a recent speech. 'Worse, it takes vast quantities of scarce and valuable potable water and natural gas to turn unusable oil into heavy low-quality oil. In a sense, this exercise is like turning gold into lead,' Mr Simmons said."
Study sees harmful hunt for extra oil
Financial Times, 18 February 2007

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article1980407.ece

From The Times

June 25, 2007

Energy crisis cannot be solved by renewables, oil chiefs say

Carl Mortished, International Business Editor

The world is blinding itself to the reality of its energy problems, ignoring the scale of growth in demand from developing countries and placing too much faith in renewable sources of power, according to two leaders of the global energy industry.

The chief executive of Royal Dutch Shell today calls for a “reality check”. Writing in The Times, Jeroen van der Veer takes issue with the widespread public opinion that green energy can replace fossil fuels.

Shell’s chief gives warning that supplies of conventional oil and gas will struggle to keep pace with rising energy demand and he calls for greater investment in energy efficiency.

Instead of a great conversion to wind power and solar power, Mr van der Veer predicts, the world will be forced into greater use of coal and much higher CO2 emissions, “possibly to levels we deem unacceptable”.

Alternative energy sources, such as renewables, will not fill the gap, says Mr van der Veer, who forecasts that even with major technological breakthroughs, renewables could account for only 30 per cent of energy supply by the middle of the century.

“Contrary to public perceptions, renewable energy is not the silver bullet that will soon solve all our problems,” he writes.

The warning from Royal Dutch Shell coincides with a critique of public energy policy by Rex Tillerson, the chief executive of ExxonMobil.

Speaking at the Royal Institute for International Affairs in London, Mr Tillerson pointed to a widespread failure by policymakers to understand the extent to which the aspirations of people in developing countries are fuelling growth in demand for energy.

Mr Tillerson said that world energy demand would rise by 45 per cent by 2030, and fossil fuels – oil, natural gas and coal – were the only energy sources of sufficient size, adaptability and affordability to meet the world’s needs.

Mr van der Veer casts doubt today on the oil and gas industry’s ability to keep up with accelerating demand. “Just when energy demand is surging, many of the world’s conventional oilfields are going into decline,” he writes.

Although there is no shortage of oil and gas in the ground, Mr van der Veer says, the industry currently lacks the technology to recover even half of that resource.

Mr Tillerson, speaking at Chatham House, expressed doubts about the oil industry’s ability to raise its game significantly without access to the oil reserves of the Opec countries of the Middle East.

“The supply outlook for nonOpec countries will be modestly up or flat,” Mr Tillerson predicted. He was sceptical about the drive by governments to increase use of biofuels and said that a fifth of America’s corn crop was being used to produce four billion gallons of ethanol, compared with targets of 12 billion gallons by 2012.

The ExxonMobil chief criticised the EU’s carbon trading system, calling it an administratively complex system that lacked transparency and failed to deliver a uniform and predictable cost of carbon. “It’s all about moving the money around,” he said.

Mr Tillerson said he would prefer a carbon tax that would enable the cost of carbon to spread through the economy in a uniform way, letting governments use the revenues to mitigate its effect by reducing employment or income taxes.

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article1980585.ece

From The Times

June 25, 2007

High hopes and hard truths dictate future

Efforts to fight global warming will be wasted unless we concentrate on energy efficiency

Jeroen van der Veer

When it comes to the future of energy, the world needs a reality check. Contrary to public perceptions, renewable energy is not the silver bullet that will soon solve all our problems. Indeed, in the decades ahead, three hard truths will generate turbulence in the global energy system.

We all know that global demand for energy is growing, but the reality of how fast hasn’t really sunk in. The first hard truth is that demand is accelerating. Energy use in 2050 may be twice as high as it is today, or higher still. The main causes are population growth, from six to more than nine billion people, and higher levels of prosperity. China and India are entering the energy-intensive phase of their development. This is the point when people buy their first television or car, or board a plane for the first time, and start to consume much more transport fuel and electricity. And most people in China and India have never boarded a plane yet! The pace of change is startling. Last year, China enlarged its electricity capacity by roughly the equivalent of Great Britain’s entire stock of power stations.

The second hard truth is that the growth rate of supplies of “easy oil”, conventional oil and natural gas that are relatively easy to extract, will struggle to keep up with accelerating demand. Just when energy demand is surging, many of the world’s conventional oilfields are going into decline. The problem is not the availability of resources as such. Overall, the International Energy Agency believes that there could be roughly 20 trillion barrels oil equivalent of oil and natural gas in place. This includes both conventional and unconventional resources, such as oil shale and sands. In theory, this is enough to keep us going for about 400 years at the current rate of consumption. In practice, though, less than half can be recovered with existing technology. The world now produces 135 million barrels oil equivalent a day of oil and natural gas. We could still raise that number with new technologies, but only gradually and certainly not indefinitely.

So what about renewables, such as wind and solar energy? The share of renewables in the global energy mix could go up from its existing very low base of about 1 per cent to about 30 per cent by the middle of the century. The number of wind turbines, for instance, may grow from about 30,000 today to one million and their capacity will be significantly larger than the ones we have built so far. This assumes that the hunt for technological breakthroughs to make renewables cheaper will be successful. But even then, fossil energy will still make up most of the remaining 70 per cent. However, this is out of sync with what opinion polls show that most Americans and Europeans believe – that renewable energy will have replaced most fossil energy by 2050. As the hard truths make clear, this simply isn’t going to happen.

That is why energy efficiency is so important. More than half the energy we generate every day is wasted. In an average car, about 20 per cent of every unit of petrol goes into moving a car forward, the rest is lost as heat. For an aircraft during take-off, the figure is 8 per cent. Only 35 per cent of burnt coal in a power plant becomes electricity; the rest, again, is lost as heat. What’s the point of producing ever more energy if we continue to waste most of it? Instead, we should aim to become twice as efficient in our use of energy by the middle of the century. That is entirely feasible, provided that the will is there.

The world’s energy system is entering a turbulent phase, and the only question is: how turbulent? A cooperative world will respond more effectively than a fragmented one. Provided governments create the right rules and incentives, and don’t throw up barriers, the global market will direct money and brainpower to the best solutions. The alternative is a global market failure, and future generations would pay the price.

The author is chief executive of Royal Dutch Shell

"Oil and Gas Executives say government involvement in supporting the development of renewable energy sources is necessary to alleviate the problem of declining oil reserves, according to the results of a survey conducted by KPMG LLP, the audit, tax and advisory firm. In the KPMG survey, which polled 553 financial executives from oil and gas companies in April 2007, twenty-five percent of the respondents said that at least 75 percent of government funding into energy should be directed at the renewable sources sector and a further 44 percent said that at least 50 percent of funding should be allocated in the same way. These feelings stem from the overwhelming majority, or 82 percent, citing declining oil reserves as a concern. 'These executives are deeply concerned about declining oil reserves, a situation they see as irreversible and worsening,' said Bill Kimble, National Line of Business Leader, Industrial Markets for KPMG LLP. 'They see renewable energy sources as a lifeline but our survey shows that the execs recognize they cannot count on them as a solution in the short-term. Consequently, oil and gas companies are sending a clear signal to the government that intervention is needed.' While oil and gas executives are keen to see renewable energy sources becoming a mass produced reality, 60 percent say that will not be possible by 2010. Of those that believe it will, 18 percent say ethanol is the most viable for mass production by then, 13 percent say biodiesel and only 3 percent say cellulosic ethanol. Sixty percent of the executives believe that the trend of declining oil reserves is irreversible. And, when asked about the impact of emerging markets, such as China, will have on declining oil reserves, almost 70 percent of the executives said that it would lead the situation to worsen.... KPMG will be discussing these survey results during its Fifth Annual Global Energy Conference, the event for financial executives in the oil and gas industry on May 22nd and 23rd at the Intercontinental Hotel in Houston."
60 percent of oil and gas execs believe trend of declining reserves is irreversible
KPMG Press Release, 11 May 2007

"Former Soviet President Mikhail Gorbachev on Wednesday urged the world's biggest industrialised nations to set up a 50-billion-dollar (44-billion-euro) fund to support solar power, warning that oil or nuclear energy were not viable energy sources for the future. Gorbachev -- who chairs an environmental thinktank, Green Cross International -- called on leaders of the Group of Eight (G8) industrialised nations to invest in renewable energy sources, in a statement marking the 20th anniversary of the Chernobyl nuclear disaster.....Rising oil prices and supply concerns, as well as the growing need to combat global warming caused by greenhouse gas emissions, have raised the profile and economic viability of some renewable energy sources."
Gorbachev urges G8 to back solar power
Agence France Presse, 26 April 2006

"Humanity’s 'primary energy production,' including all fossil fuels, nuclear power, hydroelectric and renewables, is 13 terawatts (equivalent to 13,000 large power plants), less than 1/100 of 1 percent of the 170,000 terawatts continuously delivered to the earth as sunlight. With 600 terawatts of terrestrial potential, solar energy far exceeds all other possible forms of substitution..... A direct path from sunlight to electricity can be 10 times as efficient as photosynthesis. Solar energy can’t be touched or put into a bottle. Solar is radiant energy, not a solid, liquid or gas. Electricity from renewables is ideally suited for urban transportation. It is nonpolluting and well-suited for fixed guide rail and automated routing of traffic, and an electric vehicle is at least twice as efficient as a gasoline vehicle. We are ready for a good reason to get rid of the internal combustion engine in dense urban areas, where it is about as practical as a campfire in the kitchen. Efficiency in the face of oil depletion is that compelling reason. Solar technologies continue to improve, and so do electric vehicles. A battery with three times the energy density of lead-acid and a charging time under two minutes is scheduled for introduction in 2007 or 2008."
Dawn of the Solar Era - A Wake-Up Call
Solar Today, March/April 2006

"If Iraqi production does not rise exponentially by 2015, we have a very big problem, even if Saudi Arabia fulfills all its promises. The numbers are very simple, there's no need to be an expert.... Within 5 to 10 years, non-OPEC production will reach a peak and begin to decline, as reserves run out. There are new proofs of that fact every day. At the same we'll see the peak of China's economic growth. The two events will coincide: the explosion of Chinese growth, and the fall in non-OPEC oil production. Will the oil world manage to face that twin shock is an open question.... I really hope that consuming nations will understand the gravity of the situation and put in place radical and extremely tough policies to curb oil demand growth."
Fatih Birol, Chief Economist, International Energy Agency
Without Iraqi black gold, the oil market will face a 'wall' between now and 2015
Le Monde, 27 June 2007
(French original - click here)

http://www.eurotrib.com/story/2007/6/27/173221/933

EUROPEAN TRIBUNE

Top IEA official: without Iraqi oil, we hit the wall in 2015

by Jerome a Paris
Thu Jun 28th, 2007 at 03:55:18 AM EDT

In a stunning interview for the French (reference) daily Le Monde, Fatih Birol, the chief economist of the International Energy Agency (i.e. the intergovernmental body created after the oil shocks of the 70s to coordinate the West's reaction to energy crises) effectively says that peak oil is just around the corner, and that without Iraqi oil, we'll be in deep trouble by 2015:

Si la production n'augmente pas en Irak de mani�re exponentielle d'ici � 2015, nous avons un tr�s gros probl�me, m�me si l'Arabie saoudite respecte ses engagements. Les chiffres sont tr�s simples, il n'y a pas besoin d'�tre un expert.

If Iraqi production does not rise exponentially by 2015, we have a very big problem, even if Saudi Arabia fulfills all its promises. The numbers are very simple, there's no need to be an expert

And as long as the US occupies Iraq, production will not increase... Houston, we have a problem...

The whole interview is amazingly frank and free of diplomatic obfuscation. He blasts biofuels ("not based on any kind of economic rationality"), he notes that Africa is suffering the most already from expensive oil, he points out that even a slowing of China's growth will not reduce oil demand, and he talks pretty explicitly about production peaks and depletion:

D'ici cinq � dix ans, la production p�troli�re hors-OPEP va atteindre un maximum avant de commencer � d�cliner, faute de r�serves suffisantes. Il y a chaque jour de nouvelles preuves de ce fait. Au m�me moment aura lieu le pic de la phase d'expansion �conomique de la Chine. Les deux �v�nements vont co�ncider : l'explosion de la croissance de la demande chinoise, et la chute de la production hors pays de l'OPEP. Notre syst�me p�trolier sera-t-il capable de r�pondre � ce d�fi, c'est la question.

Within 5 to 10 years, non-OPEP production will reach a peak and begin to decline, as reserves run out. There are new proofs of that fact every day. At the same we'll see the peak of China's economic growth. The two events will coincide: the explosion of Chinese growth, and the fall in non-OPEP oil production. Will the oil world manage to face that twin shock is an open question.

He says it again twice in the interview: the gap between demand and supply will widen, and he blasts our governments for doing so little:

Malheureusement, il y a beaucoup de paroles, mais peu d'actes. J'esp�re vraiment que les nations consommatrices vont comprendre la gravit� de la situation, et mettre en place des politiques tr�s fortes et radicales pour ralentir la hausse de la demande de p�trole.

Unfortunately, there's a lot of talk, but very little action. I really hope that consuming nations will understand the gravity of the situation and put in place radical and extremely tough policies to curb oil demand growth

Of course, we might need to curb more than "demand growth", and actually move to curb "demand" itself, but his words are at least quite direct and explicit. Even more interestingly, he puts the finger on two important but rarely discussed items: field depletion (he mentions an 8% decline rate for mature fields, but indicates that even a 1% difference in the actual number would mean huge volumes by 2020), and Saudi reserves:

Je crois que le gouvernement saoudien parle de 230 milliards de barils de r�serves. Je n'ai pas de raison officielle de ne pas y croire. Cependant l'Arabie saoudite de m�me que les autres pays producteurs et les firmes internationales devraient �tre plus transparents dans la pr�sentation de leurs chiffres. Car le p�trole est un bien tr�s crucial pour nous tous, et notre droit est de savoir, selon des standards internationaux, combien de p�trole il nous reste.

I understand the Saudi government claims 230 billion barrels of reserves, and I have no official reason not to believe these numbers. Nevertheless, Saudi Arabia - as well as other producing countries and oil companies - should be more transparent in their numbers. Oil is a crucial good for all of us and we have the right to know how much oil, as per international standards, is left.

While not a direct attack on Saudi numbers, this is by far the most explicit voicing of doubt about their reserves from any official of a major organisation that I have ever read. "No official reason to doubt"??? That's a pretty gaping hole there to sneak other kinds of doubts... He notes that he believes Saudi Arabian promises to be able to bring its capacity from 12mb/d today to 15mb/d in 2015, but notes at the same time that (i) it's the only place in the world (other, potentially, than Iraq) where production can grow and (ii) it's less than the expected demand growth by then from China alone.

While none of these facts should be surprising to my regular readers, it's quite something else to see them explicitly stated by one of the top officials of one of the major energy watchdogs of the Western world.

The only question left is - will our governments listen, now?

"In the past few weeks, U.S. Defense Secretary Robert Gates, U.S. Deputy Secretary of State John Negroponte and the chief U.S. commander in the Mideast, Admiral William Fallon, have all traveled to Baghdad to press Iraqi Prime Minister Maliki to pass a controversial oil law. Five Nobel Peace Prize laureates have just released a statement against the U.S. pressure on the Iraqi government. The Nobel Peace Prize Laureates -- Betty Williams, Mairead Corrigan Maguire, Jody Williams, Shirin Ebadi and Wangari Maathai -- have released the statement in opposition to the Iraq Oil Law and U.S. pressure on the Iraqi government to pass the law, which favors foreign companies."
Nobel Peace Laureates Oppose Iraqi Oil Law Imposition
IPA, 26 June 2007

"Iraq's top oil-and-gas adviser said oil contracts signed by China, Vietnam, India and Indonesia during the rule of the late Iraqi leader Saddam Hussein would be amended within the framework of the country's proposed oil law. Thamer al Ghadhban, who advises Prime Minister Nouri al Maliki about oil policy, said he expects the draft law to be in front of lawmakers within two months...."
Iraq to Amend Oil Contracts Signed Under Hussein's Rule
Wall St Journal, 27 June 2007

"The global market will need increasing volumes of oil from members of the Organisation of Petroleum Exporting Countries after non-OPEC production reaches a maximum of about 50 million b/d between 2007 and 2011... A question crucial to future oil supply, therefore is: Can OPEC's old fields deliver.... Most of the supergiant oil fields have had water or gas injection installed to maintain pressure for 20-30 years. Handling produced injection fluids is a growing problem in Iran, Saudi Arabia, the UAE, and in older fields in Iraq (Kirkuk, Zubair, and Rumailah).... The oil fields of Iraq are the least depleted and least developed of any of the Persian Gulf oil producing countries, and Iraq has the potential to rapidly increase oil output.... Combined with earlier results, these predictions for OPEC yield an estimate of the world's ultimate recoverable oil reserves of 2.5-2.9 trillion bbl, with 1.29-1.66 trillion bbl remaining (1.224 trillion bbl produced to end 2003)..... It seems unlikely that OPEC can increase production at the rate that was possible in the 1960s and 1970s, when the fields were fresh and initial well production rates were higher... Only Iraq has undeveloped supergiant oil fields (West Qurna, Majnoon, and East Baghdad) and the potential to rapidly increase production to 8-10 million b/d...... The five Persian Gulf countries (Saudi Arabia, Iraq, Iran, Kuwait and the UAE) are crucial to raising OPEC production. The political situation in Iraq is unlikely to be conducive to major investment in new oil production capacity for some years. Saudi Arabia has serious internal problems, which threaten to destabilize the ruling royal family. Iran remains under unilateral US sanctions. US military intervention in the Gulf and its failure to effectively and fairly engage in resolving the Palestinian-Israeli conflict conspire to provide a hostile backdrop to western interests in the Middle East. The combination of burgeoning future oil revenues and growing hostility to the US in the region is not conducive to major capacity expansion and will not provide a stable investment environment or offer easy opportunities to the major international oil companies to assist in any capacity expansion projects. Based on these considerations and the maturity of OPEC’s major fields, it seems more likely that OPEC’s considerable reserves will be expressed as a long plateau rather than a sharp peak. It is quite possible that the Persian Gulf countries will not raise production capacity high enough or quickly enough, either for political reasons, the slowness of internal decision-making, or the hostile security environment. The consequences of this for world oil supply are immense, with the likelihood of further military interventions and conflicts within the Middle East ….. It is unlikely, except in the high reserves case, that OPEC production will be able to meet the high demand forecast of 121 million b/d for 2025 by the US Energy Information Administration. OPEC is able to meet mid-demand growth (1.5%) until 2013-15 if OPEC’s oil reserves are low or until 2017-20 if OPEC’s reserves are high. OPEC is able to meet low-demand growth (about 1%/year) until 2020 under either reserves scenario. These forecasts suggest world oil demand is likely to be dampened by a rising oil price due to supply constraints, particularly after non-OPEC production peaks (2007-11), but also when OPEC production increases start to tail off. This could occur in 2010-15 if OPEC’s reserves turn out to be low or around 2015-20 if OPEC’s reserves are high. Oil supply will become increasingly concentrated in the Middle East and the former Soviet Union. The proportion of oil production from the main producers of the Persian Gulf (Iran, Iraq, Saudi Arabia, Kuwait, and the UAE) is forecast to rise to 45% in 2025 from 25% in 2003. Just seven countries – Russia, Iran, Iraq, Saudi Arabia, Kuwait, and the UAE and Venezuela – are expected to make up more than 60% of world oil production in 2025. For the range of oil reserves demand scenarios considered here, world oil supply is predicted to peak at 90-105 million b/d between 2016 and 2028…Based on these results, the EIA forecast of world demand of more than 120 million b/d in 2025 seems unlikely to be met by production ….. Total world oil reserves are estimated at 2.5 – 2.9 trillion bbl. The world has consumed 1.224 trillion bbl to the end of 2004, so remaining reserves are estimated at 1.3-1.7 trillion bbl (Table 1).As the different components of supply reach their maximum production rate, a series of crises in oil supply is likely over the coming decades. The first, related to the peak and decline of non-OPEC production, is practically upon us and underpins the currently high oil prices. Other factors are burgeoning world oil demand, driven primarily by China and the USA, and restricted output from Iraq. The imminent inability of non-OPEC production to meet incremental demand and its decline after 2010 precipitates the second crisis as OPEC’s diminishing spare capacity (even with Iraq’s production back to preinvasion levels) becomes less and less able to accommodate short-term fluctuations. The timing and depth of the crisis depend on world oil demand and OPEC investment in new capacity. While OPEC countries will have every incentive to make the necessary investments, the pace of past decision-making is not encouraging, and enough spare capacity may not be available in time. The third crisis, due to OPEC’s incremental supply being unable to meet incremental demand, follows in the first half of the next decade. This assumes that OPEC’s reserves are as published. If OPEC’s reserves are higher than published, this crisis may not occur until the latter half of the next decade and may be muted, particularly if demand moderates. These crises will have global economic and geopolitical significance: The oil price will be high and volatile, and demand growth will have to be curtailed..."
Oil Supply Challenges - 2: What Can OPEC Deliver?
Oil and Gas Journal, 7 March 2005
(The Author: Peter. R.A. Wells is managing director of Neftex Petroleum Advisors Ltd. He spent 12 years with Shell International in positions that included exploration manager for eastern Nigeria, followed by 4 years with BP PLC, where he was chief negotiator for Azerbaijan in 1992-3.)

"... we've been in the Middle East more than 50 years. We've been in the Middle East ever since the -- however you would like to call the dependency upon oil has developed. And our forces have been there either as naval, air or land forces in one way or another for an awful long time. And once the British pulled out the Arabian gulf, it became more and more necessary for us to provide more and more force in the region..... And ultimately, it comes down to the free flow of goods and resources on which the prosperity of our own nation and everybody else's depends upon.... We need to maintain a presence that protects the small nations and ensures the continued stability of the region and the flow of those resources that are essential to our well-being."
General John Abizaid, Commander of the United States Central Command overseeing US operations in Iraq, confirming to a US Congressional Committee that the United States needs permanent military bases in Iraq in order to maintain access to Gulf oil

"The Bush administration made plans for war and for Iraq's oil before the 9/11 attacks, sparking a policy battle between neo-cons and Big Oil, BBC's Newsnight has revealed..... Two years ago today - when President George Bush announced US, British and Allied forces would begin to bomb Baghdad - protesters claimed the US had a secret plan for Iraq's oil once Saddam had been conquered. In fact there were two conflicting plans, setting off a hidden policy war between neo-conservatives at the Pentagon, on one side, versus a combination of 'Big Oil' executives and US State Department 'pragmatists'. 'Big Oil' appears to have won. The latest plan, obtained by Newsnight from the US State Department was, we learned, drafted with the help of American oil industry consultants. Insiders told Newsnight that planning began 'within weeks' of Bush's first taking office in 2001, long before the September 11th attack on the US....The industry-favoured plan was pushed aside by a secret plan, drafted just before the invasion in 2003, which called for the sell-off of all of Iraq's oil fields. The new plan was crafted by neo-conservatives intent on using Iraq's oil to destroy the Opec cartel through massive increases in production above Opec quotas. The sell-off was given the green light in a secret meeting in London headed by Ahmed Chalabi shortly after the US entered Baghdad, according to Robert Ebel. Mr Ebel, a former Energy and CIA oil analyst, now a fellow at the Center for Strategic and International Studies in Washington, told Newsnight he flew to the London meeting at the request of the State Department.....Philip Carroll, the former CEO of Shell Oil USA who took control of Iraq's oil production for the US Government a month after the invasion, stalled the sell-off scheme.... Ariel Cohen, of the neo-conservative Heritage Foundation, told Newsnight that an opportunity had been missed to privatise Iraq's oil fields..... New plans, obtained from the State Department by Newsnight and Harper's Magazine under the US Freedom of Information Act, called for creation of a state-owned oil company favoured by the US oil industry. It was completed in January 2004 under the guidance of Amy Jaffe of the James Baker Institute in Texas. Formerly US Secretary of State, Baker is now an attorney representing Exxon-Mobil and the Saudi Arabian government.... "
Secret US plans for Iraq's oil
BBC News, 17 March 2005

"....For the most part, U.S. oil policy has relied on maintenance of free access to Middle East Gulf oil and free access for Gulf exports to world markets, relying heavily on military preparedness. The U.S. has forged a special relationship with certain key Middle East exporters that had an expressed interest in stable oil prices and, we assumed, would adjust their oil output to keep prices at levels that would neither discourage global economic growth nor fuel inflation. Taking this dependence a step further, the U.S. government has operated under the assumption that the national oil companies of these countries would make the investments needed to maintain enough surplus capacity to form a cushion against disruptions. But recently, things have changed. These Gulf allies are finding their domestic and foreign policy interests increasingly at odds with America’s strategic considerations. They have become less inclined to lower oil prices in exchange for security of markets, and evidence suggests that adequate investment is not being made in a timely enough manner to increase production capacity in line with growing global needs. The opening of new media outlets in the Middle East has also increased the likelihood that a linkage will emerge in the minds of citizens there between the U.S. alliance with Israel and cooperation on oil prices. Moreover, a trend toward anti-Americanism could affect regional leaders’ abilities to cooperate with the U.S. in the energy area. The resulting tight markets have increased U.S. and global vulnerability to disruption and provided adversaries undue potential influence over the price of oil. Iraq has become a key 'swing' producer, posing a difficult situation for the U.S. government."
STRATEGIC ENERGY POLICY: CHALLENGES FOR THE 21ST CENTURY
JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY AND THE COUNCIL FOR FOREIGN RELATIONS, APRIL 2001

"When President George W. Bush took office last January, energy matters were a high-priority issue of public policy. Heating-oil and gasoline prices were reaching historic levels and consumers throughout the industrial world were concerned about what their governments were doing to relieve their burden. Natural gas prices in the United States had risen 400 percent over the previous 18 months, forcing many industrial users of gas to shut operations rather than make uneconomic fuel purchases. Electric power shortages disrupted daily life as well as economic growth in California and other U.S. states, as well as in Brazil, India, and other areas of rapid economic expansion. Members of the Organization of Petroleum Exporting Countries (OPEC) were producing at capacity and a supply interruption of significant international dimensions loomed on the horizon, whether because of internal conflict in an oil-producing country, political manipulation by Iraq or another oil-producing government, or surging energy demand.... One of the first acts of the new U.S. administration was to convene an energy policy task force, chaired by Vice President Dick Cheney. The task force was given high political importance and charged with formulating a coherent approach toward energy policy that would aim to provide long-term solutions to the critical shortages looming along the energy supply chain. The vice president’s chairmanship gave the administration an opportunity to consolidate and assess the inevitably contradictory interests of different government departments, which themselves reflected contradictory interests among the American public. This review created a process that for the first time allowed international strategic concerns to be balanced against domestic energy interests — hence the participation of both the State and Energy Departments.... Even before the [2000] presidential election occurred, the James A. Baker III Institute for Public Policy of Rice University and the Council on Foreign Relations had decided to convene their own task force on strategic energy policy. The aim was to bring together individuals representing various public and private energy constituencies in order to map out for the new administration and for the public at large the main issues at stake. Our task force report was issued before the administration was able to produce its own study. Our report warned that years of negligence by policymakers had brought the U.S. energy sector to critical condition... it is incorrect for the public or for policymakers to assume that the oil situation is 'solved' or was simply fabricated all along.... it is certain that without an energy policy, energy shortages and temporary dislocations can easily reemerge once economic growth resumes its earlier accelerated path, or if international political events, extreme weather, or accident tilts demand back above available supply in certain locations.... reliance on volatile Middle East oil resources could increase dramatically over the next two decades unless policies are put in place to promote oil development in other regions, to shift to alternative sources, or to rein in unbridle or wasteful consumption.... Failure to respond would, in turn, leave the country vulnerable to the unacceptable future costs, as well as to the leverage that foreign adversaries could exert over our economy, if we were unnecessarily exposed to the possibility of recurrent dislocations stemming from a fresh round of volatile energy prices.....[more effective proposals are required for] Making progress in fostering the reopening of key oil-producing countries such as Saudi Arabia to foreign investment in their hydrocarbons sector......[and] Putting together more-realistic strategies in the Caspian Basin, which appear to be easing both decision-making on resource projects in the region and the speed with which new resources will be brought to market..... The administration has correctly shifted debate away from discussion of the need for U.S. energy independence. Such independence is not attainable at a reasonable cost. Policy must therefore focus on increasing the number of energy suppliers.... [We recommend that] U.S. encourages reopening of international investment in foreign oil fields [which] Provides U.S. firms long-term presence in important oil producing countries such as Saudi Arabia and Kuwait; encourages capacity expansion; strengthens U.S. ties to oil producers and open investment opportunities for U.S. firms...."
STRATEGIC ENERGY POLICY UPDATE
JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY AND THE COUNCIL FOR FOREIGN RELATIONS, SEPTEMBER 2001

"Optimists about world oil reserves, such as the Department of Energy, are getting increasingly lonely. The International Energy Agency now says that world production outside the Middle Eastern Organization of Petroleum Exporting Countries (opec) will peak in 1999 and world production overall will peak between 2010 and 2020. This projection is supported by influential recent articles in Science and Scientific American. Some knowledgeable academic and industry voices put the date that world production will peak even sooner—within the next five or six years. The optimists who project large reserve quantities of over one trillion barrels tend to base their numbers on one of three things: inclusion of heavy oil and tar sands, the exploitation of which will entail huge economic and environmental costs; puffery by opec nations lobbying for higher production quotas within the cartel; or assumptions about new drilling technologies that may accelerate production but are unlikely to expand reserves. Once production peaks, even though exhaustion of world reserves will still be many years away, prices will begin to rise sharply. This trend will be exacerbated by increased demand in the developing world..... The recent report by the President's Committee of Advisers on Science and Technology... concluded 'A plausible argument can be made that the security of the United States is at least as likely to be imperiled in the first half of the next century by the consequences of inadequacies in the energy options available to the world as by inadequacies in the capabilities of U.S. weapons systems. It is striking that the Federal government spends about 20 times more R&D money on the latter problem than on the former.'... The nearly $70 billion spent annually for imported oil represents about 40 percent of the current U.S. trade deficit.... Research is essential to produce the innovations and technical improvements that will lower the production costs of ethanol and other renewable fuels and let them compete directly with gasoline. At present, the United States is not funding a vigorous program in renewable technologies.... The United States cannot afford to wait for the next energy crisis to marshal its intellectual and industrial resources....Our growing dependence on increasingly scarce Middle Eastern oil is a fool's game—there is no way for the rest of the world to win. Our losses may come suddenly through war, steadily through price increases, agonizingly through developing-nation poverty, relentlessly through climate change—or through all of the above."
Senator Richard G. Lugar and R. James Woolsey (Former Director of the CIA)
The New Petroleum - Foreign Affairs January/February 1999

"Our industry can certainly be proud of its past achievements. Yet the challenges we will face in the coming years will be every bit as great as those encountered in the past, due in part to ever-increasing global energy use. For example, we estimate that world oil and gas production from existing fields is declining at an average rate of about 4 to 6 percent a year. To meet projected demand in 2015, the industry will have to add about 100 million oil-equivalent barrels a day of new production. That's equal to about 80 percent of today's production level. In other words, by 2015, we will need to find, develop and produce a volume of new oil and gas that is equal to eight out of every 10 barrels being produced today."
John Thompson, President of ExxonMobil Exploration
The Lamp (published for ExxonMobil shareholders), 2003, Vol. 85 No.1

"After years of work on peak oil, it is rare for me to find a book written for the general public that can teach me something I didn’t know before. But with David Strahan’s book, 'The Last Oil Shock,' it was a different matter. While I often just thumb through this kind of books, this one was worth reading carefully, line by line. Books on peak oil, so far, have been written mostly by geologists, and in general by scientists. Their approach is normally rather impersonal and is based on the analysis of literature data. Strahan’s approach, instead, is that of the investigative journalist and it is based on interviews. The result is lively and rich in insights. For instance, Strahan manages to make a convincing case that the people in power know much more about peak oil than they care to tell to us, the poor petroleum peasants. Maybe you suspected that already, but Strahan will give you much food for thought on the matter."
The Last Oil Shock - book review
ASPO-Italy, 15 April 2007

"For the world as a whole, oil companies are expected to keep finding and developing enough oil to offset our seventy one million plus barrel a day of oil depletion, but also to meet new demand. By some estimates there will be an average of two per cent annual growth in global oil demand over the years ahead along with conservatively a three per cent natural decline in production from existing reserves. That means by 2010 we will need on the order of an additional fifty million barrels a day. So where is the oil going to come from? Governments and the national oil companies are obviously in control of about ninety per cent of the assets. Oil remains fundamentally a government business. While many regions of the world offer great oil opportunities, the Middle East with two thirds of the world's oil and the lowest cost, is still where the prize ultimately lies, even though companies are anxious for greater access there, progress continues to be slow."
Dick Cheney, Chief Executive of Halliburton, now Vice President of the United States
Speech at London Institute of Petroleum, Autumn Lunch 1999

"On March 27, 2003, Paul Wolfowitz, then deputy secretary of defense, predicted that Iraq's oil revenue would 'finance' its reconstruction and do so 'relatively soon.'....According to State Department figures, production has been stagnant at 2.1 million barrels per day, or 400,000 barrels per day below the immediate prewar peak (which was matched for a few months in 2004)."
Oil's Not Well in Iraq
The Weekly Standard, 10 February 2007

"The House late Wednesday passed an Interior Department budget for 2008 that could negatively impact oil and gas development. The Interior appropriations bill - which passed by a 272-155 vote - would force re-negotiation of 1998-99 oil and gas leases that omitted royalty price thresholds....An amendment to the bill approved by the House would also slow Interior's plan for oil shale development. Rep. Mark Udall's, D-Colo., amendment would prohibit federal dollars for preparation of final rules for commercial lease sales. The department's Bureau of Land Management last August initiated the first steps towards a national oil-shale lease sale, posting a notice inviting public comments for proposed rule-making for oil-shale. Royal Dutch Shell is one of several companies working on new shale extraction technology. Industry experts estimate more than 1 trillion barrels worth of oil may be extracted from the shales, but companies have yet to develop technology that would make development economically feasible or environmentally sustainable."
House OKs Interior Bill Forcing Renegotiation Of Oil Leases
Dow Jones Newswires, 28 June 2007

"Petro-Canada, the third-largest oil company in Canada, and its partners will spend C$26.2 billion ($24.6 billion) on an oil-sands project in northern Alberta that's one of the world's most costly energy developments. The Fort Hills project is expected to produce 280,000 barrels of oil a day from the tar-like deposits by 2014, with output starting in the second quarter of 2012, the Calgary-based company said today in a statement. The project, under development for more than five years, will tap oil reserves second only to those in Saudi Arabia. Producers are turning to unconventional sources for oil such as Alberta's tar sands to replenish reserves as more easily tapped reservoirs become harder, and more costly, to find. Instability in oil-producer Nigeria and efforts by Russia and Venezuela to take control of energy projects from foreign companies makes Canada an attractive alternative. 'It's a safe supply of oil,' said Chris Feltin, an analyst at Calgary brokerage Tristone Capital Inc. who rates Petro- Canada's shares at ``outperform'' and owns none. 'Look at the people who left Venezuela this week. It wouldn't surprise me to see Exxon and Chevron try to get a bigger position in the oil sands now.' Exxon Mobil Corp. and ConocoPhillips are leaving Venezuela after failing to reach agreement with the government of President Hugo Chavez over an increased government stake in heavy-oil projects in the country.... Petro-Canada, UTS Energy Corp. and Teck Cominco Ltd. spent months reviewing the Fort Hills design to reduce costs. The project will be built in two stages to ease demand for skilled construction workers. A final decision on proceeding with the project will be made in the third quarter of 2008, Petro-Canada said.... Including previous spending and planned expansions, Fort Hills is the fourth-most-costly oil-sands project in Canada, said Pauline Dingwall, an analyst at Edinburgh-based consultant Wood Mackenzie. Joint venture Syncrude Canada Ltd. ranks first at C$44 billion, followed by projects by Shell and Suncor Energy Inc., she said in an interview."
Petro-Canada Plans C$26.2 Billion Oil-Sands Project
Bloomberg, 28 June 2007

"Commercial production of oil shale in western Colorado will require new power plants that will greatly increase pollution, according to an analysis released Monday by a coalition of conservation groups. The same groups that two weeks ago publicized the vast water needs for commercial oil shale production attacked the power needs for oil shale production as envisioned by the federal government. One million barrels per day will require an estimated 12,000 megawatts of capacity annually, the groups said. That is three times all the electricity produced in Colorado in 2005. A spokeswoman for Shell, the company doing the most extensive in-the-field oil shale research, said the company is working on lowering its power needs from the current estimate. 'We have acknowledged in the past that our method is power-intensive,' said Jill Davis. 'We are working on ways to reduce that.' The environmental coalition that has been highlighting the potential impacts of commercial oil shale development is arguing that decisions about commercial leasing of federal lands for oil shale should be slowed down."
Oil shale power needs stir alarm
Denver Post, 26 June 2007

"Oil prices have a 'substantial' risk of surging higher and boosting inflation because non-OPEC production may soon peak, the Bank for International Settlements said in its annual report.... The 244-page report said investment hasn't increased oil supplies, raising concerns that production could peak from nations outside the Organization of Petroleum Exporting Countries..... The International Energy Agency, an adviser to energy- importing nations, this month cut its 2007 estimate for non-OPEC production by 110,000 barrels a day to 50.2 million barrels a day, citing project delays."
Oil Price Surge a Risk as Non-OPEC Production Peaks, BIS Says
Bloomberg, 24 June 2007

"Petroleos Mexicanos, the state-owned oil monopoly, said crude production fell 6.6 percent in May from a year earlier and dropped to its lowest this year as the company struggles with declining output from its Cantarell field. Daily output was 3.11 million barrels, down from 3.33 million in May 2006, the Mexico City-based company said today in a report on its Web site. January's production of 3.14 million barrels was the previous low for the year. Cantarell, the world's third-largest oil field, produced 1.58 million barrels per day, a 15 percent decline from 1.86 million barrels daily in May last year. May's daily production at the offshore field was lower than 1.59 million barrels in April. Pemex has increased its spending plan this year for exploration and production to 137 billion pesos ($12.7 billion) to increase production from other offshore fields, such as Ku- Maloob-Zaap, to make up for Cantarell's drop. Ghawar in Saudi Arabia is the world's largest oil field, followed by Burgan in Kuwait. For the first five months of the year, Cantarell's output has dropped 17 percent from a year earlier to average daily production of 1.58 million barrels. Pemex had estimated a 15 percent drop at the field in 2007."
Pemex Says May Oil Output Falls 6.6% From Year Ago
Bloomberg, 21 June 2007

"The front-runner energy company in the effort to unlock oil shale in northwest Colorado has slowed down its research by withdrawing an application for a state mining permit. Shell spokeswoman Jill Davis said the withdrawal of a permit on one of its three oil-shale research and demonstration leases was done for economic reasons: Costs for building an underground wall of frozen water to contain melted shale have 'significantly escalated.' 'We are being more cautious and more prudent,' Davis said. 'Because of the nature of research you have challenges. With that in mind, it is taking a little longer to build a freeze wall than we planned.'.... Shell's method involves heating shale over a period of years and encircling it in a wall of frozen water to prevent groundwater contamination. Shell has been researching heating methods on its property in the Piceance Basin for several years and is now in the process of freezing a test wall. Research on that wall will continue. Davis said the freeze-wall test should be completed by 2009 or 2010."
Shell shelves oil-shale application to refine its research
Denver Post, 16 June 2007

"Ethanol production has put the Chinese government in an unpleasant bind, as fears rise that the environmentally friendly gasoline additive is also fueling politically dangerous increases in the price of food – particularly pork, a key staple. With the ethanol industry gobbling up a growing share of China's corn harvest, authorities have stomped on the brakes to slow what one official report calls 'blind' investment in distilleries. 'China cannot sacrifice food security for energy: that seems to be the majority view in the government now,' says Zhang Zhongjun, deputy head of the Beijing bureau of the United Nations' Food and Agriculture Organization (FAO).... China's current Five Year Plan sets the goal of using biofuels for 15 per-cent of the country's transport needs by 2020; already gas stations in a number of provinces mix 10 percent ethanol into the gasoline they sell. But critics around the world have recently begun to question the unconsidered effects of large-scale ethanol production, such as increasing competition for human or animal food supplies. And in China, where an estimated 30 million people died in a famine less than 50 years ago, many have reservations about using food for fuel. As ethanol factories large and small have sprung up in China's corn producing regions in recent years, they have begun to compete with animal-feed manufacturers for raw materials. The industrial use of corn nearly doubled between 2001 and 2005, to 23 million tons, according to a study released last December by the National Development and Reform Committee, China's chief economic planning agency. That represented 16.5 percent of the corn harvest in 2005. The result, said the report, is a shortage of corn."
As pork prices soar, Chinese put brakes on corn for ethanol
Christian Science Monitor, 31 May 2007

"President Bush imposed new unilateral US sanctions against the Government of Sudan yesterday for failing to halt what he has branded the genocide in Darfur. 'The United States will not avert our eyes from a crisis that challenges the conscience of the world,' the President said in a brief statement at the White House. The sanctions target 31 government-run companies mainly involved in the lucrative oil industry of Sudan, as well as three individuals..... Mr Bush has been under intense pressure from human rights groups, including conservative Evangelical Christians in America, to take tougher action against Sudan.....The final straw came last weekend, when Mr al-Bashir announced his opposition to the deployment of a 22,000-strong joint UN and African Union peacekeeping force. The Sudanese President said that he would accept only technical and logistical support.... Mr Bush also directed Condoleezza Rice, the US Secretary of State, yesterday to work with allies such as Britain on drafting a new UN resolution for strengthening international pressure on the Sudanese Government. Any such measure faces an uphill battle to be approved by the UN Security Council, where China, which has strong ties with Sudan through oil, is likely to use its veto. Liu Guijin, the new Chinese envoy on Africa, yesterday defended Chinese investment in Sudan as a better way to stop the bloodshed rather than the sanctions advocated by the US and other Western governments. Fresh from his first trip to Sudan since his appointment this month, Mr Liu praised humanitarian efforts."
Bush turns screw on Sudan Government with oil sanctions
London Times, 30 May 2007

"The timing could not have been worse. Within hours of the publication of the energy white paper last Wednesday, BP dealt the government’s plans a blow by scrapping a pioneering carbon capture and storage project. The oil giant pulled the plug because the government had delayed plans to fund such projects. Some observers believe BP’s decision has highlighted the key flaw of the white paper. The government has rightly identified the two great challenges – fighting climate change and securing energy supplies – but it is showing little urgency to tackle a looming energy crisis. Britain faces a serious energy gap by 2015. Up to a third of its generating capacity could be cut as ageing coal and nuclear power stations are closed. At the same time the decline in North Sea oil and gas production will make Britain ever more reliant on imported gas. The government’s response was a package of measures, including support for new nuclear power stations, proposals to encourage investment in renewable power and energy efficiency, and a mandatory carbon-trading scheme for large organisations such as banks and supermarkets. The power industry welcomed the plans, but time is not on the government’s side. The new targets will be hard to meet. The aim of tripling to 15% the amount of electricity coming from renewable sources by 2015 looks incredibly ambitious. Reducing greenhouse-gas emissions by 20% from 1990 levels by 2010 could also be a stretch. New nuclear stations will not be operational for 10 years even with a reformed planning system. The government’s laudable aim is to secure a diverse mix of energy supply. But given the long development timescales, the white paper is likely to increase Britain’s dependency on gas."
GOVERNMENT SHOWS LITTLE URGENCY IN TACKLING LOOMING ENERGY GAP
London Times, 27 May 2007

"The world’s largest untapped oil reserves – in northern Canada – have become the new front line in the battle between environmentalists and the energy industry. Shell, a self-styled 'green' energy company, is to invest billions of pounds in exploiting the Athabasca tar sands.Environmentalists say the tar sands are the world’s dirtiest oil deposits and that refining them generates three to four times more CO2 than normal oil extraction....For western countries, especially America, Canada’s oil is a chance to cut dependence on the Middle East, but the environmental costs could be huge. This is because tar sands comprise viscous bitumen and sand, a mixture that can currently only be extracted by digging it out, destroying the overlying forests. The Athabasca region has already been scarred with huge pits, some hundreds of feet deep. Alongside them lie vast ponds that hold the contaminated sands and other residues left after the oil is removed. Shell, along with Suncor and Syncrude, the other main oil companies in the area, are developing a second extraction method where superheated steam is pumped into the ground to melt the oil so that it can be sucked out as a liquid. However, both processes, and the subsequent refining, require huge amounts of energy – equivalent to up to 30% of the energy contained in the extracted oil.... Shell and its partners are extracting about 150,000 barrels of oil a day but now want a fivefold expansion to 770,000 barrels. A barrel is roughly equivalent to 35 gallons. Suncor and Syncrude are each planning similar expansions to about 500,000 barrels a day. This will require so much energy that the oil firms want to lay a pipeline across 800 miles of forest to tap into gas reserves in the Mackenzie river basin, in Canada’s far north. There are also proposals to build a nuclear power station near the tar sands.... The decision to exploit such oils is provoking a political backlash with Arnold Schwarzeneg-ger, the governor of California, effectively banning them. He has issued a fuel standard demanding a cut in 'carbon intensity', a measure of the CO2 generated in producing and using them. Ten other American states and the European Commission are considering similar measures."
Shell hit by ‘dirty’ Arctic oil furore
Sunday Times, 20 May 2007

"A plunge in American petrol stocks to a 16-year low has prompted the International Energy Agency (IEA) to call on Opec to open its taps and bring more crude oil to the market before the summer. The IEA’s warning and continued disruption to Nigerian oil exports pushed the price of Brent crude up almost a dollar to $66.67. Continued strong petrol demand in America is confounding the oil market and yesterday the Paris-based agency pointed to 930,000 barrel per day (bpd) oil and product stock draw in the first quarter of this year...That followed an 890,000 bpd stock draw in the fourth quarter of last year. The agency is predicting a 1.6 million bpd seasonal jump in oil product demand next month, requiring a significant increase in supplies that the IEA states 'looks unlikely to happen'....The IEA forecasts that nonOpec supplies of crude will increase by one million bpd in this year, recovering from last year’s weak uplift of just 0.4 million bpd and a marginal decline in nonOpec output in 2005. Overall, world demand for oil is expected to rise by 1.8 per cent in 2007, an increase of 1.5 million bpd compared with last year’s rise in demand of 0.7 million bpd. The agency’s greater optimism about nonOpec oil output, after two years of disappointment, is based on new production from Britain, Canada and Australia. However, the IEA admitted that its growth assumption is based on 'normal' operating conditions. The previous year’s underperformance was due to unforeseen disruptions and delays, it argues."
Call for Opec to increase output as US petrol stocks hit 16-year low
London Times, 12 May 2007

"The amount of water available in Northern Alberta isn't sufficient to accommodate both the needs of burgeoning oil sands development and preserve the Athabasca River, contends a study issued jointly yesterday by the University of Toronto and the University of Alberta. The study, written in part by Dr. David Schindler, a University of Alberta biologist considered Canada's top water expert, suggests that the choke point for the province's oil sands expansion may not be the huge carbon dioxide emissions arising from mining and processing the sticky, bitumen containing tar sands, as is widely assumed, but a lack of water.Oil sands plants typically use two to four barrels of water to extract a barrel of oil from the tar sands, a resource that has given the Northern Alberta region the world's largest petroleum reserves but made it a global centre of environmental controversy. The problem of water availability is expected to become acute in the decades ahead because climate change is likely to cause much more arid conditions, reducing stream flows on the Athabasca River, the source of the industry's water, to critically low levels during parts of each year.... In response to water worries, companies such as Syncrude Canada Ltd. have been trying to reduce the amounts used through such actions as increased water recycling. Syncrude bills itself as the most efficient water user in the oil sands, using only 2.28 tonnes of water in 2005 for every tonne of oil extracted."
Choke point for oil sands may be water shortage
Globe And Mail, 11 May 2007

Energy crisis cannot be solved by renewables, oil chiefs say

High hopes and hard truths dictate future

Efforts to fight global warming will be wasted unless we concentrate on energy efficiency

Top IEA official: without Iraqi oil, we hit the wall in 2015

Powerswitch, 27 June 2007 Over 20 MPs and Lords form peak oil group in Parliament

Powerswitch, 27 June 2007
Over 20 MPs and Lords form peak oil group in Parliament