Silence Breaking
TIME MAGAZINE ON PEAK OIL

www.nlpwessex.org/docs/timewjs.htm
After Subject Hits Front Page Of Wall St Journal


22 November 2007

This week 'Peak Oil' made the front page of the Wall St Journal. Now TIME has done a similar piece (see below).

This subject is coming out into the open.

NLPWESSEX
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"A growing number of oil-industry chieftains are endorsing an idea long deemed fringe: The world is approaching a practical limit to the number of barrels of crude oil that can be pumped every day. Some predict that, despite the world's fast-growing thirst for oil, producers could hit that ceiling as soon as 2012. This rough limit -- which two senior industry officials recently pegged at about 100 million barrels a day -- is well short of global demand projections over the next few decades. Current production is about 85 million barrels a day.... The new adherents -- who range from senior Western oil-company executives to current and former officials of the major world exporting countries -- don't believe the global oil tank is at the half-empty point. But they share the belief that a global production ceiling is coming for other reasons: restricted access to oil fields, spiraling costs and increasingly complex oil-field geology. This will create a global production plateau, not a peak, they contend, with oil output remaining relatively constant rather than rising or falling. The emergence of a production ceiling would mark a monumental shift in the energy world. Oil production has averaged a 2.3% annual growth rate since 1965, according to statistics compiled by British oil giant BP PLC. This expanding pool of oil, most of it priced cheaply by today's standards, fueled the post-World War II global economic expansion.... Most of the world's biggest fields are aging, and production at them is declining rapidly. So, just to keep global production at current levels, the industry needs to add new production of at least four million daily barrels, every year. That need is roughly five times the daily production of Alaska, with its big Prudhoe Bay field -- and it doesn't assume any demand growth at all....Soaring energy prices have breathed new life into projects targeting 'nonconventional' oil, such as that trapped in sand or shale. But these sources can't be tapped nearly as quickly or inexpensively as the big oil finds of the past....As these uncertainties mount, there is growing hope that Saudi Arabia, which has about 20% of the world's oil reserves, would ride to the rescue if needed. Saudi Aramco, the national oil company, has embarked on an ambitious plan to increase its daily production by 30%, or three million barrels, early next decade, and thus reclaim the title of top producer from Russia. But Mr. Al Husseini, the former Saudi oil executive, now an independent consultant, said others aren't doing as much, leaving the world entirely dependent on Saudi Arabia to provide extra capacity. 'Everyone thinks that Saudi Arabia will pull us out of this mess. Saudi Arabia is doing all it can,' he says in an interview. 'But what it is doing, in the long run, won't be enough.'"
Oil Officials See Limit Looming on Production
Wall St Journal, 19 November 2007

"If OPEC's members are not able to boost production in coming years, though, it will be impossible to keep blaming the traders as prices rise. What happens then? 'If we had better data, we could hold a global summit and say, 'Gentlemen, it's nobody's fault, but we've peaked,' says Simmons. 'We've got to embrace some conservation practices that are draconian, or we will be at war with each other.' Among the peakists, war and economic breakdown are favorite themes. They figure that cheap oil is the essential fuel of modern capitalism, which will founder without it. A more hopeful take is that innovation is the essential fuel of modern capitalism and that high oil prices will drive rapid advances in conservation and alternative energy. Either way, the beginning of the end of the oil era may be upon us....."
Peak Possibilities
TIME, 21 November 2007


http://www.time.com/time/magazine/article/0,9171,1686824,00.html

TIME

Wednesday, Nov. 21, 2007 By JUSTIN FOX

Peak Possibilities

In July 2006, the world's oil rigs pumped out crude at a rate of nearly 85.5 million bbl. a day. They haven't come close since, even as prices have risen from $75 to $98 per bbl. Which raises a question of potentially epochal significance: Is it all downhill from here?

It's not as if nobody predicted this. The true believers in what's called peak oil--a motley crew of survivalists, despisers of capitalism, a few billionaire investors and a lot of perfectly respectable geologists--have long cited the middle to end of this decade as a likely turning point.

In the oil industry and the government agencies that work with it, such talk is usually dismissed as premature. There have been temporary drops in oil production before, after all--albeit usually during global economic slowdowns, not boom times. In most official scenarios, production will soon begin rising again, peaking at more than 110 million bbl. a day around 2030.

That's alarming enough in itself. Even the optimists think we have less than three decades to go? But at industry conferences this fall, the word from producers was far gloomier. The chief executives of ConocoPhillips and French oil giant Total both declared that they can't see oil production ever topping 100 million bbl. a day. The head of the oil importers' club that is the International Energy Agency warned that "new capacity additions will not keep up with declines at current fields and the projected increase in demand."

This isn't quite the same as saying that oil production has peaked and is about to start declining sharply--the view of the true peakists. In "peak lite," as some call it, the big issues are not so much geological as political, technical, financial and even human-resource-related (the world apparently suffers from a dearth of qualified petroleum engineers). These factors all delay the arrival of oil on the market, meaning that production would not so much peak as plateau. But with demand rising sharply, especially from China and India, even a plateau could be precarious.

It's not that the world is running out of oil. There are massive reserves available in Canadian tar sands, Colorado shale, Venezuelan heavy oil and other unconventional deposits. The problem is that most of this oil is hard to extract and even harder to refine, and it isn't likely to account for a significant share of global production anytime soon. Almost everybody agrees that the pumping of conventionally sourced oil outside the Organization of Petroleum Exporting Countries (OPEC) has already peaked or will peak soon, a reality that even discoveries like the recent 8 billion-bbl. find off the coast of Brazil can't alter because production from so many existing fields is declining.

The big question mark is OPEC, which represents the oil powers of the Middle East and a few other big exporters and currently accounts for 41% of world oil production. Every optimistic scenario assumes that this share will rise dramatically in the coming decades. That is, if things turn out well, the U.S. will become substantially more dependent on Saudi Arabia and its neighbors. Great!

Then there's the gloomy view. In his 2005 book Twilight in the Desert, energy-industry investment banker Matt Simmons opened up a still raging debate over whether Saudi Arabia, OPEC's top producer, really can pump much more oil than it does now. Since the book appeared, Saudi output has dropped from 9.6 million bbl. a day to 8.6 million, despite rising prices.

Saudi officials used the occasion of an OPEC summit in Riyadh in mid-November to say they could up production at any time. But that raises the pesky question of why they don't. So far, the answer from OPEC leaders has been that high prices are the fault of speculators and the falling dollar, not low production. They're not just blowing smoke. Lynn Westfall, chief economist of refiner Tesoro Corp., says there's more than enough oil for sale right now. The price pressure, he explains, "is coming from financial participants in futures markets."

If OPEC's members are not able to boost production in coming years, though, it will be impossible to keep blaming the traders as prices rise. What happens then? "If we had better data, we could hold a global summit and say, 'Gentlemen, it's nobody's fault, but we've peaked,'" says Simmons. "We've got to embrace some conservation practices that are draconian, or we will be at war with each other."

Among the peakists, war and economic breakdown are favorite themes. They figure that cheap oil is the essential fuel of modern capitalism, which will founder without it. A more hopeful take is that innovation is the essential fuel of modern capitalism and that high oil prices will drive rapid advances in conservation and alternative energy. Either way, the beginning of the end of the oil era may be upon us, well ahead of schedule.


PEAK OIL AND LOOMING ENERGY CRISIS
WERE NO SECRET IN THE CORRIDORS OF POWER

"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."
Richard G. Lugar and R. James Woolsey (Former Director of the CIA)
The New Petroleum - Foreign Affairs January/February 1999

"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 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

"In a world of looming shortage, Iraq represented a unique opportunity. With 115bn barrels, it had the world's third biggest reserves, and after years of war and sanctions they were the most underexploited. In the late 1990s, production averaged about 2m barrels, but with the necessary investment its reserves could support three times that. .... Cheney knew, fretting about global oil depletion in a speech in London the following year, where he noted that 'the Middle East with two thirds of the world's oil and lowest cost is still where the prize ultimately lies'. Blair too had reason to be anxious: British North Sea output had peaked in 1999, while the petrol protests of 2000 had made the importance of maintaining the fuel supply excruciatingly obvious. Britain's and the US's fears were secretly formalised during the planning for Iraq. It is widely accepted that Blair's commitment to support the attack dates back to his summit with Bush in Texas in April 2002. What is less well known is that at the same summit, Blair proposed and Bush agreed to set up the US-UK Energy Dialogue, a permanent liaison dedicated to 'energy security and diversity'.  Its existence was only later exposed through a freedom of information inquiry. Both governments refuse to release minutes of Dialogue meetings, but one paper dated February 2003 notes that to meet projected demand, oil production in the Middle East would have to double by 2030 to more than 50m barrels a day. So on the eve of the invasion, UK and US officials were discussing how to raise production from the region - and we are invited to believe this is coincidence."
The real casus belli: peak oil
Guardian, 26 June 2007

"Fuel is our economic lifeblood. The price of oil can be the difference between recession and recovery. The western world is import dependent. ....So: who develops oil and gas, what the new potential sources of supply are, is a vital strategic question...The Middle East, we focus on naturally."
Prime Minister's speech at the George Bush Senior Presidential Library, Texas
10 Downing St, Press Release, 7 April 2002

"Trends in energy markets have been comparatively benign over the past 10-15 years: the UK has been self-sufficient in energy; commercial decisions have resulted in changes in the fuel mix that have reduced UK emissions of greenhouse gases; and trends in world markets and domestic liberalisation have reduced most fuel prices. The future context for energy policy will be different. The UK will be increasingly dependent on imported oil and gas... Increasingly policy towards energy security ...... will be pursued in a global arena, as part of an international effort.... energy security should be addressed by a variety of means, including enhanced international activity and continued monitoring.... The UK is currently one of just two G7 countries which is self-sufficient in energy..... The future for energy policy seems likely to be much less benign.... issues of energy security are likely to become more important. The UK will become increasingly dependent on imported oil and gas.... most other G7 countries already rely substantially on imported energy. ... [One way to maintain security is] to use international action to address global threats to energy security. On just about any scenario the UK will become more dependent on imports both for both its gas and its oil."
The Energy Review
A Performance and Innovation Unit Report - UK Cabinet Office - February 2002

AFTER THE INVASION OF IRAQ
"The UK is a net exporter of oil, so we have no need of the Iraqi oil."
British Prime Minister, House of Commons, 14 April 2003

BEFORE THE INVASION OF IRAQ
".... our energy system faces new challenges.... Our energy supplies will increasingly depend on imported gas and oil..... we need access to a wide range of energy sources."
British Prime Minister, Foreword to DTI Energy White Paper, February 2003

"International oil markets have become so tight that even small acts of sabotage could result in further large price rises, Alan Greenspan, the former chairman of the US Federal Reserve, said yesterday. 'The balance of world oil supply and demand has become so precarious that even small acts of sabotage or local insurrection have a significant impact on oil prices,' he said. Mr Greenspan painted a bleak picture of the world's rising vulnerability to high crude oil prices, saying he was sceptical that oil producers could pump enough crude to meet future demand.... Mr Greenspan, who now runs a private consultancy, said there were few good short-term policy options for bringing down energy prices, saying it was 'not a choice between good and bad' but 'between not so good and worse'".
Former Fed chief warns on oil supply
Financial Times, 8 June 2006

“I am saddened that it is politically inconvenient to acknowledge
what
everyone knows: the Iraq war is largely about oil.”
Alan Greenspan, Chairman Of The US Federal Reserve 1987 - 2006
Sunday Times, 16 September 2007

"Years before George W. Bush entered the White House, and years before the Sept. 11 attacks set the direction of his presidency, a group of influential neo-conservatives hatched a plan to get Saddam Hussein out of power... The group was never secret about its aims. In its 1998 open letter to Clinton, the group openly advocated unilateral U.S. action against Iraq.... Of the 18 people who signed the letter, 10 are now in the Bush administration. As well as Rumsfeld and Wolfowitz, they include Deputy Secretary of State Richard Armitage    ... "
Were Neo-Conservatives’ 1998 Memos a Blueprint for Iraq War?
ABC News, 10 March 2003

"We are writing you because we are convinced that current American policy toward Iraq is not succeeding..... It hardly needs to be added that if Saddam does acquire the capability to deliver weapons of mass destruction, as he is almost certain to do if we continue along the present course, the safety of American troops in the region, of our friends and allies like Israel and the moderate Arab states, and a significant portion of the world’s supply of oil will all be put at hazard."
Open Letter To President Bill Clinton, 26 January 1998

Signed by: Elliott Abrams, Richard L. Armitage, William J. Bennett, Jeffrey Bergner, John Bolton, Paula Dobriansky, Francis Fukuyama, Robert Kagan Zalmay Khalilzad, William Kristol, Richard Perle, Peter W. Rodman, Donald Rumsfeld, William Schneider, Jr., Vin Weber., Paul Wolfowitz, R. James Woolsey, Robert B. Zoellick

"The key holdout is Saudi Arabia -- and it is indeed aggravating that even though we went to war in 1991 principally to protect its oil, they are unwilling to let us launch air strikes [on Iraq] from their country."
James Woolsey - The Former CIA Director Speaks on Iraq
TIME, 18 February 1998

"Energy is vital to a country's security and material well-being. A state unable to provide its people with adequate energy supplies or desiring added leverage over other people often resorts to force. Consider Saddam Hussein's 1990 invasion of Kuwait, driven by his desire to control more of the world's oil reserves, and the international response to this threat. The underlying goal of the U.N. force, which included 500,000 American troops, was to ensure continued and unfettered access to petroleum...."
Richard G. Lugar and R. James Woolsey (Former Director of the CIA)
The New Petroleum - Foreign Affairs January/February 1999

"If OPEC's members are not able to boost production in coming years, though, it will be impossible to keep blaming the traders as prices rise. What happens then? 'If we had better data, we could hold a global summit and say, 'Gentlemen, it's nobody's fault, but we've peaked,' says Simmons. 'We've got to embrace some conservation practices that are draconian, or we will be at war with each other.'"
Peak Possibilities
TIME, 21 November 2007


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