Wednesday, August 06, 2008
On the downside of oil's peak
From the RoundTable blog
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Edwin S. Robinson
Robinson, of Catawba, is an emeritus professor of geophysics in the Department of Geosciences at Virginia Tech.
Why are fuel prices rising? To a large extent the price is set by supply and demand. The following discussion is about supply. I became interested in the sustainability of crude oil supply about 30 years ago, when I began discussing this subject in geology classes I was teaching at Virginia Tech. At that time, analysis of oil production was a well-established field of study.
The modern oil industry began in the 1850s when the first wells were drilled. The most rapid growth took place in the U.S., where production of oil reached about 2 billion barrels per year by 1950. Shortly thereafter, M. King Hubbert (1903-1989) began his analysis of oil production. Hubbert went on to become the most famous oil production analyst of all time.
From a thorough study of U.S. oil production data, he concluded that the annual change in oil production is related to the remaining volume of oil in the ground. He showed that future change in oil production should be predictable by means of a graph that mathematicians call a logistic curve. This is a bell-shaped curve that shows how oil production in some region should increase year by year until half of the original volume is used up, and thereafter should decrease year by year until all the remaining oil is gone.
After determining the particular shape of the logistic curve representing U.S. oil production, Hubbert was able to calculate how much oil would be produced during any future year as well as the total volume remaining in the ground at that time. The only information he needed was the continuous record of U.S. annual production from the beginning in 1859 up to the time he was making the calculations.
Hubbert predicted in 1956 that U.S. oil production would increase each year until reaching a maximum of approximately 3 billion barrels per year in the early 1970s, and thereafter would decrease year by year. This prediction was not received with enthusiasm. Few people were willing to consider the possibility of an oil shortage.
There was much scornful criticism of Hubbert's work. Nevertheless, production increased, reaching a peak of about 3.1 billion barrels per year in 1970, and then started the predicted irreversible decline. In 2008, U.S. production is below 2 billion barrels per year. We have used up 83 percent of the 230 billion barrels that existed in the U.S. in 1859.
Despite constant public pressure to increase U.S. domestic production by drilling more wells, nature refuses to cooperate. Each year added production from new wells falls farther behind the declining production from older wells. This ongoing decline in annual production closely follows the logistic curve.
In 1969, Hubbert presented a global logistic curve indicating that worldwide production would peak sometime close to the year 2000. This early result has been revised year by year as more production data became available. By the mid-1990s, most of Hubbert's successors agreed that peak global oil production of about 30 billion barrels per year would occur sometime between 2003 and 2010.
Recently, data compiled by the International Energy Agency indicates peak annual production close to 31 billion barrels per year was reached in 2006. Most current logistic curves compiled by different analysts indicate values between about 2 trillion and 2.2 trillion barrels for original volume of oil in the Earth. During the past 1½ centuries, we have consumed half of it.
The logistic curves calculated recently by different analysts indicate that in the decade following the peak, we can expect production to drop from about 31 billion barrels per year to slightly less than 29 billion barrels per year, and in the next decade it will fall below 23 billion barrels per year. To achieve even these diminished levels of production will require all of the ingenuity and technical resources available to the oil industry. In view of the time required to invent and develop alternatives, there appears to be no way to avoid significant changes in our style of living during the next few decades while searching for these alternatives.
Right now we are passing beyond peak oil production. The demand for crude oil exceeds the supply. While production irreversibly declines, human population continues to increase, so there are more people who still want to buy more oil-consuming machines. We should not be surprised by increasing fuel prices.
For more information about oil production, Hubbert's analyses and assessments of other energy resources, an excellent and concise reference is the book "Beyond Oil -- The View from Hubbert's Peak," by Kenneth Deffeyes.
