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December 29, 2008

What Is "Peak Oil'

Brian Schwartz, MD, professor in the Johns Hopkins Bloomberg School of Public Health’s Department of Environmental Health Sciences and co-director of the School’s Program on Global Sustainability and Health, continues his discussion of “peak oil” and the impact the demand for energy could have on our society and our health. Click here for part 1 of this series on how peak oil may impact our health.

Question: What is peak oil? 

Answer: Peak oil defines the point in time at which the world has reached the maximum production rate of petroleum. This has been called “Hubbert’s peak” after the Shell Oil geologist, M. King Hubbert, who predicted in 1956 that the United States, then the largest producer of oil in history, would pass its own peak of oil production in 1970. He was scoffed at and widely doubted at that time. However, in 1970, 14 years after Hubbert’s prediction, the U.S. did pass peak production. We peaked at around 9 million barrels per day in 1970 and now, almost 40 years later, we are at approximately half that rate, despite many more wells, more drilling, the addition of Alaskan, Gulf of Mexico, and other deep water oil, and the implementation of new technologies. 

Question: When do experts think global oil production will peak?

Answer: Hubbert, using the same rigorous methods he used to predict the U.S. peak, predicted in 1968 that the world would pass peak production in the early 21st century, soon after the year 2000.  The world now produces approximately 85 million barrels of oil per day, and this rate has been flat since 2005, despite increasing energy demand growth of 2 to 4 percent per year. This three year plateau is consistent with a peaking of production. Thus, many oil geologists and petroleum industry experts believe we are passing peak now and that we will never be able to produce more oil than 85 million barrels per day. When the peak is passed is only clear in retrospect and may take a few years past peak to be sure. Hubbert explained the bell-shaped curve of oil production increases and declines; what this means is that after peak is passed, despite all efforts, production will start to decline by 3 to 5 percent per year, and this will continue forever. The notion of oil production peaking is not at all controversial among industry experts; the only uncertainty is when, but most think the world will pass peak production sometime between now and 2015.

Question: If this is truly a problem, why did oil drop from its peak of $147 per barrel in July 2008 to less than $50 per barrel by the end of 2008?

Answer: The economic crisis caused tremendous destruction of demand for oil. There was no miraculous increase in production or solution to the geologic reality of Hubbert’s peak. It was simply that the economic crisis has caused such a large decrease in demand for oil. Once the economy recovers, oil prices will undoubtedly rise significantly again.

Question: There are untapped supplies of oil in Alaska and off shore. Could these supplies make up any short fall?

Answer: The world is producing 85 million barrels of oil per day. When peak production is passed, this will decline by at least 2 to 4 million barrels of oil per day, on average, every year thereafter, and data from fields that have already passed peak indicate that production declines may be even more rapid than that.  While there are other oil resources in the world, none are expected to be able to replace this declining production. For example, if we were to exploit it, the Arctic National Wildlife Refuge (ANWR) is expected to provide only a little over 1 million barrels per day starting in about 10 years. By that time, if we are passing peak now, world oil production could be 10 to 15 million barrels less per day than it is now. Adding 1 million barrels per day will do little to solve the challenges that this will pose for us. Furthermore, it is thought that 95 percent or so of all the oil that there is to discover has been discovered. World discovery of oil, in terms of estimated reserves, peaked in the 1960s. We have been using 2 to 4 barrels of oil for every one discovered every year since approximately 1980. 

Question: Higher oil prices will make it economical to produce oil from unconventional sources like oil sands and oil shale.  Won’t that fill the gap?

Answer: Oil sands in Alberta, Canada and oil shale in the U.S. Rocky Mountains are unlikely to ever produce more than perhaps 5 million barrels of oil per day, so again, it would not be enough to replace the declines in petroleum production, which continue inexorably. The bigger problems with oil sands and oil shale are that they are very environmentally disruptive. Production requires huge quantities of water to get the fossil energy out of solid shale and sand. Massive quantities of energy are needed to mine the shale and sand, and they are more carbon intensive than conventional oil, which means that more carbon dioxide is released for each unit of energy derived compared to oil. Deriving oil from these sources is not an ecologically sane solution and it would accelerate the rate of climate change. 

Question: What is net energy and why is it important?

Answer: An important point is that oil sands and oil shale offer very little in terms of net energy compared to oil, which is embodied in the concept of EROEI—energy returned on energy invested.  For example, the relatively easy-to-obtain oil of 50 years ago provided 100 units of energy returned for each unit of energy invested to get it out of the ground, or an EROEI of 100. Today, Middle East oil has an EROEI of around 30. Oil sand has an estimated EROEI of 3 and oil shale an EROEI of 1.5. The lower net energy means that even if we use oil sand and shale to replace oil we would have much less energy available in the world. In terms of net energy, we would need to replace one barrel of current Middle East oil with 10 barrels of liquid fossil fuels from oil sands to derive the same net energy. To replace an annual decline of 2 million barrels of oil per day, which is a reasonable estimate, we would need 20 million barrels of oil from oil sands each day to derive the same net energy. That is not ever expected to be achievable, even among advocates for oil sands production.

Question: Can’t other energy sources be used to replace the decline from oil?

Answer: The energy obtained from the oil we use is staggering. The world uses approximately 31 billion barrels of oil per year, with each barrel containing the equivalent of approximately 1.7 megawatt hours [MWh] of energy in terms of electricity. To replace just one year’s worth of energy from oil with other energy sources would require that we build thousands of coal-fired power plants, thousands of nuclear power plants, millions of rooftop solar photovoltaic systems, or millions of wind turbines.

Coal, nuclear, wind and solar energy can each be used to produce electricity. The electricity from these sources could solve some problems, but will not allow airplanes to fly for example, nor can our existing automobile fleet run on electricity. The key challenge is about the scale and the pace at which we can achieve the needed change.  The fact is that there are no alternatives that can easily replace the energy from oil, which will soon be declining in supply. However, we must try. We should invest in rapid expansion of renewable energy sources that do not emit carbon dioxide or contribute to climate change, such as solar thermal electricity, solar photovoltaic cells, wind, geothermal and possibly ocean waves.  We must also avoid making mistakes. For example, the rapid increase in production of corn-based ethanol is very unfortunate energy policy, because it is bad for climate change and for food prices.

Click here for part 1 of this series on how peak oil may impact our health