Oil/Gas/Future of Oil
There have been numerous predictions in recent decades about the decline of oil production, with many claiming that there will be a vast rise in oil-prices until, eventually, civilisation goes bust due to lack of oil. Are these predictions honest or will oil-supplies never end because rising technology always allows ever more ways to provide more oil?
Secondly, is the reason why no alternative technology to oil(such as hydrogen-cells) has been effectively produced, is mainly because of lack of funding?
Here it goes, up on my soap box ;=)
There have been many of these dooms day predictions. A decade or two or so ago was “The Crash of ‘90” (I think) when the Shah of Iran fell and Middle Eastern upset would cause us to dry up. Then there was the “Peak Oil” theory which stated that it had all been discovered and we had only one way to go, downhill. Before all of them I seem to recall something about the impending crisis.
They all were based on existing reserves and the current use. Any fifth grader can figure that. What has actually happened is that this target date is a moving target. The world’s conventional reserves were and are known and understood. A look at Saudi Arabian reserves at their old fields in 1980 minus production since 1980 will come close to what is estimated today in those original fields.
They have found new fields. When the peak oil theory was presented, deep water Gulf of Mexico drilling was in its infant stage but now it rivals anything discovered. In the late 1970’s I worked on a Brazilian project that discovered a field that is still being followed into deeper and deeper water. And, of course, now we have the Eagle Ford, Bakken, Marcelles and other shale oil fields that have reserves estimated in the multi-billions of barrels. Poland is discussing the pros and cons of shale fraking! Oil has never been an industry in Poland.
While all this was going on and new fields were being discovered Asia, Africa, mid-East and the India area were developing, selling their ox carts and buying trucks and the U.S. no longer had its near monopoly on consumption and could no longer dictate well head price. Increased consumption increased demand which increased cost which increased profit which increased exploration.
This does not mean we wont run out. Oil is a finite resource just like gold and air and will someday be exhausted. I don’t know when and I am skeptical of those who claim that they do. There are some that say oil is a renewable resource and is still being made in the earth’s core. This is probably true but it is so slow that it doesn’t matter.
While all this was going on and the price rising each year, price driven (you didn’t think it was done out of concern for the environment did you?) conservation measures improved energy efficiency and slowed the rate of increased consumption. At the same time the new, higher cost of energy has made it attractive to develop alternatives. This will also slow the rate of consumption of fossil fuels which will move that target back even further thus making it harder to predict. At age 74 I know I wont see it exhausted but I am also confident my Great-Grandson wont either.
As far as funding is concerned, if it is not profitable it is difficult to sustain without compelling reasons. The Manhattan Project needed a world war. The Tennessee Valley Project took flooding and economic loss greater that Hurricane Sandy to become urgent. During the OPEC oil embargo of the ‘70’s, Exxon spent time and money trying to extract oil from shale in Colorado and gave it up. Old records were examined to see how the Nazis extracted oil from coal during WWII and it was found that they did but it could not be done in a market economy. In the 1950’s the old Sun Oil Company started research on extracting oil from oil sands in Canada. I was present when the CEO announced that, after some 30 years it was at a breakeven point. He stated that he did not believe any other program would last that long because it was not economically sensible as changes in the tax code prevented carrying it that long. This is the same as losing funding.
So it is not funding but cost. The moment it costs less to generate electricity with a wind mill instead of a natural gas turbine the power company will be calling on you to install one in your yard.
This may sound a little Ayn Randish, I hope not as I am not one of her fans, but if you will think back on the reason for technical and scientific discoveries, the reason for exploration and the reason behind revolutions and civil wars you will find cost and profit involved, someone sees an opportunity to make a little money, find a new market or get a job. Same thing with oil. When it was $5/bbl no one worried about it. At $100/bbl we are looking for alternatives. Cost, not funding.