The wide-ranging Al Fin hit upon a graph that will stun the peak oil believers.  You’ll want to save this.  The flip side is it comes from the International Energy Agency (IEA) – a point that many will use to cast justifiable suspicion.  Yet absolute accuracy isn’t needed, the blocks paint a picture of a ratio that even if wrong by 50%, there is a huge amount of petroleum supply yet to be used.

Future Oil Sources from the IEA. Clink image for more info.

Comparing the yellow block of production to date with the sum of the others is a shock to many doomers – er, peak oil believers.  Actually another whole block is missing, the secondary and tertiary recovery from the produced block.  Factually, the development of secondary and tertiary recovery and the application is a function of wells operated by the free world majors and not much by the national oil companies.  Over time the MENA, Other Conventional Oil, Deepwater and Ultra Deepwater, and Artic blocks will have secondary and tertiary recovery, too.  And recovery technology is going to get better.

The price “problem” is based in the driver being supply demand.  Most of the list is more costly than drilling and pumping out oil.  The “drill, baby drill” call may sound a bit simplistic, but for keeping supply up to demand it remains the only fast answer and will remain so for decades.

For the alternative, new product, biofuel, environmental, and global warming perspectives high oil prices make their future goals real.  The barrier for them is the research and development costs plus the incentive to invest in viable economic scale.  The whole of the non-petroleum fuel business need look no further than American corn farmers and Brazilian sugar cane farmers for the only existing example of success.

There is also, as Mr. Fin points out, “New sources for transport fuels are likely to come from many directions, including new gas-to-liquids (GTL) technologies. Oxford Catalyst’s microchannel GTL technology is very much in demand, as are other new varieties of GTL technologies. The market for GTL fuels may be more than 20 million barrels per day! Imagine the impact of that huge new supply on the global oil market. (Note that approximately between 5 and 10 million barrels per day could be produced via GTL from currently flared gas alone. Stranded gas could double that number.) More information at this PDF white paper download from Velocys, creator of the Oxford Catalysts microchannel technology.

But short term, something the persons running for U.S. president might keep in mind, is that getting our neighbors in Canada piped up to the U.S. market and getting rid of Venezuela’s Chavez should be one of the economic priorities.  Follow that with oil shale research to drive that price down and the future doesn’t look bleak at all.

Thanks Al!  Made my day!


6 Comments so far

  1. Benjamin Cole on July 21, 2011 11:44 AM

    Excellent post.

    I have wondered about the Peak Oil crowd for years, and if certain oil interests were behind them.

    We are not running out of fossil fuels. In a way, i wish we were–I would like PHEVs to become the norm in cities, thus cleaning urban air.

    But fossil fuel is here to stay.

  2. P Thomson on July 22, 2011 2:28 PM

    This article misses the point completely.

    Peak oil is not about reserves, or running out of oil. It is about the RATE of production, which has been on a plateau since 2005. All the non-conventional projects you mention (shale oil, tar sands, etc) have not increased this rate, despite huge investments and high prices.

    Peak oil is real, and it is here. We are not running out of oil, at least for the next few decades, but that should not be a cause for complacency.

  3. Jason on July 22, 2011 2:50 PM

    I think you may get a whole different picture of the utility of our resources if you include the price levels necessary to make the resources right of conventional profitable. Will 1,000 bbl in oil shales be much use at, say, $150/barrel? According to the numbers we’ve all seen by now, gas prices have a very clear negative effect on GDP past $120/barrel or so, so blithely skipping past the cost of extraction makes me think people will see what they want to see and disregard the rest as “minor details”. From an investing standpoint, oil will be strong for decades to come, but doing so in a declining economic environment. That’s a good thing?

    We’re also seeing the petroleum market so tight that KSA can’t substitute production for Libya’s losses in volume or quality, yet you believe “liquids” are functionally the same as refined petroleum…interesting.

  4. awb on July 22, 2011 6:00 PM

    Another critical factor ignored is EROEI (energy return on energy invested). As the happy economist moves along the line to the more unconventional oil plays, it takes increasingly more energy (oil) to “harvest” a barrel of oil. The is not an economic function. Oil shales at $115/bbl don’t feed the bulldog if it takes 0.90 bbls to extract one bbl and bring to it to market. That’s called global financial collapse.

  5. Benjamin Cole on July 23, 2011 3:52 PM

    At $100 a barrel, we hit Peak Demand–but not Peak Production.

    No problem.

  6. ㅐㅑㅣ on April 7, 2012 10:42 AM

    Unconventional will not save supply. There is enough shale, tar, coal, gas, heavy oil, etc. to FRY the planet. THe eori has been declining steadily, and to invest enough to make shale a reality means a huge dent in our economy. Even if global warming wasn’t real, we would likely run out of gas and water for new tar capacity, even when you consider fracking. Second the source of the graph, the iea is too industry friendly. Even so, even they have predicted a plateau at 2006 and prospects are worse every YEAR. Deep water is dead and will stay that way for about 20 years, and new arctic supply has little pontential. we can’t drill in antarcitca until 2041 either. Sure, there is new supply coming, but little. EOR is going to take loooooong to start up aditionally. GET A LIFE

Name (required)

Email (required)


Speak your mind