Given the flurry of heated discussion on the topic of ‘peak oil‘ on another BNC post, I invited one of the protagonists, Dave Lankshear (a.k.a. “Eclipse Now” — see here for his blog), to write up a summary piece which described his position on the topic. This is given below, and should provide a good context for discussion; I also hope that this thread will help corral comments on this topic to a central point.
For earlier posts on BNC regarding peak oil (all done, incidentally, prior to BNC’s nuclear awakening), see:
I made some comments on the other comments thread about my position. To paraphrase: a fundamental problem with arguing that authorities like the IEA, EIA and ABARE are overlooking the looming ‘peak oil crisis’ is that so far, they have been correct — at least in the sense that it hasn’t yet happened, just like they predicted (or at least if it has, its ramifications to date on oil prices and availability have been minimal). As such, their predictions which ignore peak oil are, on the bald face of it, justified. Peak oil HAS happened in limited jurisdictions (including the US), but has always, to date, been compensated for by imports, or gas substitutes, other technological improvements etc., such that no nation has so far gone from being an high oil consumer to a low oil consumer on the back of peak oil.
Now I’m not making the argument here that peak oil is an invalid concept — at least regionally — and I’m not even arguing that it’s not a potentially serious future issue for which we ought to be preparing to counter now. But as far as authoritative energy bodies have been concerned, they currently have nothing to hang their heads in shame over in that regard. They’ve got it right. If they are right by luck, and misfortune is about to strike Australia and other industrial nations any time soon, then we may well curse their lack of foresight. But that’s a big IF, and there are many eminent people, including Prof Richard Hillis at my own University, who argue that by the time rising oil prices is a really serious issue, alternatives and substitutes will have been found, as they always have before. Price, they argue, will always be the principal driver of innovation. (In passing I note that this is the reason I argue that full recycling of used nuclear fuel has not yet taken hold with any real enthusiasm — mined uranium is still too cheap).
Anyway, now on to EN’s comprehensive primer, from a ‘peakist’s’ perspective…
On peak oil authorities
by David Lankshear (Eclipse Now), Peak oil activist since 2004
Recent debate on BNC has focussed on the issue of the reliability of government energy authorities in regards to the global peak oil debate. As someone with a mere Social Sciences background and no technical training, I was asked to submit an article on why I have the audacity to hold certain ‘energy authorities’ with a high degree of suspicion. Was it all just paranoid conspiracy theories I absorbed from the net? Or is there something fundamentally wrong with the way our governments have been informed regarding our most important resource, oil?
Introduction to peak oil
In the last 5 years a handful of new government sponsored reports and agencies have suddenly sprung to address an urgent question. Are we suddenly facing the final oil crisis? Are we only years from the beginning of the end of the oil age? Has it already begun? With Scientific American just today predicting global peak oil by 2014 , how did we come to be asking such an important question so late in the picture?
But first a quick-catch up to newcomers not familiar with the term ‘peak oil’. Oil fields tend to ramp up in production as new wells are drilled and the full size of the field is confirmed. But after about half the oil has been pumped out, production stabilises… and eventually declines. It’s to do with oil pressure, which forces the first oil out at high speed. We’ve all seen iconic images of drills ‘striking oil’ where the gusher shoot high into the air. But once enough oil is pumped, the pressure goes down. The going gets tough. Think about sucking on an ice-cone slurry. The first half is fast and thick and juicy, the second half is hard work and slow and watery. The life of an oil field is just like that, but spread out over years or even decades. For a further introduction to peak oil the ABC has some brilliant free online movies to watch, starting with Catalyst , Crude , and Four Corners . Or you can read the Peak Oil Primer at Energy Bulletin .
The history of peak oil in one minute
In 1956 M. King Hubbert (wiki) famously stood up at the American Petroleum Institute seminar, and predicted that within 14 or so years American oil would reach its maximum production or ‘peak’ and then begin to decline. Hubbert was laughed off the stage, as the American oil industry had pumped exponentially more oil every year for decades, with no end in site. As time rolled on and 1970 rolled around, the oil industry laughed at Hubbert and claimed “We’ve never pumped so much oil!” The irony was they never would again, as 1970 was the year they peaked.
How did he do it? In extremely simple terms, you have to find oil before you can pump it. Hubbert noticed that the discovery of oil in America had peaked and declined, and with a little math could plot when the exponentially growing consumption of oil would follow the same pattern. Watch this 2 minute youtube clip as an illustration.
Of course this was a vastly complex data management issue involving thousands of wells and production profiles, but that’s it in a nutshell. Hubbert then made a stab at world peak oil, which he predicted for 1995. But the world soon forgot. Other than Limits to Growth and a smattering of articles here and there, the world assumed we would all be flying “Mr Fusion” powered hover-cars with Marty McFly. This was all ‘in the future’, and something would turn up by then!
New authorities challenge the old
The peak oil discussion started up again in earnest when lifetime geologists Colin Campbell and Jean H. Laherrère wrote a 1998 article for Scientific American, The End of Cheap Oil. . This article re-ignited the debate. It carries the weight of two grandfathers of the oil industry. Other geologists craved a clearer, more scientific approach than was currently being practised by the official government agencies. Colin Campbell eventually founded the Association for Peak Oil and Gas (ASPO) at Uppsala University, Sweden . This university think tank receives papers from all the ‘good old boys’ of the oil industry, veterans with a lifetime on the front line of oil exploration and production. They have a range of publications  in everything from newspapers and magazines, academic theses, through to peer-reviewed works . This coalition of oil professionals and professors is was the first Association to present peak oil as a scientific case unfettered by economic bias.
Joining ASPO is an act of rebellion against the status quo. These experts are taking a stand against the might of the USGS, and all those agencies the USGS advises. This includes the American Department of Energy (DOE) and their sub-agency, the Energy Information Agency (EIA).
Even international concerns depend on the USGS. The International Energy Agency (IEA) was set up by the OECD after the 1970′s oil crisis. The IEA advises Australia on the international oil situation as well. (ABARE focus on our domestic resource issues. Dr Brian Fisher indicated to Four Corners  that he felt ABARE had not been commissioned to report on the international oil scene, even though it advises the Australian government on the oil price.)
ASPO is even winning sceptics in this titanic battle. Lifetime oil professionals are shifting from trusting the USGS to battling them in the peer reviewed literature. One such person was Chris Skrebowski (wiki):
Chris has 38 years experience in the Oil Industry, starting work in 1970 as a long-term planner for BP. His career has been divided between industry planning/market analysis and oil journalism. He was Senior Analyst for the Saudi Oil Ministry in London (1985-1994) , Editor of Petroleum Economist (1994-97)  and Editor of Petroleum Review (1997-2008)
Chris now questions the USGS methodology , writes extensively to the UK Parliament about the dangers of peak oil, and formed the All Party Parliamentary Group on Peak Oil and Gas (APPGOPO). As this coalition of geologists and energy experts grows and forms their own consensus that peak oil is imminent, the contrast with the established authorities could not be more profound. It is as if the world’s climatologists had reached a consensus on global warming with the IPCC all along rejecting it!
What are the main arguments that are convincing the likes of Chris Skrebowksi to abandon the ‘IPCC’ of oil, the USGS?
1. The USGS uses incorrect categories
Campbell and Aleklett  explain how the term ‘Proved’ reserves evolved in the unique historical setting of early Texas drilling. In this chaotic environment back in the heyday of American oil exploration, it was not unreasonable to simply multiply annual production volumes by 10 to give a rough ‘Proved’ resource. But today we use seismic mapping technologies that give a far more accurate estimation in the first place, and so using this ‘Proved’ formula can artificially inflate reserve estimates.
Unfortunately the world also has a variety of definitions of ‘Proved’ and ‘Probable’ and ‘Possible’ reserves, which also confuse the real story. Half the battle for accuracy seems to focus on terminology alone.
Campbell shows some respect for decades of US Geological Survey work right up until the 2000 report. Then it all went horribly wrong. The USGS inappropriately extrapolated specifically American categories to the rest of the world. Not only that, but magical technological improvements were assumed to allow ‘reserve growth’ – getting more out of existing fields – by an astonishing 76%! Economic paradigms were forced over the data. As Campbell and Aleklett explain in their abstract:
…what may be called the Flat-Earth Approach, in which the resource is deemed to be virtually limitless, with extraction being treated as if it were controlled only by economic, political and technological factors.
The University of Reading study by Bentley also raises concerns about the categories used .
2. It doesn’t work
The USGS 2000 study doesn’t work in practice. The USGS have such a vastly inflated estimate of the oil on this planet that their projected discovery rates were double what actually occurred in the real world .
3. The Growing Gap: those ‘twin peaks’ appear again
As we saw above, Hubbert predicted American peak oil from the ‘twin peaks’ of the discovery bell curve forecasting the consumption bell curve. We can now clearly see the same pattern unfolding on the world stage, as modelled by ASPO from Exxon Mobil data .
Discovery peaked way back in 1965, 45 years ago. Also note that as production keeps climbing, discovery keeps dying. The last time we found more oil than we burned was in the early 1980’s. A whole generation has been born, educated, attended university and entered the workforce since we stopped even finding as much oil as we burn each year. We now burn 4 or 5 times more than we find, and are eating into the oil our grandparents discovered. The discovered volumes of oil look quite high compared to our current consumption peak, it is a tricky thing to judge visually. The experts have to mathematically ‘smooth out’ the already discovered oil to supply the world’s oil on the downside of the consumption bell curve, just as Hubbert did back in 1956 to predict the American peak of 1970. ASPO add their more grounded future discovery trends and come to an Ultimately Recoverable Reserve (URR) figure. Apply this to the bell curve, and we get the peak somewhere in this decade. I call this the ‘working from the end’ method.
4. Megaprojects — looking forward
This is in contrast to the forward estimates method of Chris Skrebowski. As his wiki says:
Initially sceptical about Peak Oil predictions, he was persuaded by Colin Campbell of the unreliability of oil reserves data and the risks this posed to energy supply projections. His insight was to recognise that future production flows, rather than oil reserves, were the key determinant of global oil supply. Consequently, he developed Peak Flow Analysis based on the future oil flows identified in his own Global Oil Megaprojects Database. Using this methodology he concluded that major supply/demand imbalances would occur by 2007 with actual Peak Oil flows occurring no later than 2011.
The Megaprojects report is a database of the performance of every megaproject, or oil field that pumps over 100 thousand barrels a day . The whole of Australia’s current production would only add up to about 4 of these fields. We are a drop in the ocean. The world needs the equivalent of 840 ‘megaprojects’, or 84 million barrels a day!
Aleklett claims we now live in a world where 54 out of the top 65 oil producing nations have already peaked . These fields are now permanently producing less oil every year. Skrebowski’s concern is to look ahead, and forecast the ability of the new megaprojects that start each year to offset the oil we lose each year. Skrebowski published his Megaproject Reports in the prestigious Petroleum Review . He is also responsible for variety of magazine articles, video conferences, and podcasts with his ODAC group in the UK. Dr Fredrik Robelius wrote his Phd thesis to also focus on how tracking trends in the world’s super-giant fields alone proves peak oil to be imminent. 
5. The consensus is growing — and grouping around this decade
The Australian Federal Senate Committee showed in Chapter 3.86 that many other significant geologists, energy companies, and even energy investment bankers have also disagreed with the USGS 2000 study . A graph from the Peak Oil wiki also illustrates the point.
6. The USGS is under review
The word is spreading. The IEA now appears to be reviewing their practice of relying on the USGS for oil data . A senior IEA official has even warned the Guardian of undue American influence in denying peak oil in the IEA . And government’s are starting to hold their own independent inquiries, such as the American DOE’s Hirsch Report , the UK’s APPGOPO and of course Australia’s own Senate Committee .
7. OPEC hidden
ASPO and the other major peak oil agencies and authors doubt OPEC’s reporting. We had over 30 years of Western oil companies surveying Saudi Arabia before the oil industries were nationalised in 1970 and Western nations were banned. Since then, they want us to believe they have conveniently discovered exactly much oil as they have pumped over the last 40 years of production! Only they don’t let Western nations audit their fields. Robert Hirsch put it best when he told Four Corners :
ROBERT HIRSCH, CONSULTANT US DEPT OF ENERGY: Basically, what they’re asking us to do is to trust them. And, frankly, on something that’s the lifeblood of our civilisation and the way we live, to trust somebody who won’t allow any audits is extremely risky. I personally don’t believe the numbers that are out there.
A difficult transition
The Australian Senate Committee  decided to remain agnostic towards a final peak oil date. But even the possibility of peak oil in the next few decades has them spooked. Chapter 3 states:
3.137 The committee cannot take sides with any particular suggested date for peak oil. However in the committee’s view the possibility of a peak of conventional oil production before 2030 should be a matter of concern. Exactly when it occurs (which is very uncertain) is not the important point. In view of the enormous changes that will be needed to move to a less oil dependent future, Australia should be planning for it now.
3.138 Most of the official publications mentioned in this report seem to regard the ‘long term’ as extending to 2030, and are silent about the future after that. The committee regards this as inadequate. Longer term planning is needed. Even the prospect of peak oil in the period 2030-2050 – well within the lifespan of today’s children – should be a concern. Hirsch suggests that mitigation measures to reduce oil dependence ‘will require an intense effort over decades…’
This inescapable conclusion is based on the time required to replace vast numbers of liquid fuel consuming vehicles and the time required to build a substantial number of substitute fuel production facilities… Initiating a mitigation crash program 20 years before peaking appears to offer the possibility of avoiding a world liquid fuels shortfall for the forecast period.
If the peak in global oil production is in fact this or next year, the implications for the world economy are profound, but beyond the scope of this article.
 Scientific American (September 2010) How much is Left? The Limits of Earth’s Resources.
 ABC Science Catalyst (2005) The Real Oil Crisis (12 minutes)
 ABC Science (2007) Crude – the incredible journey of oil
Part 2: Last hours of ancient sunlight (31 minutes)
 ABC Documentary 4 Corners (2006) Peak oil? (43 minutes)
 Energy Bulletin — EnergyBulletin.net is a clearinghouse for information regarding the peak in global energy supply. We publish news, research and analysis concerning:
 Scientific American (1998) THE END OF CHEAP OIL by Colin J. Campbell and Jean H. Laherrère,
 Association for Peak Oil and Gas
 Range of published material
 Peer reviewed works from ASPO are generally behind paywalls
However, Uppsala Universitet hosts a variety of their work for free.
 Depletion – the missing demand element? by Chris Skrebowski — questions the IEA paradigms
 Minerals and Energy (2003) The Peak and Decline of World Oil and Gas Production by Kjell Aleklett and Colin J. Campbell
 University of Reading, Reading (2007) Assessing the date of the global oil peak: The need to use 2P reserves byR.W. Bentley, S.A. Mannan, S.J. Wheeler
 World Energy Vol. 5 No.3 (2002) The future of the Oil and Gas Industry: Past Approaches, New Challenges by Harry J. Longwell, Exxon Mobil Corporation
Longwell denies peak oil is imminent, but the data supplied by Exxon Mobil shows the 40 year trend in declining discoveries
 Heading For Peak: Skrebowski’s Oilfield Megaprojects Update (2005) Julian Darley interviews Chris Skrebowski
 The oil supply tsunami alert (2005) by Kjell Aleklett
 Petroleum Review (2006) Prices holding steady, despite massive planned capacity additions: Petroleum Review regularly updates its listing of the upcoming so-called ‘megaprojects’. The aim of the listing is to attempt to answer the question as to whether sufficient oil is being developed to meet likely requirements going forward, writes Chris
 University of Uppsala, Sweden (2007) Giant Oil Fields – The Highway to Oil by Dr Fredrik Robelius
 Senate Rural and Regional Affairs and Transport Committee, Australia’s future oil supply and alternative transport fuels (2007), © Commonwealth of Australia 2007, ISBN 0 642 71726 5
 Journalist and author David Strahan (2007) IEA reviews reliance on USGS resource estimates
 Guardian (November 2009) Key oil figures were distorted by US pressure, says whistleblower
 Download the entire Hirsch Report PDF from the wiki references and footnotes