- Happy New Year all!
Was just fine-tuning my procrastination skills at work and stumbled
across this article on The Advertiser's online website (The Advertiser
being Adelaide's local newspaper):
I found it interesting that ExxonMobil have spent $16M on raising
doubt about global climate change - I wonder if they're doing the same
thing with peak oil?
Over and out
- I expect that ExxonMobil's climate change policy is tied to its peak
oil policy. They are undoubtedly in the "optimist" camp when it
comes to peak oil. They publicly dismiss the possibility of a peak
before 2030, however it is important to look at what data they are
using to formulate this position.
Typically ExxonMobil uses the US Geological Survey's published
estimates of ultimately recoverable oil.
The USGS gives each figure an attached probability - nothing is
certain. In very rough terms, they say there is a 95% chance that
the world will suck out more than ~2.5 trillion barrels of oil in
total (of which we've already used about 1 trillion). Then there is
a 95% probability that the world will suck out LESS than ~4 trillion
barrels total, and the mean is quoted as about 3 trillion. In
layman's terms, this means the USGS believes there's roughly a 50/50
chance that we're a third of the way through the recoverable oil
now, and 95% chance that we're more than a quarter of the way
The reason for the differences in these estimates is partly due to
pessimistic vs optimistic predictions for future oil discoveries,
but also to do with future improvements to oil recovery techniques.
Currently on average you can only expect to pump about 30% of the
oil out of an oil reservoir due to the fluid dynamics of the system
(quoted reserve figures more-or-less take this into account).
If engineers figure out how to improve the average to, say, 40% then
they increase the recoverable oil reserve by a huge amount **see
footnote**. The thing is that such improvements can typically only
occur post-peak, so they help to lessen decline after an oilfield's
peak but do not affect the peak itself very much. Globally, this
could mean the difference between a sharp decline starting very soon
versus an undulating plateau from now until about 2030.
Although they don't draw attention to the point, ExxonMobil's
production estimates are based on the USGS's mean estimate, so at
BEST we should give them about 50/50 odds of being right. They also
suggest that we can access more than 1 trillion barrels of
unconventional oil (oil shales, tar sands and so on).
Now, enhanced oil recovery and unconventional oils require
substantially more energy to be "spent" in order to recover the oil
(i.e. more than the conventional oil supplies that either gush out
of the ground or can be pumped relatively freely). This means that
for every litre of petrol you burn, there was a whole lot more oil,
coal, and gas expended to get that litre of petrol. Therefore the
effective greenhouse emissions increase greatly.
At a time when it is absolutely paramount that we reduce global
greenhouse emissions, petroluem is about to become an even worse
emitter. I expect that is at least part of the reason why ExxonMobil
is spending millions of dollars campaigning against action on
climate change. If the world actually takes climate change seriously
and legislates against increased emissions, it will be very bad news
for oil companies like ExxonMobil, whose future revenue will
increasingly come from dirtier and dirtier oil.
Phil Hart, you probably have a much better handle on all this than I
do - any comments? Have I made any critical mistakes in my analysis?
As an aside, ExxonMobil states that a 10% increase in recovery
efficiency could lead to another 800 billion barrels of recoverable
reserves. They mean increasing efficiency from 30% to 40% (literally
an increase of 10%, but practically it's a 33% improvement in
technology!). To the common person reading the news, 10% sounds like
a trivial improvement in technology - just a tenth - whereas in
reality, improving the world's best technology by another 1/3 sounds
much harder to achieve. Always be wary of spin!