Oil-world to end with whimper! (September 2002)

Way back in my own 70’s Show—during an MSc course in Applied Geophysics—we hairy, bell-bottomed louts had the pleasure of an address from Nigel Anstey—definitely the greatest geophysicist ever to hail from the Isle of Man. At the time of oil price crises, the role of oil on the geopolitical scene was somewhat different than today. Following the nationalizations and the oil price shocks, there was a general feeling that exploring for and producing oil was a jolly good thing to do. Anstey, who was promoting his colored-in seismic sections showing strange bright spots—which he postulated were direct hydrocarbon indicators—got our attention and esteem by flattery. Anstey suggested that in a few years, geophysicists involved in oil exploration might become the ‘darlings of society’, thanks to their role in keeping the economy going.

Anstey’s Darlings

I guess that for the last thirty years or so I have been waiting to become one of Anstey’s Darlings. Like many others in the business, I have always assumed that at some time, the oil supply will reach the 'Hubbert' production peak and the subsequent decline, combined with growing demand would push the oil price through the roof, bringing us all if not ‘darling’ status, at least untold wealth!

Bludgeoned

While I have been waiting for Hubbert (which mysteriously is always just around the corner—and has been so for around fifty years), the world has changed. Today, working in the oil business is more likely to make you feel guilty about something—whether it is global warming, sustainability or pollution—than to confer ‘darling’ status. One feels particularly uncomfortable when the big eco-events, world summits on this and that come along. Friends, bludgeoned by green propaganda, begin to ask awkward questions during dinner parties, about oil companies’ practices and the sustainability of the oil economy. I usually fend off such improper  advances by asking how my interlocutor travels around town—and the conversation then  turns to the weather—which in some ways is from frying pan to fire.

Johannesburg

So in case any of you are experiencing similar friendly fire on your evenings out, I bring you the latest thoughts on oil, sustainability and all that, as gleaned from the recent Johannesburg World Summit on Sustainable Development and the World Petroleum Conference in Rio. Bob Priddle, director of the International Energy Agency (an economic think-tank not reputed for radicalism) says, “We are not on a sustainable energy path unless we make considerable changes. A secure supply of energy to underpin essential economic activity and provide services to society is essential if sustainable development is to be achieved.”

Take the bus!

The IEA considers access to energy an especially high priority in the sustainable development debate, “In the absence of radical new policies, 1.4 billion people will still have no electricity in 30 years time.”  For the IEA, sustainable transportation systems are essential, since transport is the fastest-growing use of energy worldwide. Rapidly increasing populations and vehicle usage ‘have created gridlock and sprawl, as well as exceptionally high levels of air pollution, noise and accident rates’. For the IEA, the answer lies in new bus transit systems which can ‘revolutionize urban travel’. Houstonians take note!

WPC

You may have got the idea that the IEA is into bashing the oil industry—but Priddle re-stated his position in a remarkable joint statement issued by the IEA and OPEC at the WPC. The IEA and OPEC share many views about the future of world energy—that for the foreseeable future, the world will rely predominantly on fossil fuels. Facing up to ‘global environmental expectations’ is becoming increasingly important. Both the IEA and OPEC are, ‘keenly interested in carbon sequestration and its ‘safe disposal deep onshore or offshore’. A ‘secure and affordable commercial supply of energy’ is also indispensable to tackling global poverty. ‘Energy helps to supply the basic essentials of life, such as pumped water, and is fundamental to launching small-scale, productive economic activity.’ In this context renewable energy is important in relieving energy poverty—particularly in rural communities. The two organizations are to cooperate on a ‘Joint Oil Data Exercise’—designed to ‘bring greater transparency to oil markets by improving the quality of published data on oil demand, supply and stocks’.

Ran out of rocks?

As reported in the Oil and Gas Journal, another WPC speaker, Shell researcher and hydrogen advocate Michiel Groeneveld noted that fossil fuels have proved far more abundant than previously thought. Groeneveld believes we have enough oil for the next 25-40 years, with gas reserves good for 25-50 years. In the interim, hydrogen and renewables should develop into viable alternatives. Groeneveld foresees a smooth transition to alternative energy sources (hydrogen first, then biomass) and believes the ‘oil age’ will not end because we run out of oil— any more than the ‘stone age’ ended because when we ran out of rocks!

Soft landing

So the oil world will end with a whimper, not a bang, a ‘soft landing’ which has an attractive ring of likelihood to it. Maybe we won’t be darlings—or rich! But the world will continue to have bags of energy. How much of it will get to Priddle’s 1.4 billion electrically challenged in 2030 is a different question.�

Click here to comment on this article

If your browser does not work with the MailTo button, send mail to pdm@oilit.com with PDM_V_3.3_0209_3 as the subject. Web use only - not for intranet/corporate use. Copyright © 2002 The Data Room - all rights reserved.