The following is a remarkable statement from the March 2005 newsletter of the Association for the Study of Peak Oil and Gas (ASPO). In it, the DOE states that that "Initiating crash program mitigation 20 years before peaking offers the possibility of avoiding a world liquid fuels shortfall for the forecast period", whereas initiating a program only 10 years before "would still result in a worldwide liquid fuels shortfall", and waiting to start the program until oil actually peaks would "leave the world with a significant liquid fuel deficit for two decades or longer"
It further states that "Without timely mitigation, world supply/demand balance will be achieved through massive demand destruction (shortages), accompanied by huge oil price increases, both of which would create a long period of significant economic hardship worldwide."
Other comments include:
"In the developed nations, the economic problems associated with world oil peaking and the resultant oil shortages will be extremely serious. In the developing nations, economic problems will be much worse"
" Government intervention will be essential, because the economic and social impacts of oil peaking will otherwise be chaotic"
"World oil peaking represents a problem like none other. The political, economic, and social stakes are enormous. Prudent risk management demands urgent attention and early action."
Here's the entire entry from the newsletter:
The US Department of Energy addresses Peak Oil. The US Department of Energy has submitted the following article for inclusion in this Newsletter
The Mitigation of the Peaking of World Oil Production
Summary of an Analysis, February 8, 2005
A recently completed study for the U.S. Department of Energy analyzed viable technologies to mitigate oil shortages associated with the upcoming peaking of world oil production.1 Commercial or near-commercial options include improved vehicle fuel efficiency, enhanced conventional oil recovery, and the production of substitute fuels. While research and development on other options could be important, their commercial success is by no means assured, and none offer near-term solutions.
Improved fuel efficiency in the world's transportation sector will be a critical element in the long-term reduction of liquid fuel consumption, however, the scale of effort required will inherently take time and be very expensive. For example, the U.S. has a fleet of over 200 million automobiles, vans, pick-ups, and SUVs. Replacement of just half with higher efficiency models will require at least 15 years at a cost of over two trillion dollars for the U.S. alone. Similar conclusions generally apply worldwide.
Commercial and near-commercial options for mitigating the decline of conventional oil production include: 1) Enhanced Oil Recovery (EOR), which can help moderate oil production declines from older conventional oil fields; 2) Heavy oil/oil sands, a large resource of lower grade oils, now produced primarily in Canada and Venezuela; 3) Coal liquefaction, an established technique for producing clean substitute fuels from the world's abundant coal reserves; and 4) Clean substitute fuels produced from remote natural gas.
For the foreseeable future, electricity-producing technologies, e.g., nuclear and solar energy, cannot substitute for liquid fuels in most transportation applications. Someday, electric cars may be practical, but decades will be required before they achieve significant market penetration and impact world oil consumption. And no one has yet defined viable options for powering heavy trucks or airplanes with electricity.
To explore how these technologies might contribute, three alternative mitigation scenarios were analyzed: One where action is initiated when peaking occurs, a second where action is assumed to start 10 years before peaking, and a third where action is assumed to start 20 years before peaking. Estimates of the possible contributions of each mitigation option were developed, based on crash program implementation. Crash programs represent the fastest possible implementation—the best case. In practical terms, real-world action is certain to be slower. Analysis of the simultaneous implementation of all of the options showed that an impact of roughly 25 million barrels per day might be possible 15 years after initiation. Because conventional oil production decline will start at the time of peaking, crash program mitigation inherently cannot avert massive shortages unless it is initiated well in advance of peaking.
* Waiting until world conventional oil production peaks before initiating crash program mitigation leaves the world with a significant liquid fuel deficit for two decades or longer.
* Initiating a crash program 10 years before world oil peaking would help considerably but would still result in a worldwide liquid fuels shortfall, starting roughly a decade after the time that oil would have otherwise peaked.
* Initiating crash program mitigation 20 years before peaking offers the possibility of avoiding a world liquid fuels shortfall for the forecast period.
Without timely mitigation, world supply/demand balance will be achieved through massive demand destruction (shortages), accompanied by huge oil price increases, both of which would create a long period of significant economic hardship worldwide.
Other important observations revealed by the analysis included the following:
1. The date of world oil peaking is not known with certainty, complicating the decision-making process. A fundamental problem in predicting oil peaking is uncertain and politically biased oil reserves claims from many oil producing countries.
2. As recently as 2001, authoritative forecasts of abundant future supplies of North American natural gas proved to be excessively optimistic as evidenced by the recent tripling of natural gas prices. Oil and natural gas geology is similar in many ways, suggesting that optimistic oil production forecasts deserve to be viewed with considerable skepticism.
3. In the developed nations, the economic problems associated with world oil peaking and the resultant oil shortages will be extremely serious. In the developing nations, economic problems will be much worse.
4. While greater end-use efficiency is essential in the long term, increased efficiency alone will be neither sufficient nor timely enough to solve the oil shortage problem in the short term. To preserve reasonable levels of economic prosperity and growth, production of large amounts of substitute liquid fuels will be required. While a number of substitute fuel production technologies are currently available for deployment, the massive construction effort required will be extremely expensive and very time-consuming, even on a crash program basis.
5. Government intervention will be essential, because the economic and social impacts of oil peaking will otherwise be chaotic, and crash program mitigation will need to be properly supported. How and when governments begin to seriously address these challenges is yet to be determined.
Oil peaking discussions should focus primarily on prudent risk management, and secondarily on forecasting the timing of oil peaking, which will always be inexact. Mitigation initiated earlier than required might turn out to be premature, if peaking is slow in coming. If peaking is imminent, failure to act aggressively will be extremely damaging worldwide.
World oil peaking represents a problem like none other. The political, economic, and social stakes are enormous. Prudent risk management demands urgent attention and early action.
1 Hirsch, R.L., Bezdek, R.H, Wendling, R.M. Peaking of World Oil Production: Impacts, Mitigation and Risk Management. DOE NETL. February 2005.1
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