November 15, 2006 in Nation/World

Oil’s peak still years away, historian says

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WASHINGTON – Far from being a nearly exhausted resource, the world’s oil reserves are three times bigger than what some popular estimates state, and peak global oil production is still about a quarter-century away, according to a new study by Pulitzer Prize-winning oil historian Daniel Yergin.

The remaining oil resource base is about 3.74 trillion barrels, according to a report released Tuesday by Cambridge Energy Research Associates, which Yergin runs. That’s more than three times the 1.2 trillion barrels that “peak-oil” theorists suggest.

CERA’s report, titled “Why the Peak Oil Theory Falls Down,” challenges an increasingly popular view that the world is about to run out of oil. On the contrary, CERA argues that the world is likely to begin running out of oil between 2030 and the middle of the century. Even so, CERA says, efforts are needed now to push that date back, such as new oil field discoveries, new technologies, energy conservation and alternative energy sources.

Peak-oil theorists warn that the world is on the cusp of a disastrous and rapid decline in oil production. A leading proponent of the theory is oil banker Matthew Simmons, who in the popular book “Twilight in the Desert” suggested that the world’s top producer, Saudi Arabia, has entered an oil-production decline and will take the world down with it. Last month, Simmons told a forum that the world might have reached peak oil production last December.

The CERA study debunks the so-called Hubbert Peak Oil Theory, first espoused in 1956 by geologist M. King Hubbert. Working at the time for Shell Oil Co., he predicted that world oil production would follow a bell-shaped curve in which production grows steadily until it peaks, followed by a rapid decline.

Hubbert was pretty accurate on the timing of U.S. peak oil production, coming within two years of 1970, the year experts now recognize as the peak of continental U.S. production.

But his theory failed to recognize that new technologies enabled reserves to grow over time. His theory preceded the exploitation of massive oil reserves in Alaska and the Gulf of Mexico. That’s why Yergin dismisses talk of peak oil.

“This is really the fifth time we’ve ‘run out of oil,’ ” Yergin said in a teleconference with journalists on Tuesday.

Yergin’s views carry weight because he won the Pulitzer for his 1991 book “The Prize,” an exhaustive history of oil economics.

He and colleagues believe that the decline in oil availability will play out as an “undulating plateau,” in which annual production creates a series of ups and downs, eventually peaks and then declines slowly.

“We see the undulating plateau existing one or two decades, rather than a sharp decline,” said Peter Jackson, CERA’s director of oil industry activity. He sees outright decline beginning no earlier than 2030 and perhaps after 2050.

Future oil supplies, said CERA, will be accessible by new technologies that permit drilling more than 7,000 feet below the ocean’s surface or extracting oil from tar-like deposits in sandy soil found in western Canada.

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