Peak Oil: The Science

Oil is primarily the product of the decomposition of the smallest element of the ocean food chain, which is also it's most prolific (up to 80% of total organic matter found in the ocean). Under specific conditions the sedimental collection on the ocean floor of the vast turnover of planktonic bodies over millions of years - single celled organisms capable of absorbing Carbon by photosynthesis - turns under pressure and heat into oil. This process is accompanied by the normal geological processes of the earth's crust which both bury and expose these oily layers.

Unless held in a thick layer of oil rich rock by an impermeable 'cap', the oil will try to migrate away from the intense pressure found underground. Thus it is also found on the surface.

The middle eastern oil fields for example are the result of over 100million years of ocean biomass turnover. Followed by sedimentation and folding of the earth's crust; which allowed this extremely unique product to be found and exploited today. Exploited at a far greater rate than it can ever be accumulated naturally.

Natural gas is formed from the process of the oil 'cracking' under 'greater' immense pressure and temperature into methane – the smallest Carbon molecule.

Coal is formed by an equivalent process, but based on fossilised terrestrial plant material. At a time from some 50-380 million years ago (depending on which coal type you are talking about) when the earth was a hotter more humid place; with an atmosphere richer in oxygen. Coal's early pre-eminent use in combination with the invention of the steam engine in 1712; and accompanied by appalling labour practices of the time; allowed the industrial revolution to largely put paid to small and unique cottage industry at this time in England and Europe.

Eventually it was supplanted by the liquid fuel found initially in Pennsylvania in the 1850's. Coal remains the earth's most abundant fossil fuel.

It's use however is accompanied by visible air particulate contamination and serious carbon and sulphur emissions.

The city of London banned coal fires in 1956, largely as a result of over 4000 people dying in 1952 over a five day period of little wind! This caused a black fog to descend on the city in December that year which contained an acidic atmospheric soup, that created death and havoc amongst people of all classes, caused by coal burning fires.

Peak oil describes a now well known dynamic of oil field production. Initially underlying structures allow rapid outflow to a wellhead. However once a production peak is reached, a rapid drop off inevitably occurs.

The term peak oil really means effectively a period of time when we will have continuing price rises as the easiest oil to exploit is used up, with accompanying difficulties in demand supply.

It is likely that there is substantially more oil to be found. It is the cost of it's extraction that will prove the point of difficulty. Should ways be found to reduce consumption rapidly, this problem can be delayed.

The International Energy Agency (IEA) in August 2009 published a first ever rigorous assessment of the world's major oil fields, covering in effect over 75% of global reserves.

The Report states that most of the biggest non-opec fields have already peaked. The decline of most fields is running at 6 – 7% per year.

In 2008 existing production was 126% of 1990 levels at around 86 million barrels per day (bpd). Total world production in 1990 was 66.5million bpd.

The 6-7%decline indicates a drop of 55% of 1990 levels – or a production from current fields of a total of around 36million bpd by 2020!

Comments from within some parts of the oil sector are also indicating a “devastating oil crisis” (John Hess, Chairman , Hess Corporation, December 2009)) unless global action is taken. He agrees that combining demand growth of 1 million bpd, with declining producton of more than 5% or around 4 million bpd; means the world needs to be finding an additional 5 million bpd production capacity each year.

The IEA estimation is that we need to find and install an additional 64million bpd between now and 2030. Since 1990 we have installed an additional 20 million bpd!

So it's looking interesting to say the least!

It is likely that the middle eastern countries that have the most substantial reserves will grow in market power as their share of the total rises in proportion, and the market becomes demand led.

Historically however price rises have driven alternative technologies, providing loss of market share; which these countries are aware of. Yet without higher prices, new more expensive supply cannot be recovered. The recent economic crisis has also led to a downturn in exploration, potentially aggravating the future crisis.

It is also clear that the current non-progressive NZ Government policy of increasing dependance on motorways and private transport is precisely the opposite direction by which real needs will be served.

Either the current Government knows something we don't about indigenous supply potential and future needs, or they have very limited ability to think coherently. Your choice.