The world must accept “the outlook for flattened oil supplies” and “the reality that the era of abundant cheap oil is over,” said Sadad Al Husseini, a former No. 2 executive for Saudi Arabia’s national oil company, Aramco. In emails to McClatchy, he called for worldwide energy conservation measures.
The U.S. Energy Information Administration’s deputy chief, Henry Gruenspecht, defended his agency’s main global oil supply forecast as stemming from “careful consideration of a wide range of factors.” He noted, however, that there’s “significant uncertainty” about future supply and demand of liquid fuels and a lack of transparency regarding some nations’ reserves. An international group of scientists and energy experts argues that global oil production has peaked or soon will as the second half of the oil age begins. The experts, known as peak oil advocates, say that the output of 500 existing giant oilfields that provide most of the world’s liquid fuels has begun a gradual decline that will create a 17 million-barrel daily deficit by 2035.
If they’re right, and if the Energy Information Administration has accurately projected future demand, liquid fuels production must fill a daunting, 38.6 million-barrel daily void to keep pace — an amount equal to more than 40 percent of the current global output.
“We’re facing a situation that is real hard for anyone to grasp,” said Kjell Aleklett, the Swedish president of the Association for the Study of Peak Oil.
Oil industry officials strongly disagree.
Industry consultant Daniel Yergin, chairman of IHS Cambridge Energy Research Associates, said that peak oil advocates have underestimated technology advances. While the costs are high, adequate supplies exist “if they can be developed in a reasonable time frame,” he said. Yergin, whose latest book, The Quest: Energy, Security, and the Remaking of the Modern World, details the worldwide scramble for fuel, pointed in an interview to an almost 25 percent increase in U.S. oil production since 2008 and major new discoveries in the North Sea and off the coasts of Brazil and Ghana.
Exxon Mobil’s chairman and chief executive officer, Rex Tillerson, told the Council on Foreign Relations recently that high oil prices have spurred the industry to “develop resources that were previously not accessible.” The latest technology will enable recovery of trillions of barrels of oil embedded in underground shale in Western states — enough “to carry us well into the latter part of this century at current production rates,” he said.
“There’s no question the world is running out of cheap oil,” said Brookings Institution scholar Charles Ebinger, who has advised 50 countries on energy matters. “Are we running out of expensive oil? I’m not convinced.”
Aleklett countered that, in a global context, most recent oil discoveries have been modest. For example, he said that if Norwegian oil company Statoil’s new discovery in the largely tapped North Sea amounts to a billion barrels, “that’s what the world consumes in 12 days.”