The Party's Over Part 5

In an article ent.i.tled "The Energy Spiral" (2002), Huber claimed that the more energy humans use, the more they will be able to produce. According to Huber, hundreds of millions of years of biological evolution prove that nature is always finding ways of putting more energy to use. As manifestations of nature, human societies have likewise learned to obtain ever-greater amounts of energy; Huber calls this a "chain-reaction process," even a "perpetual-motion machine." In his view, the notion that humanity could ever run out of energy is absurd because the "more we capture and burn, the better we get at capturing still more."28 Huber appears to be telling us that the more cake we eat, the more we will have. This may be a cheerful message, but is it believable? True, living things have evolved to capture more and more energy from their environments. But we may be mistaken in conflating that biological capture of solar energy, whose growth trajectory leveled off hundreds of millions of years ago and may actually have peaked in the Mesozoic era, with human drawdown of fossil fuels, which began only centuries ago and is still spiraling upward at an astonis.h.i.+ng rate. The latter process perhaps more closely resembles typical bloom-and-dieoff events, as when yeast cells are introduced into a wine vat filled with grape juice. With plenty of food available, the yeast organisms at first proliferate wildly. Their capture of the energy from their environment of sugar-laden juice grows exponentially - until their own fermentation byproducts begin to smother and poison them, whereupon all the organisms die.

Here is the essence of Huber's fallacy: he describes evolution as a one-way street - with species capturing ever-more energy - but omits any mention of the innumerable casualties that litter its curbs. For a species to run out of energy is hardly unprecedented; that's what extinction is all about, and vastly more species succ.u.mbed to extinction in the past than exist today. Moreover, as was discussed in Chapter 1, history is full of examples of complex human societies that overspent their energy budgets and collapsed as a result. There is no natural law that exempts modern industrial societies from the limiting principles that govern other living systems.

When we a.n.a.lyze it, Huber's argument amounts merely to a flawed and misapplied a.n.a.logy.

Figure 14. Relation between oil demand and GDP growth. Except during the 1970s and 1980s, when most of the world's nuclear power plants came into operation and reduced the demand for oil to fuel electricity generation, there is clearly a strong correlation. When many countries ceased adopting more nuclear power, oil demand accordingly grew by about 2 percent to deliver the ensuing growth of GDP. (Source: International Energy Agency, "World Energy Outlook 2004.") A somewhat more formidable critique of oil-depletion warnings is offered by Bjrn Lomborg, author of The Skeptical Environmentalist (2001) and a.s.sociate Professor of political science at the University of Aarhus, Denmark. In an article t.i.tled "Running on Empty" (2001), Lomborg writes: Today, oil is the most important and most valuable commodity of international trade, and its value to our civilisation is underlined by the recurrent worry that we are running out of it. In 1914, the US Bureau of Mines estimated that supplies would last only 10 more years. In 1939, the US Department of the Interior predicted that oil would last only 13 more years. In 1951, it made the same projection: oil had only 13 more years ....29 These predictions were obviously wrong. More recently, however, ... we have had an ever-rising prediction of the number of years' worth of oil remaining (years of consumption), despite increasing consumption. This is astounding. Common sense dictates that if we had 35 years' consumption left in 1955, we should have had 34 years' supply left the year after - if not less, because we consumed more oil in 1956 than in 1955. But ... in 1956 there were more years of reserves available ....

So how can we have used ever more, and still have ever more left? The answers provide three central arguments against the limited resources approach.

The first of Lomborg's "central arguments" is that "known reserves" are not finite but constantly growing: It is not that we know all the places with oil, and now just need to pump it up. We explore new areas and find new oil. It is rather odd that anyone could have thought that known resources pretty much represented what was left, and therefore predicted dire problems when these had run out. It is like glancing into my refrigerator and saying: "Oh, you've only got food for three days. In four days you will die of starvation." But in two days I will go to the supermarket and buy more food. The point is that oil will come not only from the sources we already know, but also from many sources of which we do not yet know.

His second argument is that we are constantly becoming better at exploiting resources: We use new technology to extract more oil from known oilfields, become better at finding new oilfields, and can start exploiting oilfields that were previously too expensive and/or difficult to exploit. An initial drilling typically exploits only 20 percent of the oil in the reservoir. Even with the most advanced techniques using water, steam or chemical flooding to squeeze out extra oil, more than half the resource commonly remains in the ground. It is estimated that the 10 largest oilfields in the US will still contain 63 percent of their original oil when production closes down. Consequently, there is still much to be reaped in this area. According to the latest US Geological Survey a.s.sessment, such technical improvements are expected to increase the amount of available oil by 50 percent.

At the same time, we have become better at exploiting each litre of oil. Since 1973, the average US car has improved its mpg by 60 percent. Home heating in Europe and the US has improved by 2443 percent. Many appliances have become much more efficient - dishwashers and was.h.i.+ng machines have cut energy use by about 50 percent ....

Lomborg's third argument is that we can always find subst.i.tutes for any resource that begins to grow scarce: We do not demand oil as such, but rather the services it can provide. Mostly we want heating, energy or fuel, and this we can obtain from other sources, if they prove to be better or cheaper. This happened in England around 1600 when wood became increasingly expensive (because of local deforestation and bad infrastructure), prompting a gradual switch to coal. During the latter part of the 19th century, a similar move from coal to oil took place.

In the short run, it would be most obvious to subst.i.tute oil with other commonly known fossil fuels such as gas and coal. For both, estimates of the number of years' supply remaining have increased. Moreover, shale oil could cover a large part of our longer-term oil needs. At $40 a barrel (less than one-third above the current world price of crude), shale oil can supply oil for the next 250 years at current consumption; in total, there is enough shale oil to cover our total energy consumption for 5,000 years.

In the long run, renewable energy sources could cover a large part of our needs. Today, they make up a vanis.h.i.+ngly small part of global energy production, but this will probably change. The cost of solar energy and wind energy has dropped by 9498 percent over the past 20 years, and they have come much closer to being strictly profitable. Renewable energy resources are almost incomprehensibly large. The sun could potentially provide about 7,000 times our own energy consumption - in principle, covering just 2.6 percent of the Sahara desert with solar cells could supply our entire needs.

It is likely that we will eventually change our energy uses from fossil fuels towards other, cheaper energy sources - maybe renewables, maybe fusion, maybe some as yet unthought-of technology. As Sheikh Yamani, Saudi Arabia's former oil minister and a founding architect of Opec, has pointed out: "The stone age came to an end not for a lack of stones, and the oil age will end, but not for a lack of oil." We stopped using stone because bronze and iron were superior materials; likewise, we will stop using oil when other energy technologies provide superior benefits.

I have quoted Lomborg at some length because he presents his ideas well and forcibly, and because the arguments he advances are the princ.i.p.al ones also cited by other Hubbert-school critics. Let us examine each of his points in turn, beginning with his preliminary comments.

The fact that some early oil-depletion predictions have failed does not tell us that all such predictions are bound to fail. Each prediction must be a.s.sessed on its own merits.

Moreover, the work of Hubbert and his followers is based on far better data and a far more robust understanding of the process of oil depletion than was available in the early 20th century. Hubbert predicted that US oil production would peak around 1970; it did. By now, roughly two dozen other oil-producing nations have pa.s.sed their all-time production peaks. Nearly every year, another nation joins the "past-peak" club. Thus the discussion of the phenomenon of peak oil is as much about history as it is about prediction. The degree of extrapolation needed narrows with each pa.s.sing year.

Why was there apparently more oil in the ground in 1956 than in 1955? Because these were some of the best years in history for oil discovery worldwide. Discovery rates have fallen off dramatically since then. The rate of discovery of new oil in the lower-48 US peaked in the 1930s; discovery worldwide peaked in the 1960s. Today, in a typical year, we are pumping and burning between five and six barrels of oil for each new barrel discovered. Demand for oil continues to increase, on average, at about two percent per year. From such information it should be possible to derive a working estimate of when global demand for oil will begin to exceed supply.

Now, to Lomborg's three main arguments. His first, that known reserves keep growing, centers on a subject to which Colin Campbell and Jean Laherrere have devoted years of study. As mentioned earlier, those authors have shown that such reserve growth is largely illusory and is derived partly from unverified and inflated reserve reports of OPEC countries vying for increased export quotas.

Lomborg implies that there is a vast amount of oil waiting to be discovered, but some specifics would be helpful. Where is all of this oil hiding? A few hints would surely cheer geologists who have spent decades applying the most advanced techniques to the problem of locating petroleum wherever it exists and who, on average, are finding ever smaller fields each year.

Lomborg's second argument is related to the first in that increased efficiency at recovering already discovered resources is often a component in the reported growth of existing oil reserves. Yes, new technology may enable us to increase the amount of oil extracted from any given field - perhaps, in some instances, even doubling the ultimately recoverable percentage. But enhanced recovery methods typically do not delay the peak of production from any given field by very much; they merely extend the field's production lifetime. Sometimes they merely enable recovery to proceed more rapidly, and thus cause the peak to occur earlier. Campbell, Laherrere, et al., have already accounted for such technology-based reserve growth in their estimates.

Figure 15. Giant oil field discoveries by decade. (Source: International Energy Agency, "World Energy Outlook 2004.") Moreover, it is important to understand that technology rarely offers a free ride; there are new costs incurred by nearly every technological advance. In the technologies involved with energy resource extraction, such costs are often reflected in the ratio of energy return on energy invested (EROEI). How much energy do we have to expend in order to obtain a given energy resource? In the early days of oil exploration, when we used simple technologies to access large, previously untapped reservoirs, the amount of energy that had to be invested in the enterprise was insignificant when compared with the amount harvested. As oil fields have aged and technologies have become more advanced and costly, that ratio has become less favorable.

This is reflected most clearly in figures for rates of oil recovery per foot of drilling. During the first 60 years of oil drilling (until 1920), roughly 240 barrels of oil were recovered, on average, for every foot of exploratory drilling. In the 1930s, as new geophysical exploratory techniques became available and the 6 billion-barrel east-Texas field was found by accident, the discovery rate reached a peak of 300 barrels per foot. But since then, during successive decades of drilling, discoveries per foot of drilling have dropped steadily to fewer than 10 barrels per foot. And this decline has occurred during a period of intensive exploration, using ever more advanced technologies, such as 3D seismic and horizontal drilling. Thus, while new technologies have enabled the discovery of more oil, the EROEI for the activity of oil exploration has inexorably plummeted.

Figure 16. US trade in petroleum and petroleum products, 1949-2003 (Source: US Energy Information Administration) The same will no doubt be true of technologies used to increase the amount recoverable from existing reservoirs: we will indeed be able to get more oil out of wells than we otherwise would have, but we will have to invest more effort -and thus more energy - to obtain that oil, with an ever-decreasing EROEI.

How important is EROEI? When the EROEI ratio for oil exploration declines to the point that it merely breaks even - that is, when the energy equivalent of a barrel of oil must be invested in order to obtain a barrel of oil - the exercise will become almost pointless. Even if oil remains a useful lubricant or a feedstock for plastics, it will have ceased to be an energy resource. EROEI is also an essential consideration in the subst.i.tution of one energy resource for another: if we replace an energy resource that has, say, a four-to-one EROEI ratio with an alternative that has a two-to-one EROEI ratio, we will have to produce roughly twice as much gross energy to obtain the same net quant.i.ty. Thus, when a society adopts lower-EROEI energy sources, the amount of energy available to do work in that society will inevitably decline.30 The other half of Lomborg's efficiency argument is that we are learning to use each barrel of oil more thoroughly, thus getting more work out of it. This is certainly true and commendable, but it is a fact that must be viewed in context. The all-important context, in this instance, is that our total petroleum usage, nationally and globally, continues to increase each year. In terms of depletion rates and production peaks, increased efficiency of use means nothing unless we are actually reducing the total amount of petroleum extracted and burned. That is not happening, nor does any responsible agency project it to happen voluntarily within the next two or three decades. We are not reducing our dependency on oil - it is still growing.

Lomborg's third argument - that we can always find a subst.i.tute for any scarce resource - raises questions that we will address in more detail in the next chapter, in a discussion of alternative energy sources. For now, suffice it to say that subst.i.tutes, to be successful, must pa.s.s certain tests. When Europeans began subst.i.tuting abundant coal for scarce wood, they soon found that their subst.i.tute sometimes contained more energy per kilogram than the original resource. When industrial countries began switching from coal to oil, the subst.i.tute was very noticeably more energy-dense. Lomborg suggests that industrial societies will deal with petroleum shortages by switching back to coal, but that means returning to a resource that is substantially less energy-dense and thus unsuitable for supplying society's vastly increased energy needs. He also mentions natural gas - but is there enough available to subst.i.tute for oil? Again, we will address that important question in detail in the next chapter; for now, it is enough merely to point out that North American production of natural gas is already in sharp decline.

Ah, but there is enough shale oil to last 5,000 years! Lomborg helpfully informs us that the dollar price of shale oil will necessarily be higher than the current price of conventional oil, which suggests a lower EROEI, but he does not discuss net-energy figures explicitly. Had he done so, the picture would not have been so encouraging.

Shale oil (or oil shale) is actually a misnomer: the rock is not shale but organic marlstone, and it contains no oil, but rather a solid organic material called kerogen. However, promoters have always preferred terms like "oil shale," since they encourage the sale of venture shares. Efforts to develop an oil-shale industry date back nearly 90 years, and so far all attempts - even serious and relatively recent ones by Chevron, Unocal, Exxon, and Occidental Petroleum - have failed. The recovery process involves mining ore, transporting it, heating it to 900 degrees Fahrenheit, adding hydrogen, and disposing of the waste - which is much greater in volume than the original ore and is also a groundwater pollution hazard. Processing and auxiliary support facilities require large amounts of fresh water - a resource intrinsically even more precious than oil. Walter Youngquist sums up the situation well: "Adding up the water supply problem, the enormous scale of the mining which would be needed, the low, at best, net energy return, and the huge waste disposal problem, it is evident that oil shale is unlikely to yield any very significant amount of oil, as compared with the huge amounts of conventional oil now being used."31 Lomborg might also have mentioned tar sands (sometimes optimistically called "oil sands"), which are likewise reputed to be potential subst.i.tutes for conventional oil. The Athabasca tar sands in northern Alberta are estimated to contain an estimated 870 billion to 1.3 trillion barrels of oil (when processed) - an amount equal to or greater than all of the conventional oil extracted to date. Currently, Syncrude (a consortium of companies) and Suncor (a division of Sun Oil Company) operate oil-sands plants in Alberta. Total production from the tar sands now stands at about one million barrels per day. The extraction process involves using hot-water flotation to remove a thin coating of bitumen from grains of sand, then adding naphtha - a petroleum distillate - to the resulting tar-like material in order to upgrade it to a synthetic crude that can be pumped. Currently, two tons of sand must be mined in order to yield one barrel of oil. As with oil shale, the net-energy figures for tar sands are discouraging: Youngquist notes that "it takes the equivalent of two out of each three barrels of oil recovered to pay for all the energy and other costs involved in getting the oil from the oil sands."32 The primary method that is used to process tar sands yields an oily waste water. For each barrel of oil recovered, two-and-a-half barrels of liquid waste are pumped into huge ponds. In the Syncrude pond, measuring 22 kilometers (14 miles) in circ.u.mference, six meters (20 feet) of murky water float on a 40-meter-thick (133-foot) slurry of sand, silt, clay, and unrecovered oil.33 Residents of northern Alberta have initiated lawsuits and engaged in activist campaigns to close down the tar-sands plants because of devastating environmental problems a.s.sociated with their operation, including the displacement of native peoples, the destruction of boreal forests, livestock deaths, and a worrisome increase in human miscarriages.34 To replace the global usage of conventional crude - 70 million barrels a day - would require about 350 additional plants the size of the existing Syncrude plant. Together, they would generate a waste pond of 8,750 sq. km, about half the size of Lake Ontario. But since tar sands yield less than half the net energy of conventional oil, the world would need more than 700 plants to supply its needs, and a pond of over 17,500 sq. km - almost as big as Lake Ontario. Realistically, while tar sands represent a significant energy a.s.set for Canada, it would be foolish to a.s.sume that they can make up for the inevitable decline in the global production of conventional oil.

When examined closely, Bjrn Lomborg's arguments amount to an appeal to unspecified future discoveries and to hopeful but vague promises.

Michael C. Lynch, Chief Energy Economist of DRI-WEFA, Inc., has written extensively on petroleum depletion and is probably the foremost oil cornucopian in the current public debate. In his many writings he has emphasized essentially the same points as Lomborg, which we need not address again. However, in his essay "Closed Coffin: Ending the Debate on 'The End of Cheap Oil'" (2001), Lynch offers a confrontational, if somewhat technical, challenge leveled specifically at Campbell and Laherrere.35 In it, he leaves aside other arguments and focuses almost entirely on reserve growth. I apologize to readers who are uninterested in this level of detail, but since the question of whether oil production is about to peak is central to this book, it is absolutely necessary that we examine the contentions of this foremost critic of production-peak estimates. Lynch writes: The primary flaw in [Campbell and Laherrere's] model is the a.s.sumption that recoverable petroleum resources are fixed, when the amount of oil which can be recovered depends on both the total amount of oil (a geological factor which is fixed), but also dynamic variables like price, infrastructure, and technology. If the amount of recoverable oil increases, as it has in the past, then the level predicted for peak production must increase and the date [of the production peak be] pushed further into the future ....

The reliance on discovery trends to estimate URR has received similar criticism as the faulty URR estimates, namely that estimates of field size tend to increase over time with improved recovery methods, better examination of seismic data, infill drilling, and so forth. This means that the size of the recent fields is being underestimated compared to older fields .... An a.n.a.logy would be to plant trees over twenty years and note that the size of the most recently planted trees was shrinking, and concluding that timber resources would become scarce ....

Following these general comments, Lynch makes his specific charges: Last year, the publication of the USGS's World Petroleum a.s.sessment provided one particularly sharp nail in the coffin of this argument, when (among other things) they examined the development of field size estimates over time using the same proprietary database which Campbell and Laherrere relied on, and concluded that reserve growth from existing fields, although uncertain, would be substantial. They published a mean estimate of 612 billion barrels (nearly 30 years of current consumption) ....

But the final nails seem to be located in this summer's little-noticed announcement by IHS Energy - the firm whose field database Campbell and Laherrere have utilized - of estimated discoveries. According to the firm, discoveries in 2000 were 14.3 billion barrels, a 10 percent drop from 1999. This has two interesting implications: first, discoveries have risen sharply the past two years, refuting the statement that poor geology, rather than lack of access to the most prospective areas in OPEC, has kept discoveries low for the past three decades .... Undoubtedly [Campbell and Laherrere] - and others - will argue that this is due to the firm's inclusion of deepwater reserves, which they are not considering, and that is a factor in the recent robustness of discoveries. However, the primary element behind the greater discovery rates has been the finding of two new supergiant fields in Kazakhstan and Iran. Again, this refutes the argument that discoveries have been relatively low in recent decades due to geological scarcity and supports the optimists' arguments that the lower discoveries are partly due to reduced drilling in the Middle East after the 1970s nationalizations ....

[W]hile we need be concerned about quite a number of issues related to petroleum supply - depletion, change in reserve growth, concentration of production in politically stable areas - a possible near-term peak in production (conventional or otherwise) is not one of them.

As we did with Lomborg's arguments, let us address Lynch's one by one. His first substantive point has to do with the USGS "World Petroleum a.s.sessment 2000," which predicts such substantial reserve growth as to delay a production peak by many years, perhaps by two or more decades.36 The USGS is a government agency that employs many competent geologists and data a.n.a.lysts. Is there any reason to disbelieve its projections?

Many of the USGS's own experts criticize what they view as wildly optimistic a.s.sumptions contained in the WPA 2000 report. USGS geologist L. B. Magoon maintains a website warning of the imminent "Big Rollover" world production peak.36 In fact, the report's main authors, Schmoker and Klett, explain clearly in their chapter on reserve growth that there is complete uncertainty about reserve growth outside of the US and Canada, but that they believe it is better to use the US lower-48 reserve growth function than none at all. However, there are serious problems with extrapolating historic US reserve growth figures to the rest of the world.

The following example may be helpful. a.s.sume a Texas oil field discovered in the 1930s. Examine the reported reserve growth from 1965 to 1995 - namely 30-year reserve growth figures for a 30-year-old field. Now apply this growth factor to a Saudi field discovered in 1965, using reported production and reserve figures as of 1995. The result: considerable growth is to be expected from the Saudi field. But there are two main problems with this method: First, the 1930s Texas reserve estimate was probably intentionally understated, and the 1995 Saudi report was probably intentionally overstated. Typically, US oil companies have reported reserves with an extremely conservative 90 percent probability of recovery (P90), while other countries, including Saudi Arabia, use a 50 percent probability (P50) for their reserve estimates. Some countries even report P10 reserves, yielding greatly inflated figures. And, as we have already seen, the Saudis stated a substantial "proven" reserves addition in the late 1980s that was probably mostly, if not entirely, spurious. True Saudi reserve figures remain a state secret.

Second, US reserve growth after 1965 benefited from recent technological recovery advances and included the reporting of at least part of the previously understated reserves. The Saudi estimates of 1995, in contrast, already included the expected impact of all recent technological recovery advances, which became standard in the industry from the 1970s on.

Thus it is unreasonable to a.s.sume that the Saudi field will experience the same rate of reserve growth in the next three decades as the Texas field did in the past. If the USGS estimates were corrected for these problems, it is doubtful that what the authors call "potential" reserve growth would exceed 300 billion barrels, an amount that would not significantly affect projections for the peak production year.

But the USGS a.n.a.lysis is far more sanguine than this; it calls for a total increase of 1200 billion barrels of oil (discovery plus reserve growth) during the decades from 2000 to 2030, or an average increase of 40 billion barrels per year. During the most productive decade of discovery in world history - from 1957 to 1967 - exploration yielded an average of 48 billion barrels per year. If the industry is capable of repeating that feat, why hasn't it done so in any of the past three decades? Discovery plus reserve growth averaged 9 billion barrels per year in the decade of the 1990s. It is difficult to imagine circ.u.mstances that would enable that figure to quadruple in the years ahead.

Why would a government agency like the USGS publish a report that gives an extravagantly optimistic view of global oil resources? Nor is such optimism confined to the USGS: the Energy Information Agency (EIA) of the Department of Energy (DoE) has released similarly rosy projections. What's going on here?

A clue is contained in a sentence buried in the EIA "Annual Energy Outlook 1998 with Projections to 2020"; it reads: "These adjustments to the USGS and MMS [Materials Management Service] estimates are based on non-technical considerations that support domestic supply growth to the levels necessary to meet projected demand levels."37 In other words, supply projections were simply engineered to fit demand projections. As industry insiders have known for years, USGS and EIA data on current and past production are accurate as can be hoped for, given the fuzziness of the numbers from some producing countries. But their future projections are essentially political statements designed to convey the message that there is no foreseeable problem with petroleum supply and that the American people should continue buying and consuming with no care for the future. This is not a new situation: in 1973, Congress demanded an investigation of the USGS for its failure to foresee the 1970 US oil production peak.38 In contrast, the Paris-based International Energy Agency (IEA) adopted a modified Hubbert-peak forecasting method in 1998, predicting a production peak in 2015. Its World Energy Outlook: 2001 concluded that soon all non-Middle East oil reservoirs will peak and decline, throwing the world into increasing dependence on a small number of Middle East suppliers.39 Next let us examine Lynch's claims concerning the world oil discovery figures for the years 19992000. They were, as he points out, anomalously large. Still, the amount discovered in the better year of the two - 1999 - represented only about 62 percent of the amount of all oil extracted and consumed that year. If, in even the best recent year of discovery, the world still used much more oil than was found, this is hardly an argument against the idea that production will foreseeably peak.

But let's look closer. The average figure for discovery plus reserve growth in the years 19962000 was about 10 billion barrels per year. a.s.suming that this rate could continue, we might, in the next 30 years, expect that 300 billion barrels of oil would be added to current proven reserves (let's use the credible estimate that 1100 billion barrels remain to be produced globally out of an original URR of 2000). Meanwhile, we must subtract the yearly projected drawdown of those reserves; with a conservatively estimated average demand of 30 billion barrels per year in the decades 20002030, that would be 900 billion barrels total. A quick calculation shows that half the oil would be gone - and hence production would likely peak - well before 2010. But remember: these figures are optimistic in every respect; we are a.s.suming, for example, that many more large discoveries like the Kazakhstan find of 1999 will continue to occur, when the actual long-term trend is toward the discovery of less oil with each pa.s.sing year.

Lynch believes that increased drilling in the Middle East and in deep-water areas will make all the difference. While more discovery will no doubt take place in the Middle East, most of the largest fields there were found in the 1960s. Nearly the entire region has been mapped with 3D seismic; and, due to the time interval needed to ramp up production, even the discovery tomorrow of a couple of more "elephants" in the range of 50 billion barrels each would not push back the global production peak by more than a few years. Deep-water reserves are challenging and costly to access - in both monetary and energy terms. And again, a few moderate-to-large discoveries in deep-water regions made now will not significantly delay the global production peak.

The following paragraph from Campbell and Laherrere's "The End of Cheap Oil" (1998) puts matters in perspective: Perhaps surprisingly, that prediction [of a production peak during the first decade of the new century] does not s.h.i.+ft much even if our estimates are a few hundred billion barrels high or low. Craig Bond Hatfield of the University of Toledo, for example, has conducted his own a.n.a.lysis based on a 1991 estimate by the U.S. Geological Survey of 1,550 Gbo remaining - 55 percent higher than our figure. Yet he similarly concludes that the world will hit maximum oil production within the next 15 years. John D. Edwards of the University of Colorado published last August one of the most optimistic recent estimates of oil remaining: 2,036 Gbo. (Edwards concedes that the industry has only a 5 percent chance of attaining that very high goal.) Even so, his calculations suggest that conventional oil will top out in 2020.

Tellingly, Michael Lynch refuses to offer his own prediction of when global oil production will peak, even when pressed to do so.

Who Is Right? Why Does It Matter?

In many two-sided controversies, the bystander is justified in a.s.suming that both sides have valid points and that the truth probably lies roughly equidistant between extreme claims. But on the vital question of when world oil production will peak, the arguments of cornucopians like Huber, Lomborg, and Lynch appear vague and weak, and the a.s.sessments of public agencies like the USGS and EIA sometimes break down under close scrutiny. In contrast, the clarity and logic of the a.n.a.lysis, and the depth of expertise, of the petroleum pessimists - Campbell, Laherrere, Deffeyes, Youngquist, et al. - seem impressive.

Ultimately, we will know for sure when global oil production peaks only after the fact: one year we will notice that gasoline prices have been climbing at a rapid pace, and we will look back on the previous few years' petroleum production figures and note a downward slope. It is possible that the next decade will be a "plateau" period, in which recurring economic recessions will result in lowered energy demand, which will in turn temporarily mask the underlying depletion trend.

As I have made clear, I personally am convinced of the correctness of the Ca.s.sandras' message that global conventional oil production will peak some time during this first decade of the 21st century.

The world reached a fork in the road in the 1970s. In some respects it is still hesitating at that juncture. The two conflicting paths of action with which we were - and still are - presented correspond fairly closely with the "two universal, overlapping, and incompatible intellectual systems" mentioned by M. King Hubbert in the pa.s.sage quoted earlier in this chapter.

On the one hand is the path based on the "monetary culture that has evolved from folkways of prehistoric origin." This is the path of the optimists, who are predominantly economists by profession (Michael Lynch is the prime example, though Peter Huber, who has an engineering degree, represents a counterexample). For decades most economists have been united in proclaiming that resources are effectively infinite, and that the more of any resource we consume, the more its reserves will grow. The human intellect is the greatest resource of all, the optimists tell us, and so population growth means that we all benefit from an increasing collective problem-solving capacity. Like money in the bank expanding inexorably through compounding interest, humanity is growing a measurably brighter future with each pa.s.sing year as it reproduces, transforms its environment, invents new technologies, and consumes resources.

On the other hand is the path based on "the acc.u.mulated knowledge of the ... properties and interrelations.h.i.+ps of matter and energy." For decades we have also been hearing from ecologists, petroleum geologists, climatologists, and other scientists who tell us that resources are limited, that the Earth's carrying capacity for humans is finite, and that the biosphere on which we depend cannot for long continue to absorb the rapidly expanding stream of wastes from industrial civilization.

Our leaders' hesitancy to listen seriously to the latter point of view is understandable; if they did so, they would logically and morally be compelled to 1. adopt the ethic of "sustainability" in all aspects of planning, thinking ahead for many future generations; 2. inst.i.tute systematic efforts to improve efficiency in the use of energy, and combine such efforts with programs to reduce the total amount of energy used by society; 3. encourage the rapid development and deployment of all varieties of renewable energy technologies throughout society; 4. systematically discourage (through taxation or other means) the consumption of nonrenewable resources; and 5. find humane ways to encourage a reduction in human fertility in all countries, so as to reduce the population over time.

As a result of their inaction along these lines, our leaders have in effect chosen the first path, that of the optimists, which implies a diametrically opposite pattern of choices and compels them to 1. make plans to meet only short-term crises because that is the only kind we will ever face, and don't worry about future generations because they will have advanced technologies to solve whatever problems we may be creating for them; 2. forget about efforts to impose improvements in energy efficiency since the marketplace will provide for improvements when and if they are needed; 3. forget about government programs to develop renewable energies because if and when alternatives are needed, price signals will trigger the market to turn in their direction; 4. continue to use fossil fuels at whatever rates are dictated by the market since to do otherwise will hurt the economy; and 5. treat population growth as a benefit rather than a problem, and do nothing to slow or reverse existing growth trends.

This latter path involves less short-term intervention in the economy and works to the near-term advantage of many significant power holders in society (including the oil and automobile companies). By taking it, our politicians have simply followed the path of least resistance.

This may be understandable, but the consequences - if the economists are wrong and the physical scientists are right - will be devastating for nearly everyone.

It is therefore particularly important that we think long and hard about the path not taken before it disappears from sight altogether. What if the Ca.s.sandras are right?

Throughout the rest of this book - primarily because of what I see as the overwhelming hard evidence in its favor, but also for the reason just cited - I will a.s.sume as correct the Ca.s.sandras' prediction that global oil production (all liquids) will peak some time during the remainder of this decade.

If we take that as a given, can we still avoid catastrophe by switching to other technologies and fuels in the years ahead? What, precisely, are our options?

4.

Non-Petroleum Energy Sources:.

Can the Party Continue?

Under the rule of the "free market" ideology, we have gone through two decades of an energy crisis without an effective energy policy .... We have no adequate policy for the development or use of other, less harmful forms of energy. We have no adequate system of public transportation.

- Wendell Berry (1992).

The pattern of preferences for using energy efficiency to decrease demand and [for renewable energy sources] to supply energy has been consistent in the poll data for 18 years. This is one of the strongest patterns identified in the entire data set on energy and the environment.

- Dr. Barbara Farhar (2000).

Nonrenewable resources should be exploited, but at a rate equal to the creation of renewable subst.i.tutes.

- Herman Daly (1992).

Continuing to increase our dependency on petroleum consumption is clearly a suicidal course of action. The only intelligent alternative is to begin reducing energy consumption and finding alternative energy sources to subst.i.tute for petroleum.

- Paul Ehrlich (1974).

Total energy consumption is projected to increase from 96.1 quadrillion British thermal units (BTU) to 127.0 quadrillion BTU between 1999 and 2020, an average annual increase of 1.3 percent.

- US Department of Energy (1999).

This chapter focuses exclusively on a single vital question: To what degree can any given non-petroleum energy source, or combination of sources, enable industrial civilization to survive the end of oil?

Before we can make this a.s.sessment, it is important that we clearly understand what has made oil such a valuable energy commodity. Oil is * easily transported (liquid fuels are more economically transported than solids, such as coal, or gases, such as methane, and can be carried in s.h.i.+ps far more easily than can gases); * energy-dense (gasoline contains roughly 40 kilowatt-hours per gallon); * capable of being refined into several fuels, including gasoline, kerosene, and diesel, suitable for a variety of applications; and * suitable for a variety of uses, including transportation, heating, and the production of agricultural chemicals and other materials.

Moreover, historically petroleum has been easy to access, which has helped give it a very high energy return on energy invested (EROEI). Net energy - or EROEI - is a subject we will touch on frequently in this chapter. In a.s.sessing each of the non-petroleum energy sources, I will refer to net-energy figures from Howard T. Odum's Environmental Accounting, Energy and Decision Making (1996), and C. J. Cleveland, R. Costanza, C. A. S. Hall, and R. Kaufmann's "Energy and the U.S. Economy: A Biophysical Perspective" (1984).1 Odum a.s.signs imported oil a current EROEI of between 8.4 (that is, 8.4 units of energy returned on every unit of energy invested in exploration, drilling, building of drill rigs, transportation, the housing of production workers, etc.) and 11.1, depending on the source.

However, for the period between 1950 and 1970, he calculates that oil had an EROEI of 40. Cleveland et al. calculated a greater than 100-to-1 return for oil discoveries prior to 1950, which declined to a 30-to-1 return by the 1970s.

In this chapter we will examine each of the most prominent non-petroleum energy sources, starting with those that are closest to oil in their characteristics (i.e., the other fossil fuels: natural gas and coal), then moving to nuclear and geothermal power, the renewables (solar power, wind, bioma.s.s, tides, waves, and hydro), hydrogen, and exotic sources (cold fusion and "zero-point" energy). Finally, we will explore the potential for energy conservation (not a "source," but an essential strategy) to ensure the survival of industrial societies as the petroleum interval comes to a close.

Natural Gas.

In some respects, natural gas appears to be an ideal replacement fuel for oil: it burns more cleanly (though it still produces CO2); automobiles, trucks, and buses can be converted to run on it; and it is energy-dense and versatile. Its EROEI is quite high. It has long been used to create nitrogen fertilizers for agriculture (through the Haber-Bosch process), for industrial processes like gla.s.smaking, for electricity generation, and for household cooking and heating. Currently, natural gas accounts for about 25 percent of US energy consumption; 17 percent of the gas extracted is used to generate electricity. Thus there already is an infrastructure in place to make use of this fuel.

Could extraction be increased to make up for the projected shortfalls in oil? Some organizations and individuals claim there is enough gas available globally to last for many decades. Estimates for total reserves vary from about 300 to 1,400 tcf (trillion cubic feet). With such a wide range of figures, it is clear that methods of reporting and estimating are imprecise and speculative. The number 1,100 tcf is often cited; this would represent 50 years' worth of reserves at current rates of global usage. The ever-optimistic US Energy Information Agency (EIA) reports that the US also has about 50 years' worth of natural gas, with proven reserves of 177.4 tcf in 2001. As of 2001, annual usage was in the range of 23 tcf.2 Clearly, the EIA is a.s.suming considerable future discovery, as current proven reserves would last fewer than ten years at current usage rates. That a.s.sumption - that future discoveries will more than quadruple current proven reserves - is highly questionable; moreover, we should also ask: Does natural gas depletion follow a Hubbert-type curve, so that we should expect a peak of production and a long period of decline to occur long before the last cubic foot is extracted?

Many industry a.n.a.lysts believe the outlook for future discoveries in North America is far less favorable than EIA forecasts suggest. In the decade from 1977 to 1987, 9,000 new gas fields were discovered, but the following decade yielded only 2,500 new fields. This general downward trend in discovery is continuing, despite strenuous efforts on the part of the industry. Matthew Simmons has reported that the number of drilling rigs in the Gulf of Mexico grew by 40 percent between April 1996 and April 2000, yet production remained virtually flat. That is largely because the newer fields tend to be smaller; moreover, because of the application of new technology, they tend to be depleted faster than was the case only a decade or two ago: new wells average a 56 percent depletion rate in the first year of production.

In a story dated August 7, 2001, a.s.sociated Press business writer Brad Foss noted that in the previous year, "there were 16,000 new gas wells drilled, up nearly 60 percent from 10,400 drilled in 1999. But output only rose about 2 percent over the same period, according to estimates from the Energy Department. The industry is on pace to add 24,000 wells by the end of the year, with only a marginal uptick expected in production."3 In June 1999, Oil & Gas Journal described how the Texas gas industry, which produces one-third of the nation's gas, had to drill 6,400 new wells that year to keep production from plummeting. Just the previous year, only 4,000 wells had to be drilled to keep production steady.4 According to Randy Udall of the Community Office for Resource Efficiency in Aspen, Colorado, "[n]o one likes talking about [natural-gas] depletion; it is the crazy aunt in the attic, the emperor without clothes, the wolf at the door. But the truth is that drillers in Texas are chained to a treadmill, and they must run faster and faster each year to keep up."5 US natural gas production has been wavering for years; in order to make up for increasing shortfalls, the nation has had to increase its imports from Canada, and Canada is itself having to drill an increasing number of wells each year just to keep production steady - a sign of a downward trend in discovery. A May 31, 2002 article by Jeffrey Jones for Reuters, ent.i.tled "Canada Faces Struggle Pumping More Natgas to US," begins ominously: "Canadian natural gas production may have reached a plateau just as the country's role as supplier to the United States is becoming more crucial due to declining US gas output and rising demand ...."

Figure 17. Net US imports of natural gas as share of consumption (Source: US Energy Information Administration) Figure 18a. US natural gas well productivity (Source: US Energy Information Administration) Figure 18b. Average oil well productivity, US 19502003 (Source: US Energy Information Administration) Furthermore, Mexico has already cut its gas exports to the US to zero, and has become a net importer of the fuel.

A gas pipeline from Alaska could help, but not much. A three-foot-diameter pipeline would deliver only two percent of the projected needs for the year 2020.

Nearly all of the natural gas used in the US is extracted in North America. While gas is more abundant in the Middle East, which has over a third of the world's reserves, the amount that could be transported by s.h.i.+p to the American market is limited. The s.h.i.+pment process itself is feasible (there is only a 15 percent energy penalty from cooling and transportation), but the US has only four liquified natural gas offloading terminals at present, and it will take time and considerable investment to build more.

Moreover, nearly all of the existing LNG s.h.i.+pping capacity is spoken for by j.a.pan, Korea, and Taiwan through long-term contracts. Europe and the Far East may be able to depend on gas from the Middle East and Russia for several decades to come, but that is probably not a realistic prospect for the US.

The public got its first hint of a natural gas supply problem in the latter months of 2000, when the wellhead price shot up by 400 percent. This was a more dramatic energy price increase than even the oil spikes of the 1970s. Homeowners, businesses, and industry all suffered. This gas crisis, together with simultaneous oil price hikes, helped throw the nation - and the world - into recession. Farmland Industries shut down some of its fertilizer plants because it could not afford to use expensive natural gas to make cheap fertilizer; many consumers were dismayed to find that their utility bills had doubled. A frenzy of new drilling resulted, which, together with a scaling back of demand due to the recession, enabled the natural gas market to recover so that prices eased back. Yet by the spring of 2001, wellhead gas prices were still twice what they had been twelve months earlier, and gas in storage had reached its lowest level ever. The nation narrowly averted serious shortages again in 2003; however, unusually mild winter and summer weather in 2004 enabled the refilling of underground gas storage reservoirs. The US has managed to avoid a train wreck so far, but given declining production, the event seems inevitable, whether it occurs this year or next.

The increasing demand for gas is coming largely from an increasing demand for electricity. To meet growing electricity needs, utilities in 20002001 ordered 180,000 megawatts of gas-fired power plants to be installed by 2005. This strategy seemed perfectly logical to the utilities' managers since burning gas is currently the cheapest and cleanest way to convert fossil fuel into electricity. But apparently no one in the industry had bothered to inquire whether there will be enough gas available to fire all of those new generators over their useful lifetime. Many exploration geologists are doubtful. By mid-2002, plans for many of those new gas-fired plants were being cancelled or delayed.

Does natural gas extraction follow the same Hubbert curve as does oil extraction? Oil wells are depleted relatively slowly, whereas, as we have seen, gas wells - especially newer ones - often deplete much more quickly. The typical natural gas well production profile rises from zero, plateaus for some time, and then drops off sharply. However, in aggregate, combining all of the natural gas wells in a country or large geographical region, extraction does follow a modified Hubbert curve, with the right-hand side of the curve being somewhat steeper than that for crude.

Hence, natural gas will not solve the energy-supply problem caused by oil depletion; rather, it may actually compound that problem. Our society is already highly dependent on natural gas and becoming more so each year. But soon we are likely to see a fairly rapid crash in production. As my colleague Julian Darley has written in his book High Noon for Natural Gas: The New Energy Crisis, "The coming shortage of natural gas in the United States and Canada, compounded by the global oil peak and decline, will try the energy and economic systems of both countries to their limits. It will plunge first the United States, then Canada, into a carbon chasm, a hydrocarbon hole, from which they will be hard put to emerge unscathed."6 Many alternative energy advocates have described natural gas as a "transition fuel" whose increased usage can enable the nation to buy time for a switch to renewable energy sources. However, in view of the precarious status of North American gas supplies, it seems more likely that any attempt to s.h.i.+ft to natural gas as an intermediate fuel would simply waste time and capital in the enlargement of an infrastructure that will soon be obsolete anyway - while also quickly burning up a natural resource of potential value to future generations.

Coal.

Currently, the US derives about as much energy from coal as it does from natural gas. Approximately 90 percent of coal mined and burned is used to generate electricity.

Coal is the most abundant of the fossil fuels, but also the most controversial one because of environmental destruction caused by coal mining, emissions from burning coal (including carbon dioxide and acid rain-causing sulphur oxides), and its inefficiency as an energy source. Coal producers typically fight all attempts to regulate emissions or to improve efficiency, and nearly all progress in these areas has come from government research in cooperation with electric utility companies.

Demand for coal has increased over the past few decades at an average pace of about 2.4 percent per year (meaning that, at current rates of increase, total usage doubles every 30 years). The EIA estimates that recoverable reserves in the US amount to about 275 billion short tons (bst), representing roughly 25 percent of total world reserves. Production in 1998 amounted to about 1.1 bst; at that rate of usage, current reserves could theoretically last 250 years. However, the EIA also notes that "much of this may not be mined because of sulfur content, unfavorable quality, mining costs and/or transportation infrastructure."

Even given these caveats, and also taking into account the fact that rates of usage are projected to continue growing, it might seem safe to a.s.sume that there are theoretically still several decades' worth of coal reserves in the US. Moreover, these reserves are already known and mapped; expensive exploration is not needed in order to locate them.

With coal, impending shortage does not appear to be as much of a problem as with oil and natural gas; however, its inefficiency, pollution, and declining net energy yield cast a pall on prospects for the increased use of coal to replace dwindling oil. Currently, we use oil to mine coal. Most of the increased coal production during the past three decades has been from opencut (open-pit) mines that are worked by relatively few miners using giant earth-moving machines that can consume as much as 100 gallons of diesel fuel per hour. As petroleum becomes less available, the energy used to mine coal will have to come from coal or some other source.