15 JUNE 2002: THE COMING
OIL PRODUCTION PEAK…

——– Original Message
——–

Subject: Viridian Note 00316: 
Hubbert’s Peak

Date: 11 Jun 2002 23:34:02
-0000

From: Bruce Sterling <bruces@well.com>

(((I have  received
this elegantly composed rant

from Eric Hughes, 
who often favors us with his perorations.)))

Hubbert’s Peak, The Impending
World Oil Shortage

by Kenneth S. Deffeyes

Princeton University Press,
2001

Reviewed by Eric Hughes

One of my favorite Matt Groening
cartoons is near the

beginning of the Love is
Hell series, where he recommends,

next time you are think
about doing something shameless,

just consider “how long
you’re going to be dead”.  Below

that is a timeline, stretching
to infinity in both

directions, with a small
black dot in the middle labeled

“you are here.”

    The same
illustration might well have been captioned

“how long you’re not going
to be mining oil from the

ground.”

    This
last weekend I had the great pleasure of reading

*Hubbert’s Peak*, a book
on the global petroleum industry.

The author is a recently-retired
geologist who taught at

Princeton for thirty years,
worked in the oil industry

before that, and grew up
in the middle of Kansas oil

fields.  The man is
pure oil-intelligentsia, a category I

was not previously familiar
with.  The book contains a

wealth of detail, not exhaustive
and dry detail, but

selective and illuminating
detail.

    The purpose
of the book is to make and justify a

prediction about the year
of maximum world oil production.

His precedent is a 1956
prediction by M. King Hubbert (a

former colleague of his)
that U.S. oil production would

peak in the early 1970’s. 
The actual peak was 1970.

    Let’s
cut to the chase.  Deffeyes’s prediction is

2004.7, plus or minus a
couple of years.  As he says

immediately thereafter:
“There is nothing plausible that

could postpone the peak
to 2009.  Get used to it.”

   I’m not going
to summarize the argument; that’s the

content of the book. 
I will summarize, though, the

subject elements that lead
up to the argument: initial oil

formation, the geology of
its deposits, prospecting,

drilling and extraction,
and the statistics of oil fields

and their discovery. 
He then spends a couple of chapters

on Hubbert’s argument, and
another couple on the future.

It’s a relatively slender
book, only about 200 pages.

It’s plenty to make his
point, without overflowing into

boredom.

    One of
the delights of the book is the author’s sense

of humor.  At one point
in the text he presents a

particular way of doing
a graph that he’s proud of.  Fifty

pages later, in an endnote,
he makes the following

comment: “Here in the back
of the book, where my editor

isn’t likely to look, we
can derive the equation.”  This

combination of enthusiasm
and restraint in the exposition

is one of the charms of
the book.

    Another
appreciation I got from this book is the

difference in the dynamics
between oil and gas production.

They are intertwined in
terms of their discovery and

production techniques, but
their drilling and markets are

divergent.

    Oil is
found primarily in the “oil window” of 7,500

and 15,000 feet; gas is
found below those depths.  Both

are sources of combustion
energy, but they aren’t direct

replacements.  In order
to switch, capital has to be

invested, which takes a
while.  The oil peak really

matters, since it’s not
possible to immediately transition

to natural gas or any other
energy source.

    It is
easy to question individual assumptions and

intermediate conclusions
in the argument.  That’s not

really the point, though. 

The conclusion that Deffeyes

draws is both very narrow
and quite robust.  His only

point is to estimate the
year in which the most oil will

be taken from the ground
worldwide.  He is not making a

prediction about oil prices,
about how many years of oil

there are left, nor of any
number of other questions about

the dynamics.  What’s
interesting is that under many

variations of the model
and permutations of the

assumptions, the peak year
doesn’t really budge.

    The model
is robust against variations in reserve

estimates.  As recently
observed on this list, total

reserves depend a lot on
the prevailing oil price.  This

observation, though, doesn’t
change the estimate of the

peak year of production. 
Discoveries lead production by

about 11 years.  This
reflects the capital investment

cycle and the time needed
to get into production.

    
As oil prices rise, existing reserves come into

economic viability, but
still with a lag time, and that

lag time is longer because
many of these sources require

technology transfer in addition
to the capital spending.

As a result, there may well
be some local upswings in

production after the peak,
but total world production will

never reach its maximum
again.

   Along the lines
of other critiques, Thomas Gold’s idea

of deeply buried hydrocarbons
does not change this

prediction of the oil peak. 
First, Gold is speaking

primarily of methane, the
principal component of natural

gas.  Even the partial
replenishment referenced in

Viridian Note 00314 was
“very light oil and gas.”  The oil

window goes down only to
15,000 feet because below that,

it’s too hot for long-chain
hydrocarbons to be stable.  So

even if Gold is right about
oil and gas being produced by

microbes from raw organic
materials embedded in the earth,

that doesn’t change the
timing of the oil peak.  Deep

drilling for oil is poppycock;
deep  drilling gets you gas, not oil.

    This
is a science book, not an economic or political

tract.  Deffeyes makes
no political predictions, but he

does observe that political
disruption is inevitable.  The

U.S. oil crisis of the early
1970’s was precipitated by

the peak of U.S. oil production
in 1970.  Prior to that,

fluctuations in U.S. demand
could be satisfied by simply

pumping more American oil. 
After the American peak, the

excess demand could only
be met with overseas oil.  Once

OPEC realized this, there
was a “crisis”.

    The disruptions
that will happen after a world oil

peak will be even more interesting,
as in the curse about

“interesting times.” 
Excess demand is going to be met by

rationing; some will simply
have to go without.

Previously, demand could
be met by shifting the source of

supply.  This time
there is no more source of supply

anywhere.  The few
years after the peak will  be particularly

disruptive, since during
that time many  profound assumptions

about the way the world
works will be  proven wrong.

Bad investment decisions
will be revealed  in hindsight,

and one should expect an
orgy of finger-pointing.

    Deffeyes
mentions a potential flashpoint:  “You

guessed it; several islands
stick up in the middle of the

South China Sea, and the
drilling rights are claimed by

six different countries.” 
These, as I recall, are the

Spratly Islands.  The
claimants, just to give an idea of

the touchiness of the situation,
are China, Taiwan,

Vietnam, Malaysia, Brunei,
and the Philippines.  Control

of the islands is currently
divided between the six

disputants.

    After
a world oil peak, oil prices will go inevitably

upward for some years, continuously
increasing the stakes.

This is an unstable situation
that may well lead to war.

If this sounds alarmist,
it’s worth considering the Middle

East, the single largest
oil region in the world.  Ask

yourself if the U.S. would
have much political interest in

a Middle East without oil
fields.

   I have painted
a pessimistic picture of the medium-term

future.  The long-term
future, while not worked out, has

no such negative necessities. 
For one, there’s plenty of

oil left after the peak
of production; it’s just going to

get rarer and more expensive. 
The taps won’t all turn off

at once.  There is
plenty of time to develop a successor

energy infrastructure. 
Note that I didn’t say

“alternative energy infrastructure.” 
There won’t be

anything alternative about
the successor energy regime.

   Right now everything
is an alternative to oil.  Soon

these other sources will
become the main ball game.  I was

gratified to read about
the large remaining natural gas

reserves.  Reformation
of natural gas is the best

immediate source of fuel
hydrogen, and there’s plenty of

it.  Making the transition
to a hydrogen economy will

cost, but it will certainly
be possible.

    On balance,
I’d consider this book a Viridian must-

read.  It’s a wake-up
call, a particular Viridian

competence.  Every
important opinion needs enthusiasts as

promoters.  I’ll be
promoting the lesson of Hubbert’s

peak; please do likewise.

Eric Hughes