The Guardian has a long piece arguing that "the end of oil is closer than you think." It focuses mainly on the work of Colin Campbell, co-founder of the Oil Depletion Analysis Centre. Its exposition on Hubbard's Peak is pretty good (this article in the National Journal provides more information about the ODAC's analysis), but the centerpiece of the article is its argument that most government and corporate estimates of reserves are always overestimates:
[T]he Campbell analysis [that we're right at Hubbard's Peak today, and that starting next year, "global oil production can be expected to decline steadily at about 2-3% a year"] is way off the much more optimistic official figures. The US Geological Survey (USGS) states that reserves in 2000 (its latest figures) of recoverable oil were about three trillion barrels and that peak production will not come for about 30 years. The International Energy Agency (IEA) believes that oil will peak between "2013 and 2037" and Saudi Arabia, Kuwait, Iraq and Iran, four countries with much of the world's known reserves, report little if any depletion of reserves. Meanwhile, the oil companies - which do not make public estimates of their own "peak oil" - say there is no shortage of oil and gas for the long term. "The world holds enough proved reserves for 40 years of supply and at least 60 years of gas supply at current consumption rates," said BP this week.
Indeed, almost every year for 150 years, the oil industry has produced more than it did the year before, and predictions of oil running out or peaking have always been proved wrong. Today, the industry is producing about 83m barrels a day, with big new fields in Azerbaijan, Angola, Algeria, the deep waters of the Gulf of Mexico and elsewhere soon expected on stream.
But the business of estimating oil reserves is contentious and political. According to Campbell, companies seldom report their true findings for commercial reasons, and governments - which own 90% of the reserves - often lie. Most official figures, he says, are grossly unreliable: "Estimating reserves is a scientific business. There is a range of uncertainty but it is not impossible to get a good idea of what a field contains. Reporting [reserves], however, is a political act."
According to Campbell and other oil industry sources, the two most widely used estimates of world oil reserves, drawn up by theOil and Gas Journal and the BP Statistical Review, both rely on reserve estimates provided to them by governments and industry and do not question their accuracy.
Companies, says Campbell, "under-report their new discoveries to comply with strict US stock exchange rules, but then revise them upwards over time", partly to boost their share prices with "good news" results. "I do not think that I ever told the truth about the size of a prospect. That was not the game we were in," he says. "As we were competing for funds with other subsidiaries around the world, we had to exaggerate."
Most serious of all, he and other oil depletion analysts and petroleum geologists, most of whom have been in the industry for years, accuse the US of using questionable statistical probability models to calculate global reserves and Opec countries of drastically revising upwards their reserves in the 1980s.
"The estimates for the Opec countries were systematically exaggerated in the late 1980s to win a greater slice of the allocation cake. Middle East official reserves jumped 43% in just three years despite no new major finds," he says.
An article in Al-Jazeera also notes another incentive to overstate reserves:
[I]n 1990 Saudi Arabia, along with other Opec producing countries, notably Kuwait, revised their reserve estimates overnight.
This was in order to pump more oil as part of Opec's quota arrangement. The more reserves you claimed to have, the more money you made.
Saudi Arabia announced "a massive increase from 170 to 258gb in 1990. It had evidently decided to follow Kuwait's practice of reporting original, not remaining reserves," Campbell says.
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