Peak Oil: The Pessimism That Just Won’t Die No Matter What!
Founder and CEO of the Institute for Energy Research
Principal, MasterResource: A Free-Market Energy Blog….
[Editor’s Note: Peak oil won’t die because pessimism and Malthusian fears of running out are perennial favorites with those eager to scare others into putting them into power.]
Peak Oil and Peak Gas beliefs never really die. They just go underground. Remember The Oil Drum website (2005–2013)? This central meeting place of the resource neo-Malthusians went kaput in the face of the oil and gas hydraulic fractionation boom. Such has been, is, and will be the case in a high-energy world not paralyzed by government intervention.
Rise and Fall
A Reuter’s story in mid-2013, “The Oil Drum Website Set to Close as Peak Oil Fears Vanish,” recounted the cycle of interest and decline. “The decision to shutter ‘The Oil Drum’, the leading website devoted to peak oil,” the article began, “has come to symbolise the end of an era – and sparked a furious debate about whether the theory was all along based on a fundamental mistake.” Some history was presented:
After presenting a conference paper on oil depletion in 2001, Campbell went on to found the Association for the Study of Peak Oil (ASPO), a network of scientists and others interested in determining the date and impact of peaking world oil and gas production….
Interest in peak oil rose to fever pitch in 2008 as prices rose relentlessly to reach more than $147 per barrel. Later that year, the International Energy Agency (IEA), devoted its flagship publication, the annual World Economic Outlook, to analysing the accelerating decline rates at many of the world’s oil fields.
The Oil Drum became the popular front-end for a growing community of experts. They succeeded in pushing concerns about peaking oil supplies back up the agenda for policymakers after almost two decades when it had been absent.
And then came hydraulic fractionation…. The lesson of oil (and natural gas) cycles is that in a free market, “the cure for high prices is high prices.” And the tonic for low prices: innovation, cost containment, and revenue enhancement. And just imagine what a new era of privatization would do for global supply and consumer welfare–and democratizing wealth, as explained by Guillermo Yeatts.
Darren Woods … Meet Resourceship
Some of the ExxonMobil CEO’s recent comments follow:
” … if you look at shale, it’s not unlike a lot of the cycles or evolution that the industry has gone through where technology unlocks additional resources that prior to that technology advancement, we didn’t think those resources were available to the world.
Deepwater is an example that came before that. So if you go back in time, there are stages in the industry where you see new resources coming on with the advent of new technologies or new techniques.
“… we’ve seen the kind of the initial rush of shale and understand that proposition there. I think there’s still a lot of technology to unlock, and that’s still relatively immature in its development cycle. We’re still only recovering about 10% of unconventional resources. And so there’s a lot of oil being left in the ground based on industry’s ability to tap into that and recover that oil.
“All these independents are playing very short-term gains in the unconventional space. We’re kind of a long ball hitter. And so what does long ball look like in unconventional? And so you saw us in 2018 pivot that XTO business into a much, what I’d say, longer-term horizon, building infrastructure, developing more of a manufacturing approach and very importantly, establishing a technology program.”
“My challenge to the organization was to double recoveries and to find technologies that could unlock that. And that’s been a kind of a 5-year program, and we’re beginning to see signs of some. I think, very promising new technologies to better unlock some of that resource, which I look forward to taking advantage of that technology, and applying that to the resource that we know is there.”
New Generation Shale?
Ed Ireland at Substack noted the latest technology developments in the upstream oil and gas sector:
The U.S. shale revolution propelled the U.S. from being a crude oil importer to being the world’s largest producer and exporter of crude oil and natural gas. … Fracking has been around for a really long time but the science of fracking is not well understood. There are very few companies or organizations out there that could tell you exactly how fracks propagate, and what that looks like underground.
Woods mentioned two improvements in hydraulic fracturing they have identified. One is improving the ability to frac along a very long lateral, and the other is improving the longevity of the proppants so the fracks stay open longer.
The implications of ExxonMobil’s research are enormous. Improved fracking technology will not only enhance production from new wells, but they might be able to go back into old wells and recover more oil and gas than has already been produced. The technologies he suggests could mean that the next shale revolution is coming.
Although Woods did not go into detail about the research ExxonMobil is doing on improving hydraulic fracturing, it no doubt involves big data. Every oil and gas well drilled and completed for over a decade has collected massive amounts of data at each stage of the drilling and completion process. Dealing with the enormous amount of data that has been collected has been challenging. The recent advances in A.I. offer a path to analyze all that data.
Woods’ comments indicate that ExxonMobil is very close to developing the technologies that will keep the United States the world leader in hydraulic fracturing and enable the U.S. to remain the world’s largest crude oil and natural gas producer for decades.
Peak Oil and Gas as an inherent limitation is “a theory based on a lack of imagination.” Opponents of oil and gas have shifted from supply to demand to argue that it will be demand destruction that limits supply, not the other way around. Their favorite quotation, “The Stone Age didn’t end for lack of stone, and the oil age will end long before the world runs out of oil,” is a poor analogy given the necessity of petroleum for the modern world.
What is big news today is just another way station of an industry engaged in continuous improvement, despite government intervention against oil and gas. There is more to come. Government just needs to get out of the way of resourceship.
Related Posts at MasterResource
The Liberating Theory of Resourceship (June 12, 2023)
Resourceship vs. Fixity/ Depletion: An Illustrative Debate (September 27, 2021)
Refrack Resourceship: Why the Carbon-based Energy Era Is Still Young(August 17, 2015)
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