CIBC's Rubin Says We're Already Peak Oil

Jeff Rubin, chief economist of CIBC World Markets, has said that we are already in Peak Oil, according to this Toronto Star article. Not only that, but we've been there since 2006. Not only that, but demand is growing so rapidly that a plateau in production is as good as a decline, according to this CIBC article by Rubin (from last summer). This article says that he sees "oil at $150 (U.S.) a barrel within the next four years – possibly much sooner," and "He supports the peak oil theory and believes we've already passed the peak in conventional production."

I only wish I could derive some satisfaction from saying, "I told you so."

The best thing to do is figure out ways to cut our consumption, so we can ride the tsunami. Buy a bike, install new windows, get solar heating on our roofs...

Saudi Peak Oil Revisited

Three more scary pieces of data have added their weight to my belief that we'll hit Peak Oil within the next decade.

OPEC Reserves Overstated

The first is a very well written document by Phil Hart and Chris Skrebowski, titled "Peak Oil: A Detailed and Transparent Analysis". A summary of this article appeared in the June 2007 issue of the Journal of Petroleum Technology. They wrote this article in response to an anti-peak oil article by Peter Jackson of Cambridge Energy Research Associates in February's J.PT.

In a very ominous portion of the article, they show how Kuwait's oil reserves were severely over-stated. They go on to say:

...it is reasonable to question the size of the remaining reserves of the other OPEC members who also increased their assessments in the so-called 'quota wars' of the 1980's. It is our view that OPEC member reserves are overstated by approximately 250 billion barrels in total.

Saudis Becoming Nervous

My second scary piece of news comes from a friend of mine working at the King Fahd University of Petroleum & Minerals in Dhahran (yes, there is such a thing as a Petroleum University). He says that he's been asking knowledgeable people about the questions discussed in my blog post, "Is Saudi Arabia Running Out of Oil?"

The responses he's been getting have not been encouraging. The Saudi nationals will either not discuss the issues at all, or they simply say, "everything's fine!" The ex-pats (the Western experts working in Saudi) have a different story. They point to recent frenzied activity on the part of the Saudis to re-open old wells and drill new ones as evidence that not all is well in the Kingdom. My friend found general agreement that the Saudis have been lying about their reserves, but of course, no one knows by how much. And finally, he found general agreement that the Ghawar field is starting to "run down."

As my friend put it, "When Saudi peaks, the world has peaked."

Has Saudi Already Peaked?

Saudi isn't the biggest oil producer anymore. Not since 2005.

Saudi Arabia was the largest producer of oil up until 2005, but its production recently has been declining. Russia is now the largest producer of oil. In 2006, Saudi Arabia produced 9,152,000 barrels per day while Russia produced 9,246,000 barrels per day, based on March 2007 US Energy Information Agency data.

Saudi Arabia is the still the largest oil exporter. While Russia produces more, its population is greater, so it has less to export.

OPEC announced a reduction in production as of November 1[, 2006]... [However,] even before the announced cutbacks, the three large OPEC producers (Saudi Arabia, Iran, and Venezuela) were all showing declining production.

-- Oil Quiz, Test Your Knowledge

I hope, for the sake of my child, that the world won't peak for a few more years. We're just not ready for a post-peak world.

Nuclear Power: Salvation or Disaster?

I just stumbled across the very interesting Wilson Quarterly from the Woodrow Wilson Center for Scholars, and I have really enjoyed reading the debate in last Autumn's issue about nuclear power. Max Schulz says that Nuclear is the Future, while Brice Smith and Arjun Makhijani argue that Nuclear Is Not the Way. Both sides make excellent points, but since I happen to also believe that we are nearing Peak Oil, something that neither side considers in their arguments, I think expanding nuclear power may be worth the risks.

Oh, and I saw a great quote on The Oil Drum when I was retrieving the Peak Oil link:

“Every time I see an adult on a bicycle, I no longer despair for the future of the human race.”

—H. G. Wells, 1904

Is Saudi Arabia Running Out of Oil?

This month, I have been following a series of articles over at The Oil Drum. Two knowledgable and articulate members have been having a debate about whether Saudi Arabia has hit Peak Oil or not. Stuart Staniford has been producing graphs, charts and tables that back up his theory that the steady 8% decline in Saudi production over 2006 was not voluntary and they have started down the post-peak slide. Euan Mearns has been arguing that the KSA is just doing what it usually does, acting as a swing producer, and that the declines over the year were not as severe as Staniford showed, nor were they involuntary.

There are a few scary things about this debate. First of all, Staniford is frighteningly well informed, and his numbers are difficult to dispute; most people seem to be disputing his conclusions but not his numbers. Secondly, Mearns doesn't pooh-pooh Staniford's claims outright; the best he can do is, "[I] feel there are several cautionary observations that need to be made before jumping to any conclusion about the end of the oil age. If Stuart is right, and he may be, then the consequences may be dire." Thirdly, the comments at the bottom of each article seem to include many expert sources quibbling over small details, but nobody seriously disputing the observation that started it all, that Saudi's production dropped steadily last year.

Lastly, the most scary thing is that Staniford bets anyone willing to take him up on it that the claim made in a Saudi Aramco press release that they will "increase maximum sustained capacity to 10.7 million barrels per day (bpd)" is total BS. He bets that "the international oil agencies will never report sustained Saudi production of crude+condensate of 10.7 million barrels or more." He starts his bet at $1000, and later raises it to $2000.

Nobody takes him up on the bet. The best that Mearns can say is, "High stakes and long odds! If Stuart was so confident that Saudi production was heading south for good then he would not have set the bar so high." ... gulp ... So even the doubter thinks that the press release's numbers are "long odds."

Anyway, here are the articles (so far). Make sure you peruse the comments as well as the articles. Unlike so many comments on other sites, the comments here seem to be mostly from industry experts.

Saudi Arabian oil declines 8% in 2006: March 2, 2007 (Stuart Staniford)
Saudi Arabia and that $1000 bet: March 7, 2007 (Euan Mearns)
A Nosedive Toward the Desert: March 8, 2007 (Stuart Staniford)
Saudi production laid bare: March 19, 2007 (Euan Mearns)
Water in the Gas Tank, Further Forensics on Saudi Oil Supply: March 26, 2007 (Stuart Staniford)

Stuart has called a peak in Saudi production in 2005 and no matter how many wells they now drill, he forecasts that production will continue to slide in a manner similar to that shown. My position is that recent falls in Saudi production reflect voluntary restraint achieved by retiring wells and that production may rise again in the future, dependent upon global demand picking up.

- Euan Mearns

And yet, Mearns refuses to take up Staniford's $2000 bet.

I think I should start getting all of my world travel in now, before it's too late...