Peak oil

Cameron Dunn

Peak oil

What is peak oil?

•Peak oil refers to the point in time

when crude oil production reaches its

maximum level.

•After peak production, supply will

decline and oil prices will rise.

•Crude oil, and natural gas, are

fossil fuels so there is a finite

supply of them and they will

eventually run out.

•The peak is more important than the

point in time oil actually runs out,

because of rising prices as supply

falls.

Peak oil theory is based on the work of Shell

geologist M. King Hubbert in the 1950s

Peak oil

When will oil supply peak?There is considerable debate over

when global peak oil production

will occur:

Source Suggested date

USA Dept of Defense 2012

Kuwait University 2014

International Energy Agency

2030

Energy Watch Group 2006

ASPO 2010

UK Energy Research Centre

2020

Peak oil

Peak discovery•In support of peak oil is

the fact that the discovery

of new oil fields peaked in

1965.

•Since 1983, annual oil

consumption has exceeded

annual new oil discoveries.

•In other words, very few new

oil reserves are found today.

•This is despite improvements

in geophysical prospection

techniques used to find new

oil fields.Trends in the discovery of newoil fields 1930–2010

Peak oil

Past and future peaks•Globally, peak oil

may be close, or even

already have happened.

•Many nations have

already passed peak

production, increasing

their reliance on oil

imports.

•This includes the UK

in 1999, the USA in

1970 and Nigeria in

1979.

National peak oil production

Peak oil

Plateau oil?•Some geologists and economists

expect global oil production to

‘plateau’.

•In this scenario, oil supply would

be stagnant for 10–20 years.

•During this time prices are likely

to be high as there will always be

pressure on oil supplies.

•Oil companies might increase the

rate at which they pump oil, or

use enhanced recovery methods, in

order to try and maintain

production.

Global crude oil production1965–2010

Peak oil

Alternative oil supplies

•Peak oil relates to the

production of light crude oil

(also called conventional

oil), which is cheap to

extract, process and

transport.

•The steep price rises expected

after peak oil could be

limited by developing

alternative supplies.

•None of these in likely to

dramatically increase the

supply of cheap oil.

Peak oil

The importance of oil prices•The price of a barrel of crude oil

is important.

•The world economy depends on oil.

•It is used in transport, plastics,

chemicals and to generate

electricity.

•The price record was set in 2008 at

$147 per barrel.

•Rapid oil price rises increase costs

for businesses and consumers.

•Unfortunately, steep price rises

correlate well with global

recessions: