Thursday, April 17, 2008

Peak Oil?

Two recent oil discoveries that would seem to poke another hole in the peak oil thesis. First this from right here in the US:

Reston, VA - North Dakota and Montana have an estimated 3.0 to 4.3 billion barrels of undiscovered, technically recoverable oil in an area known as the Bakken Formation.

A U.S. Geological Survey assessment, released April 10, shows a 25-fold increase in the amount of oil that can be recovered compared to the agency's 1995 estimate of 151million barrels of oil.

Technically recoverable oil resources are those producible using currently available technology and industry practices. USGS is the only provider of publicly available estimates of undiscovered technically recoverable oil and gas resources.

And another potential large field offshore from Brazil (via The Economist):

JUST how much oil is there off the coast of Brazil? Until recently, Brazil’s oil reserves were thought to be relatively modest: about 12 billion barrels at the beginning of 2007, according to BP, or about 1% of the world’s total. But last year, Petrobras, Brazil’s partly state-owned oil firm, announced the world’s biggest oil discovery since 2000: the Tupi field, which it hopes will produce between 5 billion and 8 billion barrels. Now the head of Brazil’s National Petroleum Agency (ANP) says another nearby discovery might hold as much as 33 billion barrels, which would make it the third-largest field ever found.

The important part of the first report is the phrase "technically recoverable". The difference in this estimate and the previous estimate has a lot do with the changes in drilling technology. That's the thing that the peak oil folks keep missing. In both of these cases it is the advance in technology that makes these reserves recoverable. To reach Malthusian conclusions, one must assume that technology stands still, which is of course ridiculous.

The rise in oil prices has nothing to do with "peak oil". It has everything to do with monetary policy and an increase in demand from developing countries. I believe that long before we run out of fossil fuels, technological advances will produce an alternative. And in the meantime, technological advances will allow us to further exploit the most abundant energy resource on the planet.

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