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Why New Oil Discoveries wont Make a Difference to our Energy Future
Why New Oil Discoveries won?t Make a Difference to our Energy Future
Why New Oil Discoveries won?t Make a Difference to our Energy Future
With the media awash in stories telling us how much oil is being discovered around the world, there is one word which the optimists quoted in these stories refuse to utter: Depletion.
The simple fact is that depletion never sleeps. It starts as soon as an oil well begins production and goes on 24 hours a day, 365 days a year. Furthermore, it is not exactly news that oil is being discovered all around the world. The industry has been spending record amounts to find it.
Whats critical is the difference between the annual additions to oil production capacity and the annual decline in the rate of production from existing wells, a decline which is running anywhere from 4 to 9 percent depending on whom you talk to.
Even at the low end of decline rate estimates, the world must find and put into production the equivalent of what is currently coming out of the entire North Sea, one the worlds largest finds, and we must do so EVERY SINGLE YEAR before worldwide production can rise. So difficult has this task become, that weve only just been able to keep global production on a bumpy plateau since 2005. For now, the oil industry is on a treadmill which requires ever more drilling just to keep production even.
(Many regular readers will wonder why I continually emphasize the flat trajectory of world oil production since 2005. Its so new readers will be introduced to this central fact about oil suppliesan indisputable trend which the industry simply refuses to talk about and even tries to obscure by changing the definition of oil to include things which are not oil. This trend has ominous implications for our society if it continues or, even worse, turns downward.)
To the untrained observer the quantities of oil recently discovered sound large. But, when put into the context of how much we consume, they wont extend the oil age by much. Norway, which produces oil from the North Sea, recently announced its largest find since 2000, a field with nearly 1.8 billion barrels. How long would the oil in that field last the world at the current rate of consumption? About 24 days.
The math looks like this. The world currently consumes about 27.4 billion barrels a year of crude oil including lease condensatewhich is the definition of oil. So, just divide 1.8 billion by 27.4 billion and multiply the fractional result by 365 days in a year, and youll get the number of days such a discovery could supply the world if we could pump it out at any rate we want to (which we cant).
Well, there are larger discoveries in Brazil, you may say. If we accept the governments figures on their face (and we really ought to be a little skeptical), then the Tupi field has 5 to 8 billion barrels and the Sugarloaf field has 33 billion. (The truth is no one really knows because there hasnt been enough drilling.)
Lets take the top end of the estimates and call it 41 billion barrels. If we do the above calculation for just one billion barrels, we find that it will last about 13 days. And so, a little multiplication tells us that two of the most massive finds ever (if they actually pan out) will give us 41 X 13 days of oil or 533 days, which is about a year and a half. Its nothing to sneeze at; but it doesnt exactly change the overall picture that much.