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Derek Brower: Crude realities

A new film, “A Crude Awakening”, leaves out too many inconvenient truths By Derek Brower, journalist OIL IS a finite resource, so the more of it the world’s energy companies extract, the less will remain. On that, everyone agrees. One day, we will reach the mathematical peak of the world’s reserves. When that day will be – or if it has already passed – is a question that continues to divide opinion. “A Crude Awakening” claims to be a documentary about Peak Oil, as the theory is known, and follows the success of Al Gore’s “An Inconvenient Truth” (2006), another movie for the green generation. In “A Crude Awakening” investigation and exposition of the facts are both casualties of the rhetoric, which seeks to tell us one big thing: the world has reached peak oil and civilization as we know it is about to end. The remaining 83 minutes want to scare viewers into accepting the dark prophecy. It won’t fall on deaf ears. Among the film-watching public, apocalyptic movies about the evils of the energy industry and the threat it poses to our way of life are becoming a genre of their own, complete with their own standard clichés and tropes. Greene07.jpg The good old days Everyone knows that the US invaded Iraq to control oilfields, that a conspiracy among oil companies is preventing new alternative energies from gaining market share and that the public is being deceived by a cabal of shady policy makers in Houston and Washington DC. They are all good stories, with grains – or perhaps mountains – of truth in them. So why let the facts get in the way? The inconvenient truth of films like “A Crude Awakening” is that things aren’t quite as simple as their arguments would have us believe. This movie relies on interviews with several prophetic voices in the energy industry. The most powerful belongs to Matthew Simmons, a venerable investment banker and expert in the technologies oil service companies apply in drilling for crude. Simmons has been the oil industry’s Cassandra for decades. Compared with him, the apocalyptic tenor of Matt Savinar, who runs a website called www.lifeaftertheoilcrash.net and is one of the film’s most important voices, sounds frantic. He’s eloquent, but he also seems a touch demented. Unfairly, the film seems to mock him: wearing a green military sweater, he speaks from what looks to be a bunker, with boxed emergency supplies behind his head. And then there are the deceptions that will be evident only to energy journalists like me who have had the misfortune to travel in parts of the world scarred by oil companies. Images of dilapidation in Venezuela’s Lake Maracaibo and Baku, in Azerbaijan, are presented to show how the boom times have gone. Yet both places remain prolific oil producing regions. I’ve been to that oilfield in Baku. It’s ugly and a stain on the city. And it no longer produces much oil. But a few miles away are far more prolific oilfields, all brought on stream recently. Azerbaijan’s oil production (654,000 b/d) is now about three times what it was 20 years ago. A lot of statements go unchallenged, too. Simmons’ argument about Saudi reserves, made in his book Twilight in the Desert (2005), was powerful. It said that the kingdom’s upstream record had gone into sharp decline and that its largest find, the Ghawar field, was nearing peak and another like it would never be found. The book forced Saudi Arabia to offer the world more data about their reserves. But this film brooks no counter argument to Simmons’s claims and it relies exclusively on one methodology for calculating the depletion of reserves. As Leo Drollas of the Centre for Global Energy Studies has pointed out, there is a crucial difference between “strict depletion” (the methodology adopted in ‘A Crude Awakening’) and “net depletion”. In the former, you take the reserves and production rate of the field and calculate how long it has left. A 300m barrel field producing at a rate of 50,000 barrels a day will last 16 years. But reserves aren’t static. They also increase (or decrease) over time, depending on the exploration of the reserve and technology improvements. “Net depletion” calculates the reserves of the field, plus the new reserves added, against the extraction of the oil. It makes a crucial difference. Drollas says that from 2000 to 2006, gross additions to the world’s reserves amounted to 43bn barrels a year. Gross production amounted to 25bn b/y. Net depletion in 2006 was positive, at 2.2%. That is, the world’s reserves were 2.2% larger than the year before. Strict depletion calculations showed a negative: -2.3%. That might all be too boring for a mass-market documentary. But it is an example of how the counter arguments get missed when convenient ones that support a lazier argument are available. There is much more mileage in the peak oil theory than I’ve described above, but its proponents need to be more rigorous in making their argument. It doesn’t help that, in this film, the oil industry’s claims are dismissed so flippantly. That might play well to the crowd, but intellectually it doesn’t build a solid case. Just because it is the big bad oil company making the argument doesn’t mean it’s wrong. One example is particularly egregious. The Alberta oil sands, potentially the biggest oil reserve outside of Saudi Arabia, get barely a mention in the film. In fact, they are used to prove that the world is really running out of oil, because if the industry is going after such low-quality oil it shows just how desperate the situation really is. There is some truth to that. But it is also true that the Alberta oil sands are next door to the world’s biggest consumer of oil and are in a country, Canada, that presents neither geopolitical threats to consumer governments nor punitive royalty regimes to their companies (despite recent proposals). That makes them attractive. And whether the oil is low quality or not, it won’t stop another 2m-3m barrels a day from coming on stream in the next decade. Discounting Alberta’s reserves (and Venezuela’s – there’s lots of bitumen-rich oil there, too) from its argument is a rhetorical step too far. The oil sands are costly – in monetary and environmental terms – but they keep getting cheaper and in Canada alone they still hold up to 3 trillion barrels of oil. There’s another problem with the film. Any high-school student can show that “oil is a magnet for war”, as the movie states. Of course it is. It might even be a good reason for war. But glibly to suggest that the disastrous Iraq invasion was an effort to capture the country’s oil reserves by deposing a popular leader undermines the film’s other serious claims. If the US really wanted to secure its supply of oil from Iraq, it went about it the wrong way, with the result that 3m barrels a day of production were immediately shut in. Far easier would have been quietly to drop the sanctions against Saddam’s regime and do what the US does elsewhere in the Middle East: prop up a nasty regime in exchange for access to oil reserves. That doesn’t mean Iraq’s reserves weren’t the motivating factor – just that the question is complex. Given the soft targets at which the film takes aim (the oil industry, the US government, Western consumerism) and the antipathy most of its viewers will already have towards the oil industry, “A Crude Awakening” will be popular. It has already won a host of awards and laudatory reviews. And it might prompt more debate about oil consumption patterns. The oil age will end one day. We’re no closer to knowing when that will be – the film says it has happened; the industry says it’s decades away – but we’re closer to the day itself with each barrel consumed. Something will have to give. Alas, the film doesn’t tell us how to move from our oil-dominated lives to a post-crash existence. Some footage of an Amish man driving a horse-drawn carriage might be a clue. But the real conclusion – after biofuels and the possibility of technological advances in oil exploration have been hurriedly discarded – is that we need to harness the power of the sun and replace petroleum with solar power. That is laughably idealistic. Indeed, it calls to mind the comedy sketch in which Ali G wants to turn a skateboard into a “hoverboard”. But where is the science for the hoverboard, asks a venture capitalist. “That’s where you guys come in,” says Ali. “A Crude Awakening: The Oil Crash” is directed by Basil Gelpke and Ray McCormack www.derekbrower.com