Tom Nicholls: Aspo ups the ante in peak-oil debate

$100,000 says we are running out of oil faster than you think, peak-oil group tells US consultancy The Association for the Study of Peak Oil-USA (Aspo-USA) is so sure that world oil-supply growth will fall short of a recent forecast by a US energy consultancy that it says it is willing to bet $100,000 against it. Last June, Cambridge Energy Research Associated (Cera) forecast that world oil production capacity will reach 112 million barrels a day (b/d) by 2017. Assuming the same ratio as today of oil produced to production capacity, this would mean actual output of something like 107 million b/d in nine years’ time – a 20 million b/d increase from today’s 87 million b/d. “Cera is forecasting an addition of 20 million barrels within a decade,” said Steve Andrews, co-founder of Aspo-USA. “We are betting you can’t do that with the drill bit.” Aspo-USA has questioned Cera’s record on forecasting

The 11 members of Aspo-USA’s betting pool claim to have issued the wager “to raise awareness about the fragile state of the world’s future oil supplies”. Participants include Jeremy Gilbert, a former chief petroleum engineer for BP and Matt Simmons, a Houston energy banker.Peak oil has become an increasingly touchy subject in recent years. In January, Cera, responding to gloomy predictions about oil supply, published analysis that it claimed provides “the basis for more confidence about the future availability of oil”. Central to its argument is that rates of decline in field production tend to be less severe than assumed by the propagators of the “more pessimistic peak-oil views”.According to Cera, which says its study is based on data from 811 oil and gas fields, the aggregate global decline rate is 4.5%, rather than the 8% cited in many studies. It says figures that put the decline rate above 4.5% “may be a function of the generally more rapid decline rates observed in small fields – increasingly being developed in mature non-Opec countries – and the rise of deep-water projects, which tend to flow at high rates as a requirement of commerciality, but which also decline rapidly”. In addition, it points out that the application of new technology tends to lengthen field life and reduce decline rates, suggesting that constant reppraisal of the outlook for production and production capacity is necessary.In January, a senior BP economist, Peter Davies, told a group of UK politicians investigating the peak-oil issue that while world oil production will peak in the next generation, it will be as a result of a peaking of demand rather than of supply – as countries implement measures to control greenhouse gas emissions. Claiming there is “no imminent binding global resource shortage”, Davies also stressed the importance of looking at the bigger picture: he pointed out that liquid hydrocarbons are, increasingly, being produced from non-oil sources, including natural gas liquids, agricultural crops, coal, gas-to-liquids, shale and the mining of tar sands. “The reality is that the world’s oil reserves are not fixed. They depend on technology and economics as well as on geology,” he said.Other large oil companies continue to produce optimistic forecasts. At an energy conference in Rome in November, ExxonMobil’s chief executive, Rex Tillerson, quoted the US Geological Survey’s estimate that twice the total conventional oil resources consumed to date remain to be produced. At the same event, Saudi Aramco, the world’s biggest oil company, claimed there could be up to 200 years’ worth of producible conventional and unconventional oil supplies left worldwide.