The Peak Oil concept is that production has peaked, production levels will soon decline in the U.S. & worldwide, and we will soon run out of oil. At a fundamental level that assumes there isn’t any more oil than what we know about right now and that we can’t get to anything that we don’t know how to reach now.
Today I provide two illustrations of the fallacy of Peak Oil.
First, a new field means that tomorrow we can get to energy we didn’t know about yesterday.
Apache Corp. has announced a huge find in Canada. An article from the Calgary Herald provides the story: Apache discover huge shale gas reservoir in northern B.C.
This is a big find:
One of three companies planning a $4.5-billion liquefied natural gas terminal at Kitimat on Thursday announced an “outstanding” new shale gas discovery in British Columbia’s remote and largely unexplored Liard Basin.
The find by Apache Corp. is estimated to contain enough gas in itself to justify doubling the size of the Kitimat terminal it’s proposing with partners Encana Corp. and EOG Resources. The company is calling it the best and highest quality shale gas reservoir in North America, based on the volume of gas three test wells are producing.
Here’s more detail on the location. Notice there has been little exploration in this area.
The Liard Basin is in northeastern B.C., west of the Horn River basin. Most drilling activity is taking place in the central part of the basin, 110 kilometres northwest of Fort Nelson, B.C.
According to a B.C. ministry of energy and mines report on shale gas activity in that province, it remains a relatively unexplored area covering 1.25 million hectares.
Translation: That means the engineers didn’t know about that huge amount of natural gas a few years ago. That gas was not a part of proven reserves. It was not even a part of the known reserves. I’m guessing it was just on the mind of some geologists as a possible energy source.
Here is the fallacy of peak oil – we can calculate the amount of all mineral resources we can ever get out of the ground and that amount will always go down, never up. We won’t ever find a new field.
This new find breaks that concept.
Second point, new technology means we can get to energy today we couldn’t touch yesterday
Here is a comment I read in Hard Facts – An Energy Primer provided by the Institute for Energy Research:
To understand the difference that hydraulic fracturing makes, in 1995 the U.S. Geological Survey (USGS) estimated that the Bakken formation held 151 million barrels of technically recoverable oil. But in 2008, after the impact of hydraulic fracturing and direction drilling were included in the USGS’s assessment, the estimate of recoverable oil in the Bakken jumped 25 fold.
One of many things I enjoy about Hard Facts is the extensive documentation. That comment I quoted has a footnote linking to the USGS news release, which you can find here.
The USGS report says:
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 151 million 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.
New geologic models applied to the Bakken Formation, advances in drilling and production technologies, and recent oil discoveries have resulted in these substantially larger technically recoverable oil volumes. About 105 million barrels of oil were produced from the Bakken Formation by the end of 2007.
Estimated technically recoverable oil in Bakken soared from 151M barrels in 1995 to 3,650M in 2008 (which is the mean of the range).
Not all of that is economically recoverable and the engineers don’t know exactly where it is (which only means nobody knows which specific farmers get eventually get the royalty check), but it is technically possible to reach that oil.
Putting that into perspective of total production, the technically recoverable oil in 1995 was estimated to be equal to 1.4 times all of the oil ever produced from Bakken through 2007. In 2008 the technically recoverable oil is equal to 34 times all the oil produced through 2007.
Let me describe the technically recoverable reserves in relation to production in North Dakota. That’s not a correct comparison for several reasons, but it allows me to put another nail in the coffin of Peak Oil.
Based on stats from the North Dakota Department of Mineral Resources found here, I calculated that 2011 oil production in North Dakota was 152.9M barrels.
That means the technically recoverable oil in the entire Bakken field in 1995 was equal to 360 days of production just in the state of North Dakota. Technically recoverable oil in Bakken from the 2008 estimate is equal to 23.8 years at the rate of North Dakota’s production in 2011.
Let me rephrase that – 2011 production just from the state of North Dakota was greater than the 1985 technically recoverable oil in the entire Bakken field which is spread across the entire region of North Dakota, eastern Wyoming, and south-central Canada.
What happened?
New technology was developed. Specifically, directional horizontal drilling and hydraulic fracturing.
Add new technology and the oil we can get to increases by a factor of 25!
Here’s the fallacy of peak oil this illustrates – Peak oil assumes we will never figure out a way to get to more oil than we know how to get to this afternoon.
Human ingenuity and creativity means today we can get to oil we couldn’t touch yesterday.
Can we bury Peak Oil?
Don’t tell biden about any of this