The last decade has seen a significant change in the terms of the debate around the concept of “peak oil”. Ten years ago the focus was on when oil resources would start to run out and was still based on a concept developed in the 1950s by a Shell geophysicist called M King Hubbert. Hubbert saw in the life story of an individual oil field, which rises to maximum production and then usually rapidly declines, a model that could be applied to the industry as a whole. As a finite resource, global oil would inevitably reach a point where the only prospect was decline. Technology has enabled the industry to keep finding more oil and has identified ways to extract it from existing fields that had been thought close to exhaustion. Science and engineering have made production possible from resources once thought uneconomic for commercial development — the most obvious example of which is shale. The volume of identified reserves not yet developed is greater now than it was in 1977 when I first joined the industry, despite 40 years of growing production. The concept of peak oil has therefore shifted from peak supply to peak demand. There is no consensus on the date but the expectation is that demand will begin to fall before supply starts to run out. Static or falling demand in the developed world reinforces that theory as does the suggestion, recently articulated by a senior Chinese official, that Beijing is considering banning petrol and diesel cars at some point. Some say the peak could come within five years; others put the date much later.
FT 18th Sept 2017 read more »
