Expenditures for finding and developing oil fields have tripled in the last decade and the return from these expenditures has not been enough to justify the costs. Nearly all of the major oil companies have announced major reductions in their exploration and drilling programs and several are selling off assets as they are caught in a trap between steady oil prices and rapidly rising operating costs.
Tom Whipple, a former CIA analyst and highly-respected editor of the daily Peak Oil News and the weekly Peak Oil Review [published by ASPO – the Association for the Study of Peak Oil] offered that observation, [and the other quotations here], in an informative, straightforward, and necessarily sobering assessment of the current state of fossil fuel production.
His efforts won’t gain him rapid admittance into the Happy Talk Misleading Hall of Fame. What his observations will do (coupled with those of other esteemed analysts and commentators on the subject of peak oil) is to interject a much-needed awareness of facts and reality into public discussions about our future and the energy supplies we’ll all be relying upon.
That awareness cannot come too soon, burdened as most citizens are by a steady parade of foggy assertions bearing a reasonable but incomplete relationship to truth. We need more than passing acquaintance with facts that so clearly affect each and every one of us. Few of us appreciate just how much we rely upon inexpensive, readily-available supplies of energy to live our lives.
Taking this for granted shouldn’t come as a surprise to anyone. It’s pretty much all any of us and our immediate prior generations have ever known. Who among us considers the air we breathe thousands of times each day?
The simple fact, however, is that there is one vital aspect to this great body of fossil fuels which has powered us from the time of our Founding Fathers to this extraordinarily complex and awe-inspiring technologically-advanced 21st Century. These are finite resources.
We’ve drawn the cheap and easy supply in ever-more innovative and ingenious ways for nearly two centuries. Our go-to supplies are now harder to extract, more costly, less efficient. An engineering degree is not required to appreciate that this combination does not bode well for societies blindly pursuing more of everything without a pause to consider an alternate plan or two.
The world’s existing fields are depleting at rate of circa 4 million b/d each year so without constant drilling of new wells in new fields global production will quickly wither and prices will climb still more….
To keep the oil flowing, the world’s oil companies have invested some $4 trillion in the last nine years to drill for oil. About $2.5 trillion of this was spent on simply replacing production from existing oil fields. Even this gigantic expenditure was not enough since conventional oil production fell by 1 million b/d during the period.
Pause for a moment to consider that current state of affairs. For all the hype about the marvels of fracking and the energy boom tight oil production unleashed, the investments and returns aren’t adding up as bottom-line admirers hope. We consumers aren’t delighted with paying the higher prices needed to support the more extravagant energy production costs associated with unconventional energy supplies being relied upon more and more. (Worth mentioning again that the decline rates of fracked wells, and thus the need to drill more and more wells, at higher and higher prices, for less efficient products, are facts all conveniently omitted from the cheers offered by the oil industry’s media shills.)
A reckoning on both scores will come soon. Tom Whipple was succinct in that regard:
[I]nvestments in future production are going down, meaning that in a few years depletion likely will overwhelm new production and output of conventional oil will drop.
His inquiry was as good as any:
What is going to happen in the next few years?
Contemplating an answer or two might be a good investment.
~ My Photo: “Know The Risks” – Newport Beach, CA 02.16.14
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