Is ‘Peak Oil’ Behind Us?

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Is ‘Peak Oil’ Behind Us?

Peak oil is not just here — it’s behind us already.

That’s the conclusion of the International Energy Agency, the Paris-based organization that provides energy analysis to 28 industrialized nations. According to a projection in the agency’s latest annual report, released last week, production of conventional crude oil — the black liquid stuff that rigs pump out of the ground — probably topped out for good in 2006, at about 70 million barrels a day. Production from currently producing oil fields will drop sharply in coming decades, the report suggests.

The agency does not see energy doom on the horizon, however. By its estimation, after a short dip in production, crude production will reach an “undulating plateau” of about 68 million barrels a day between 2020 and 2035.

Yet strong demand growth from China, which the report estimates is now the world’s largest energy user, and elsewhere will require liquid energy supplies to not just hold steady, but to climb by more than 20 percent.
Meeting that additional demand will fall entirely on unconventional oil sources like Canada’s tar sands as well as increased production of natural gas liquids. A major boost in these energy sources should be able to meet demand, but that is far from certain, Nobuo Tanaka, the agency’s executive director, told reporters in London, according to the Associated Press.

“Recent events have cast a veil of uncertainty over our energy future,” Mr. Tanaka said.

The I.E.A.’s stance that 2006 will be the year global supplies of conventional oil reached their ultimate peak is a more pessimistic take than its previous assessments. In 2008, the organization projected that conventional oil production would continue to slowly climb for several more decades.

Its current estimate that enough new oil will be found to keep the oil supply roughly steady for the next 25 years is hardly ironclad, however, a point the report acknowledges in the executive summary. “Will peak oil be a guest or the spectre at the feast?” its authors ask.

“The size of ultimately recoverable resources of both conventional and unconventional oil is a major source of uncertainty for the long-term outlook for world oil production,” it concludes.

Over all, oil prices should continue to climb in coming decades, reaching $135 a barrel by 2035, a price level that some economists believe contributed to the global economic collapse of 2008.

Some experts found the report’s projections troubling.

“It’s a perfect storm headed our way — a steady rise in global demand for oil crashing up against an increasingly limited supply of economically recoverable oil,” William Chameides, professor of environmental science at Duke University, wrote on his blog.

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