Thursday, 10 February 2011

More on Saudi Arabia

The big buzz at the minute on the doomer sites is that wikileaks says the Saudis effectively say peak oil is real and that it's coming to a town near you by 2015.

The detail, however, is more interesting.

Unlike the more extremist doomer peak oil sites like dieoff which will now start ranting about the collapse of global industrial civilization circa 2015 caused by rapid depletion of oil supplies upon which *everything* depends, what the Saudis are actually saying is this:

By 2015 there will be a global production plateau which will be difficult to breach without significant investment. This plateau will last about 15 years followed by a sharp and then decelerating slow decline.

That's not too too far off of my own estimate, although I reckon the plateau will be closer to 10 years and that much of the decline will be mitigated by substitution, demand destruction as well as efficiency.

The upside to this is that it means we have something like 15-20 years to do a switchover.
Hirsch said that if we hit peak then we would have needed a crash program 10 years in advance of *depletion* in order to avoid liquid fuels shortages.

If we take the Hirsch report as reasonable rather than the out on the looney farm fringes (and I do, in spite of his failure to address certain substitutes) then we can say the following based on what the Saudis are saying:

1. We still have time to start the 10 year crash program if so needed
2. If we start now then maybe we don't need a "crash" program and merely an intensive program will be adequate

In fact, we have *already* started. Pressure to electrify the transportation system has been mounting since at least 2003. Great progress has been made on process engineering and cost reduction for both renewables and energy storage. Great progress has also been made in the transportation sector itself. We have viable (though still somewhat expensive) electric vehicles coming into production from almost all major manufacturers as well as Natural Gas alternative fueled vehicles. We also have made great leaps in our ability to extract natural gas from shale and are making increasing strides in our ability to extract from formations similar to the bakken. There are improvements to the processes for extracting usable synthetic crude from the oil sands. There has been deepwater oil discovered in quantities great enough to stave off depletion for probably another five to ten years giving us yet more breathing room. There is significant pressure to move towards fast breeder reactors to extend uranium reserves and additionally there is now a program by both India and China to attempt to utilize the much greater resource of thorium. There are efficiency programs underway also through tax breaks in many countries. In short we have options even if we have been slower on the uptake than at "emergency ramming speed".

While I do not think things are going to be easy (particularly due to the financial crisis in the western world instigated by the housing bubble and subsequent popping thereof) and I suspect we in the "developed" world are possibly going to see something like a combination of high inflation a la Britain in the early 1970s punctuated with recessions for the next two decades, I seriously doubt we are going to see fullscale collapse as foreseen by the extreme doomers.

We have the pieces in play, now it's just time to watch and see what shakes out.
I'm excited. We live in interesting times.

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