It must be hard for the world to have sympathy for an oil and gas industry that has been so extravagant and wasteful. In the public consciousness, it is the cause of most of our environmental problems. We know that hydrocarbons are a finite resource and it is a popular view that the sooner we break our dependency on them, the better.
The Hubbert curve is a logistic model showing the theoretical depletion of worldwide resources over a two hundred year period. It has a steep ramp up to peak production, followed by a drop and then, rapid decline. The curve is symmetrical, or at least would be were it not for the many external influences such as regulation, political upheaval, changes in demand levels, enhanced recovery and premature abandonment. This is peak theory.
It is not because of sudden enlightenment or visionary leadership that the industry has been forced to look at its inefficiencies but a matter of survival and the need to keep investors onside in a commodity war. The war is on market share and it threatens us globally. Cheap energy can stimulate growth but it also stimulates consumption and waste. As a global market we are squandering a finite resource by selling it below the intrinsic energy value. It threatens the development of 'green' energy because, the cheaper hydrocarbons are, the less viable the alternatives.
Hubbert illustrates that rapid decline is inevitable and if we are not ready for it, it will lead to social and political upheaval, possibly war and most certainly, global energy poverty. The technical maturity of alternatives is not helped by the death of oil; we need it to develop those alternatives. If nuclear power is too dangerous and hydrocarbons are all bad, how do we power the vessels for maintaining offshore windfarms and tidal generators in the future? If we don't know the answer to those questions and ones like it, we are not ready to abandon hydrocarbons. This brings us to a key point; the production of energy requires energy. We need it for every stage of a project from concept, through to manufacture and on to installation-execution. During the life of any development, production values follow its own 'Hubbert' curve, so at end of life the business case becomes more challenging as returns diminish. If we are forced to abandon inventories and prematurely decommission the hardware, most of those resources will be lost to us forever. If the energy required to re-establish the infrastructure outweighs the recoverable energy it can never be viable at any price. That is a net loss to the world. Where are these most fundamental risks being prioritised? The answer is nowhere, with the traditional hierarchy of shareholders at the top, oil companies below and everything else disposable and only existing to serve their purpose. Yet is it really acceptable to dismantle the industry, its knowledge base and abandon the people who work in it, to satisfy a global game high stakes poker? Can we really progress as a species like this?
There are lots of articles in the media predicting a return to higher oil prices; they are convincing theories about a low oil-price-triggered bounce in demand or reduction in supply. As much as we need a higher valuation on our precious resources, this is not the way we need to do it. Increase in demand accelerates depletion. As for supply, a high oil price that does not result from a political solution, means that we have either killed off sectors of our industry forever, or there is a military war in key producing regions.
Regardless of the advancements we might make with exploration and production technology, it’s undeniable that one day there will be no more. Yet in theory at least, what we do have control of is when that end-date might be and that is by optimising our efficiency in extraction and not leaving anything behind unnecessarily. The market share competition is a race to the bottom and the bigger issue is how we will possibly make the transition into alternatives if we force ourselves into global energy poverty.
We must make our remaining resources last and look to carbon capture methods and cleaner ways of using it; the alternative is to burn it all before we learn how to keep the by-products out of the atmosphere. We must look at how to make the alternatives viable now, realising that the pay-off for that is in the future. The question is whether we will be there with sufficiently mature technology to meet it, because to get there requires hydrocarbons.
No comments:
Post a Comment