This issue's special report, beginning on p. 22, tackles the subject of corporate governance.
Admittedly a squishy term, corporate governance encompasses for OGJ readers how oil and gas companies cope with a wide range of issues.
Corporate financial scandals, climate change, terrorism, human rights, and growing shareholder clout are all part of a new landscape these days for executives struggling to maintain their bearings at the helms of oil and gas companies.
While these are all daunting challenges, no one sees them realistically as threatening the industry's existence.
The Big Issue
But a much larger issue, one that dwarfs governance concerns, looms on the horizon. It's flying pretty much under the public's radar for now, but that is likely to change soon. And it speaks to the very survival of the oil and gas industry: the future supply of hydrocarbons.
The issue has resurfaced as an object of controversy within the industry recently. That's why OGJ tackled the subject this summer in a series of six special reports on future energy supply that began with a report on the famed Hubbert's peak theory of oil depletion (OGJ, July 14, 2003, p. 18).
This task was undertaken with a sense of déjà vu. A quick search of the Nexis-Lexis database showed OGJ has published 72 articles with some reference to M. King Hubbert or the Hubbert curve since 1978. Indeed, a series of Watching Washington columns in 1980-81 reported that Hubbert was challenging US Geological Survey estimates of US ultimate recoverable resources of oil, claiming geologically spawned oil shortages were imminent, and espousing a switch to solar power. Sound familiar?
When the legendary geophysicist made his 1956 prediction about US Lower 48 oil production peaking around 1970, he was proven correct. His predictive track record was a bit spottier after that, but others have taken up the cause with vigor in recent years. So much so that several organizations have coalesced around the issue of peak oil just in the past few years. The most prominent of these is the Association for the Study of Peak Oil & Gas (ASPO), cofounded by Hubbert's intellectual heir, Colin J. Campbell. Papers presented at recent ASPO conferences have gotten some attention in the general press, taking note of dire warnings coming from some highly qualified petroleum scientists. Some ASPO publications are pretty harsh in tone about their skeptics, including frequent references to "flat-earth economists." The battle has been joined again.
Overwhelming response
This time around, the debate is more rancorous and the stakes much bigger. The level of interest expressed in the issue was a revelation to this editor. In "virtual" e-mail interviews with some of the most prominent figures in the debate, the response was overwhelming throughout the series—as it has been from readers.
Just as a measure of the interest expressed in this heated debate, check out the various OGJ Forums addressing the subject on our web site at www.ogjonline.com. There you will find compiled e-mail responses that totaled more than 100,000 words. Some submitted entire articles, or at least enough material to qualify for one.
Meanwhile, some of the OGJ articles in the series have been conscripted for use in a graduate-level course on world oil markets at Johns Hopkins University's prestigious Paul H. Nitze School of Advanced International Studies. And this editor has been asked to participate—presumably for contrast alongside some legitimate industry heavyweights—in a special session on the peak-oil debate at next year's Offshore Technology Conference here in Houston. Come watch the fur fly.
Self-fulfilling prophecy?
That kind of attention is gratifying. At the same time, it's a bit worrisome. It's clear that the issue of oil depletion is more than just a largely academic exercise this time around.
The peak-oil theorists, convinced that a day of reckoning is imminent, are becoming more heated in rhetoric and more apocalyptic in tone. This is getting picked up increasingly by the daily press—especially since some depletionists seek to tie the US-led war in Iraq to oil depletion concerns. And some have added climate-change worries to the lurking fear of resource depletion as further reason to switch to alternative fuels.
Connect the dots. It may not matter whether the depletionists are right or wrong; the alarms themselves could grow to the point where predictions of an end to the Hydrocarbon Age become a self-fulfilling prophecy.
So line up your data, and let the games begin.
