This column marks the final appearance of the above byline in this space, after logging roughly a decade and some 500 columns, counting earlier fax and online versions.
The purpose always has been to take the pulse of oil, natural gas, and refined products markets as a gauge of general petroleum industry health. Most of the time, the approach has been to canvass the top analysts and consultants for their views on markets past, present, and future, then briefly compare and contrast their views while being permitted the occasional wry personal observation. This time, personal observations are the rule.
Peak oil concerns
The oil market in this decade and in those to come should remain focused on an industry debate that has popped up often in years past: peak oil.
The peak-oil debate has broken into the mainstream public consciousness after 50 years of largely academic debate within the industry. No matter how fierce that debate became, the vagaries of oil price, supply, and demand inevitably would relegate it again to the musty realm of academe.
That is changing dramatically, as was borne out by the explosion of attention given the topic in the past year. Certainly not in any OGJ editor's memory was there a reader response of the magnitude seen with last year's Future Energy Supply (FES) series, which showcased the peak-oil debate (OGJ, July 14-Aug. 18, 2003). In all, it has been the most gratifying experience of a long career with the world's best petroleum publication. That's because OGJ always has been and always will be all about what readers want and need, and this response is thundering validation of that mission.
Observations
In putting together the FES series, a reporter's neutrality was necessary. But a columnist has the luxury of making personal observations.
Both sides in the peak-oil debate have it somewhat wrong and somewhat right. There most likely will be ample hydrocarbon resources ultimately available to meet the world's energy needs—when nonconventional oil and gas are included—until a truly benign, cost-effective nonhydrocarbon energy source comes along. But protracted supply-demand crunches seem inevitable, perhaps beginning as early as this decade—the result not of ultimate resources but of timing, due to insufficiencies in capital, prospects, and information. The surprising spurt in oil demand from China, India, and other developing nations this year offers a preview. Such future demand spurts might be met only by economy-wrecking, price-induced demand destruction.
Not enough money has been invested in replacing reserves in countries both within and outside the Organization of Petroleum Exporting Countries. Not enough quality prospects are available in non-OPEC countries. Not enough is known about the extent of the global oil resources that remain, especially within OPEC, and a global hydrocarbon inventory (GHI) initiative is urgently needed.
If the world is to transition to a prosperous, nonhydrocarbon-dominated future, it will need that accounting. It also will need every bit of capital and every drop of bitumen, extra-heavy crude, shale oil, gas-to-liquids, and the like. Oil importing nations will need to stop treating OPEC like the enemy and start treating it like a partner in a mutually beneficial energy future. OPEC members and all other oil producing nations will need to view oil and gas companies in the same way and make investment opportunities available and attractive. And oil and gas companies need to remind themselves and their investors that their core business is finding and producing hydrocarbons, not appeasing Wall Street moodswings.
The peak-oil debate is no longer academic. Antioil activists are seizing upon the issue and coupling it to concerns over global warming and Middle East conflicts to bludgeon the industry into premature extinction in favor of immature energy sources. That scenario comes with a horrendous cost to the global economy and consequent economic disaster for the world's poor.
Stay focused on resolving this debate, starting with a GHI initiative. Or be prepared to become the buggy whip manufacturers of tomorrow.
This column also serves as the swan song for a 24 year career with OGJ. It is with some sadness and much pride that I reflect upon those years working for the "bible" of the oil and gas industry. My new job keeps me within the industry, so I will continue as a faithful reader of OGJ, for the best information about the most important and most fascinating business in the world. For my part in that mission, thanks for reading.
(Online Sept. 20; author's e-mail: [email protected])
