The letter by Al-Husseini and Al-Husseini about the Cambridge Energy Research Associates decline-rate study, as well as comments by other peak oil theorists on the subject, demonstrates their habit of ignoring historical context (OGJ, Feb. 4, 2008, p. 12). The point is that the decline rate, and the effect of depletion on capacity, is not a new element; rather, the industry has been replacing about 4 million b/d of lost capacity a year for some time now. With growth of approximately 1.5 million b/d of capacity every year, the gross additions must be on the order of 5.5-6 million b/d, or more than a Saudi Arabia every 2 years. Analysts like Matt Simmons and ASPO-USA always describe this without context. Thomas Petrie, for example, was quoted as saying, “When was the last time we discovered another Iran?”
Yet the industry has not only raised capacity by about 15 million b/d over the last 10 years, it has replaced something like 35 million b/d of capacity lost to depletion. This is equal to 10 Irans, without actually finding a new, major petroleum basin.
The only point of interest is whether or not the decline rate in existing fields has grown with new technologies, as some have claimed. CERA states that it did not find this to be the case. Why peak-oil pundits ignore this is hard to explain. Indeed, ASPO-USA’s comment that “betting on depletion is like betting on rust” nicely demonstrates the shortcoming of their thinking: The oil industry, and many others, deals with rust all the time, without thinking it will cause them to peak and decline.
Depletion, like rust, has always been with us and can be dealt with, given proper investment.
It is hard to produce oil, and always has been. But the industry has managed not only to run faster to stay in place, but to continually pull ahead. The resource that is lacking is logical thinking on the part of the peak-oil community.
Michael Lynch, President
Strategic Energy & Economic Research Inc.
Winchester, Mass.