Oil Depletion and Peak Oil
The peak in global oil production or oil depletion is of major concern as usable energy is the world’s most critical resource. Oil is a finite, non-renewable resource and will someday run out. Oil is used to transport raw minerals, to refine them, to manufacture goods, and to transport the goods to markets. Oil accounts for 40% of all energy use.
Oil companies have extracted the easiest to reach, oil first. Companies like, Western Pipeline Corporation , use advanced technologies to extract oil in harder to reach areas but it is much costlier. The oil pumped first was on land, near the surface, under pressure, light and “sweet” (meaning low sulfur content) and because of the low sulfur content, easy to refine into gasoline. The remaining oil takes a lot more money and energy to extract and refine. The rate of extraction drops and eventually it isn’t economically viable to extract.
Peak oil is the term used for the peak in global oil production. Peak oil means running out of conventional (cheap) oil. Any discussion about peak oil is controversial due to the economic and political ramifications involved with the decline in what’s considered the fuel of the world’s economy. Many analysts believe that within the next decade, the supply of conventional oil will be unable to keep up with demand. In the 1950’s a U.S. geologist, M. King Hubbert , predicted that production from the US lower 48 states would peak between 1965 and 1970. He noticed that oil discoveries graphed over time tended to follow a bell shape curve. Hubbert was right; U.S. continental oil production did peak in 1970. The U.S. oil peak created the conditions for the energy crises of the 1970’s which led to much greater strategic emphasis on controlling foreign sources of oil. Peak oil in the U.S. was hardly noticed because oil was imported from elsewhere. However, when global oil production peaks the implications will be much greater.
When countries reach peak oil production gradually declines. Naturally, prices will rise with the same level of demand with scarcer resources. Of the sixty-five largest oil producing countries in the world, up to fifty-four have passed their peak of production and are now in decline, including the U.S. and the North Sea. Many petroleum scientists suggest that “regular” oil peaked in 2004. If heavy oil, deepwater, polar and natural gas liquids are considered, the oil peak is projected for around 2010.
Meanwhile global demand for oil is rising. The Energy Information Administration forecasts that worldwide demand for oil will increase 60 percent by 2020. This era of oil depletion will affect everything from transportation to food to medicine. Almost everything we do is dependent on oil.
Bob Jent is the CEO of Western Pipeline Corporation. Western Pipeline Corp specializes in identifying, acquiring and developing existing, producing reserves on behalf of its individual clients.
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