Shell CEO Admits Peak Oil Could be Here in 7 Years
by Jeremy Elton Jacquot, Los Angeles on 01.26.08
Image courtesy of LinBow via flickr
In a rare moment of candor, Jeroen van der Veer, the chief executive of Royal Dutch Shell, acknowledged what many have long considered a forgone conclusion: the end of the oil era is almost upon us, and sooner than you might think. The Oil Drum retrieved an e-mail sent to all Shell employees in which the CEO admitted the obvious (emphasis ours):
"Regardless of which route we choose, the world's current predicament limits our maneuvering room. We are experiencing a step-change in the growth rate of energy demand due to population growth and economic development, and Shell estimates that after 2015 supplies of easy-to-access oil and gas will no longer keep up with demand."
He went on to criticize the sluggish response by policymakers to the coming energy crisis:
"Taking the path of least resistance, policymakers pay little attention to curbing energy consumption - until supplies run short. Likewise, despite much rhetoric, greenhouse gas emissions are not seriously addressed until major shocks trigger political reactions. Since these responses are overdue, they are severe and lead to energy price spikes and volatility.
...
As calls for harmonization increase, policies converge across the globe. Cap-and-trade mechanisms that put a cost on industrial CO 2 emissions gain international acceptance. Rising CO2 prices accelerate innovation, spawning breakthroughs. A growing number of cars are powered by electricity and hydrogen, while industrial facilities are fitted with technology to capture CO2 and store it underground.
Against the backdrop of these two equally plausible scenarios, we will only know in a few years whether December's Bali declaration on climate change was just rhetoric or the beginning of a global effort to counter it. Much will depend on how attitudes evolve in Beijing, Brussels, New Delhi and Washington."
It is rare to hear such candid talk from an energy executive given that the future success of his business is predicated on the longterm availability of oil. His call for more investment in renewable sources of energy sounds prescient though many will likely dispute his assertion that only nuclear power will provide a stable, reliable solution to our energy needs. More controversial will surely be his statement that we will need to spend more money on accessing difficult-to-reach fossil fuels, such as the vast Canadian tar sand deposits and oil reserves from the Arctic.
The contrast he draws between what he views as the two likely energy scenarios that will likely come to pass - the "Blueprints" scenario vs. the "Scramble" scenario (which John also covered here) - also deserves mention:
"At Shell, we think the world will take one of two possible routes. The first, a scenario we call Scramble, resembles a race through a mountainous desert. Like an off-road rally, it promises excitement and fierce competition. However, the unintended consequence of "more haste" will often be "less speed" and many will crash along the way.
The alternative scenario, called Blueprints, has some false starts and develops like a cautious ride on a road that is still under construction. Whether we arrive safely at our destination depends on the discipline of the drivers and the ingenuity of all those involved in the construction effort. Technical innovation provides for excitement."
Whether or not you agree with the substance of his views, it is well worth your time to read his e-mail in full. Alternatively, you can also listen to a brief discussion of his e-mail on American Public Media's Marketplace program here. Even if peak oil arrives later, his comments and recommendations are well worth keeping in mind as we see the energy landscape change over the coming years.
See also: ::Future Green: Prognostications For 2008 & Beyond, ::Everything You Wanted to Know About Peak Oil, ::IEA Sounds Peak Oil Alarm
Thanks for leading us down a dead end road Jeroen, now what the F@CK are we supposed to do? We're in some real pretty stuff now man... [/Aliens]
Would it be so difficult for the oil companies to be at the forefront of the "new" technologies?
Have they not made enough money off of oil?
Do they not understand that if the entire world goes to shit that all the money they've made will not help them one bit? That Leerjet aint gonna fly on wishful thinking.
Plus, if they are at the forefront of the "revolution" they get to milk profit from the people for another 100+ years?
It's a win/win situation for them, situation: normal for the rest of us. They retain control of the world and make more money, what else do they want?
Given what this man said, guess we going to have to take another look at hybrid, electric and hydrogen fuel cell technology for cars. Also, we may need to look again on nuclear technology too. Also coal to liquid tech, and oil shale technologies are going to need to be looked at too.
Keep in mind - that peak oil might begin in 7 years doesn't mean that there will be no oil in 7 years. It might mean that the rich get oil and the poor don't, or that there is only a little bit less oil available, before ALL of the oil is gone.
Just putting that out there.
Very likely Shell believes it is in the energy business...and wants to remain in business...nothing new...can we remember horse and buggy vs. cars companies.
I also know that Shell has been very forward looking for more then 25 years, although we like to find their faults.
Will the alternative energy be "mass" again and someone else "taking" the profits or will there be a new smaller scale...I don't know.
Check out this viewpoint: http://www.thebreakthrough.org/
Used up all the easy oil in 4-5 generations.....well, at least we all had a nice time with it.......
It is so confounding to me that oil companies don't invest in battery technology at this point. Check this out:
(Net) Cash on books:
Chevron: $2.59 Billion
Exxon: ~$22 Billion
(Most of the others, surprisingly, are in the red)
Total: $24.59 Billion
@$.50/W (achievable at those scales) these two oil companies could buy 49,190,000,000W/h worth of batteries
or
49,190,000kw/h worth of batteries
which could provide
50,000,000 cars with a 1kw/h battery (for hybrid purposes)
In the meantime, researchers work on Ethanol solutions, GROWN here in the U.S. Learn more at www.Cropsci.ncsu.edu.
The current hold up? Production level refinement plants.
Oil will be around for another 4 or 5 generations.
We all knew this was coming with China and India coming online with autos, so its really no news at all. And with record profits still, the oil companies need not change anything just yet. But because they have a ton of cash, and are on the ground in every locale, you can guarantee that when the price comparison for alternative energy meets oil, they will be transferring their power into it aggressively to stay ahead. Some small companies might lead there, but ultimately, there is too much $ at stake for them to just give up on the future of energy. Like someone said here, their 25 year projections have been quite accurate, and a lot of money has been spent to envision this future, so they will always be around, most likely.
Remember, regardless of Gate's speech last week trying to trumpet corporate giving, commerce is about making profits, not charities. So they'll keep their eye on that and adapt when it is economically profitable to do so. Chances are, Shell will be serving up fuel to you in some form 100 years from now...
So wait.. Someone that is bound to make more money off of higher oil prices is telling a chilling tale about us running out of oil soon? Like to create a scare to inflate prices to make more money?
Does that seem like it could be the case here?
Just wondering what people think...
@Brian
At these prices no major producer has any reason to cut back production (esp OPEC nations with their highest incremental cost around ~$32/b and their lowest cost ~$14/b)
The scarcity we are running into is a geological limitation. Remaining reserves are massive: >1 trillion barrels of conventional reserves which at 85,000,000bpd should last us more than 12 years. The problem (geological) is flow rate. Many of the most prolific fields (Ghawar, Safinya, Abqiaq, Prudhoe Bay, and esp Cantarell) are "mature" and can no longer flow the 9.8,3,2,1.5, and 2.5 million barrels per day(respectively) that they once did.
Think of it like this:
Lets say you had a safe in your basement that had $1Billion in it and that's all the money you'd ever have in your life. Would that be enough to get by? Most people would say yes, but they'd fail to ask a key question: "How much money can I take out every day?" If the answer is "only $1" than $1Billion would not be enough to get by.
Interesting discussion. Many feel that oil has already peaked. There may be a collission between demand, which continues to rise, and supply, which is being held steady with difficulty. Analysts also suspect that Saudi Arabia overstates their reserves, and there is a theory with evidence behind it that Iraqi oil ended up diverted to Saudi Arabia to allow the appearance of steady world supply.
Keep reading posts, and PBS and History and Discovery channels - shale oil and tar sands debatably produce maybe a bit of extra energy, but require a lot of fuel to extract; nuclear is a disaster waiting to happen, and biofuels are at best a very short-term fix, since the earth's farmland is maxed out, and fertilized heavily in many countries using - you know it - natural gas derived fertilizer. There is no easy fix, but solar (wind, photovoltaic, tidal, wave) have the potential to replace all of the current energy production. But we need to start ramping up right away. So: what is the delay??
What the CEO Jeroen van der Veer is quoted as saying is "supply will no longer keep up with demand." Peak Oil to my knowledge is when demand is growing faster than new capacity. His statement is more alarming as Peak Oil still accounts for surplus capacity meaning we still have a little leeway. Jeroen van der Veer's statement means that we simply won't have enough oil to meet demand. At that point you start running out at gas stations and the price goes crazy. We have already passed Peak Oil and now even an oil company CEO is telling us we are approaching the next event horizon, supply outages. Hang on to your butts cuss we be going for a ride.
Peak Oil doesn't mean that we're running out of oil, it means that we're running out of cheap ($90-$100 per bbl) oil.
I believe the global C+C peak still stands as 2005. The United States Peaked in 1970!
There are amazing resources all over http://www.theoildrum.com/.
Watch Oily Cassandra on Peak Oil (http://www.youtube.com/watch?v=vAPf9V3_li0). ***Warning... there is a scantily clad female dancing provocatively in this 4 minute peak oil summary video. If you're easily offended, turn your monitor off while listening to what she says.
Ross said...Keep in mind - that peak oil might begin in 7 years doesn't mean that there will be no oil in 7 years. It might mean that the rich get oil and the poor don't, or that there is only a little bit less oil available, before ALL of the oil is gone.
This sounds good, so let's not worry we still have time. I bet ross has a "W" sticker on his car. It has been a trademark by our current administration to not worry until a problem is right in front of us, i.e terrorism, katrina, subprime morgages, and now oil. your right Ross WE STILL HAVE TIME...
OH and lets find a way to remind those rich people who will be able to afford the remaining gas, you wont be rich for long if "THE PEOPLE" cant get to work