"If we don’t change our course, we’ll end up where we’re headed," says an ancient Chinese proverb.
From the deepest waters of the Gulf of Mexico to the prairies of North Dakota, and many places in between, the production of oil and gas in the United States has greatly increased over recent years through the industry’s ability to access heretofore inaccessible and unaffordable "unconventional oil." Using new technology and financed by the rising prices of oil since the mid-2000s, national oil production has risen over the past four years from 4.95 million barrels a day (mb/d) to 5.7. The Energy Department projects 7 mb/d by 2020, while other experts claim production could eventually be 10 million, which would put the United States in the league with Saudi Arabia.
With this increased production, a growing number of people (especially from the oil industry, Wall Street, and the Republican Party) have loudly proclaimed the end of peak oil, dismissing it as a myth that has now been dispelled. We’re not running out of oil, they insist.
But peak oil is not about the end of oil. Geologically speaking, that will never happen. Rather, peak oil is about the end of the cheap, abundant, easy to extract oil, the "sweet" crude that has been the bedrock of our industrial civilization, and the basis of the economic growth we’ve come to take for granted. This older oil still accounts for 75 percent of our daily consumption, but has been disappearing at the rate of 3-4 mb/d each year, and will be largely gone in 20 years. As older fields dry up, newer ones are not being discovered. In 20 years, cheap oil will be largely gone.
Peak oil is also about the increasing worldwide demand that is outstripping production. According to the latest report from the International Energy Agency, global oil demand is forecast to climb to 89.9 mb/d in 2012, a gain of 0.8 mb/d (or 0.9 percent) on 2011. Oil production has flat lined at around 85 mb/d since 2005; producers cannot increase production because new fields cannot keep pace with declining production from old fields, registering an aggregate decline rate about 5 per cent per year. When supply cannot meet demand, oil prices rise, along with everything else in our consumer-oriented society that is dependent upon oil (like our food).
Hence, energy companies have increasingly turned to unconventional sources, those previously identified reservoirs that were long considered inaccessible and prohibitively expensive, such as deep offshore and Arctic oil, shale oil, and tar sands.
Despite their apparent promise of a bright future, however, this shift to unconventional fossil fuels has a very dark side. For one thing, their extraction and processing is extremely expensive. The Energy Returned on Energy Investment (EROEI) for the Bakken shale in North Dakota, for example is 4:1, which means it takes one barrel of energy to produce four barrels of shale oil, and that is before refining the oil to finished products. The tar sands net energy in Alberta is 3:1. These compare with the halcyon days of cheap oil - the 1930s and 1940s - where the EROEI produced 100:1 net-energy. In order to recoup their considerable investment, energy companies will have to charge triple digit sums for a barrel of oil. Historically, the U.S. goes into a recession when we spend more than 4.6 percent of our GDP on oil, around $60 a barrel. Charles Hall, at the State University of New York, has calculated that it is not possible to run our complex civilization on a net-energy below about a 6:1ratio.
Additionally, this bonanza is short term. The 24 billion barrels, for example, estimated to be trapped in U.S. shale formations is only about 9 months’ worth of global consumption. Fracking wells typically don’t keep producing for very long. While some have been able to yield as much as 1,000 barrels a day, the rate then falls off to 65 percent the first year, 35 percent the second, and 15 percent the third.
Then there is the environmental damage, like the BP Gulf disaster in 2010. The drilling technique for tar sands and shale oil -- "fracking" -- uses great amounts of highly pressurized water, sand and toxic chemicals to force oil and gas from the rock formations in which they are embedded. This has resulted in serious air pollution, wastewater problems, and concerns about the safety of water supplies, with growing evidence that toxic fracking water is leaking into underground aquifers. Earthquakes are also occurring in fracking areas where they’ve not happened before.
But the ultimate irony to this so-called "end of peak oil" scenario is the climate card that unavoidably comes into play. For in addition to the expensive wells and environmental damage, there is also the fact that this new technology must burn great amounts of energy -- and, hence, release millions of tons of carbon into the atmosphere -- in order to extract yet additional fossil fuels to be burned. Unconventional oil and gas -- the touted liberators from peak oil -- require far more energy than drilling for conventional fuels.
The U.S. Energy Information Agency calculates that, barring serious changes, global emissions of carbon dioxide will rise 43 percent between 2008 and 2035, an increase that would eliminate any hope of avoiding the apocalyptic consequences of global warming.
Rather than devoting resources, and the time we have left, to creating a sane transition to a post petroleum world, this oil rush to unconventional sources only exacerbates our addiction to oil, and compounds our delusion that technology can somehow trump nature, as well as the challenges that are essentially political, social, economic, and (especially!) spiritual, blindly hurtling us yet closer and faster to the edge of the cliff.