Pushing the boundaries to find petroleum
What will oil supply be like 5 years from today?
Calgary energy economist and geophysicist Peter Tertzakian from ARC Financial revealed a little known fact at a recent London meeting to talk about his book “The Age of Energy Obesity”.
Oil consumption in the rich (OECD) countries of the world actually peaked in 2006 and started decreasing – before the oil price spike and before the recession. US vehicle miles hardly changed between 2003 and 2007 (and then declined in the recession).
It isn’t so surprising when you think about it – there is, after all, a limit to the amount of time someone is prepared to spend driving to work every day, and cars are slowly becoming more efficient.
Of course, overall oil demand continues to increase due to growth in other parts of the world (non OECD). But how long will this continue?
Peter believes that a likely scenario is for overall oil demand to increase over the next few years, as the world comes out of recession and prices are still fairly low. But what then?
To provide a say 5 per cent increase in supply in 3 years time, oil companies would probably need to be making much more investment today than they are doing, if it is possible to achieve at all. Otherwise, prices will peak and people will be trying much harder to find alternatives.
“$150 oil is the oil company’s worst nightmare," he says.
There are also a few technologies on the horizon with the potential to reduce oil demand – electric cars, new composite materials for conventional car bodies which is much lighter than steel (and means less fuel consumption), rapid refining of “telepresence” videoconferencing technologies reducing the need for business travel
Peter warns that the oil industry might be too complacent and unaware of the big changes around the corner. “I’d say the oil business is arrogant in thinking that their turf is sacred and secure,” he says.
Oil consumption in the rich (OECD) countries of the world actually peaked in 2006 and started decreasing – before the oil price spike and before the recession. US vehicle miles hardly changed between 2003 and 2007 (and then declined in the recession).
It isn’t so surprising when you think about it – there is, after all, a limit to the amount of time someone is prepared to spend driving to work every day, and cars are slowly becoming more efficient.
Of course, overall oil demand continues to increase due to growth in other parts of the world (non OECD). But how long will this continue?
Peter believes that a likely scenario is for overall oil demand to increase over the next few years, as the world comes out of recession and prices are still fairly low. But what then?
To provide a say 5 per cent increase in supply in 3 years time, oil companies would probably need to be making much more investment today than they are doing, if it is possible to achieve at all. Otherwise, prices will peak and people will be trying much harder to find alternatives.
“$150 oil is the oil company’s worst nightmare," he says.
There are also a few technologies on the horizon with the potential to reduce oil demand – electric cars, new composite materials for conventional car bodies which is much lighter than steel (and means less fuel consumption), rapid refining of “telepresence” videoconferencing technologies reducing the need for business travel
Peter warns that the oil industry might be too complacent and unaware of the big changes around the corner. “I’d say the oil business is arrogant in thinking that their turf is sacred and secure,” he says.
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