The BP disaster might be telling us that the age of peak oil has arrived. Last week, I did a blog entry suggesting we have entered the era of tough oil. With depleting oil reserves, companies will have to drill in more remote places and extract the stuff in riskier and more damaging ways. All this suggests that the BP oil will be one of many disasters still to come.
The Daily Mail's William Rees-Mogg looks at this and raises some uncomfortable scenarios. "There are three facts which have to be recognised. The first – and most important – is that the age of readily available petroleum is over. For some time there has been a theory that the world had already reached 'peak oil': the point at which the growth of demand for oil exceeds the growth in supply. The BP disaster goes beyond the doctrine of peak oil. We are now at the point of 'peak technology', where the risks of drilling technology have become greater than society is willing to support."
Writing in the Oil Drum geophysical consultant Glenn Morton says BP deep water drilling at its other Gulf of Mexico rig Thunder Horse is not going to plan and not producing enough. "After nearly two years of production history on the field, it is becoming obvious to most outside observers that Thunder Horse field is not performing as it was expected to perform, if one is to believe the press accounts and specifications of the production facilities. If the field is underperforming, as the data available from the Minerals Management Service seems to indicate, this should be of concern and interest to those in the Peak Oil community, and to the world."
Basically, that means the economics of deep water exploration will send up the price of oil.
Add to that this analysis from the 24/7 Wall St site which looks at data from Energy Information Administration which reveals that demand for oil will go up but production will remain flat.
"Does this really signal that world oil production has peaked?… Combine that with the effect the leaking well in the Gulf is bound to have on offshore exploration and production and declining production from Alaska, the North Sea, and the Mexican part of the Gulf of Mexico, and it's not hard to conclude that we have in fact reached peak oil. New discoveries are almost always found in hard-to-reach and expensive-to-extract locations. It is absolutely accurate to say that the peak for easy-to-get and cheap oil is not only here, but behind us."
So supply will not be able to keep up with demand and that can only push oil prices in one direction.
no comment untill now