Last year’s oil price peak, along with the recent oil price increase amidst a severe economic slowdown, have fueled worries about the future availability of oil. Some argue that concerns about peak oil or the end of oil are greatly exaggerated. Lynch (NYT 8/24/09) goes as far to say that such concerns are the domain of fear-mongering environmentalists, or of those without a proper grasp of history and geology.

If you're anything like me, your head has been scratched many times in the last year because of the price of crude oil. When I started at Stanford in 2001, both gas and oil prices (15US$/barrel) were low. Much too low to encourage rapid development of greener alternatives for transport or electricity production. My colleagues and I certainly expected (and hoped!) that the oil price would go up in the years following. Global demand was clearly increasing, with most of the demand rise caused by growing economies in China and India. But none of us had anticipated the very sharp increases between mid 2006 and mid 2008, with the extraordinary peak of $145US just this last summer.

The International Energy Agency (IEA) has just published its long awaited
World Energy Outlook 2008 .
A highly recommended read.

A quick first summary with more analysis to come:

The current financial crisis could well lead to a growing worldwide petroleum shortage in the short to medium term. The crisis has lead to a decrease in crude oil prices (see our stats in the left column of the page). Oil companies are therefore not making the profits hoped for and some have started cutting or delaying new projects.
IEA expects that oil prices will bounce back up to around 100 dollars per barrel in 2010.

Is global oil production peaking? The peak oil debate has been going on for a number of years. Depending on how production and exploration numbers are presented, and also depending on who you talk to (NGO, oil industry, government, economist), you may either be convinced that oil will peak soon, or that we have plenty of it.

My colleague Roland Horne recently wrote an excellent summary of this problem, which he presented at the International Forum on Higher Education and Energy at China University of Petroleum last month. You can download it here. A very highly recommended read. It will help you put this debate in perspective.

OK, it's time to write something about offshore drilling. When it first came into the spotlight I thought it would quickly disappear. But, it has proven to be a valuable election campaign tool, especially for McCain, with public emotions running high. Perhaps now that the oil price is coming down this issue will not have a strong appeal for much longer.

In previous podcasts, we discussed the implications of moving towards nonconventional oil. Heavy oils, in abundant supply, are no doubt going to make up a large part of our oil consumption in the not so far future. They are very hard to produce, and generally require heat to mobilize the sticky, tar-like substance. The most commonly used method is steam flooding, where steam is injected into the oil reservoir. But it takes energy to create the steam, which is typically produced by burning gas. Voila: a large carbon footprint.

This is part II of Tony Kovscek’s discussion of heavy oil.

The world is not running out of oil any time soon, at least not the easier to get to, lighter kind. It is estimated that there are of the order of a trillion barrels of heavy oil in the world that can be produced at the current oil price. Is this good news? Not necessarily. These heavy oils, like the tar sands in Alberta or the shale oil in the Rockies, are currently being produced with techniques that are not environmentally friendly.

Western Canada is very rich in heavy oils. These thick oils that have the consistency of molasses or even peanut butter are rather tricky to produce in an environmentally friendly manner. However, with our strong dependency in the next several decades on petroleum, and the decline of easy to produce oil reserves, it is inevitable that the production of these oils will increase. The prospect is not that rosy, given the current state of technology. However, experts in the petroleum industry are adamant that green and sustainable ways for their production will be found.

Listen to Ian Gates from the University of Calgary, who explains why Alberta faces potential wealth, but also many challenges.

We’re not running out of oil, but we may be running out of the oil in easy-to-reach places. That’s because oil doesn’t sit in a big pool just below the surface — it’s always been hard to reach, but the more we use, the harder it’s getting. In this second podcast in a series on oil, gas and coal, we continue to learn about some of the hard realities facing us as we deal with the energy sources we will all depend on for the foreseeable future.