When Will Peak Oil Arrive?

Nearly anyone who studies our world oil supply knows that someday production will peak and start its inexorable course downward. The issue comes down to one of a) peak oil coming "naturally" as a result of inability of the world's oil producers to supply an increasing amount of oil, or b) some outside force stopping a significant amount of production.

Last week, the Association for the Study of Peak Oil (ASPO) released a new estimate of the year in which peak oil will arrive. The new date, which is based on a reevaluation of the potential for further deepwater oil production, is now 2010 vs. the previous estimate of 2007.

85 million barrels are extracted from the earth each day, refined and sent on their way to the world's fuel tanks, factories, and electric power plants. And everyday, hundreds of wells are depleted. When a country can no longer find places to drill new cost-effective wells, it is said to be in depletion. Now some 20 major oil producing countries and dozens of smaller ones are in the stage of declining national production. In the next couple of years, several others will join the ranks of countries in depletion.

This is where deepwater oil comes in. Most of the new growth to offset the decline from existing fields is expected to come from deepwater (below 400 meters) fields. The bottom line is, that while an estimated 50 billion barrels of oil have been found, economically exploitable deepwater fields have only been found in the Gulf of Mexico, and off of Nigeria, Angola, and Brazil. But we are currently pumping out 30 billion barrels a year. If no major new deepwater fields are found, deepwater oil will extend the cheap oil age by about 20 months only.

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