Once upon a time…

…there was a geophysicist named Marion King Hubbert. Hubbert is perhaps best-known for the Hubbert peak theory, which (according to Wikipedia) states that:

The Hubbert peak theory says that for any given geographical area, from an individual oil-producing region to the planet as a whole, the rate of petroleum production tends to follow a bell-shaped curve. It is one of the primary theories on peak oil.

Early in the curve (pre-peak), the production rate increases because of the discovery rate and the addition of infrastructure. Late in the curve (post-peak), production declines because of resource depletion.

Which is perfectly logical. As we all know, petroleum —by its nature— is a finite resource. Does that mean that we know the reserves? Here’s the kicker: No.

You see Hubbert’s theory is based on “resource depletion”. So the obvious question is “when is an oilfield considered depleted?”. Most of you would think “when there isn’t any oil left”, and while it’s the obvious and simplest answer, in this case it isn’t correct.

Reserve your seats

An oilfield is “abandoned” when its reserves are depleted. Reserves of course being the amount of technically and economically recoverable oil. Did you noticed the catch there?

“Technically” means that as technology evolves over time, more oil can be extracted from the same reservoir than before (or to allow for the possibility of a more efficient method coming along and extract the same amount of oil at lower cost), while “economically” refers to the viability of the proposed methods of extraction for the price of oil at the time.

Therefore reserves actually fluctuate according to the price of oil on any given time, since the higher the price, more costly methods can be used and extract more hydrocarbons.

So how much is there?

It’s important to note that currently fully extracting all of the oil that exists in a given reservoir isn’t possible, in fact roughly 50% can be extracted currently (if I recall the figure correctly from my relevant undergraduate course, see disclosure at the end). Don’t take my word on it though: in 2005, the New York Times reported that at that time, technology was capable of extracting about 40% of the oil from most wells (see the end of page 3).

So an oilfield that has been “depleted” actually contains oil that hasn’t yet been extracted. As the price of oil changes and technology progresses, abandoned oilfields may be revisited.

To boldly go…

Furthermore there’s the obvious fact that we can draw our estimations from the already discovered fields. It’s also obvious that we can’t be sure we have found every single one reservoir; we can be reasonably sure that the opposite is true, if nothing else since there are large regions that haven’t been explored, such as the arctic.

Are we there yet?

It’s accepted as fact however that all the easily extracted oil has already been found. Increasing prices have led to oil exploration in areas where extraction is much more expensive, such as in extremely deep wells, extreme downhole temperatures, and environmentally sensitive areas (which increase the cost to extract safely without environmental damage) or where cutting-edge (by the standards of the upstream sector) technology will be required to extract it.

So Hubbert’s theory can’t accurately predict peak oil as most of us understand it, because you need to accurately know both the beginning and ending state in order to locate said peak. Instead, at best, he could predict the peak of cheap oil production, and that’s if no new major discoveries take place. And since almost everyone seems to agree that cheap oil has already been produced (again, barring new discoveries), what’s the use anyway?

The gist

It’s obvious that the subject has far-reaching repercussions. Energy, the economy, politics and lest we forget, safeguarding the environment which —besides the morality of the subject— is hidden in the economics (since it essentially raises the cost), are all at play. Ergo the matter lends itself to “spin” from various sides.

As I see it, peak oil isn’t an immediate concern, in the light that we really don’t know and we can’t know until it’s too late.

However, oil is a finite resource (in the sense that as far as we know, we consume hydrocarbons much faster than they’re created). One day it is going to “end”. Despite that I doubt it’ll happen soon, eventually technology will have to change and adapt.

In conclusion, that’s the problem, isn’t it? That the “end” that I refer to above, isn’t realistically the total depletion of the resource, but the cost of it beyond acceptable levels. I believe that either the economy will have to find ways to cope (since in an economy-versus-nature struggle, economy is man-made and therefore the only side that can yield, not the other way around) or a better, cheaper alternative will be found.

“Predictions of ‘undiscovered’ or ‘ultimate’ reserves . . . are not of the in-ground stock; rather they are economic forecasts: how much it will be profitable to produce given current costs and current knowledge. The estimator of ‘ultimate reserves’ is doing economics without knowing it. An inspired guess may be right, but there is no way to tell. As knowledge grows, so do the ‘ultimates’.” — M.A. Adelman

Disclosure: At the time of writing, I’m an undergraduate student at the Mineral Resources Dept. of the Technical University of Crete, focusing on the energy branch. During my studies I’ve been taught a few petroleum engineering courses, but I’m certainly not an expert.