Some time ago, I set up a Google Alert on ‘peak oil’, which generates way more emails than I have time to read – they get squirreled away in a folder which I occasionally trawl through, hitting delete wildly. Today I avoided deleting a few from late January about this year’s Davos meeting. The theme for this meeting was to “Improve the State of the World: Rethink, Redesign and Rebuild”. Yeah, right! While there were several alerts, one title jumped out – that “energy bosses were divided on peak oil risks”. On reading the article, it soon became clear that it was the old conventional vs. non-conventional oil argument, although it is encouraging that peak oil is being discussed at the World Economic Forum, I s’pose.
Put simply, conventional oil is the good stuff, the cheap & easy stuff, the stuff which has fuelled the growth of globalisation. It doesn’t need to be heated or diluted because it’s too thick and gloopy – it’s Goldilocks oil. However, of all the world’s oil resources, conventional oil makes up just one third – the rest is non-conventional oil, which includes heavy oils and tar sands. This is why those who dismiss peak oil say things like “of the four trillion (barrels) of oil the planet is endowed with, only one has been produced” – yes, and it was the best one!
These non-conventional oils require a lot more energy to access and to process. They are not the same – it’s like comparing apples with horses because of ‘net energy’, a really important if slightly nerdy concept rarely considered by, well, anyone. I have recently learned (and hence updated this post) that non-conventional oil does not include deep, ultra-deep and Arctic oil reserves but these are still concerning because they require more ‘energy in’, yet many refer to these as being proof that peak oil is nothing to worry about. Net energy issues are incredibly complex but they can be thought of very simply. It takes a certain amount of energy to find oil, to get it out of the ground, to process it and to transport the end-product to market. If we go exploring miles off shore and find oil beneath thousands of meters of sea and rock, it’s going to take more energy to get each barrel out. But the energy within each barrel will be roughly the same. If the oil is heavy oil, it will take more processing, in which case even more energy has gone in to get a barrel of the good stuff out. This is ‘net energy in a nutshell’ (the title of my forthcoming book – yikes!) and since the 1930s, the net energy returned from oil has dropped from 100:1 (i.e. one unit invested in oil extraction yields 100 units out the other end – a net energy of 99) to as little as 3:1 today for some of the worst returning fields. If the guys at Davos understood this, I doubt there would have been much disagreement and I would love to have heard how those discussions might have gone if they really did want to “Improve the State of the World: Rethink, Redesign and Rebuild”. Any ideas?