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Oil: Why We're in Trouble
[Commentary] There are no major fields left
Nicolas van der Leek (Nick)     Print Article 
Published 2008-06-18 02:46 (KST)   
We've been here before. $139.89. Record oil prices. 28 years ago, after the Iranian Revolution, the world suffered an oil price shock that resulted in chronic shortages. How did the world get itself out of the conundrum in 1980? Simple -- it turned the world into Swiss cheese; it drilled the world full of holes, and came up with three large fields: The North Sea, Prudhoe Bay in Alaska and Russian Oil fields.

Today we are in the same position we were in 1980, except there are no major fields left to be brought on-line, and all the aforementioned fields are facing serious depletion.

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The North Sea

A large amount of the world's oil is quoted as either New York Crude or Brent Crude. Brent North Sea fields are crashing at between 8 percent and 17 percent a year. The United Kingdom is already a net importer of gasoline.


Prudhoe Bay -- the world's 15th largest field -- is an example of how difficult it is going to be to extract the remaining 50 percent of crude that remains. The first 50 percent of oil is light, sweet and was found in easily to reach places (including on American soil). What remains is in either politically sensitive areas (Iran, Nigeria, Venezuela), under Arctic tundra or in ultra deep-water areas off the Gulf of Mexico.

In every case, the amount of energy required to extract less and less oil is increasing, and this drives up the ultimate cost. Prudhoe Bay is declining at 4.2 percent a year.


Russian oil has grown impressively, even overtaking Saudi Arabia recently as the world's largest oil producer. While Russia has provided the world with a large additional resource, China has gobbled up most of these endowments. Russia also consumes a large proportion of its own product; hence, it is behind Saudi Arabia in oil exports. Right now Russian oil production has reached a plateau, with many peak oil experts citing an imminent 3-4 percent depletion rate for Russian megaprojects.

Meanwhile, Saudi oil production declined 8 percent in 2006. The reason this decline was not initially noticed was that this 8 percent was picked up from a myriad of smaller fields around the world, including those in Africa. Also, OPEC has played a bold game of charades, stating confidently their willingness (or not) to increase production; but it turns out that their ability to ramp up production has virtually disappeared. Supply is very tight and growing tighter by the day.

So there it is. Twenty-eight years later, and all three of the world's modern giant oil fields are struggling. The North Sea is struggling the most. What remains are fields like the super giant Ghawar (in Saudi Arabia) that are over 50 years old, and in obvious decline. Seawater in being pumped into these fields to get the oil out faster, but this compromises both the integrity of the underground structures holding the oil, and also the ultimate percentage of oil that can be extracted.

Serious Situation Demands Lifestyle Change

As a result, we are faced with a bleak and serious situation. No matter how much we drill and pump, we face irreversible declines. This is peak oil. Since reaching 85 million barrels per day, global production has struggled to maintain this level, and now faces serious decline. Worse, what we are able to produce is becoming increasingly expensive not only to extract but also to refine. It requires a lot more energy to transform tar sands and coal into the stuff that goes into cars. And here is the seat of the problem. Everyone is trying to find ways to get and pump more oil. The real problem lies on the demand side. No one is talking about driving less, about changing how we live, connecting homes into organic systems and developing communities that are more walkable.

The reason is obvious: we are addicted to oil. We are addicted in almost every facet of our lives. And most worrying of all, the world's food is based to a large extent on cheap fossil fuels. For fertilizers, for pesticides, for irrigation, for storage and for transport.

The high price of diesel now transfers directly into those premiums we're paying for food.

While economists and journalists and other "energy experts" dissemble or calmly finger speculators and exchange rates (these do have some limited impact on prices), and even to some extent reflect calmly that "this has all happened before," while populations angrily blame their governments, actually, what we're experiencing now isn't normal: it is a severe aberration.

The fundamental problems are clear. We've exhausted and are exhausting what remains of all the major oil fields of our world, and 28 years after the original oil shock, there are hundreds of millions more vehicles on the road and a lot more people to feed. We use up a precious resource in order to drive to the mall -- stuff that is used to make the ink in ballpoint pens, plastics, fertilizers, stuff that helps us to grow and make food.

We drive out this stuff without an afterthought. There are no new major fields out there that can save us. As such we are heading for shortages, and very soon we will see patterns of hoarding behavior starting to spread. We've become a ravenous, rapacious society that's not used to hearing about limits or inconveniences. But we will get used to it -- whether by choice or circumstance: inconveniently high prices for everything is about to become a theme song in news bulletins and a grumbling in family homes for the foreseeable future.

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©2008 OhmyNews
Other articles by reporter Nicolas van der Leek

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