This week, Nature produced an article that says counting on the abundance of the United States’ natural gas reserves is “wishful thinking” and “overly optimistic.” Nature bases this claim on what it calls a “careful examination of the assumptions behind such bullish forecasts,” which is apparently a study by researchers who were billed as “energy experts” and “industry insiders.”
The study itself doesn’t appear to be available (if or when it is we’ll be weighing in) but regardless, there are a few important things folks need to know about the “experts” cited in Nature’s piece. First and foremost that they are, in fact, avid peak oil enthusiasts who are clearly attempting to make their work relevant in the face of all the real-world data that has consistently contradicted them. At no point does Nature inform its readers of this crucial fact.
Let’s have a look:
In an interview two years ago, the Texas Observer described Tad Patzek as a “Peak Oil Expert” and introduced him this way: “Patzek is firmly in the Peak Oil camp. He’s the incoming chair of the Association for the Study of Peak Oil & Gas (ASPO), a group that describes itself as a “non-profit, non-partisan research and public education initiative to address peak oil and energy challenges for the United States.” His bio for ASPO can be found here, by the way. He’s even featured prominently on Wikipedia’s “Peak Gas” post!
The anti-fracking publication Truthout reported last year on Patzek’s claims, opening its piece with this:
“For Tad Patzek, Peak Oil – not climate change – poses the greatest risk to human health and survival on Earth.”
In that article, Patzek makes this over-the-top comment:
“People need to realize that this is a finite resource, and using it in the crazy, irresponsible ways we use it today is in fact suicidal – suicidal within one generation,” Patzek says.
And if there’s still any doubt as to where Patzek stands, here’s what he chose to be the cover of his book:
Richard Nehring is a self-declared “delayed Peakist,” which, according to him, means that the peak in oil will not come immediately but rather about 30 years down the road. As he says in a talk for ASPO,
“The necessary transition away from oil this century will be difficult, painful and expensive. The delayed peakists allow time for this transition to occur. The imminent peakists do not.”
And this is the “expert” Nature held up as an “industry insider”!
Another “peakist” quoted is Ruud Weijermars, who has long been predicting the end of oil. In 2011, he said,
“A decline in US shale gas production would occur when wells are shut in as various companies edge toward filing for Chapter 11. This could occur as early as January 2011.”
That certainly didn’t happen, but two years later, he was still marching to the same drum. In 2013, he said there is a strong “basis for reasonable doubts about the reliability and durability of US shale gas reserves.”
David Hughes is a Canadian geoscientist and a fellow of the anti-fracking Post Carbon Institute, who has just put out a new report, which argues that “tight oil production from major plays will peak before 2020.” Here’s what his bio for the Post Carbon Institute says,
“He is a board member of Physicians, Scientists, and Engineers for Healthy Energy and the Association for the Study of Peak Oil and Gas – Canada. He has contributed to Nature Journal and Carbon Shift, an anthology edited by Thomas Homer-Dixon on the twin issues of peak energy and climate change.”
Let’s not forget that Physicians, Scientists, and Engineers for Healthy Energy (PSEHE) is run by anti-fracking activist Tony Ingraffea, and it never met a criticism of shale it didn’t widely promote.
Paul Stevens is a senior fellow at Chatham House who wrote a 2009 report, which he describes as “nothing to do with belowground resource constrains or arguments to do with ‘peak oil.’” However, it argues that,
“This report argues that unless there is a collapse in oil demand within the next five to ten years, there will be a serious oil ‘supply crunch.’”
When would this supply crunch occur, according to Stevens?
“While the forecast is controversial and extremely bullish, even allowing for some increase in capacity over the next few years, a supply crunch appears likely around 2013.”
Well, that didn’t turn out as planned.
Peak oil is dead
Of course, the doomsday predictions of all these folks have been directly contradicted by the U.S. Energy Information Administration (EIA), the International Energy Agency, the leadership of the International Energy Forum, as well as notable scholars and experts.
In fact the same day Nature published its article, EIA released a report detailing the United States’ proven reserves, finding that “U.S. crude oil and lease condensate proved reserves rose for the fifth consecutive year in 2013, increasing by 9% from the 2012 level to 36.5 billion barrels.” EIA also reported U.S. natural gas reserves increasing 10 percent in 2013 to reach a record high of 354 Tcf. This data comes just after EIA’s latest Drilling Productivity Report, which shows increasing productivity in every U.S. shale play with the exception of the Haynesville shale. On top of that, this week, the Ohio Department of Natural Resources released the 2014 third quarter Utica well production numbers, showing that production is up 49% compared to the second quarter of production.
Models forecasting future development depend on well productivity inputs, which are determined by technical innovations. And contrary to what peakists report, oil and gas producers are innovating in a way that results in higher production from fewer wells. EIA explained this several months ago:
“The productivity of oil and natural gas wells is steadily increasing in many basins across the United States because of the increasing precision and efficiency of horizontal drilling and hydraulic fracturing in oil and natural gas extraction.” (emphasis added)
In fact, it’s thanks in large part to this efficiency that oil and gas development will continue to be productive even with a drop global oil prices. As Manhattan Institute’s Mark Mills explained in a Wall Street Journal op-ed:
“Shale production is getting more efficient, which means that profits are possible at prices even lower than today. Smart drilling techniques—horizontal drilling, hydraulic fracturing and information technologies that accurately locate where to place rigs and enable precise steering of the drill through meandering horizontal hydrocarbon-rich shales—are far more productive than when the boom started.”
Bloomberg put it well, reporting that “OPEC’s price war against the American shale industry” actually “won’t do the one thing cartel leader Saudi Arabia wants: reduce U.S. production.”
“Peakists” like Hughes, Patzek and Nehring have been have been debunked time and time again and the predictions in their latest report will suffer the same fate. Perhaps the Wall Street Journal put it best in an editorial this week, “‘Peak Oil’ Debunked, Again,” which explains,
“Given this 130-year record of predictive failure, why does the end-of-oil myth persist? Part of it is that peak oil is more wish than prediction—a desire to see the end of fossil fuels to serve a larger political agenda. It is also a way of scaring governments into pouring money into alternative energy sources that can’t compete with oil and natural gas without subsidies and mandates. Predicting disaster can also be a profitable business and a path to speech-making celebrity.
The happy ending is that the notion that the world is running out of resources always fails because the ingenuity of entrepreneurs, spurred by necessity and incentive, always exceeds the imagination of doomsayers. So we are learning again, and let’s hope memories will be longer this time.”