Cambride Energy Research Associates’ (CERA) Robert Esser testified before a US House of Congress subcommittee hearing on the peak oil theory this month and suggested that the Peak Oil concept is ‘not very helpful’ and lacking in ‘descriptive power.’ CERA’s research suggests that, ‘rather than an imminent peak, we envision an undulating plateau two to four decades away.’
IHS Energy
CERA’s analysis combines its own research with parent group IHS Energy’s oil field data. Esser recognizes that ‘the planet has a finite resource, and the world is consuming 30 billion barrels a year.’ But the oil supply situation ‘needs some clarification’ to consider technology, economics, timing, fiscal and regulatory terms, and ‘a comprehensive understanding of current and future productive capacity.’ CERA believes that ‘the model for peak oil has been and continues to be flawed. The resource base is still poorly understood and it appears to continue to expand.’
Polar
CERA’s views are diametrically opposed to the Matt Simmons’ analysis (OITJ Vol. 10 N° 10). CERA believes that ‘the world is not running out of oil in the near or medium term.’ In fact there is ‘a substantial build-up of liquid capacity over the next several years.’ Furthermore an increasing share of supplies will come from ‘non traditional oils’—from the ultra-deep waters, oil sands, natural gas liquids, gas-to-liquids, coal-to-liquids, etc. On the issue of Saudi Arabia’s reserves, CERA is bullish and sees no justification of claims that production is about to ‘fall off a cliff’.’
What could go wrong?
CERA believes the risks to capacity expansion are mostly above ground: people, rigs, yard space, and raw materials are in very short supply; costs have been driven up; and the situation shows no sign of easing. This will limit the expansion of the exploration effort and slow the rate at which new projects will be sanctioned. Other risks include ‘creeping nationalization,’ ‘resurgent nationalism,’ and ‘tightening fiscal terms.’
SEC
CERA believes that current reserve estimates, particularly those filed under the United States Securities and Exchange Commission (SEC) rules overly conservative. A 2005 CERA report ‘In Search of Reasonable Certainty’ advocated revising the SEC rules to align them with the Society of Petroleum Engineers’ guidelines to create ‘a globally consistent data set that covered the vast majority of the world’s oil and gas reserves.’
Digital Oilfield?
Curiously, Esser omitted to tell the House about CERA’s own great ‘discovery’ of recent years—the promise of the ‘digital technologies’ that were supposed to add some 125 billion barrels to world reserves (more than Iraq’s current reserve base!). These were revealed in the 2003 CERA study of the ‘Digital Oilfield of the Future’ (OITJ Vol. 8 N° 2).
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