Crippling crude a blessing in disguise - Strahan

03 June 2008 16:14  [Source: ICIS news]

By Peter Salisbury

 

BUDAPEST (ICIS news)--Increasing cost pressures from feedstocks and energy prices could be a blessing in disguise as chemical producers are forced to find alternatives to fossil fuels, a leading “peak oil” thinker said on Tuesday.

 

David Strahan told the 5th ICIS World Phenol and Acetone Conference that supplies of crude oil would soon reach a peak from which there could only be an inexorable decline.

 

“[Crude oil] output has been flat since 2005 and the price has gone through the roof,” he said. “The question is why, as it is flat? Speculators are involved for sure, but only because they see it as a one way bet. We have been consuming more than we are discovering,” he added.

 

Strahan, author of The Last Oil Shock: A Survival Guide to the Imminent Extinction of the Petroleum Man, said "peak oil" was not about running out of oil but more a huge reversal in trends. He said supply would shrink rather than run out altogether.

 

Where in the past it had been possible to explore for further supplies when individual regions had seen a decline in production, Strahan claimed, the major global oil field discoveries had now been made. 

 

This meant that whilst a number of major producers were in decline, any new discoveries were only enough to leave supply “standing still” in a context of soaring demand, he said.

 

The effects that current high costs had on both end-use demand and producer margins made it economically viable to explore all other available options. This was also an opportunity to react to current environmental concerns, he added.

 

A number of solutions were available, Strahan said, with synthetic methanol production in particular a widely mooted alternative.

 

He drew attention to an Eindhoven University of Technology paper which put forward the idea of using nuclear power to thermally crack water for hydrogen. Adding carbon dioxide (CO2) absorbed from the atmosphere could give methanol, ethylene and propylene.

 

Much of the industry’s end products could still be manufactured from a methanol base, he said.

 

“We create a future for the industry which is low in CO2 emissions and replaces the front end with methanol using nuclear power. They say this would not only be possible, it would be economic.

 

“I urge you to think about this in the context of [my] presentation,” he said. “With much more expensive carbon and $200/bbl crude this would be possible. 

 

“You might hate the oil price today, but it might be doing you a favour. It might give you a chance to segway out of hydrocarbons into alternative methods.

 

“I don’t know whether oil costs will double again, but we will see rising feedstock costs and depressed customers. You can’t thrive if the general economy doesn’t thrive. It is finally possible to get off this [track]. How painful is the alternative?” 

 

All of this, he said in closing however, would require political pressure and help from governments.

 

“My worst nightmare is that we are going over the cliff without any political preparation.” 

By: Peter Salisbury
+44 20 8652 3214

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