Peak Oil concept lingers despite innovation – IHS CERA

08 June 2012 09:46  [Source: ICIS news]

KUALA LUMPUR (ICIS)--The volume might have been turned down on Peak Oil by technological breakthroughs in gas and oil, but the concept hasn’t gone away, said Daniel Yergin, the chairman of IHS CERA.

“We should also be talking about peak demand,” he added, referring to the potential limits on growth if sufficient energy supplies are not forthcoming to deal with a world economy that could double in size over the next 20-25 years.

Yergin was speaking during a news conference at the 25th World Gas Conference being held in the Malaysian capital, Kuala Lumpur.

Peak Oil refers to a point in time in the future when maximum rate of oil extraction is reached and after which oil production will continue to decline.

But Yergin added that the good news was that the “belief system”, embedded in crude markets since 2008 that oil would remain in tight supply, has led to the innovations that have created doubts over whether Peak Oil remains a valid theory.

“Here is one my favourite statistics. Membership of the Massachusetts Institute of Technology energy club was zero in 2004. Now it is 2,000.”

Innovations include the shale gas and shale oil revolutions in the US, leading to abundant natural gas and an increase in US oil production, he added.

But he warned that technological breakthroughs had to continue to meet energy demand growth, which would accelerate, particularly in emerging markets, once the current economic crisis is over.

Governments have a “responsibility” to maintain investments in energy research and development (R&D, and not just the private sector, he said.

“We are not talking about huge sums of money.”

When asked whether the US would become energy independent as a result of shale gas and shale oil, he replied: “We see the US becoming less energy dependent.

“We see the US becoming more integrated with Canada (which has huge tar or oil-sands reserves) and Brazilian pre-salt (deep-sea oil reserves).”

By: John Richardson
+65 6780 4359

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