30 Mar 2006 HEADLINE

Peak Oil Pessimists Ignore American "Can-Do" Spirit

If you believe that oil and gas companies conspired to receive record high profits, that oil supplies are diminishing and that gasoline companies purposely gouged — buckle up, because this will be a very rough ride.

Many shout about gas price gouging lately. Actually you are gouged when you have no choice but to pay some exorbitant fee for an absolutely necessary service or product. Paying $50 per gram for penicillin (one supplier) for allowing your daughter to live — that’s gouging. Non-life-threatening circumstances with products available through other vendors is not gouging. So many ogled at the alleged profits oil firms reported during this last quarter. But taking the initial investment, the total sales dollars and the actual profit margin of sales, you would see that most oil companies lately have made only 7-9 percent.

Many believe in M.K. Hubbert’s theory of “peak oil.” It says that production will peak and then decline while demand increases. Proponents theorize that oil is a fossil fuel from decaying forests and dinosaurs, and we are running out. But another theory argues that the science of oil is an “abiotic” (lifeless) natural product that the earth generates on a constant basis, and may well be a renewable resource.

To predict a correct theory is difficult at best. But recorded data is as follows:

• 1885; U.S. Geologic Survey — “Little or no chance of oil in California.”

• 1991; U.S. Geologic Survey — Same prophesy for Kansas and Texas.

• 1914; U.S. Bureau of Mines — Total future production limit of 5.7 billion barrels of oil; at most a 10-year supply remaining.

• 1939; Dept. of Interior — Oil reserves in the United States exhausted in 13 years.

• 1951; Oil and Gas Division — Oil reserves to be exhausted in 13 years.

• 2005; Energy Information Administration — proven worldwide reserves of oil at 1.28 trillion barrels.

Consider some good indicators. Russia’s giant Samotlor Field reached peak production in 1983. After BP spent 18 billion on “hydraulic fracturing,” production went from 30 tons per day per well in 2000, to 117 tons in 2004.

Brazilian oil giant Petrobras has seen surprising results by drilling ultra-deep offshore wells in Brazil’s Barracuda and Caratingua oil fields. Brazil’s oil production has grown at 9 percent per year since 1980.

Saudi Oil Minister Al-Naimi told a conference in Washington, D.C., that Saudi oil reserves have been drastically underestimated. Energy Information Administration estimated them at 262 billion barrels in 2004 — only 20 percent of Al-Naimi’s estimate. Ghawar oil has been dated with Precambrian rock produced 570 million years ago, but dinosaurs did not roam the earth until 250 million years ago.

Pemex’s Cantarell field formed 65 million years ago when the Chicxulub meteor impacted the Gulf of Mexico. Abiotic proponents argue that the deep fracturing of bedrock by the meteor’s impact was responsible for oil formed in the mantle to seep into the sedimentary rock.

Thunder Horse, 125 miles southeast of New Orleans, promises to produce 1 million barrels per day by next year. Thunder Horse is truly an ultra-deep project, and only part of BP’s 2.5 billion barrels of proven reserves in the Gulf. From the floor, BP has drilled down another six miles to hit oil.

There is no evidence that any ancient dinosaur walked on land that is now eight miles down. Thunder Horse illuminates the current technology that makes it possible to tap into reserves thought inaccessible.

A study by Integrated Geophysics Corp. emphasizes that almost 90 percent of the Gulf’s discovery prospects lie in 3,000-5,000 foot of water. However, radical environmentalists are currently blocking oil production almost globally. In actuality, oil drilling in the Arctic National Wildlife Refuge would require 5,000-7,000 acres, or about 0.004 percent of Alaska’s total land mass. Even with Prudhoe Bay, the total area represents the size of a postage stamp on a football field.

Even a limited area for ANWR drilling would offer the option of producing 40 percent of the oil consumed in America from Alaska. But now, with oil at $60 per barrel, we are sending overseas nearly a quarter of a trillion dollars each year.

No matter which theory is correct, peak oil or abiotic, it behooves us to remember the past. Didn’t pessimists say we couldn’t get to the moon, that the atom could not be harnessed that light only traveled in straight lines and that women could never hold a regular job?

For 30 years we have not built an oil refinery. Current drilling techniques access more oil, whatever theory is correct. So even if a hurricane takes out a main supply line, depleted supply, higher prices, energy dependence and alleged gouging would never occur if we used our heads instead of our emotions.

Originally from New Orleans, Kevin Roeten has a B.S. from Louisiana Tech in chemical engineering. He lives in south Asheville.