Myths about Peak Oil: There are not enough petro-engineers!

This series will discuss why believers in Peak Oil (aka “Peakists”) are a minority, with little influence over national energy policy in the US and elsewhere. Looking at Peak Oil literature, it appears that the answer is they typical one of American “doomster” communities: “we are smart/visionary/public-spirited; they are stupid/blind/evil-doers-in-thrall-to-dark-forces. In other words, the Peakists are 21st Americans — our mantra is “It is not my fault.”

This series will examine Peak Oil myths to determine if, to some extent, failure of America to mobilize for Peak Oil results from errors of Peakists.

Peak Oil warning sign
By Viktor Hertz.

 

Myth #1:
some experts don’t believe in Peak Oil

True, but these folks comprise a trival fraction fraction of oil experts Such as Thomas Gold, believer in abiogenic oil (of non-biological origin). Overwhelmingly experts believe that oil will peak, that prices will rise as we approach peak production, and that this will force evolution of our energy supplies to greater efficiency and reliance on alternative sources. Like the old joke, everyone believes in peaking; the question is when. Peakists believe in peaking soon. Non-peakists believe in a distant peak, 15 or even 30 years away.

Disclosure: I too am a Peakist. I believe that global production of conventional oil will probably peak in the next five – ten years and total production (including arctic, deepsea, heavy, bitumen “oil sands”, kerogen “oil shale”, and biofuels) during the next 10 – 15 years. As described in earlier posts (part I, part II, part III), we do not have the data to reliably forecast peaking. “We” meaning everyone but Middle East elites. Production could peak tomorrow, perhaps sharply (aka, a rapid decline of 4 – 10% after peaking). This uncertainty about these high-impact scenarios creates a major risk for the global economy.

But I believe that the non-peakists do analytical work of far higher quality than do Peakists, and that this one reason why Peakists have little influence. Deservedly so. Hence this series, an encouragement for us to do better.

Myth #2:
a shortage of oil technicians limits growth in production over the next decade

The analytical foundation for this belief is pitifully weak, but constant repetition has established it as dogma. Supporting is is the sea of “grey hairs” at meetings of the Society of Petroleum Engineers (SPE), or staff meetings of the large western oil companies. Charts documenting this appear on Peak Oil sites across the web, another reason for readers to despair about our future. Why are the folks running the industry so stupid?

Perhaps because analysis of the numbers shows no serious problem. The US and other western nations train only a fraction of the petroleum engineers needed for the future. But Asian nations have picked up the slack. From Schlumberger’s Surviving the Skills Shortage – 2006 (requires registration):

The 2005 SBC study revealed there were in fact enough petrotechnical graduates in the world, but that many needed to be relocated to areas of high demand. …The main result of the survey was positive: there are enough graduates in the world to fulfill the demand of the industry. However, they are not located where they are needed, with North America and the Middle East showing a huge deficit of students in geosciences and petroleum engineering.

Quite a surprise: cheaper Asian technicians replacing expensive western ones! Has this ever happened before? Also note the deficit vs surplus areas: North America (expensive) and Middle East (low population), vs. Asian (inexpensive and high population).

What happens as the grey hairs retire, taking with them their wisdom and experience? Again, from the Schlumberger report: A better practice would be to to accelerate the time to autonomy. … It is a matter of management philosophy, a willingness to take a risk with people. Innovative companies just have the right mindset to give their personnel the opportunities and training to make autonomous decisions earlier.

This industry has treated its employees as Kleenex. At the bottom of each cycle the old joke returns. “How do you call a member of the SPE? Waiter!” Hence until now they seldom needed to treasure their people, a different mind-set than maximizing efficiency. Scarce talent will now force the industry to do better. The Manhattan Project, the development of the B-29, and the Apollo Program show that a young labor force can do great things if well led.

Why have so few Americans responded to the wonderful opportunities as the industry gears up for peak oil? America’s history suggest that the pace of oil exploration will skyrocket, as we tap smaller, deeper, more difficult to find and tap fields. Glory days for the SPE ahead? An article in the March 2006 issue of Petroleum Economist explains “A greater public understanding of the industry should eventually result in a rise in interest in energy careers.” Here’s why, paraphrased for greater realism and emphasis:

  • Your first wife will leave in the early boom years because of frequent relocations, life in vacation spots like Angola, long separations (your kids collect the stamps you post from places like Greenland!).
  • During the next decade there will be busts, as a severe global economic recession reduces oil demand just as new sources come online (perhaps from Iraq and Iran). Make sure she has a career to offset your periods of low income or unemployment.
  • After you get well-established, your second wife will leave because of your low income (competing against all those Asian and African peers) and long “lay-offs” (due to over-production of petroleum experts by Asian universities).

This is, of course, an exaggeration to illustrate some cold facts: the oil industry will experience the same shift as have so many other American industries. Jobs will be outsourced to those from Asia and other emerging regions, despite these jobs’ high educational requirements (another myth: education as a cure to outsourcing). Wages will not rise as many expect due to competition from emerging nations.

The oil is not in America, and in the future fewer Americans will be in the oil industry. Oil expertise is not a crisis shortage, but just a common short-term resource constraint. Whatever the nationality of those in the oil industry, I’ll bet that the available oil will be found and extracted.

More stories about “The Big Crew Change”

  1. Education and the Big Crew Change, Society of Petroleum Engineers, 20 slides (January 2004)
  2. Aging Workforce – The Big Crew Change in Exploration and Production, Energy Insights (summary) (August 2006)
  3. The Big Crew Change: Turnover in the Oil Workforce, The Oil Drum: Europe (17 March 2007)

For more information

If you liked this post, like us on Facebook and follow us on Twitter. See all posts about the full archive , especially these…

  1. When will global oil production peak? Here is the answer!, 1 November 2008.
  2. Links to articles and presentations of some A-team energy experts, 11 November 2007.
  3. The most dangerous form of Peak Oil, 8 April 2008.
  4. The world changed last week, with no headlines to mark the news, 25 April 2008.
  5. Peak Oil Doomsters debunked, end of civilization called off, 8 May 2008.
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6 thoughts on “Myths about Peak Oil: There are not enough petro-engineers!

  1. Yes, yes. Non-peakists do better analysis. Maybe the 64 trillion dollar answer is already known by the ‘powers that be.’ “Those who speak do no know. Those who know, do not speak.” How can the rest of us analyze data that is not available?

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  2. CERA, Wall Street Firms, and other non-peakists have roughly the same data as ASPO and other peakists. The non-peakists just, in my opinion, do a better job with what we have. The “we do not know everything, so we can be sloppy” excuse is unworthy of such a serious issue.

    The other question you raise is “what does our government know?” I discuss this in “When will Global Production Peak?

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  3. I don’t like peakist. It’s an awful word. It sounds like “I’m smart, you’re not”. Environmentalists (and most other -ists) have the same problem. Most people agree that oil will run out. The only argument is when: next year, next decade, next century, or next millenium.

    I’ve abandoned catastrophe as a tactic. Whether your motivation is geopolitics, peak oil, global warming, or financial risk, you can defend making investments with a good ROI that reduce energy consumption. I just ask for a bias, not a sacrifice. Do not make investments with a poor ROI, and certainly do not spend money without a return. That is the big failing of the global warmingists and environmentalists.

    The news continues to report companies that find 100% annual ROI from energy saving investments. That is not the norm any more. Typical ROI are 25-35%. That is not a bad ROI. I only ask that people pick a energy saving investment over some non-energy saving investment. It’s just a bias, not a sacrifice. Also, unless peak oil is happening right now, energy usage is fungible. You can’t switch fuels overnight, but you can switch over decades. So pick the energy savings with the best ROI regardless of the type. The long term fungibility of energy will shift this saving to oil saving over time.

    The easiest first step in the ROI focus is to ask that all regular maintenance, service, replacement, and renovation activities include consideration of energy saving alternatives and evaluate their ROI. Don’t follow the 2GW path of mandating any particular answer. Accept that many alternatives will not have a suitable ROI and will not be done. There are enough with a good ROI to consume the available investment dollars. The conscious act of evaluation will reveal much more than you think. I picked these activities because these are the times when you are already planning an expenditure and have already planned the disposal of older facilities. This makes the investment cost just the incremental difference between a pure replacement and a more efficient replacement. That makes high ROI more likely.

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  4. What’s a better word than Peakist? Also, when you say it sounds like “I am smart”, who is “I”? The “peakist” or the non-peakist? (I am, as stated in this post, a peakist.)

    While I am not a doomster (“catastrophe”), a horrifying scenario (peaking soon followed by sharp production decline) is a possible scenario. It must be considered when doing national-level planning. I agree with you that the current peakist tactic of focusing on this one low probability scenario is unwise. See the recent ASPO conference to see why. Filled with doomster forecasts; received little expert or media attention.

    Unfortunately, increased energy efficience and conservation are only one plank in the bridge to our future. No matter how high the ROI’s, they effect national stats only over years — strong impacts only over a decade or more. Commercial incentives, high returns on investment, only get us so far, so fast. Again, see the Hirsch et al “Mitigations” report for more on this.

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  5. I think peak oil is a non-issue. For me, the real question focuses on what type of society we want to create: a centralized on based on non-renewable resources or a decentralized on based on renewable resources. Energy is abundant in the universe. We are capable of tapping limitless supplies at a reasonable, and decreasing, cost. However this will change our societal paradigm. Paradigm changes are VERY difficult.

    Try renewable with hydrogen storage and smart networks to distribute what’s produced from a multitude of sources by a multitude of means and a multitude of people and groups of people.

    Down with centralized domination and control. Power (literally) from the people and for the people.

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  6. Raiserw — your post illustrates our peril. It’s a matter of fact and analysis, not whether you think it is an issue or non-issue. We have not collected the available data nor done the analysis, so folks have opinions. The US government bases its energy (liquid fuel) program on oil and corn, spending tens of billions/year on the latter, with a level of thought typical for a colony of cherrystone clams.

    As for your vision, maybe it is possible. Maybe it is not. Until we do the work of building models of current and possible energy use, the future remains something that HAPPENS to us — not something we shape. That was the point of this series of posts. Dreams — by themselves — do not help when dealing systems on a national or global scale, and the US seems to have contracted an allergy to data and analysis.

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