Wednesday June 11, 2008

Expert: Oil industry at peak production

KUALA LUMPUR: The world’s oil industry has started to reach its peak production rate and every nation now needs to build a “crash mat” to cushion the fall, an expert warned yesterday.

Kjell Aleklett, physics professor at Sweden’s Uppsala University, said such a move was important as the world was now already in a phase of transition to an uncertain future with oil getting more difficult and costly to produce.

“New discoveries are getting much lower. We have climbed high on the ‘oil leader’ and yet we must descend one way or another,” he said in his keynote address at the 13th Asia Oil and Gas Conference 2008 here.

“It may be too late for a gentle descent, but there may still be time to build a thick crash mat to cushion the fall.”

Aleklett, also a leader of the Global Energy Systems Research Group and Uppsala Hydrocarbon Depletion Study Group, said many oil-producing countries, including Russia, had already passed their peak, suggesting that the world’s peak production was now imminent.

“The demand for oil from countries that are importers is forecast to increase from current import levels of 50 million barrels per day to 80 million barrels,” he said.

“Saudi Arabia, Russia and Norway, today’s largest oil exporters, will experience a decline in their export volumes of the order of four million to six million barrels per day by 2030.”

Hence, Aleklett said, the projected shortfall could not be offset by exports from other region.

To cushion the impact, he suggested a persistent exploration of new oilfields.

“We must find new oilfields and put them in production.

“A production of three million barrels per day is 1.1 trillion barrels per year and to be able to produce this, an oil reserve of 27 billion barrels is needed,” he said.

Aleklett said with the gap between discovery and production widening, the necessary decisions for economic transformation were now vital to mitigate this decline.

“In a business-as-usual case, the shortage of fossil fuel liquids for transportation will be substantial by 2030.

“The necessary decisions for the economic transformation required to mitigate this decline in available oil supply should already have been made and efforts to deploy solutions underway,” he added. – Bernama