Paris Peak Oil Conference Reveals Deepening Crisis
by Michael C. Ruppert
© Copyright 2003, From The Wilderness Publications, www.fromthewilderness.com. All Rights Reserved. This story may NOT be posted on any Internet web site without express written permission. Contact [EMAIL PROTECTED]. May be circulated, distributed or transmitted for non-profit purposes only.
May 30, 2003, 1800 PDT, (FTW), PARIS – Research presented on May 26th and
27th at the French Institute for Petroleum (IFP) by a wide variety of
experts from varying and often competitive perspectives disclosed that, in the
year since the first conference of the Association for the Study of Peak Oil
(ASPO) supply, constraints have worsened and the realities of energy depletion
are becoming more apparent. A year of violent political history centered on oil
and ever-more unforgiving production results have begun to force reluctant
political and economic acknowledgement of Peak Oi's threat to civilization. Yet
ASPO's founder, Professor Colin Campbell, and his colleagues, retired
TotalFinaElf Exploration Manager, Jean Laherrère, and Physics
Professor, Kjell Aleklett, have good reason to be pleased with the
second-ever ASPO conference. Two hundred people from more than twenty countries
attended this year, doubling attendance for the inaugural event held last May in
Olivier Appert, Chairman of the IFP, bluntly acknowledged that many oil experts have concluded that world oil depletion is between five and ten per cent per year and that 60 Million barrels per day (Mbpd) of new capacity is needed to meet demand. On that basis he concluded in his opening remarks, "It is timely to reopen the debate." Appert however told the audience that he was an optimist basically because he predicted that new technologies would produce new discoveries and better recovery in the future.
But quiet, official support of the conference fell far short of the political and economic mobilization the organizers believe necessary to respond to a crisis that might start grinding national economies to a halt and causing massive dislocations in short order. As one conference organizer told FTW, "The fact that several governments have asked to be kept ‘fully informed,' or that the French government allows us to use their facilities, or that major oil companies and automakers like Daimler-Chrysler come to make presentations is a way of listening closely to what we are doing without having to publicly accept what we are saying. The political and economic ramifications of that are too drastic from their perspectives, but each hour of delay only assures that the eventual crisis will be worse once it has been acknowledged."
IFP Chairman Appert's optimism was belied by experts like Laherrère, whose brutally honest graphs and plots not only mirror the truth of declining discovery and production but also establish scientifically that there are no more major significant reserves to be found. Other experts established definitively that wildly exaggerated hopes for polar or deep sea discoveries, or tar sands production are both unfounded and dangerously deceptive because of the excessive production costs and the investment required to develop what will likely prove to be disappointing yields.
In the end, the most realistic and integrated analyses were delivered by political scientist and author Michael Klare and Professor Kenneth Deffeyes of Princeton, a one-time colleague of the late M. King Hubbert, whose Hubbert Curve predicted today's events with startling accuracy some six decades ago. These two conference presenters gave integrated presentations incorporating real-world current events and showed clearly that Peak Oil is here now.
BBC sets the tone
One of the first presentations of the conference was the screening of a new
BBC documentary which aired on March 26, 2003, titled, "The War For Oil." In stark and irrefutable detail the film verified
every major aspect of Peak Oil including declining production, vanishing
discovery rates, smaller field sizes and increasing demand. It pointed out that
worldwide production capacity was stretched to the limit and that the
The BBC documentary also quoted oil expert and Bush administration
advisor, Matthew Simmons, as stating very clearly that the
Confirmation of Peak Oi's role in 9/11
Starting in October 2001 FTW reported, and has continued to
maintain, that Peak Oil was the driving factor behind the
Speaking at the end of the conference via satellite from his Houston offices, Simmons said:
"Is peaking an important question or issue? First of all, if you start out by saying usable energy is the world's most critical resource then obviously it is an important issue. Without …energy, we have no sustainable water, no sustainable food, and no sustainable healthcare…
"What peaking does mean, in energy terms, is that once you've peaked, further growth in supply, is over… So is this issue important, I think the answer is an emphatic yes. Why does this issue evoke such controversy? Well, I think for several reasons, first of all, the term "peaking" unfortunately, does suggest a bleak future. It also suggests high future energy prices and neither are a pleasant thought. I think it is human nature, basically, to say that we really like to have pleasant thoughts. The one crying wolf is abandoned unless the wolf turns out to be already at the front door, and by then, the cry is generally too late. And crises are basically problems, by definition, that have gone ignored. And all great crises were ignored until it became too late to do anything about it..."
Simmons pointed out that five-sixths of the world barely uses any energy but
that this is where demand is growing fastest. FTW reported
recently that auto sales in
Natural gas appeared to be an even more pressing issue.
Unlike oil, natural gas production tends to reach a plateau and then fall straight down a cliff because the gas moves quickly from the well until there is no more pressure and then it just stops.
Confirming that the once-hoped-for Caspian Sea oil bonanza had proved to be a
major bust, Simmons noted that in 2001, twenty out of twenty-five new wells sunk
in the Caspian basin had produced dry holes. That was the same year that
The Golden Triangle and "Plan B"
In an ironic reference to the Southeast Asian region known for its
CIA-connected cultivation of the opium poppy, Simmons observed that the Middle
East was still the "Promised Land," and that eighty-five per cent of all Middle
Eastern oil was in a golden triangle running from Kirkuk, in
northern Iraq, through Iran to the United Arab Emirates, then west through Saudi
Arabia's central oil fields, then northwards and back up to Kirkuk. In Simmons'
Referring to a 1960's report from The Club of Rome suggesting that there were limits to growth, Simmons observed that, "The world has no Plan B."
During a brief question and answer session, this writer posed a question to Simmons which evoked laughter from the audience and a blushed, bowed head from Simmons.
Q. Mike Ruppert: I have two questions. In the Baker Institute CFR Report from April, 2001, you were kind of dissenting and you called for a Manhattan Project-type investment program to address energy, what would that entail? My second question is in The War on Terrorism since 9/11, we have gone to Afghanistan, and we've seen some pipeline development across Afghanistan, we've seen Iraq, now Saudi Arabia, developments in West Africa, also in Colombia where the terrorism coincidentally seems to appear exactly where the oil is, either in large reserves or in swing producing nations, do you believe that is all coincidental? (Audience laughter)
A. Simmons: (More laughter) Those are pretty intelligent questions. What I encouraged people to think about when the Council on Foreign Relations and the Baker Institute were doing the energy blueprints was to think in terms of future energy plans the way we did the Marshall Plan in rebuilding Europe. It was about collecting the largest group of experts we could and having them fan out across Europe and figure out how we could get from A to Z. I still believe that there is an urgent need for an Energy Marshall Plan. I think we need to couple that with a water, a water energy program...
On the terrorists, I don't know if you can draw any parallels on why does it seem that every place we have energy we also have terrorism other than just musing about the fact that over the last twenty years while we have apparently benefited from these unbelievably low bargain oil prices, the prices were so low that none of the host nations were able to basically create any semblance of a modern society. And over a 20-year period of time, all of their populations exploded, they all have high birthrate, very young people, and terrible economies. Unfortunately, we ended up with an oil price that was so low that it was hard for them to maintain a healthy infrastructure and there was nothing left over to start rebuilding their societies. I suspect that had they been lucky enough to have had energy prices two to three times higher and then worked carefully with these producing countries to be enlightened about how they should spend this newfound wealth instead of putting in some young and powerful leaders to start creating a middle class then the people would have started focusing more on how to become more prosperous. I guess in hindsight that is easy to say.
Another questioner asked Simmons why there was such an unbelievable disconnect between oval office policy and Simmons' stated views. The first words out of Simmons' mouth in reply were, "The US has some unbelievable energy problems."
[A full transcript of Simmons' statement at the ASPO conference will be made available shortly. – Ed]
Different Motivations, Some
The ASPO conference was attended by oil company experts, academics from the fields of geology, and the sciences, such as political science, alternative energy advocates, economic and financial concerns like Deutschebank, government research facilities, and, journalists. Three "camps" emerged fairly quickly. The Peak Oil camp generally represented those who felt that oil and gas depletion was extremely serious and about to become the paramount issue on the planet because there are no suitable alternative energy sources either in the near or intermediate term that will soften the effects. The Alternative Energy Panacea camp generally agreed that Peak Oil was imminent but argued that alternative energy sources would generally permit life to go on as usual. The Flat Earth camp, generally comprised of oil company employees, oil industry representatives, representatives of the International Energy Agency (IEA) and investment banks, and, politicians, all off whom generally assumed that demand and increased investment would somehow produce all the solutions and energy necessary to solve any problems and, that new technology would find the oil and gas that most attendees of the conference – especially after the presentation of data from undisputed experts – agreed was nonexistent.
Dishonest Reserve Reporting and Definitions
There was no defense raised from any of the attending camps for overstated
oil reserve estimates previously produced by either the US Geological Survey
(USGS) or the IEA. It took little effort from experts like Campbell,
Laherrère, Aleklett, Chris Skrebowski of the
The chief misleading error always committed by both oil companies and government institutions is their failure to backdate reserve discoveries. When oil companies drill their first successful well in any field they generally have a reasonable idea of how much oil will be ultimately recoverable. The first problem is, that if they report the anticipated size of the field in the year of discovery, they have to pay taxes on all of it. Naturally, they report the reserve estimates as increasing over time to spread out the tax burden. They do it also to keep share prices up and stable, and to stimulate continued investment by reporting the discovery of new reserves in older fields that are not new discoveries at all. And in cases where national production is determined by stated "proven" reserves, estimates are sometime changed, as with the OPEC nations in the mid 1980s, simply as a result of an accountant applying an eraser to the previously stated reserves when more cash is needed as a result of increased production.
Experts like Campbell and Laherrère insist that all reserves everywhere should immediately be backdated to the first successful borehole in a field and then the amount pumped subsequently subtracted as a means of accurately determining how much oil is really left. To engage in honest discussion of what is really there, terms like Probable, Estimated, and even Proven Reserves need to be thrown out in favor of Ultimately Recoverable Reserves (URR) which have been properly backdated. Anything else is pandering to the needs of an accountant, a politician, or a stock market analyst.
There is a reason why -- in spite of all the reserve numbers put out by governments, oil companies and market analysts -- a company called Petroleum Consultants in Geneva Switzerland publishes an annual report on oil reserves country by country and charges a reported million dollars per copy. The CIA is reported to have a hand in its drafting and is a recipient of the work product. That is a testament in itself to the unreliability of reserve estimates from other sources.
Emerging Visions of the Future
There were crossovers of opinion and these descriptions are not all
inclusive. One oil company executive, Ali Samsam Bakhtiari, Ph.D., of the
National Iranian Oil Company, was firmly in the Peak Oil camp and he presented
startling figures on oil depletion in
As FTW has repeatedly reported, once a field, a nation, or the planet passes the peak of production, each new barrel produced on the average requires more money and more energy, while at the same time tending to be of declining quality and thus more expensive to refine. Bakhtiari's assessments were supported by other presentations showing that even though 43% of the world's URR may be located in the Middle East their size may be far less than hoped for and the nations in the region may be actually peaking much sooner than expected.
The sobering numbers tended to reinforce Simmons' position as presented to the Bush administration and debate frequently turned to alternative energy sources. No one at the conference presented any evidence of any combination of alternative energy sources which would replace hydrocarbon energy and no one alleged that even if such a mix was available it could be implemented in time to prevent major economic and human catastrophes.
This writer walked away with the conclusion that as a result of political and economic denial, as the lights started going out, as cars stopped running, as fertilizers and pesticides became too expensive for third world nations, and as famine started to hit the planet, coal and nuclear would be the knee-jerk solutions reached for and that they would not prove to be effective for anything except an immediate finger-in-the-dyke solution.
One conclusion generally accepted by almost every attendee was that hydrogen, contrary to popularly accepted comfort promotions by writers like Jeremy Rifkin, was not a solution either in the near or long term because of intensive costs of production, inherent energy inefficiencies, lack of infrastructure and impracticalities. Speaking for Daimler Chrysler, which paid lip service to Peak Oil yet acknowledged that it had done extensive research on hydrogen vehicles, Dr. Jorg Wind told the conference that his company did not see hydrogen as a viable alternative to petroleum-based internal combustion engines.
"We use fossil fuels to make hydrogen. That does not result in a significant
CO2 reduction. We predict that by 2020 only 5% of fuel use will be hydrogen and
that infrastructure and the political framework is the most important factor. In
order of relevance and likelihood from the standpoint of the auto industry Wind
stated that we would see improved conventional vehicles, starter hybrid
vehicles, electric hybrid vehicles and, finally, fuel cell vehicles as
solutions, but he had little optimism that fuel cells would ever amount to a
significant market share. In a telling left-handed acknowledgement of Peak Oil,
Wind noted that one third of all diesel fuels currently used in
French presenters confirmed that ethanol was only viable in
When asked by FTW if Daimler-Chrysler had estimated the costs for infrastructure changes and capital investment to produce fuel cell vehicles Wind stated that the company did not know these costs. The implication was that having evaluated the technology involved in the vehicles themselves the company didn't consider it worthwhile to undertake further financial evaluation.
Wind elicited groans from the audience when he asserted that everything was customer driven and that corporations bore no responsibility for the shortage of practical solutions to the looming crisis.
"It may not be profitable to slow decline"
Dutch economist Maarten Van Mourik of the Netherlands Economic Institute delivered some chilling facts and then offered perhaps the most memorable quote of the entire conference.
He had little hope for deep sea exploration, stating that deep water
non-conventional oil would represent only five per cent of world supply by 2020.
Ultimately it would produce only about 5 Gb. The world is currently consuming a
billion barrels of oil every twelve days. "It is way too expensive. The cost is
fifty to sixty million per rig and there is little guaranteed return." He noted,
not surprisingly, in view of recent developments in the "war against terrorism,"
that West Africa was the best deep water oil prospect with
After looking at more of the various alternatives, Van Mourik revealed an underlying truth that is certain to exacerbate the effects of Peak Oil, "It may not be profitable to slow decline."
Hydrogen's Lead Financial Balloon
Pierre-Rene Bauquis, Vice President of the French Energy Institute, associate IFP professor and former special advisor to the president of TotalFinaElf, confirmed prior research by FTW citing hard scientific data showing that hydrogen is not a practical solution. As a member of Environmentalists for Nuclear Energy he made no secret of his advocacy of nuclear power. And it is quite probable that if Total or any other oil company could make a profit from hydrogen they would rush to do it, especially since they know that they are running out of their current product.
Noting that one half of all oil is used for transportation, Bauquis insisted that renewable energies sources would not solve the problem and stated flatly that "Hydrogen is not the fuel of tomorrow." He noted that the first internal combustion engine, built in 1805, was a hydrogen engine and that it was quickly discarded because of the problems hydrogen poses with transportation, storage and efficiency.
Bauquis observed that, "Commercial production of hydrogen is two to five times the cost of the fossil fuels used to make it. Transportation is impossible. It is two times as costly to transport hydrogen as it is to transport electricity. The storage costs for hydrogen are one hundred times the cost of liquid petroleum products."
He was equally unforgiving when it came to ethanol. "To replace forty per cent of the oil in use you would need three times the currently available farmland just for feedstock."
Bauquis drew some groans from the audience when he insisted that the "Chernobyl" disaster was a hoax perpetrated by Green Peace which had grossly exaggerated the number of deaths resulting from the 1986 nuclear accident but his observations about hydrogen are consistent with a wide number of scientific studies from a number of differing political and economic interests. He did acknowledge that perhaps in several decades, so-called green or white hydrogen (produced by electrolysis rather than from methane) might become feasible but only as a result of nuclear energy to power the conversion process.
One audience member elicited boisterous audience laughter by asking another presenter, "Now we have one situation in the market in which we get conventional fuel, namely oil, we burn it in a combustion engine, and we do work. Now what I understand the hydrogen defendants are promoting, led by Mr. Jeremy Rifkin, is a hydrogen economy consisting basically in getting the conventional fuels again and producing alternative/solar energies or clean energy… or a wind generator …to produce electricity to then split the water molecules into hydrogen and oxygen and then compressing the liquefied hydrogen for transportation and storage and then injecting the hydrogen into the fuel cell to produce electricity to do work in the machine. Do you really believe that this is efficiency?"
J. Peter Gerling, head of the Energy resources section of
Sticky Tar Sands in
Professor Kjell Aleklett made a stunning graphic display of how the world's
oil is distributed by using twenty champagne bottles to represent the two
trillion barrels of oil with which the planet was endowed. After removing ten
bottles to indicate what had already been used he put two bottles aside to
represent the oil that had been given to the
He then turned to tar sands projects which had once been heralded as
Aleklett then noted that
No one needed to ask about energy returned on energy invested.
Stating the Obvious
American Five College Professor of Peace and World Security, Michael Klare,
author of the book, Resource Wars, provided the much needed integration
of Peak Oil issues with world events by noting that
As is so often the case with government reports such as those produced by the
CIA's Inspector General evaluating the CIA's role in the drug trade, it is
necessary to discard letters of transmittal and summaries to find out what the
report really says. Klare noted that Chapter 8 of the Cheney report disclosed
that what the secretive body really advocated was an increased reliance on oil
and natural gas. The report stated that
Klare's analysis left no doubt that the military operations witnessed since 9/11 were indeed the result of an elaborate plan put into place and executed steadily for more than a decade and that US energy, military, and anti-terrorism policies were really three strands of the same rope, all meshing perfectly in global and hegemonic conquest.
Princeton Professor Kenneth Deffeyes – a colleague of King Hubbert and author
of the book, Hubbert's Peak: The Impending World oil
Shortage, argued that Peak Oil actually arrived in 2000 by noting that
production has actually been declining since that time. As further evidence of
the production peak, Deffeyes noted that since 2000, there has been
a 30% drop in stock values, interest rate cuts have not helped, two million have
become unemployed and the employed have been unable to retire, budget surpluses
have vanished, the middle class has vanished, and the World Trade Center has
vanished. He added that the only way to meet the delusional USGS oil discovery
predictions for the
One of his greatest concerns, he said, was the cost of fertilizer production for the Third World, implying that natural gas shortages and related electrical manufacturing and transport costs might precipitate a famine of unimagined proportions.
From FTW's perspective the reality of Peak Oil has been almost completely transparent since 9/11. As a cosmological explanation of the sublimely convenient attacks of 9/11, abetted by the US government, the sequential war to control the largest oil reserves on the planet, the near hysteria over biological warfare, the steady assault on civil liberties, and the continually declining economic performance, there is no other construct which provides a canvas on which these developments fit.
The second annual ASPO conference in Paris only deepened our conviction.
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