Are oil companies are finding it increasingly difficult to find new oil? It can certainly seem that way. Most of the older, easier-to-drill oil fields appear to be running near full capacity, while newer supplies often prove costly and difficult to drill — think of deepwater extraction off the Gulf of Mexico or shale production in North Dakota, which isn’t economical unless crude prices rise higher than $60 per barrel.
But here’s another way to look at it. As a chart from ExxonMobil’s new 2012 Outlook for Energy (via Gregor McDonald) shows, the vast bulk of our oil comes from those older, easier-to-drill fields, with more recently discovered supplies playing a smaller and smaller role:
As ExxonMobil details in its report, more than 95 percent of today’s oil comes from fields discovered before 2000. About 75 percent comes from pre-1980 discoveries. While many massive, older fields can keep gushing for decades — Saudi Arabia’s Ghawar field, first tapped in 1951, still hums along at 5 million barrels per day — they seem to be dwindling overall. As Exxon’s chart shows, reserves discovered in the 1960s and before maxed out around 1980 (even as oil companies are trying to recover additional oil from older wells with better technology). What’s more, it seems to be getting tougher to squeeze oil out of newer finds.
Is this proof that oil’s peaking or running out? That’s not so clear. Certainly Exxon and agencies like the Energy Information Administration sound confident that oil production will keep surging in the decades ahead, as nearly one billion new middle-class drivers in China, India and elsewhere start buying cars. Judging by its outlook report, ExxonMobil is banking on the belief that extraction technology will keep improving and production will keep rising significantly.
On the other hand, pessimists like Gregor McDonald point out that global oil production seems to have hit a ceiling since 2005, even as demand has been growing. And, they note, while the world certainly won’t run out of crude anytime soon, all this new unconventional oil in hard-to-drill regions like the Arctic will require inordinately high crude prices that could prove incompatible with healthy economic growth. (Burning all that dirty unconventional oil would also speed up the pace of global warming.) That’s the real worry about peak oil, and it’s a concern that the official forecasting agencies often discount.