Half of oil and gas CFOs say we are peaking
According to a new survey by BDO Seidman, LLP, one of the nation’s leading accounting and consulting organizations, 48 percent of chief financial officers (CFOs) at U.S. oil and gas exploration and production companies agree that the world has reached its peak petroleum (liquid hydrocarbon) production rate or will reach it within the next few years, while another 52 percent disagree with that statement.
I think the headline is wrong, though:
Energy CFOs Are Split on World’s Peak Petroleum Production Rate, According to BDO Seidman, LLP.
Chief Financial Officers at exploration and production companies are arguably the most cautious “show me the money” people in the entire energy business. The news is not that they are split. The news is that half think we are peaking or soon will.
The point is, it is not just the “peakists” who think we have a big, big problem. And it’s not just the CFOs. The CEO of Royal Dutch/Shell emailed his employees, “Shell estimates that after 2015 supplies of easy-to-access oil and gas will no longer keep up with demand.” The CEO of French oil company Total S.A., said that production of even 100 million barrels a day by 2030 will be “difficult.” The CEO of ConocoPhillips said, “I don’t think we are going to see the supply going over 100 million barrels a day.”
Remember, the problem is far graver than it appears for one simple reason: Replacing oil in the transportation sector requires strong government action two decades before a peak because of the time needed to replace vehicles and fuel infrastructure. That was the conclusion of a major study funded by the Bush Department of Energy in 2005 on “Peaking of World Oil Production” [PDF]. The report notes:
The world has never faced a problem like this. Without massive mitigation more than a decade before the fact, the problem will be pervasive and will not be temporary. Previous energy transitions (wood to coal and coal to oil) were gradual and evolutionary; oil peaking will be abrupt and revolutionary.
Ouch! The same point is true about global warming. If we want global carbon dioxide emissions to peak and start declining, the planet must start aggressive mitigation policies two decades in advance — which means now, for the 450 ppm-ers or the 350-ppmers.
The time to act is now.