Quenching the world’s growing thirst for oil

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: Some 70 years ago on the eve of World War II, Winston Churchill made an historic decision: to use oil in place of coal to power British navy ships to make his fleets faster than those of the Germans. This heralded a tectonic shift—an energy transformation equivalent to the shift from wood to coal in the 17th century.

Unarguably, oil has shaped the 21st century, invading every facet of the economy, from agriculture to aviation. However, though it took millions of years for oil to form, we have managed to consume roughly half the globe’s oil reserves in barely 150 years, and a bulk of them in the last 70 years.

The world today consumes 85 million barrels of oil a day and demand is growing exponentially, apparently unaffected by the onslaught of rampaging oil prices that have touched $120/bbl. The unfolding scenario is a far cry from that of barely a decade ago when oil was sold at $10/bbl.

The Association of Peak Oil is crying itself hoarse predicting that we have either reached, or are on the verge of, peak oil. From here onwards, the slide is imminent and production is bound to decline. On the other hand, Cambridge Energy Research Associates (Cera), contesting the peak oil theory, sees no evidence of a peak in oil production before 2030, with global production eventually following an undulating plateau for one or more decades before declining slowly.

However, there is no contesting the evidence that supply is becoming severely constrained with each passing day. Demand growth, fuelled by the booming economies of China and other developing nations, is one of the factors.

But the predominant factor is that supply has failed to keep pace with demand. The moot question now is: does the world have enough oil to feed the ever-growing demand of developed and developing countries—and for how long?

Jeremy Leggett in his article, Peak Oil: The Twilight Zone, in The Independent in April 2005, pointed out that no major oil province has been discovered since the 1970s, and that the 100 largest oil fields, which account for around half the global oil production, are more than 25 years old. We are consuming more than what we are discovering. Given the level of sophistication and the understanding reached by geosc-ientists of this age, it is very unlikely that a large major field has eluded their attention.