Free The End of Doom by Ronald Bailey Page A

petroleum reserves and resources and the oil industry’s ever-increasing technological prowess to exploit them. The notion that once half of the oil in a field has been produced, the only direction is down seems intuitively obvious. And oil is, after all, an exhaustible resource of which there is only so much. Peak oil theorists ominously point out that since the 1980s the volume of new discoveries has been smaller than the amount of oil extracted. Yet, oil reserves have continued to grow. How could this be?
    Swedish economist Marian Radetzki explained this paradox by noting that “the quantity of reserves in new discoveries regularly appreciates in the process of field development exploration and subsequent exploitation.” In other words, oil companies often find more crude in their wells than initially predicted. In addition, peak oilists tend to assume that oil production technology is static when in fact constant improvement enables the extraction of ever-greater quantities of oil from a field. “Historical data from the United States reveal that the ultimately recovered oil when a field ceases to produce is on average six times as large as the volume announced after the initial discovery,” observes Radetzki. Oil companies basically look for more crude in fields that that they have already discovered and regularly find it in the form of appreciating reserves.
    For example, since 1950 some 2.6 million oil and gas wells have been drilled in the United States and more than 800,000 are currently producing oil or gas. In contrast, Saudi Arabia has only about 2,900 operating wells, and all of the Organization of Petroleum Exporting Countries (OPEC) wells total just 37,500. This suggests, even taking into account differences in geology, that there is plenty of scope for boosting the production of known fields by means of reserve appreciation in OPEC and other oil-producing countries.
    Consider the Kern River Field in California, which was discovered in 1899. In 1942 it was estimated that only 54 million barrels remained to be produced there. During the next forty-four years the field produced 736 million barrels and had another 970 million barrels remaining. In 1980 the US was estimated to have between 27 and 30 billion barrels of reserves. In 2013 the US Energy Information Administration estimated US proven oil reserves at 29 billion barrels, even though American oil fields had produced about 80 billion barrels of oil between 1980 and 2013.
    Back in 1973, US Foreign Service officer James Akins dryly observed: “Oil experts, economists, and government officials who have attempted in recent years to predict the future demand and prices of oil have had only marginally better success than those who foretell the advent of earthquakes or the second coming of the Messiah.” Keeping Akins’s admonition firmly in mind, what does future energy demand look like?
    In their April 2013 study “The Global Energy Outlook,” Duke University researchers Richard Newell and Stuart Iler comprehensively review petroleum consumption and production estimates from the US Energy Information Administration, the International Energy Agency, and the oil companies ExxonMobil and BP. Those estimates more or less converge on an increase in consumption from the current 88 million barrels per day to around 110 million barrels per day in 2035. Similarly, they project that natural gas demand will rise from 320 billion cubic feet per day now to somewhere between 462 to 514 billion cubic feet per day in 2035. They do further note: “While energy consumption continues to grow, it is growing at a slower rate as energy continues to decouple from economic growth, due to structural transformation in the economy and technological improvements in energy efficiency. Fossil fuels will continue to dominate the energy mix, but their share is falling, and for the first time the absolute level of some fossil fuels looks ready to