Let the oil scramble begin: Wells 'will start running dry in 10 years'

Published on Wednesday 7 October 2009 22:00

THERE is a "significant risk" global oil production could begin to decline in the next decade, researchers have warned.

The UK Energy Research Council (UKERC) said production of conventional oil could "peak" and go into terminal decline before 2020 – and warned the government was not facing up to the risk. Falls in production will lead to higher and more volatile prices and could encourage investment in even more polluting fossil fuels, such as tar sands, which "need to stay in the ground" to avoid dangerous climate change as a result of carbon emissions, the researchers said.

The UKERC report said there was too much geological, political and economic uncertainty to predict an exact date for a peak – which would be followed not by a sudden decline but by a "bumpy plateau", with a downward trend in extraction.

But the report said those who predicted an imminent decline had underestimated oil reserves, while more positive forecasts suggesting that oil production would not peak before 2030 were "at best optimistic and at worst implausible".

The report said the world had used less than half of the planet's conventional oil, but the remaining resources would be more difficult and expensive to extract.

With exploitation of the world's reserves running at more than 80 million barrels a day, even major new discoveries, such as in the Gulf of Mexico, would delay a peak by only a few days or weeks.

Robert Gross, of UKERC, said: "The age of easy and cheap oil is coming to an end. It doesn't suddenly come to an end, but we're moving to increasingly difficult and expensive oil."

He said the public should expect to see higher and more volatile petrol costs in the future, with long-distance travel also becoming more expensive.

Britons should invest in the most energy-efficient vehicles and put pressure on the government to take the issue seriously, the researchers said.

The report said the UK government had no contingency plans for oil peaking before 2020, but officials needed to increase and speed up measures to cut climate emissions, such as improving vehicle fuel efficiency, a shift to electric cars and greater investment in public transport.

A spokesman for the Energy and Climate Change Department said: "We are well aware of the significant challenges for investment in future oil production and that there is a role for governments to play in reducing demand for fossil fuels.

"Already our climate change, energy efficiency and energy security policies outlined in the UK low-carbon transition plan are not only reducing the UK's carbon emissions, but are consistent with the need to reduce our use of fossil fuels.

"In addition, the UK government is investing and supporting research on renewable and clean transport technologies."

The latest economic report by trade body Oil and Gas UK says up to 25 billion barrels of oil and gas have still to be recovered from the UK continental shelf. In 2008, 549 million barrels of oil – 6 per cent less than the previous year – were recovered, with 68 billion cubic metres of gas, 3 per cent less than in 2007.

However, there was a 78 per cent fall in exploration drilling in the first quarter of 2009 and the industry forecasts investment could fall "significantly " in 2010 to below 3bn.