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Discussion of The Energy Shift*
Over the years the owner of Globalshift has written many articles and presentations on oil and gas supply and industry activity. The selection above demonstrates how perceptions within the industry have changed in 3 decades. Signals of ‘The Energy Shift’ first appeared around 2005.
In the 1980s and early 1990s themes were technology and growth. New frontiers of science and of geography were discussed to meet volatile demand; unfettered by global resource constraints or environmental concerns.
However, from the mid 1990s the focus moved to analysis of future oil supply and demand with clear recognition of the twin threats of dwindling cheap resources and environmental change. Forecasts were simple, tending to be pessimistic. Traditional exploration areas were declining in both number and potential whilst new technology appeared unable to make up the difference.
By 2005 discussions had expanded to include more detailed, scientific analysis of all conventional and unconventional oil supplies coupled with the implications of demand fluctuations, price issues and newly adapting technologies. A future supply gap was identified and quantified while noting the urgent need for additions to fossil fuel types, such as from shales and oil sands, and replacements from other energy sources. In the longer term the trend for unconventional fossil fuels to become more valuable was recognised but with the awareness that they would be unable to fully offset decline of conventional oils over longer periods.
Moreover, these balancing issues would be counter-balanced by an increased public awareness of the damaging environmental effects of the new fossil fuels. The sense of an impending ‘energy transition’ was sign-posted. The owner expected “rapidly rising prices after 2010 accompanied by painful conservation” along with comments such as “predictions that oil demand will increase to 120 mn b/d by 2020 [by the EIA] are futile and damaging to policy makers.” Articles were built around how the industry could and should deal with change, especially by developing new energy sources.
Drilling and spending levels were also examined, allied to forecasts of cost escalation. The relative importance of new geographic frontiers (such as deep waters) and technological frontiers (such as horizontal drilling) once again became central to the analysis of future supply.
After a deep recession in 2008, the world appeared resigned to volatile prices even though alternatives were being exploited, including large volumes of oil (and gas) from tight reservoirs. To add to this, demand was fluctuating during price peaks and a future of feast and famine with dramatic price volatility was now expected - and still is. By late 2014 the world was entering a deep oil price trough with activity in high cost environments collapsing, even as service costs plummeted. The ‘energy shift’ (forecast for 2016 in many early articles and commercial reports by the owner) had begun.
At the end of 2016, OPEC and a number of other countries, alarmed by persistent lower oil prices, began to establish new rules to attempt to restrict output once again, albeit aware that oil shales in the USA were waiting in the wings to fill up any shortfalls. In this environment, over the longer term, repeated waves of price peaks and troughs are inevitable as resources are shared amongst growing, affluent populations living under the dual threat of resource wars and environmental disaster.
*To control forecasts and constrain data sets, Globalshift has introduced the concept of the ‘Energy Shift’ to replace the term peak oil, once used to describe oil use growing to a peak and then declining. The ‘Energy Shift’ also obviates the use of other terms by some commentators such as peak supply and peak demand. These are simplistic ideas adopted in the mistaken belief that eventual decline in fossil fuel use will only be controlled by a single trigger. Nevertheless, of course, as part of the Energy Shift, peak oil (including peak demand) will come when oil discovery and extraction costs (Capex and Opex) exceed the value (the amount most of us are willing to pay) of the refined product.
Technological Drive for Marginal Field Development - Petromin Asia, July 1986
Lessons from the rush to Yemen - Asian Oil and Gas, February 1993
Remote Control: The cost of modern communications - Asian Oil and Gas, June 1993
The Consulting Business: How both sides can win - Asian Oil and Gas, October 1993
Upstream Technology Special Report: Part 1 - Petroleum Argus, July 1999
Upstream Technology Special Report: Part 2 - Petroleum Argus, August 1999
Oil Energy Security in the Asia-Pacific Region - Petromin Asia, April 2002
Energy Security in Europe - Petroleum Review, August 2002
US oil supply vulnerability growing - Offshore Magazine, August 2002
When Will Oil Supplies Peak - Scandinavian Oil and Gas Magazine, August 2004
Putting paid to unrealistic demand predictions - Petroleum Review, October 2005
Resource Depletion: Modeling and forecasting oil production - Session 6, Modeling Energy Transitions, Washington, May 2006
Spending surge for offshore drilling - Petroleum Review, May 2006
The cash activity conundrum - Asian Oil and Gas, January 2007
Filling the oil supply gap - Petroleum Review, February 2007
Who gets what in offshore drilling: Part 1 - Drilling Contractor, July 2007
Who gets what in offshore drilling: Part 2 - Drilling Contractor, November 2007
Escalating offshore expenditure, production expected - Offshore Magazine, May 2008
Deep water drilling can maintain oil production: But for how long? - Scandinavian Oil and Gas, June 2008
Declines are happening but they should be short-lived - Scandinavian Oil and Gas, November 2009
Forecasting oil and gas supply and activity - The Oil Age, January 2015
Towards the Energy Shift
Selected Articles by the owner (contact us for a copy)