BP Fights Self in Phone Booth, Loses Match
British Petroleum ranks as one of the lead members of the peak oil denial club. ASPO’s Colin Campbell and Kjell Aleklett both took BP to task for recent comments slamming the peak oil perspective, even denying its validity. (More on the latter point in a moment.)
But it wasn’t always this way. Just over a decade ago, and as recently as 2001, one could fairly say that-based on at least two notable points made over a 5-year period-BP ranked as one of the more realistic oil majors when it came to looming world oil production limits.
Back in January 29, 1996 issue of the Oil & Gas Journal, London-based columnist David Knott featured Colin Campbell vs. BP’s senior economist Paul Appleby in a piece entitled “Reserves Debate.” Appleby hadn’t wandered off the reservation with his comments; in fact, Knott quoted the economist from a piece Appleby wrote for a house magazine published by BP. Some clips from Knott’s piece:
“Appleby, sounding the optimist’s view, said this reserves growth and new discoveries have enabled total reserves to grow faster than production. ‘By this measure, rather than running out of oil we seem to be running into it. The perception of oil as a dwindling resource seems to be a hangover from the late 1970s.’”
“BP predicts that within the next 15 years the industry will reach the point at which half of the world’s oil reserves will have been recovered. Appleby said worldwide oil production will flatten and start falling by 2010.”
Yes, the first point is one often made by today’s peak oil denial gang-Cambridge Energy Research Associates, Exxon-Mobil, the US Energy Information Administration, and individuals like economist Michael Lynch. But the second point put BP squarely in the realistic camp. Peak oil by 2010-that statement from an approved BP source made Knott’s piece an instant keeper.
Fast forward to late January 2001, in Davos, Switzerland, where the tony World Economic Forum met to discuss perceived global concerns. Among the issues aired was a panel entitled “The Price and Supply of Oil.” Presenting for BP was none other than CEO Sir John Browne, alongside CERA’s CEO Daniel Yergin and Venezuela’s President Hugo Chavez. Here’s the key statement from Jeremy Warner’s article of January 29, 2001, published in The Independent (UK newspaper) and entitled “Future of Oil Supplies.”
“The BP chief executive is predicting that world oil demand will rise by 2 per cent a year for the next 10 years up to a peak of about 90 million barrels of oil a day, a level he believes might be close to the industry’s maximum production capacity. Furthermore, with developments in technology, allowing deep water drilling in the Gulf of Mexico and elsewhere, that level of production might be maintained for 30 or 40 years before known oil reserves begin to run dry.”
There you have it: peak oil by 2010 at 90 mmb/day, plus or minus, followed by an enormously long plateau. End of story? Not even close. Within months, BP became a full-fledged member of the peak oil denial club. Most recently, if you haven’t read the November 2008 ASPO-Ireland newsletter, Colin Campbell laid out the latest view from BP’s chief economist Christof Ruhl, who stated the following in an interview published Oct 1, 2008:
“Physical peak oil, which I have no reason to accept as a valid statement either on theoretical, scientific or ideological grounds, would be insensitive to prices. In fact the whole hypothesis of peak oil - which is that there is a certain amount of oil in the ground, consumed at a certain rate, and then it’s finished - does not react to anything.
And you can turn anything into oil into if you are willing to pay the financial and environmental price….It is more likely that demand will peak, which is what we are seeing in Japan and in Europe…Peak oil has been predicted for 150 years. It has never happened, and it will stay this way.
Why did BP end up rejecting their more realistic view of peak oil that they held at least between 1996 and January 2001? How could Christof claim peak oil “has never happened” when the UK had clearly peaked back in 1999? One strongly suspects that CERA’s Yergin whispered long and hard in Browne’s ear right after their 2001 panel, possibly over a few Davos martinis.
Perhaps BP decided it was not in their stockholders’ interests to acknowledge the looming reality of peak oil. Perhaps leadership perceived the resource as being sufficiently large that they could for now ignore the fact that world oil production has been relatively flat for the last three-plus years and will likely struggle going forward in the deteriorating economic climate. Whatever the cause of BP’s most recent definitive denial, their present position makes it harder for today’s public- and private-sector decision makers to both grasp the significance of the peak oil dilemma and make a commitment to respond proactively to it.
(Note: Commentaries do not necessarily represent ASPO-USA’s positions; they are personal statements and observations by informed commentators)
Comments
By Don Hirschberg on December 1st, 2008 at 9:21 pm
“There’s no use trying,” she (Alice) said, “one can’t believe impossible things.”
“I daresay you haven’t had much practice, “said the Queen. “When I was your age I did it for half-an-hour a day.” (Through the Looking Glass)
At BP it must be practice, practice, practice.
By Ben Levi on December 2nd, 2008 at 5:14 am
It seems to me that to peak oil debunkers such as BP’s Chief Economist Ruhl, the exact wording of what they say is important. His statement in 2008 that you can turn anything into oil if you’re willing to pay the financial and environmental price, is based on emerging technologies that were only ideas back in 1996, and barely realities in 2001 (let alone mature in 2008). One can say that peak oil doesn’t exist if one ignores EROEI and creates oil using technologies such as tar sands conversion that take almost as much energy to produce the oil as the oil returns (especially if that energy comes from “clean” nuclear). And with technologies like coal-to-liquid fuels, which have huge environmental costs, the argument gets quite a bit clearer… we can have plenty of oil if you let us pollute as much as we need to. So it seems to me the key to the conversation is pinning down the context, so you’re talking about the same “picture” (a picture’s worth 1,000 words, but they’re not always the same words). Once that’s done, I actually think everyone would be much closer to being on the same page. If you take EROEI and the environment into account (or not), there’s probably more agreement than differences with regard to future global oil supplies, consumption (and the price of oil) notwithstanding. That’s no excuse for not strategically planning ten or more years into the future, but it would explain why there’s more denial than acceptance of what the future will bring.
By Abdulaziz Alkhowaiter on December 3rd, 2008 at 3:32 am
Why do many ASPO’ers take BP and other peak oil deniers at face value? Do you honestly believe they are that stupid, and ASPO so much smarter? Don’t kid yourselves! To find the answer to their denial of a physical reality, we must look elsewhere. Peak oil means peak economic growth, which in turn causes a devaluation of all equity values and destroys any hope of future debts being paid off. What we will have is the complete implosion of the current financial system. The collapse could be so severe that most current political entities would also cease to exist. This is obviously not something that anyone responsible would want to report to the average joe in the street. More than anything, ASPO need to get a handle on the timing of the final collapse and its severity. Phase one of this financial ruin has begun. What are the options left to the main players in this dramatic game?