Let investors decide about the risks of early peak oil


Hans Altevogt

Jeremy Leggett, author of ‘The Energy of Nations': "Independent assessments of oil reserves necessary"

Introductie door Hans Altevogt

Oud-Greenpeace-collega Jeremy Leggett was degene die mij in 1992 de wereld van de klimaatdiplomatie in-coachte. Dat was in New York bij de Verenigde Naties tijdens mijn eerste werkweek bij Greenpeace Nederland, vijf jaar voor Kyoto.

Nu, 22 jaar later, sprak hij op mijn afscheidsfeestje naar aanleiding van mijn pensioen bij Greenpeace over zijn laatste boek The Energy of Nations / Uit de Olie.

Wat mij in zijn boek het meest fascineert, is de zoektocht naar de bronnen van de energie- en klimaatcrises die hij signaleert: wat verklaart de collectieve blindheid voor risico's, die niets minder dan ons voortbestaan raakt of, op z'n minst, in de gezongen woorden van REM: It's the end of the world as we know it.

Betrekkelijk nieuw in die verkenning is de geboden ruimte aan neuro-wetenschappelijke verklaringen voor risicoblindheid: wat verklaart die behoefte aan ontkenning en is dit door positieve prikkels te beïnvloeden in de richting van behoud, herstel en vernieuwing van de wereld ‘as we know it', omdat dat moet. Kortom: hoe worden blinden ziend?

Een neuro-wetenschappelijke insteek houdt dus niet op bij de vraag of duurzame ontwikkeling een kwestie is van (politieke) wil. Het biedt zicht op nieuwe verklaringen, onafhankelijk van systeem, cultuur en tijd. Dit is nog grotendeels onontgonnen sociologisch terrein binnen de huidige discussie over de energietransitie. Met dank aan Jeremy Leggett die - voor zover ik weet - als één van de eersten meer aandacht voor neurowetenschappelijke verklaringen van de weerstanden tegen energietransitie bepleit.

Ik hoop hierover meer te leren en te lezen, ook in de kolommen van Energiepodium.

Hans Altevogt, emeritus campagneleider energietransitie Greenpeace Nederland

Interview with Jeremy Leggett

In ‘The Energy of Nations', you write about two parallel histories: the peak oil crisis, which you argue will cause a global economic meltdown within years, and the current financial crisis. How do you feel those two are connected?
"There is a strong comparison between the two. The financial crisis was caused by an incumbency with a narrative of plenty and new wealth, in the same way that the oil and gas industry is now giving us a narrative of the new age of fossil fuels. In the financial crisis you saw banks defending that story in the face of a minority that argued they were wrong, that there was a flaw, that some of those derivatives were toxic. The financial industry rubbished the whistle-blowers, among whom were respected financial journalists and eminent economists, including Noble Prize winners, and claimed they did not understand complex derivatives and the ways they sliced and diced risks. The oil industry is now using exactly the same language when it talks about peak oil.
The connection between the two crisis is with the capital, with the money. I think that this is where the war will be won or lost. Most players in capital markets perceive an interest in keeping the whole narrative of plenty on the road. The gas industry is losing a fortune by drilling for shale in the United States. The last count is 35 billion dollars in write-offs by the top 15 oil and gas companies. This is supposed to be a boom, what's happened? The answer is that the industry is borrowing huge sums of money and desperately hoping that the gas price will go up. The banks have an interest in massive loans, the industry has an interest in activity, and so the whole thing consolidates. Also, as in the financial crisis, there are very few experts in the oil industry who see the whole picture when it comes to assets. Many members of that select group of geologists are now in the peak oil camp."
“"If you talk about conventional crude oil, that probably already peaked in 2005"”

You argue that oil companies are not transparent about their assets. What information do you think they should publish?
"Clearly the extent of the oil reserves is a matter of national security. So, I would ask for much more transparency than they are showing right now. I would like to see independently audited reserves assessments from outside the companies themselves. We need an international agency that is ready to show its teeth. The IEA, the International Energy Agency, is now the main provider of assessments on supplies. But they are part of the incumbency, basically the mates of the large oil companies. It is completely dysfunctional.
Changes in corporate culture are necessary as well. One of BP's mantras is that it does not "believe" in peak oil. That is their official position. They do not say they have severe doubts about the arrival of peak oil in the short term. No, BP ‘does not believe'. That is a technically illiterate thing to say. There might come a time that people will really look back in anger at this sort of statement.

We should be having sensible discussions. Let's talk about Shell. Poor Peter Voser, Shell's former CEO, didn't cover himself with glory in the past few years. He has been telling people to tone it down on the shale. He wasted billions of his investors' money. Not just in shale but also in projects like the Kashagan oil field in Kazakhstan, one of the biggest offshore fields in the world, where production has recently been halted for a minimum of two years due to technical difficulties.

Or take the massive Monterey shale formation in California, which according to one much hyped report contains two thirds of deliverable US shale oil resources. Just recently, federal authorities have slashed the estimated amount of recoverable oil by 96 per cent. That's insane. Let's drop this ‘we are going to frack our way to prosperity' nonsense.

It's not just private companies, either. There are huge questions about the full extent of remaining oil reserves in Saudi-Arabia, which could be cleared up by sending a dozen well-trained geological assessors there to see all the relevant data. Sadly, that is not going to happen."

Do you have the same fears with the gas and coal supplies as you do with oil?
"I do think the gas and coal supplies are probably overstated. But the problems with oil are acute. We would be well on our way to six degrees climate change before we ran into problems with gas or coal supplies. The carbon overhang is just so big. "

Let's go back to predictions. When do you think we will reach peak oil?
"If you talk about conventional crude oil, that probably already peaked in 2005. That's the stuff you really have to worry about. The oil companies fiddle around and include condensates, gas liquids and even biofuels in some of their figures. If you read between the lines of IEA statistics, you see that drop-off from 69 million barrels a day today to 10 million in 2035 if there is no capital expenditure. If they invest significantly that moves up to 38 million barrels a day. That is a huge problem. If we talk about oil prices, I worry about the short term. I would not be surprised by prices of 200 dollars or more. If I am forced to make an educated best guess as to when we face an oil crisis, it would be 2015. The key point, however, is that we will have an oil crisis sooner rather than later. Let me be clear: if the oil industry is still motoring away at about 95 million barrels a day in 2020, the peak oil camp is wrong. But the consequences of such an oil crisis would be devastating, the risks are massive. That is why we need transparency. I say: let the investors decide."

Hans Altevogt