This article on T. Boone Pickens's views on peak oil comes from EV World, a web site about electric vehicles. -- In it, Pickens says that he believes that global oil has already reached the level of maximum production; that is, that peak oil is here: "I am just so sure that we have peaked," he told the 11th National Clean Cities conference on May 4....
BOONE PICKENS WARNS OF PETROLEUM PRODUCTION PEAK
** Legendary oil magnate calls it, peak oil is here **
May 4, 2005
Legendary Oklahoma energy magnate, T. Boone Pickens will be 77 years old this month, and maybe because of that, he feels free to speak what's on his mind; and he did to an audience of alternative fuel advocates in Palm Springs today.
Addressing the 11th National Clean Cities conference, hosted by the former mayor of Palm Springs and introduced by former U.S. Energy Secretary John Herrington (1984-1989), Boone, as his friends refer to him, was candid in his views of wind energy, nuclear power, natural gas, and in particular petroleum.
While he acknowledges wind power is cheap today, he, as well as former-Secretary Herrington, questioned the contribution it can make to the nation's future energy needs. He finds nuclear power attractive and believes natural gas should be used to power our transportation fleets rather than to generate electricity. In general, he was very upbeat about the prospects for alternative transportation fuels.
But on the future of petroleum, he was less sanguine.
"Let me tell you some facts the way I see it," he began. "Global oil (production) is 84 million barrels (a day). I don't believe you can get it any more than 84 million barrels. I don't care what (Saudi Crown Prince) Abdullah, (Russian Premier Vladimir) Putin or anybody else says about oil reserves or production. I think they are on decline in the biggest oil fields in the world today and I know what's it like once you turn the corner and start declining, it's a tread mill that you just can't keep up with.
"So, when you start adding the reserves in these countries, you're not even replacing what you're taking out.
"Let me take you to another situation quickly. 84 million barrels a day times 365 days is 30 billion barrels of oil a year that we're depleting. All of the world's (oil) industry doesn't even come close to replacing 30 billion barrels of oil. We don't spend enough money to even give ourselves a chance to replace 30 billion barrels. It may be because the prospects are not there. I rather imagine that's what the answer is to that.
"So, if you accept that 84 million barrels a day is all the world can (produce), and then look at refining capacity, I think it's just a coincidence that refining capacity . . . world capacity . . . is 84 million barrels a day. So, we're in balance: 84, 84.
"Now you see the projections for the fourth quarter of '05, I mean like tomorrow; it is 86 to 87 million barrels of oil a day required. China (and) India (are) growing fast. Our economy is going down a little bit, but it doesn't seem to be shutting off demand for gasoline, oil, natural gas, whatever. But around the world . . . just assume that the (U.S.) economy is slowing, but China is still ramped up; it is still 86, 87 million for the fourth quarter.
"Now we've got some pretty good inventory, those will be . . . I think . . . they'll be gone in the third quarter. I can't wait to see how this is all going to play out.
"Don't let the day-to-day NYMEX (New York Mercantile Exchange) fool you, because it can turn and go the other direction. I may be wrong. Some of the experts say we'll be down to $35 oil by the end of the year. I think it'll be $60 oil by the end of the year. You're going to see $3 gasoline twelve months from today, or some time during that period. I know you've already experienced it in California. I am not that much out of it . . . But in the Midwest you've probably got $2.20 today. That's the way I see it unfolding".
Pickens went to explain that if he were Energy "Czar," he'd immediately begin to phase out the use of natural gas in electric power generation and encourage the construction of more coal-fired and nuclear power plants. He'd use the natural gas to power transportation instead.
Speaking of the various alternative fuels, he stated, "I don't think any of them can miss. I think some will be further out than others. Hydrogen, I think, is going to take a long time." Speaking before an audience with vested interests in ethanol, biodiesel, propane and compressed natural gas as transportation fuels, he added that he believes all the alternatives will work.
"We're going to have to use shale oil the western slope of the Rockies. That's going to happen. The technology is just about here," he noted, adding that he blames both Republican and Democratic administrations for not engaging in long term planning to meet the nation's future energy needs.
"It's all getting very, very tight. We're just about there. The sixty percent we import now (of petroleum), is about all we can get from the countries that export." He cited the example of Venezuela where its "screwball" leader, Hugo Chavez has pledged to not sell any additional oil to the United States.
"The majors, they talk about plenty of oil and that they can produce more, but if you look at ExxonMobile, ChevronTexaco, BP (British Petroleum), all the production (is) going down every year. They don't replace and they don't add to production, but they say there's plenty of oil around.
"Now why would they say that? One of the chief economists with one of the major oil companies . . . I was at a conference where he was . . . we were talking and I asked, why do they say that? And he said, can you imagine what would happen if one of these major oil company's CEO's got up and made a speech and he said, 'We're running out of oil'? I said there'd be panic and he said, 'That's right. They're not going to make the statement. They're going to say there's plenty of oil around'".
"I know that sounds rather simple, but that's the best answer I've had . . . why they keep saying that there's plenty of oil around. I can't tell you positive, but I am just so sure that we have peaked and from here on the demand side that we are going to have a hard time making the trip on fuel. I know demand will come down with price. That will happen".
He answered several audience questions and predicted that if the summer is hot in the Southeast that natural gas prices will go to $10. "Natural gas is in decline," he stated, concluding that eventually the market will sort out the winners and losers".
After his remarks, EV World asked Mr. Pickens if he agrees with Houston-based investment banker Matthew Simmons that Saudi Arabia's oil fields may be on the verge of decline and he replied that he did agree him.
If Pickens and Simmons are correct, then Crown Prince Abdullah's promises to raise production over the next ten years to 15 million barrels a day may be just wishful thinking, in which case, Saudi Arabia's role as swing producer and oil price stabilizer may be a thing of the past. Oil prices will begin to experience unprecedented volatility, which is likely to place serious stresses on a world largely unprepared for the end of cheap fossil fuels. The road from here on will be a bumpy one.