Energy leaders search for crude solutions

Room for improvement
“There is inefficiency that’s still in play right now and great room for improvement,” said Adams. “And it will ultimately lead to more barrels of oil produced each year. It’s not that you’re depleting the reservoir faster — meaning that your limiting supply. It means that you’re getting more out of the ground from the same reservoirs when you got less before.”

‘There is inefficiency that’s still in play right now and great room for improvement.’ — Gar Adamas IBM Business Consulting Services

But despite billions in investment around the world, and advances in exploration technology, the pace of new oil discovery has slowed in the past few decades. After over a hundred years of exploration, the number of a major new finds of easily recoverable oil have steadily diminished. That’s forced oil companies to look deeper and deeper offshore or in hostile climates like Siberia. And oil produced from those projects isn’t cheap.

“It’s like catching bass in a pond,” said Deffeyes. “After you’ve caught most of the fish, it gets harder to catch more fish. And after you’ve found most of the oil, it gets hard to find more oil.”

And as exploration moves to more difficult locations, development of existing reserves has become more difficult in many oil-rich countries due to ongoing political turmoil.

Even Yergin concedes that the prospects for finding more oil underground could be severely constrained by political turmoil above the ground. From Nigeria, where violent conflict and protests have repeatedly interrupted oil exports, to Russia, where the government seizure of oil producer Yukos has scared away investors, oil supplies from more than a dozen “hot spots” around the globe are at risk of being cut off, according to the U.S. Energy Information Administration.

While no one can say for sure how much more oil will be found — or how fast production will increase — the stakes are huge. Though higher oil prices have spurred development of alternative sources like wind and solar (and provided momentum for expanded use of coal and nuclear power), these alternatives aren’t close to being ready to replace petroleum. Given the lead time in developing alternative energy sources, the risk is that a shortfall in oil supplies could leave the world’s economic engine sputtering.

Losing bet
One need only to look to New Orleans for an example of the risk of postponing investment as a solution to the global economy’s dependence on scarce oil, said Robert Kauffman, a professor at Boston University's Center for Energy & Environmental Studies.

“Everybody knew eventually that hurricane was coming,” he said. “And we said, ‘We don’t need to fix it now, we can postpone it.’ We made a bet, and we lost. And now we have to pay up big time.

‘You want to say the peak isn’t for 30 years or 40 years? Fine. Do nothing. But if you lose the bet, you’ve got to pay up big time.’ — Robert Kaufman Boston Univ. Center for Energy & Environmenal Studies

“And it’s the same thing with oil. You want to make a bet? Fine. You want to say the peak isn’t for 30 years or 40 years? Fine. Do nothing. But if you lose the bet, you’ve got to pay up big time.”

What would it take to replace oil? Simmons believes it will require nothing less than the equivalent cost and commitment on the order of fighting another war — this one to transform the world’s energy infrastructure in less than a decade.

“I really do believe that if we understand these problems and go to a war footing,” he said, “that in a shorter period of time than the 12 years it took to destroy and rebuild Europe and Japan we can fix this thing.

“And in fixing it, we can get along while we also go on a scientific expedition that exceeds what we did when we invented radar and the atomic bomb. Because we can probably invent some new forms of energy we don’t even know about.”

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