CEO of Lundin Oil is a Peak Oiler - and says it on live TV
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Journalist: The second question is about an intense debate that have been circulating in some Swedish newspaper the last couple of days. It has got to do with the Peak Oil theory and the ideas of professor Kjell Aleklett in Uppsala University. I know that Lundin has in partly been financing his researches and his work. What's your view on the Peak Oil theory and professor Aleklett's ideas about that?
Ashley Heppenstall: I very much believe in the theory of Peak Oil. I think the big question is when will Peak Oil occur. It's no question in my mind that it will occur. I think that the for the last two or three years we've been talking about Peak Oil as a company and we were interested in helping professor Aleklett in terms of that work because we think it's extremely important. The simple facts are to me very easy to understand. We have continued increasing demand for oil. The International Energy Agency (IEA) are forecasting 1.6% increase in oil demand. Last year it was over 3%, and this year it's forecast at 1.9%. This demand is coming from China, India, and as with the world, the world grows and develops. So if you extrapolate those numbers from where we are today, the world needs 130 million barrels a day. More than 50% more than what it's producing today within the next 25 years. At the same time the world is being consuming more oil since 1985 than what it's been finding. It's been catching up by revising the reserves of existing fields. That simply cannot continue, and if you take a very conservative 6% decline rate on the existing 85 million barrels a day of production and assume we don't develop any new oil or find any new oil, which is obviously not correct, but then the production which we currently have will drop to 15 million barrels a day in that 25 year period. This basically means that we need to find over 100 million barrels a day of new inverted common oil. In my view, sitting where I am in the industry at the moment, and looking how difficult it is to find oil; the big oilfields have been found, I firmly believe that is not possible. Therefore, the only thing that can give is that something got to happen on the demand side. Today is 70% of oil consumption used in transportation. Whether we like it or not, people talk about alternative forms of fueling transportation, we haven't found a viable substitute at this point. Even if one looks at electricity or electrical cars, the huge costs in terms of transferring our fleet to electricity will mean that it will take years to be able to achieve that. So I do agree with the Peak Oil theory. The big question is when it occurs. Ultimately, if we do reach the Peak Oil then oil prices are going to go up and at some point it's got to have an impact on demand. The world's a very bright place; there's a lot of intelligent people around and somebody will find an alternative. That's in part, I think, driving the oil price, or part of the oil price, today.
Journalist: The second question is about an intense debate that have been circulating in some Swedish newspaper the last couple of days. It has got to do with the Peak Oil theory and the ideas of professor Kjell Aleklett in Uppsala University. I know that Lundin has in partly been financing his researches and his work. What's your view on the Peak Oil theory and professor Aleklett's ideas about that?
Ashley Heppenstall: I very much believe in the theory of Peak Oil. I think the big question is when will Peak Oil occur. It's no question in my mind that it will occur. I think that the for the last two or three years we've been talking about Peak Oil as a company and we were interested in helping professor Aleklett in terms of that work because we think it's extremely important. The simple facts are to me very easy to understand. We have continued increasing demand for oil. The International Energy Agency (IEA) are forecasting 1.6% increase in oil demand. Last year it was over 3%, and this year it's forecast at 1.9%. This demand is coming from China, India, and as with the world, the world grows and develops. So if you extrapolate those numbers from where we are today, the world needs 130 million barrels a day. More than 50% more than what it's producing today within the next 25 years. At the same time the world is being consuming more oil since 1985 than what it's been finding. It's been catching up by revising the reserves of existing fields. That simply cannot continue, and if you take a very conservative 6% decline rate on the existing 85 million barrels a day of production and assume we don't develop any new oil or find any new oil, which is obviously not correct, but then the production which we currently have will drop to 15 million barrels a day in that 25 year period. This basically means that we need to find over 100 million barrels a day of new inverted common oil. In my view, sitting where I am in the industry at the moment, and looking how difficult it is to find oil; the big oilfields have been found, I firmly believe that is not possible. Therefore, the only thing that can give is that something got to happen on the demand side. Today is 70% of oil consumption used in transportation. Whether we like it or not, people talk about alternative forms of fueling transportation, we haven't found a viable substitute at this point. Even if one looks at electricity or electrical cars, the huge costs in terms of transferring our fleet to electricity will mean that it will take years to be able to achieve that. So I do agree with the Peak Oil theory. The big question is when it occurs. Ultimately, if we do reach the Peak Oil then oil prices are going to go up and at some point it's got to have an impact on demand. The world's a very bright place; there's a lot of intelligent people around and somebody will find an alternative. That's in part, I think, driving the oil price, or part of the oil price, today.
posted by Marcel at 1:47 PM
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