WASHINGTON -- Far from being a nearly exhausted resource, the world's oil reserves are three times bigger than what some popular estimates state, and peak global oil production is still about a quarter-century away, according to a new study by Pulitzer Prize-winning oil historian Daniel Yergin.
The remaining oil resource base is about 3.74 trillion barrels, according to a report released yesterday by Cambridge Energy Research Associates, which Yergin runs. That's more than three times the 1.2 trillion barrels that "peak-oil" theorists suggest.
CERA's report, titled "Why the Peak Oil Theory Falls Down," challenges an increasingly popular view that the world is about to run out of oil. On the contrary, CERA argues that the world is likely to begin running out of oil between 2030 and the middle of the century. Even so, CERA says, efforts are needed now to push that date back, such as new oil field discoveries, new technologies, energy conservation and alternative energy sources.
Peak-oil theorists warn that the world is on the cusp of a disastrous and rapid decline in oil production. A leading proponent of the theory is oil banker Matthew Simmons, who in the popular book Twilight in the Desert suggested that the world's top producer, Saudi Arabia, has entered an oil-production decline and will take the world down with it. Last month, Simmons told a forum that the world might have reached peak oil production last December.
The peak-oil theory has gained supporters since late 2004, when surging global demand for oil began tightening up available supplies and driving up world oil prices. The price hit $78.40 a barrel in July, but has fallen to less than $60 a barrel in recent months.
The CERA study debunks the so-called Hubbert Peak Oil Theory, first espoused in 1956 by geologist M. King Hubbert. Working at the time for Shell Oil Co., he predicted that world oil production would follow a bell-shaped curve in which production grows steadily until it peaks, followed by a rapid decline.
Hubbert was pretty accurate on the timing of U.S. peak oil production, coming within two years of 1970, the year experts now recognize as the peak of continental U.S. production.
But his theory failed to recognize that new technologies enabled reserves to grow over time. His theory preceded the exploitation of vast oil reserves in Alaska and the Gulf of Mexico.
That's why Yergin dismisses talk of peak oil.
"This is really the fifth time we've 'run out of oil,'" Yergin said in a teleconference with journalists yesterday. He recalled past predictions dating back to 1880 of an end to oil or gasoline production.
Yergin's views carry weight because he won the Pulitzer for his 1991 book The Prize, an exhaustive history of oil economics.
He and colleagues believe that the decline in oil availability will play out as an "undulating plateau," in which annual production produces a series of ups and downs, eventually peaks and then declines slowly.
"We see the undulating plateau existing one or two decades, rather than a sharp decline," said Peter Jackson, CERA's director of oil industry activity. He sees outright decline beginning no earlier than 2030 and perhaps after 2050.
Future oil supplies, said CERA, will be accessible by new technologies that permit drilling more than 7,000 feet below the ocean's surface or extracting oil from tar-like deposits in sandy soil found in western Canada.
"Ours is not a view of endless abundance of resources," said Jackson, cautioning that he doesn't want CERA's findings to "distract us from addressing real issues."
Another source of optimism for this energy-hungry world emerged from another report this week, this one a technical paper from the Los Angeles-based think tank Rand Corp. It ran 1,500 simulations of varied energy prices and technology costs to estimate future supplies of both renewable and nonrenewable fuels.
It concluded that up to 25 percent of the electricity and motor fuels consumed in the United States in 2025 could be produced from renewable sources, up from 6 percent today. For that to happen, the price of fossil fuels must remain high and the costs of producing alternative energy must keep falling.
"The renewables case could displace about 2.5 million barrels a day of petroleum products in the United States in 2025, or 20 percent of total consumption," the Rand report said.
Together, the two reports give hope that energy will be plentiful for another generation or more.
"I've never seen so much activity in terms of energy technology all along the spectrum," Yergin said. "I think the system is responding."