Some key points:
The oil sands are flavour of the month and their story is certainly beguiling. But I think the reality is that developing the oil sands is going to be difficult. For example, the thermal processes [the heating of the bitumen to allow it to be pumped to the surface] that work in the laboratory don’t always work in real life. There are going to be cost and execution difficulties in the oil sands. The oil sands are not just a big sand box with uniform oil-reserve quality throughout.
Re potential for big, new oil finds
it’s a hard row to hoe. The giant fields are largely discovered.
Do you think the world has reached peak oil production?
I do – we’re there or close to it. Mexico, the North Sea and possibly Ghawar [in Saudi Arabia, the world’s largest conventional oil field] are all in decline. The truth is the world is producing 30 billion-plus barrels of oil a year and is finding less than 10 billion. This is the worry.
Future oil prices
If we’re close to peak oil, what is your price forecast?
The price has to be high enough to hurt demand. It has to be rationed by price. There is no real demand destruction yet [with oil near $80 (U.S.) a barrel]. It’ll have to be at $120 a barrel, I think, before you’ll see that.
When the oil executives are saying things like this, you would hope that the world’s leaders are listening … you would hope.
By the way, re price. If demand was not squashed by a quadrupling of oil costs in the past seven years, why should a 50% additional increase be seen as likely to have a major impact?