Claims of Peak Oil's Demise Have Been Greatly Exaggerated

James Hamilton wrote a new post yesterday in response to Colin Sullivan's article and the recent "Peak Oil is dead" meme that's been floating around the media these past few weeks. It's important for a few reasons. It points out the fact that prominent voices in the optimist camp have been wrong in the past, and few people take the time to point that out. He examines the fact that we've shifted the talk to "total liquids" which can take the form of natural gas liquids and biofuels. Finally, Hamilton examines Saudi Arabian production and without speculating on the reason for Saudi cutbacks, he says this: "this much I'm sure about: those who assured us that Saudi production was going to continue to increase from its levels in 2005 are the ones who so far have proved to be dead wrong."

The rush to judgment seems to be based on the remarkable recent success from using horizontal fracturing to extract oil from tighter rock formations. Here for example is a graph of production from the state of Texas, one of the areas experiencing the most dramatic growth in tight oil production. In 2012, Texas produced almost 2 million barrels each day, up 800,000 barrels a day from 2010.

But Texas production in 2012 was still 1.4 mb/d below the state’s peak production in 1970, and I haven’t heard anyone suggest that Texas is ever going to get close again to 1970 levels.
— James Hamilton

I made it into the comment section myself to share one of my favorite historical documents on this topic, it's the 2005 New York Times article "The Breaking Point" that actually features both Matthew Simmons and Daniel Yergin. You'll note how dismissive Saudi representatives are of Simmons and his research. And in the article, Saudi oil minister, Ali al-Naimi (in 2005) told an audience that Saudi Arabia was embarked on a crash program to raise capacity to 12.5 mbpd by 2009 and this gem: "'I can assure you that we haven't peaked,'' he responded. ''If we peaked, we would not be going to 12.5 and we would not be visualizing a 15-million-barrel-per-day production capacity. . . . We can maintain 12.5 or 15 million for the next 30 to 50 years.''

As charts in Hamilton's article show, they never came close to 12.5... they've barely touched 10mbpd, and now, in response to US increases, may be forced to cut production even more.