Former CEO of Talisman Energy: Peak oil is 'here or hereabouts'

From ABC Radio, via Energy Bulletin.

MARK COLVIN: Meanwhile, 'peak oil' - the idea that the world's supplies of oil have either peaked or will soon start declining, has suddenly gained new respectability. It's been derided by the big oil companies for years, but at the end of last week came a turnabout. The Chief Executive of the oil giant Royal Dutch Shell, Jeroen van der Veer put out a paper on Friday forecasting the end of easy oil. Mr Van der Veer said the result could be a worldwide scramble to mitigate climate change.

Dr Jim Buckee has just retired as President and CEO of Talisman Energy, a major independent Canadian oil company with a market capitalisation of $25-billion. On the phone from Perth, Dr Buckee told me that 'peak oil' was now either here, or very close.

JIM BUCKEE: It is the underlying decline of the world's major fields that is the dominant driving factor here. If you think that at the moment the world is consuming 30-plus billion barrels a year of oil and is finding seven or eight billion barrels a year. And this state of affairs has been going on now for 20 or more years. It's obviously unsustainable and the world is increasingly drawing on the bigger older fields. You couple that notion with the irreversibility of decline and you've got a very alarming picture.

MARK COLVIN: Now this was a very unfashionable notion among the oil companies until pretty recently. But just last week the Chief Executive of Shell came out and said that easy oil was coming to an end. Did that surprise you?

JIM BUCKEE: I think it was only a matter of time before one of them had to say that and the pronouncements of the majors are inscrutable at best and I believe they often have a very political overturn.

MARK COLVIN: What are the politics there?

JIM BUCKEE: I think it's pretty alarmist if one or more of the worlds largest oil companies say, listen guys, supplies of oil are gonna get tight. The ramifications are immense.

Always the line of the major oil companies, Exxon, Shell, BP has been, 'there's plenty of oil, you know technology will overcome shortages; we'll find it'.

They changed a little bit to, 'there's plenty of oil, but access is difficult' and then this is a change again saying, 'well actually, it looks like it's finite and you know we're looking over the hill'.

MARK COLVIN: Global warming has brought a worldwide debate as to what to do about it, centring around, whether there should be a carbon tax or cap in trade. Is this peak oil going to just force everybody's hand anyway because the oil will run out?

JIM BUCKEE: Oil running out is sort of wrong terminology. It will continue to produce in large quantities, but increasingly less quantities at higher prices. So we'll still be using a lot of oil in 20 or 30 years time, but it'll be rationed by price to the most essential uses of oil and that's generally transportation.

MARK COLVIN: So we won't be able to make plastic bottles out of it to put water in?

JIM BUCKEE: Well…quite right.

And in passing of course we pay more for water than we do for petrol at the moment, which is insane. But that sort of thing will rectify.

So another point here is that the amount of carbon generated by hydrocarbons will be nowhere near that envisaged in e.g. the Stern report.

MARK COLVIN: How high can oil go now?

JIM BUCKEE: I don't think that really we've seen any rationing of consumption by price. We did see it in '79, '80 and that was largely because of the sudden quadrupling of the price of oil. Now we've seen a relatively gentle approach and people have accommodated it.

So I would say you need to see oil in the $150, $200 a barrel range before it would have any particular impact on demand.

MARK COLVIN: When do you think we'll reach that?

JIM BUCKEE: The situation is always very tight in the fourth quarter because Northern Hemisphere demand increases; it's the sort of highest quarter for demands. So I'd say we'll see stress again in the third and fourth quarter of ‘08.

MARK COLVIN: Do you think it'll get to $150, 200 by then?

JIM BUCKEE: I think that's the number that's required to ration demand and I'd say so yes.

MARK COLVIN: That's really racing up on us.

JIM BUCKEE: Well I think the whole situation it's here. It's snuck up on us without any people really paying attention to it. And it's very important. I mean things like layouts of cities and future plans all have to take this sort of thing into account.

I mean if you look at a city like Los Angeles, if the supply of gasoline became tight, it'd be a big problem; how to run Los Angeles and the same problem, smaller in lots of other places. Where you have work at point A, residence at point B, shops at point C and they're all miles apart.

MARK COLVIN: You'd have to include most of Australia's big cities in that wouldn't you?

JIM BUCKEE: Yes I think so. But I mean Perth isn't quite there yet I don't think but yes in general it ignores the distances, yes.

MARK COLVIN: Dr Jim Buckee, former president and CEO of the Big Canadian independent oil company Talisman Energy, on the phone from Perth.

The SA Liberal Party is considering electrification of the rail network as a policy. This is a progressive step. The Labor Government says there is no money for that (but there is money for a desalination plant).

It would help if the feds would divert money into electric rail and tram infrastructure instead of highways and tax cuts. Would be short term economically neutral and long term very positive.

Too many powerful pro-car lobby groups.

There's just no public debate yet in Australia, despite the docos like Crude and Crude Awakening getting a showing on SBS or ABC.

I emailed the SA govt after watching the Tour Down Under and suggested we should use our motor race track for an EV sports car racing event. The Tesla is now hitting the roads in USA, the Lightning will this year in UK, and enthusiasts' all electric sports cars like X1, ThoRR and others are viewable on YouTube out accelerating Porsches, Ferraris, Corvettes etc.

Putting up Petrol taxes would be hard politically, but making the sales tax on new vehicles a sliding one related to petrol consumption may be politically doable. Could even give tax rebates for hybrid cars.

I raised the issue of peak oil with my brother who is a senior bureaucrat for the Victorian government. This was 4 years ago. He said he was well aware of the issue but the government could not recognize the problem because of the very nature of politics. I am of the opinion that no matter how high oil goes governments will not intervene ever. Considering they have had forewarning of this for many years now perhaps they should be held accountable for their negligence. Essentially they are misleading the public for the sake of their own political lives. My brother knew beforehand that the issue was too hot for politicians to handle, so for the sake of his career he chose to say nothing. After all, it is a matter of survival, so the politicians best course of action is to do nothing until the public demand it.

PRT can be privately financed.

The next story after this one on that episode of PM was talking about the rising cost of food. Energy input to farmers was glossed over as just another increase in cost as was increase in fertilizer. No links, no deafening sound on the other shoe dropping. But we got a mention so that is a good thing...

Your points on cost of oil affecting food is a huge story that is getting very little coverage.

Here's an interesting side note regarding the rising cost of food. When inflation figures are released in the US, they do not include rising cost of food or fuel. That's considered core inflation and is only considered by the federal govt. as anectodel, and rarely reported. Tell a family of four trying to pay all the bills, that the rising cost of food or gas to get to work is anectodel.

But as much as this country is struggling to pay for higher food prices, undeveloped countries are really getting hit hard. We get information about it on websites like this one about peak oil, but it's not covered on TV. Recently the Haitans started eating yellow mud because they can no longer afford rice. The Monks that protested in Burma did so primarily due to higher fuel prices, but that was not reported on TV. In Mexico, people started rioting due to prices of tortillas being increased to twice as much due to higher fuel prices to process them, and the mex. govt. stepped in to subsidize the tortilla industry to keep the old prices. There are dozens of more stories, but let it suffice to say, that as crude oil extractions continue to plateau while demand increases, and farmers can make more from producing food used for fuel, then millions of people will be unable to pay for increased prices of food and either go hungry or starve.

This is the early signs of the big crash, that will last for many years. It won't be a quick disaster, but rather an ongoing downward adjustment of our economy and reduced quality of life.

I'm not sure it is being completely ignored. Perhaps in the US it is, because everyone is on the ethanol bandwagon in an election year, just like the Emporer's New Clothes. Here was the cover story of the Economist, unlike Newsweek, which might have a US cover and ROTW cover, this was on the US bookshelves:

It is pretty much guaranteed that whenever anyone rants about how the MSM is completely ignoring an issue, you can find several MSM stories on the first page of Google about that issue.

About half the time people rant that the MSM is ignoring an issue, they link to an MSM story about the issue.

Seems to be that "scramble" is a euphemism, and not about warming.


To put the whole Climate Change issue into perspective vis-a-vis the Peak Oil Crisis, everyone needs to ask themselves, their associates, all sitting elected officials and those seeking office, especially the office of President of the United States, "What is more threatening in both the long and short terms, a beneficial 1 degree F rise in average world temperatures over the past 100 years, or a 1 percent decline in world oil production over the last 100 weeks - with steepening declines forecast? Furthermore, can our economy better deal with declining fuel inventories in an environment of persistent warming, or in an environment of declining average temperatures over the next several decades, the most likely, and the most serious, scenario given the highly reliable solar inertial motion (SIM) model forecasts of climate change?" Everyone is going to make their Kyoto targets whether they plan to or not, so we all need to let go of the Global Warming boogy-man. It does not matter, and it is foolish and arrogant to think that somehow humans can change the climate.

Aren't you trying to have it both ways here ? On the one hand you say the temperature is rising, but it doesn't matter because we will supposedly all meet our Kyoto targets anyway. Then you deny global warming is happening at all. Which is it ?

With regards to the first claim, don't you think declining crude oil supplies could meet a hell-for-leather coal to liquids, tar sands, heavy oil and shale oil development boom ? And with the low EROEI of some of these, we end up with far higher carbon emissions for the same, or even less, net output than we have today.

Some fact based debunking of global warming rather than just random assertions would be nice too (care to give us some links to your "highly reliable" climate change models)...

as chance would have it there is a nice article in The Oz today about the Goyder Line.

Apparently the "beneficial warming" may have moved Goyders Line south, with the result that hundreds of more wheat farms are potentially unviable.

Goyders Line in South Australia marks the limit of "reliable rains" for wheat production. Goyder determed this ~150 years ago. Also some interesting history about opportunistic land grabs and pooh poohing of Goyders 'scientific' advice... needles to say, it ended in tears.

Maybe of interest for PeakEnergy.

Thanks SP - I hadn't noticed that one - very interesting (especially for those still pushing the grain ethanol wagon)...

Even Matt Simmons is now saying peak oil is the bigger threat than global warming. That view will grow.

I think it is very encouraging that CEO's of large IOC's are coming forward to acknowledge PO. I hope that sooner, rather than later, this will help to raise public awareness, which in turn might motivate our political leaders to tackle this serious issue. There are too many discouraging crisis unfolding at an ever increasing rate and I can only hope we find a way to deal with them. Thinking that it is "too late" achieves nothing, even if it is true.

As to jjauregui's comment that "we all need to let go of the Global Warming boogy-man. It does not matter, and it is foolish and arrogant to think that somehow humans can change the climate", I find this remark extremely misinformed and simply wrong. Humans are changing the climate. This is no longer in dispute within the scientific community. And although we should all be very concerned over PO, climate stability must be our priority even as we seek to mitigate this crisis. After all, what is worse, losing our energy intensive way of life or losing the integrity of our biosphere (read - losing our lives). While PO should reduce CO2 emissions - most climate scientists agree that we have perhaps less than a decade to act in significantly reducing GHG emissions if we are to avoid climate catastrophe - I'm afraid that as oil declines we will use more and more coal to compensate. This would be disasterous and I hope we as citizens demand that our leaders instead focus on renewable energy and sustainable living to meet the challenges PO presents.

jim,A building materials chain Placemaker in New Zealand thru the dist. Matrex Cold Patch is sell a nanotech coating that is water based that at 5 mil dry thickness has a 60 degree temperature block (paintable insulation)called Nansulate.I've used it in my house that was built in 1927.I'm about 3/4 done on interior and we've dropped our heating and cooling bill about 30% and that is with heating and cooling an extra 450 sq ft of upstairs rooms we normally don't heat or cool unless we have company.But I wanted to see how it preformed.I'm a painter by trade and I like to use a new product before my customers.They have being using Nansulate to spay the underside of roof deckings in the attic and getting a 40-50 temp drop.The company has also stated they are releasing a epoxy base product for marine and oil and gas etc reducing the CO2 emissions from a home by painting is a pretty simple solution plus the added reduced energy bill and even if someone doesn't believe in GW I would think lower energy cost would "Foster" a for researching product Nansulate from Industrial Nanotech.I'm from Kansas USA you and yours take care.

i checked out the referenced website, and have a ?, why do they report the results in terms of temp drop or gain? do you have a figure for r value ?

the site claims a 30 deg f average temp gain. well if my ceiling is at, oh let me see 65 deg f, and i want the house at 72 deg f, what good does a 30 deg f temp rise do me ?

If you do a little digging in the site the comparison of a K-value as how fast heat passes thru the product compared to other insulation the lower the number the better spray foam best on market .047 Nansulate .017.One of the test on our house is the north bedroom 5ft across the hall from our bedroom that is my wifes dressing room it has always in the winter 5-8 degrees colder than our bedroom but after coating you can't tell any difference.And now since the 2 bedrooms and bath across the back of the house have been coated it's warmer back there than in the front where the thermostat is located a complete reversal from last yr.If you want numbers I'm not the guy to ask I just know what has worked in this old house from 1927 with no insulation in the side walls.

Opinions, based on much study: I believe we will have BOTH peak oil and global warming. As others have mentioned, although oil will become scarcer, we will continue to use fossil fuels - there is plenty of coal, and there is the messy and global-warming and low-energy-production tar sands and oil shale. So global warming will happen, while oil becomes harder and harder to obtain. Lack of natural gas and oil will also mean difficulty fertilizing our depleted soils, and difficulty moving food around. Plus, biofuels take away farmland and forest - a bad path!

You can read a variety of articles and blog entries on this topic at

The best way to minimize this negative double threat is with true renewables. These are primarily wind, photovoltaic, tidal, and wave power. Unlike nuclear and all the others, they do not create toxic waste, they use the unlimited and freely available resource of sunlight, and every country has sun and some wind, at the least.

So, what is wrong with these renewable, wonderful-sounding energy sources? It seems the big companies worry about maintaining control with renewable sources that anyone can set up. Towns can set up their own windmills and not need a large power plant. Individuals can set up small vertical windmills and photovoltaics. My question is, will the public be smart enough to push the planet down that sustainable path, or will coal/oil/nuclear/natural gas fool us and back us into an awful corner in 20 or 30 years (and poor countries way before then)?

You may have seen the new ad being run on CNN by API. It contains some numbers that makes my (our?) ears burn. It may be worth an outright challenge. The public certainly deserves clarification!

API begins softly enough, by claiming the oil and gas business has a relatively low to middling return on investment. I believe they use 8.2%. They then claim "$1.25 trillion has neen invested in the search for new resources since 1992." These selected numbers are clearly only statistics in the sense of "lies, damn lies etc..." No mention, of course, of stock buybacks: Jim Buckee's company Talisman may be Canada's biggest buyer for its own underperforming shares. This is why I chose his post for this comment.

API's final statement just can't be left unchallenged: "We will need 50% more oil and gas by 2030." To state a high demand case without any reference to supply is ridiculous, verging on fraud. The omission allows API to leave viewers with the impression that increased oil profits (presumably hand-in-hand with solving the usual laundry list of industry complaints; ANWR, pesky environmental laws, sovereign supplier problems etc...) can actually lead to this outcome.

IMHO, the API is reminding a new administration exactly how perilously addicted to imported oil Cheney's White House will leave a great nation. Is the API telling them the golden goose could use more and more of its eggs for purposes other than producing more eggs if it doesn't get what it wants from its main "customer"?

Exxon Mobil just released news of $40+B in quarterly profits this morning. Another new record. This is more than high stakes. The issue of stock buybacks versus exploration expenditures and, especially, domestic energy diversification looks more like end-game. No amount of hand-holding, sword-dancing or butt-kissing with the friendly suppliers like the KSA can change geological and sovereign facts of life on the other side of the petro-hill.

I'd love to hear Mr. Buckee as well as other oil drummers opine on the API's shameless misuse of selected statistics with the general public. In addition, does anyone know exactly where these Newspeak ads are running? If the API is only running this ad in US markets, the implications regarding access to overseas oil and/or demand destruction are scary eg. Key aspects of both World Wars. Does defending Mr. Cheney's version of "the American way of life" justify wars of aggression? Is US military power deployed to protect supply lines all over the globe? Talk about diminishing EREOI!

Ironically, the API's irresponsible and self-serving propaganda has the indirect effect of supporting the likes of Iranian rent-a-mobs and their trademark death chants. Coming from the API, the suggestion that 50% leaps in oil production are conceivable (not to mention carbon ceilings) when even CERA is backpedaling is nothing short of seditious. Sorry, Dick. We know who your friends are. It's come down to this: Diversify or die, America.

I'd love to hear Mr. Buckee and other oil drum members opine on the API's shameless use of "numbers". While we're at it, I am surprised to have not found any mention of Scientific American's cover piece on Mega-Solar last December. Admittedly, I've been pretty busy lately but but it sometimes seems Oil Drum is dominated to the point of paralysis by "apocalypticians"? Prove me wrong. Please.

July1406 you are not wrong. The shameless use of numbers produces the "apolypticians". They are not above it themselves as they use fallacious arguments like EROEI that feed the doom. It is the struggle between fallacy and truth that makes TOD interesting. Try to overlook it (or correct it) as this is a great site anyway.

Correction: ExxonMobil's profits and the fog of large numbers.

I wince when people, especially newscasters, confuse million with billion when reporting on large numbers, like those of the API. There's a big difference, three orders of magnitude. It doesn't help that the UK still has a different (smaller) billion, right?

As it turns out, I misheard an earnings report on CNBC while writing my comment incorrectly. I don't have enough Exxon shares to really care...LOL Nevertheless, I erred in reporting $40B (almost as much in earnings - not cash flow - as todays MS/Yahoo bid!) as quarterly rather than annual earnings in an "exceptional" year. Or is this too big a number to really make a difference?

The experts get a lot of rope dealing with these kind of numbers, especially with the general public. Scientists are reduced to using shorthand like orders of magnitude. Surely this situation is ideal for the spinmeisters, who more or less take that rope and fashion it into a bullwhip with regard to elections and public policy. If they are really special interests...we have a problem.

What is the result? Deficits, war budgets, massive numbers like energy consumption, buybacks and reinvestment - even those profits - are simply lost in a smoke screen. The fog of...say what? Like numbers that apply to outer space, very large numbers with critical terrestrial (and political) implications lose traction. This applies in spades to the current housing debacle.

Why does this matter? We are just about to get swept into a Presidential campaign that is surely the last historical gasp of the cornucopians and the "iron triangle". Except for some small skirmishes in the Carolinas, the ruthless propaganda machines have so far held fire. Waiting to see the whites of many eyeballs.

Hey practical. I'm a simple fellow: EROEI doesn't sound like a fallacy, especially when its attached to price tags and share buybacks. How so then? It actually sounds more like the old farmyard song - and has as much relevance to the average schmoe. And don't "apolypticians" inspect our gastric XRays?

July1406 was my 50th birthday. It marked an interim peak on our plateau. This reminded me that my lifespan may have managed to mark and straddle the peaking process with remarkable accuracy. To mark the occasion, I decided to get active in our Montreal Peak Oil Awareness group. Gee whiz, its the least a son of the fifties can do. Great forward planning. Thanks Mom and Dad!

I'd love to hear Mr. Buckee and other oil drum members opine on the API's shameless use of "numbers". While we're at it, I am surprised to have not found any mention of Scientific American's cover piece on Mega-Solar last December. Admittedly, I've been pretty busy lately but but it sometimes seems Oil Drum is dominated to the point of paralysis by "apocalypticians"? Prove me wrong. Please.

I agree with your comments about the API and their PR campaign.

I would guess that Scientific American's "Grand Solar Plan" got a mention in a Drumbeat. I know I did a post on the subject at my own blog.

Surely (Stuart) Staniford's recent post on solar power that initiated so much discussion earlier in the week shows that TOD isn't paralysed by apocaphilia ?

At the end of the day, I think a wide range of views are aired here...

Sometimes you counts the votes and sometimes you weighs 'em. Energy and Capital just came out with some numbers regarding the liquidation of peak oil. If they are correct, the total for Exxon alone is over $300B (by memory...). This would mean $1.25 Trillion spent on exploration and development is by far the lesser sum for the industry as a whole since 1992. I agree that a range of views are represented and that is all to the good. For example, I was surprised to see my original comment provoke a comment that EROEI is a myth! I'd like to see that case explained in detail.

Thanks for the thread and for Friday night. It's a good one. I've been too busy to really delve TOD lately but don't think the Sci Am article made Drumbeat. It should, shouldn't it? Too late?

We have been dealing with group dynamics (and paralysis) with our new Peak Oil Awareness group here in Montreal.

I thought I'd heard all the perpetual motion schemes. Apparently, some people think human beings can power commuter trains using hand flatcars. It took a long time to explain. I wonder why?

There was some discussion amongst the editors when it came out about a full post being done on the subject, but the volunteer author seems to have run out of energy...

I'm sure we'll see more posts on large scale solar power adoption in future anyway.

Upon review, the reference is Brian Hicks, Feb 1/08 and Exxon's share buyback number is $30B/year. Say...what? My recollection may not be too far off!

The post for the CNBC Simmons interview on which this is based is

We'll probably see this interview posted here. Share buyback versus reinvestment, esepcially in domestic energy, issue goes right to the heart of these issues, does it not?