From the August 14-September 10, 2006 issue of Canadian Business magazine

Jessica Ernst is a combative Alberta businesswoman with an unusual problem: she can set her tap water on fire. No kidding. After filling up a plastic pop bottle, the owner of Ernst Environmental Services, a well-respected oilpatch consulting company, can light a match and create a blue or yellow flame, complete with a rocket-like roar. Ever since she made the explosive discovery last November, the environmental-impact scientist has been asking a lot of questions about aggressive shallow-gas developments in booming Alberta.

Ernst now finds herself at the centre of a major resource controversy, as well as something of a folk hero. "She has been a lightning rod for rural Albertans, as well as a source of credible information," says Liberal environment critic, David Swann. Ernst has not only forced major groundwater investigations, but also prompted Alberta's leading oil-and-gas regulator, the Energy and Utilities Board (EUB), to temporarily suspend contact with her for alleged security reasons. The board's legal counsel, Rick McKee, now endearingly refers to her as a "pain in the butt."

From the October 9-22, 2006 issue of Canadian Business magazine

K

jell Aleklett, a perky and persuasive physicist at Uppsala University, talks with characteristic Swedish candour. As president of the Association for the Study of Peak Oil, he jokes that all the big "strawberries" in the world's oilfields have been thoroughly picked over. ("Peak oil" just means the end of cheap oil.) Fifty years ago, the world burned four billion barrels of oil a year and happily discovered lots of big berry patches — 30 billion barrels a year. Today, those figures are exactly reversed, which goes a long way toward explaining volatile oil prices and Sweden's determined plan to get off fossil fuels by 2020. "Money is not running the world," the jaunty global player likes to say during his talks. "Money is used to buy energy." Right.

Aleklett, whose first name (I kid you not) rhymes with Shell, can also be cheeky. Last year, for example, he told the U.S. House Subcommittee on Energy and Air Quality that the American people — just 5% of the world's population — shouldn't be gobbling up 25% of the world's oil production, because peak oil will probably start to hobble most economies by 2010. Aleklett spelled out another inconvenient truth: since 1900, not one country in the world has increased its GDP without a corresponding increase in oil consumption. He ended his talk by reminding the Yanks that Canada's fabulous and much-lauded oilsands was no lifesaver. Don't count on it, he said.

The Swede, who recently gave his berry-and-oil talk to the international Pulp and Paper Products Council in Vancouver, later backed up his contrarian conclusion with a 46-page report entitled A Crash Program Scenario for the Canadian Oil Sands Industry. The provocative analysis, all based on Canadian industry and government data, looks at the maximum that companies could squeeze out of the tarry sands in the near future, and asks whether this boreal smashing exercise would actually ease prices at global gas pumps.

Peak oil theory states: that any finite resource, (including oil), will have a beginning, middle, and an end of production, and at some point it will reach a level of maximum output as seen in the graph to the left.

Oil production typically follows a bell shaped curve when charted on a graph, with the peak of production occurring when approximately half of the oil has been extracted. With some exceptions, this holds true for a single well, a whole field, an entire region, and presumably the world. The underlying reasons are many and beyond the scope of this primer, suffice to say that oil becomes more difficult and expensive to extract as a field ages past the mid-point of its life.

In the US for example, oil production grew steadily until 1970 and declined thereafter, regardless of market price or improved technologies.

In 1956 M. King Hubbert, a geologist for Shell Oil, predicted the peaking of US Oil production would occur in the late 1960's.

Although derided by most in the industry he was correct. He was the first to assert that oil discovery, and therefore production, would follow a bell shaped curve over its life. After his success in forecasting the US peak, this analysis became known as the Hubbert's Peak.

• The amount of oil discovered in the US has dropped since the late 1930s.
• 40 years later, US oil production had peaked, and has fallen ever since.

World discovery of oil peaked in the 1960s, and has declined since then. If the 40 year cycle seen in the US holds true for world oil production, that puts global peak oil production, right about now; after which oil becomes less available, and more expensive.

Today we consume around 4 times as much oil as we discover.

If we apply Hubbert's Peak to world oil production we estimate that approximately half of all oil that will be recovered, has been recovered, and oil production may reach a peak in the near future, or perhaps already has.