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Oil reserves will peak within five years: rep -

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Oil reserves will peak within five years: report

The World Today - Wednesday, 29 October , 2008 12:28:00

ELEANOR HALL: A report to be released in the UK later today predicts that the world's oil reserves
will reach their peak in three to five years.

The report warns that this means political leaders will have to rapidly re-evaluate the global
economy's reliance on cheap sources of energy.

And as Jennifer Macey reports, local experts say Australia has already reached peak oil.

JENNIFER MACEY: The global economy is heavily dependent on oil, for transport, food production even
the plastics used in hospitals are made from oil.

But now a UK report suggests that the new discoveries of cheap easy-flowing crude oil, haven't kept
up with global demand.

A group of eight British companies including Virgin, Yahoo, the engineering firm Arup and the
energy company Scottish and Southern are so worried about peak oil they've formed a taskforce.

The UK industry taskforce on peak oil and energy security releases its report in Britain later

The editor of the report is Dr Jeremy Leggett a former geologist and oil industry advisor he's now
the executive chairman of a solar energy company called Solarcentury.

JEREMY LEGGETT: The time at which you reach the most you're ever going to produce and you start
going down the other side, so the world expects growing supplies of oil and actually what they get
is diminishing supplies, possibly rapidly diminishing and the way that will play out, is the third
global energy crisis.

And what our fear is, the eight companies in this taskforce, is that for many countries that will
not be experienced as an energy crisis, as bad as that would be, but an energy famine, because the
producers at that point start, you know, keeping more and more for themselves.

JENNIFER MACEY: The report makes a damning assessment of the ability and willingness of oil
companies to dig for new sources of oil. The taskforce did however ask the petroleum exploration
firm Royal Dutch Shell to contribute a chapter.

Shell says it expects oil production to flatten out by 2015 due largely to the extraction of
unconventional sources of oil such as tar sands. But Dr Leggett says this is an expensive and
difficult exercise.

JEREMY LEGGETT: Well this is the stuff in Canada and Venezuela where you've got stuff that isn't
liquid oil. The tar sands in Canada you have to pump really super-heated water underground to melt
the stuff before you can pump it to the surface.

So this is all very greenhouse intensive, it's also much slower than conventional oil production.

JENNIFER MACEY: However there are sceptics to the peak oil theory.

Dr Peter McCabe is the leader of Petroleum Resources program at the CSIRO. He says it's only 35 per
cent of the available oil reserves have been used so far.

PETER MCCABE: There was an assessment by the US geological survey, in which I was part of that
assessment, estimates that we've got 65 per cent of the world's conventional oil still remains, and
I think most of the major oil companies agree more or less with those types of numbers.

And on top of that is a lot of unconventional oil, already about 50 per cent of Canada's production
is from the oil sands.

JENNIFER MACEY: Trevor Powell is the president of the Geosciences Council of Australia. He says the
issue of peak oil is whether the world can produce enough oil cheaply to keep up with demand.

TREVOR POWELL: For example at the moment, the development of the Athabasca Tar Sands is going
through a boom time. But the issue of course, is that it's a huge engineering enterprise and the
rate at which you can produce the material is not at the same rate that you can produce oil from
conventional oil fields.

The concept of peak oil, is all about the rate of production, it's not that oil is going to run
out, it's whether you can produce enough to meet world demand.

JENNIFER MACEY: He says oil fields are depleting and that Australia has already reached domestic
peak oil. He says production in Australia peaked in 2000 and has been in decline ever since.

TREVOR POWELL: With current fields, we will continue to, production will continue to decline and we
will be reaching only maybe 20 to 25 per cent of our needs in 10 to 15 years' time. So it is an
issue for Australia.

JENNIFER MACEY: But the UK industry taskforce's report into peak oil says the scenario doesn't have
to be all doom and gloom.

Dr Jeremy Leggett again:

JEREMY LEGGETT: If the analysis is correct, the problem will hit us, oil supply will start to drop
very rapidly, and that will force governments to bring in renewables, sufficiently low-carbon
technology, all the things that are enjoying massive investment anyway.

And you know, that will then force us to deal with climate change in a way that the climate change
stimulus alone sadly, has so far failed to make us react.

ELEANOR HALL: That's Dr Jeremy Leggett, the editor of the UK Industry Taskforce report into peak
oil, ending that report by Jennifer Macey.