By Ryu Jin
Staff Reporter
South Korea’s state-run oil firm claimed Monday that it would take at least 80 more years before oil is used up, dampening the so-called ``peak oil’’ theory, which has been gaining more currency amid high crude prices in recent months.
In a report titled ``Is the Era of $100 per Barrel Really Coming?’’ the Korea National Oil Corporation (KNOC) also argued that it will be difficult in the foreseeable future for people to see oil prices beyond $100.
In the peak oil theory, advocated by many scholars, the world’s petroleum production rate is meant to reach a maximum level at a certain point in time, after which the rate would enter terminal decline.
Supporters of the theory argue that, if the global consumption is not mitigated before the peak, the availability of the conventional oil will drop and prices continue to rise, perhaps dramatically, due to the finite nature of the natural resource.
First used by geoscientist Marion King Hubbert in 1956 to predict the U.S. oil production, the model has since been used to predict the peak petroleum production of many other countries and has also proved useful in other limited-resource production domains.
However, some critics argue that the old theory is flawed since it did not take into account several variables such as the discovery of new oil reserves. KNOC also described the claim of a possible oil exhaustion within 40 years as simply ``nonsense.’’
``We have some 1.2 trillion barrels of oil at the moment and we produce some 30 billion barrels a year. So, a simple calculation could lead us to a conclusion that the oil would dry up in 40 years,’’ the KNOC said in the report. ``But this is a nonsense, almost comedic.’’
While the peak oil is concerned with the amount of oil produced over time, the KNOC added in the report, the amount of ``recoverable reserves’’ is important since this determines the amount of oil that could potentially be extracted in the future.
Beside conventional crude oil reserves, the report went on, there are other forms of oil such as liquids extracted from mined solids or gasses such as tar sands, oil shale, gas-to-liquid processes or coal-to-liquid processes.
``If only 10 percent of them are recovered, the non-conventional oil reserve would top 3 trillion barrels, which theoretically means that it would take at least more than 80 years before exhaustion,’’ the report said.
In the meantime, the KNOC cited such structural causes as the lack of supply capability, increase of demand for transportation in developing countries and the weak U.S. dollar as well as the OPEC’s policy to reduce production as causes of the high crude oil prices in recent months.
But the state oil unit predicted that such temporary factors would not serve as a fundamental cause to bring about the era of $100 per barrel in a true sense in the coming years.