Wed Oct 17th, 2007 at 05:27:40 AM EST
Following in the steps Lord Oxburgh of BP, Jim Buckee, the astrophysicist PhD and retired CEO of Talisman Energy has decided to share some of his feelings of our current energy situation, including the oil sands, Peak Oil, climate change, and his greatest regret.
Diary rescue by Migeru
Companies with oil sands exposure have outperformed conventional oil producers such as Talisman in recent years. Why did Talisman avoid the oil sands and do you regret the decision?
Not particularly. The oil sands are flavour of the month and their story is certainly beguiling. But I think the reality is that developing the oil sands is going to be difficult. For example, the thermal processes [the heating of the bitumen to allow it to be pumped to the surface] that work in the laboratory don't always work in real life. There are going to be cost and execution difficulties in the oil sands. The oil sands are not just a big sand box with uniform oil-reserve quality throughout.
The oil sands are not a saving cheapo panacea despite the huge resource base, if anyone still had that faulty idea.
Talisman has always promoted itself as an exploration company as well as a developer and producer. How much oil did you actually find?
I would have preferred our exploration to have been better. But it's a hard row to hoe. The giant fields are largely discovered.
While this is well known to a lot people interested in energy, it's virtually unknown among the public, and also among astoundingly many people who actually know anything about energy issues.
Do you think the world has reached peak oil production?
I do - we're there or close to it. Mexico, the North Sea and possibly Ghawar [in Saudi Arabia, the world's largest conventional oil field] are all in decline. The truth is the world is producing 30 billion-plus barrels of oil a year and is finding less than 10 billion. This is the worry.
It indeed is. It's quite interesting that a former CEO of a big oil company has come out as an early peaker, as even most people in the industry now seem to be accepting Peak Oil, they usually prefer pushing it away, 10 to 20 years out.
And while it is obvious even to the blindest that the North Sea and Cantarell are in decline, the mention of Ghawar sends a chill down my spine. We really don't want Ghawar to start declining for at least another decade.
If we're close to peak oil, what is your price forecast?
The price has to be high enough to hurt demand. It has to be rationed by price. There is no real demand destruction yet [with oil near $80 (U.S.) a barrel]. It'll have to be at $120 a barrel, I think, before you'll see that.
It's very interesting, and scary, that he mentions demand destruction, not substitution by alternative supply, as the thing that will help markets clear.
That is, the big thing won't be that we will replace oil with other stuff but that poor people will have to go without.
You've been called a climate-change denier. Fair label?
I'm not a climate-change denier. The climate changes all the time and the question is what causes it. It could be caused by changes in sun activity - we don't know for sure. It has been warmer in the past. Calgary's hottest year was not in the last decade. It was in 1927.
Now that you've stepped down as CEO, what are your plans?
I've got a lot of interest in energy demand and supply, or lack of supply, which is a big worry to me. I'm a big skeptic of the anthropogenic global warming story.
I'll do some work on all that.
I'll be generous and assume this is just an effect of his contrarian personality.
What is your biggest regret?
I have always been a big believer in the oil price going higher. I should have pursued acquisitions more aggressively than I did, because the supply situation is proving just as tight as I thought it would be.
He is not the only one with that regret...