The current edition of Peak Oil Review includes an interesting commentary by Chris Nelder he wrote after attending the 2009 Offshore Technology Conference in Houston. He noted that much of the discussion was on policy and not technology, writing that oil and gas industry executives... ...discounted the potential of renewables and made overblown claims about how technology will always provide more oil. They clearly favored a political approach to the climate change issue over objective scientific analysis. I heard not one word suggesting that oil production may have in fact peaked, nor any mention of decline rates.

In my experience, the green side of the debate is no better. They seem to have as little appetite for the facts on fossil fuels as the fossil fuel industry has for objective evaluation of renewables.

What I see is both sides of the debate retreating to their corners, throwing up walls of propaganda, and demonizing the other side. It is most emphatically not a neutral and balanced dialogue. It is the art of political compromise, not data, which continues to drive policymaking.

The oil and gas industry remains mired in denial about the peak and decline of its products. Renewable advocates are still lost in a dream about quickly replacing fossil fuels with green energy and an infrastructure that runs on it.

Neither side trusts the other.

In response, Nelder proposed what he calls Inconvenient Truths, which are listed below for you edification and debate.

We have extracted nearly all of the world’s easy, cheap oil and gas, and now we’re getting down to the difficult, expensive stuff. As a result, global oil production has for all intents and purposes peaked. Natural gas production will also peak in 10 to 15 years. Neither technology nor high prices will change that. Therefore we must begin to replace those fuels with renewables, and use what remains much more efficiently, with the expectation that most of the world’s oil and gas will be gone by the end of this century.

Drilling for oil and gas in the OCS and ANWR must and will be done; our need for those fuels is simply too great. An additional 2-3 mbpd will put a dent in the roughly 12 mbpd the US now imports, but if we drill for it now, the first wave won’t hit the market for 10 years or more. By that time, it probably won’t compensate for the depletion of conventional oil in North America, nor will it do much to reduce prices. But it will be crucially necessary, and producing it won’t make an ugly environmental mess.

Renewables are clearly the long-term answer, as is an all-electric infrastructure that runs on its clean power. However, it will likely take over 30 years for renewables to ramp up from a less than 2% share of primary energy today to 20% or more. They probably won’t even be able to fill the gap created by the decline of fossil fuels. Oil and gas currently provide about 58% of the world’s primary energy, and they will remain our primary fuels for a long time to come. It will take many decades to reconfigure our transportation systems to run on electricity. It will take decades to fix our leaky, wasteful buildings so that they doesn’t need as much energy to begin with. None of the solutions will come quickly or easily.

Neither renewables nor fossil fuels nor nuclear power alone can bring “energy independence.” Indeed, if independence means isolating ourselves from the rest of the world’s energy commerce, it might not even be desirable. We must pursue all sources of energy immediately and aggressively if we hope to meet our future needs. Pitting one against another is counterproductive. Nuclear power will not grow significantly in the next several decades, as nearly all of the existing reactors will need to be decommissioned within the next 20 years, and a new generation of reactors must be built to replace them. A renaissance for next-generation nuclear energy may be possible, but only after we have confronted the crises of peak oil and peak gas. It may produce no net reduction in emissions at all.

Climate change must be confronted via a unified policy on emissions and energy supply. In our zeal to control emissions, we must take care not to squelch the production of the oil and gas that constitutes the majority of our energy supply, at least until we have something to replace it. To do so could have unintended and paradoxical consequences. Rather than emphasizing the uncertainty on climate change data, and fomenting fear about the cost of mitigation, the fossil fuel industry should submit to neutral scientific analysis.

We should use accurate and unbiased models of the future growth and decline curves of all forms of energy for policymaking--models based on historical data, not faith. If the data says we’re likely to recover another 1.2 trillion barrels of oil worldwide and no more, then we should not assume that future drilling and technological progress will somehow turn that into 3 trillion barrels of recoverable oil.

Carbon emissions will soon come with a price. Drilling the remaining prospects for oil and gas will be expensive. Deploying thousands of wind turbines and solar systems will be expensive and slow. Replacing millions of inefficient internal combustion engine vehicles with electric and plug-in hybrids will be expensive. Rebuilding the nation’s rail system will be hugely expensive. In short, all the solutions going forward will be expensive.

Nuclear Power and the Bottom Line

The issue of nuclear power raised in point seven came up during a recent family discussion. My younger brother was in town and over dinner at my parents -- we grilled Omaha Steaks, of course -- we got into a discussion about the future of energy, agreeing to much of what Nelder is proposing above, with the exception of nuclear power. While my brother thought it was important that we build more nuclear power plants, I argued that it wasn't going to happen and not for the usual lefty, anti-nuclear reasons like weapons proliferation, reactor safety and radioactive waste storage, but for economic ones. ork City with Dr. Robert Bell. Over dinner at Cognacs just off Time Square, the chair of Brooklyn College’s economics department and I talked about a wide range of 'green' technology topics, including nuclear power. Dr. Bell spends half his time in Paris and told me about a conversation he had with one of France's leading scientists who confided in him that despite reports that nuclear power plants have high availability factors in the 80-90% range, the truth was they are much closer to only 50% availability, because the slightest malfunction can force a temporary shutdown as a safety precaution. The more time a nuke is off-line, the less it is earning its keep and the more expensive is its product: electricity. It was almost a year ago that the Wall Street Journal reported on the rapidly rising costs of nuclear power plant construction.

I shared with my brother comments that David Freeman made to me during an interview I did with him in 2007. Freeman said that when he was the head of the Tennessee Valley Authority or TVA, he had to shut down nuclear power plants then under construction because of their huge cost overruns. They were simply becoming too expensive to operate. That interview stimulated a lot of reader comments, but the most compelling in my view was the final one by David Meldrum, who quoted Amory Lovins as once stating... "Well I take markets seriously and I notice that there isn't a single nuclear project in the world with a penny of private capital at risk. They're all bought by central planners and they're paid for one way or another from the public purse. In fact in this country last year the president got through congress a new bill that subsidized the next six nuclear plants if any, by roughly their entire capital costs. Standard and Poors put out two reports saying it didn't matter much. It wouldn't much improve credit ratings of the builders. So my conclusion is, it's kinda' like defibrillating a corpse. And the reason that micropower and efficiency have taken at least half the world market in electrical services is it costs a lot less than nuclear, coal or gas, big power plants. They have less financial risk. That's the kind of thing that private capital likes to finance." The irony here is that it is the supposed 'free market capitalists' who are, in effect, calling for socialist-like programs to subsidize a costly, potentially dangerous, expensive source of electric power that neither banks nor insurance companies want to finance or underwrite on their own. There may be a few centrally-managed economies like China and India that will attempt to build nuclear power plants, but as Dr. Bell cautioned, the first Chinese power plant to have a serious operational accident will be the final nail in this zombie's coffin.

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