Latest news with #peakOil
National Post
16-05-2025
- Business
- National Post
Jamie Sarkonak: Of course Steven Guilbeault would cling to the myth of peak oil
The first notable act of our newly-minted culture minister, Steven Guilbeault, was to recite to media scribes the myth of peak oil. Asked whether pipelines would continue to be a disruptor to Alberta-Ottawa relations, he replied: Article content Article content 'The Canadian energy regulator, as well as the International Energy Agency, are telling us that probably by 2028, 2029, demand for oil will peak globally and it will also peak in Canada.' Article content 'So… before we start talking about building an entirely new pipeline, maybe we should maximize the use of existing infrastructure.' He went on to claim that the Trans Mountain Expansion Project (TMX), which came online in 2024, was running at only 40 per cent capacity. This was wildly incorrect: in 2024, TMX ran at 77 per cent capacity, and that share is projected to grow over the years to reach 96 per cent in 2028. Article content Article content As for peak oil, Guilbeault was also very likely wrong. For years, activists have claimed that the highest volumes of oil consumption were just over the horizon, only to be proven wrong time and time again. Just like how the deadline on COVID restrictions of 'two weeks to flatten the curve' was stretched to two years, the impending decline of oil constantly moved farther and farther out. Article content The theory was first put forward in 1956. Geologist and Shell researcher M. King Hubbert put forward a paper predicting the beginning of the end of U.S. oil production somewhere between 1965 and 1971. This was a fearsome prospect because life in the developed world was dependent on cheap, readily available energy, and its absence (and subsequent increase in price) could reverse hard-fought economic progress. Article content Article content For a time, he appeared to be right: when the early 1970s hit, oil production in the United States began falling slowly — but the bottom of this trough was hit in 2006, and U.S. production surpassed historic highs around 2014. Article content Article content Globally, Hubbert predicted a production peak for 2000. In reality, production hit what is now a mini-peak in 1979, sinking to early '70s levels during the early '80s — but it later picked up speed and steadily climbed over the years. No ceiling was hit in 2000; production kept on rising. It did hit a trough in 2020, but that was due to worldwide COVID shutdowns and the price shock they caused to oil contracts. Article content Had technology never advanced past the achievements of the 1950s, Hubbert may well have been proven right. But humans continued to innovate and eventually found new ways of extracting harder-to-reach hydrocarbons from the earth's crust. Article content Doomsday predictors continue to be fooled by humanity's ability to improve technology and find new ways to consume. 'Peak Oil Production May Already Be Here,' read one 2011 headline in Science. One 2005 paper sponsored by the U.S. government laid out a number of other failures following Hubbert: an Iranian oil executive thought 2006, a California Institute of Technology vice-provost thought 2010 or earlier, various oil company geologists predicted somewhere between pre-2009 and 2020.
Forbes
11-05-2025
- Business
- Forbes
Peak Oil In America: 'Drill, Baby, Drill' May Be Hitting A Wall
The term "peak oil" has sparked debate for decades, fueling speculation, and more than a few forecasts of doomsday scenarios. But for all the noise, it remains a largely misunderstood concept. That's unfortunate, because peak oil—both in theory and in practice—still carries serious implications for the global economy and energy markets. The phrase was very popular 20 years ago but then faded when the shale revolution gathered steam. But all booms eventually end, and a growing number of voices are suggesting that peak production in the U.S. may soon be upon us. But let's begin with the basics. "Peak oil" doesn't mean we are running out of oil. It means that we have hit a maximum level of oil production, and after that point, production begins to decline. The concept was popularized in the 1950s by geophysicist Shell M. King Hubbert, who predicted that U.S. oil production would peak around 1970. That prediction was initially correct, but it didn't account for the eventual surge in unconventional oil—especially from shale—which temporarily reversed that decline decades later. Still, Hubbert's basic framework held up well: oil fields follow a bell-shaped curve. Production rises, peaks, and then drops. It's not hard to understand why. As the easiest, most accessible oil gets pumped out, the remaining oil is harder to reach, more expensive to produce, and often requires new technologies or techniques. This is simply a resource depletion issue. In recent years, the conversation around peak oil has shifted. In the 2000s, concerns about supply limitations drove oil prices to record highs. But by the 2010s, the U.S. shale boom dramatically changed the narrative. Suddenly, talk of "peak demand" replaced talk of "peak supply." Some analysts argued that growing interest in electric vehicles, renewables, and climate policy would cause oil use to top out long before production capacity did. But here we are in 2025, and the old concerns are creeping back in. One of the more notable warnings came recently from Travis Stice, CEO of Diamondback Energy. In a letter to shareholders, he said flatly: 'It is likely that U.S. onshore oil production has peaked and will begin to decline this quarter.' This isn't idle speculation. Diamondback, like many other producers, has scaled back drilling and completion work. Crews are being cut. The pace of new well development is slowing. The company estimates fracking teams in the Permian are down 20% from earlier this year. Rig counts are following a similar path. This isn't happening because of a lack of support from Washington. In fact, the current administration has rolled back environmental regulations, opened up new drilling zones, and pitched U.S. energy dominance as a core policy goal. But even favorable policy can't force drilling if the economics don't work. Costs are up—steel prices, service contracts, and everything in between. Supply chains remain strained, and tariffs continue to complicate procurement. More importantly, capital markets have changed. Shareholders now expect returns, not just production growth. Gone are the days of 'drill, baby, drill' at any price. Stice isn't the only one sounding the alarm. At this year's CERAWeek in Houston, Occidental CEO Vicki Hollub said she expects U.S. oil production to peak between 2027 and 2030. ConocoPhillips chief Ryan Lance gave a similar timeline. Harold Hamm, the founder of Continental Resources—never one to shy away from a bullish forecast—also acknowledged the slowdown. The U.S. Energy Information Administration still forecasts record output this year, but the pace of growth has clearly slowed. The major shale plays are maturing. Easy drilling locations are becoming harder to find. And companies are increasingly deploying capital elsewhere, including into lower-carbon assets. If we're near the peak of U.S. oil output, that matters for several reasons: Today's relatively low oil prices—thanks to global stockpiles and worrisome economic signals—are masking some of this risk. But that could change quickly. If demand surprises to the upside or supply falls short, prices may jump, especially with U.S. firms showing reluctance to ramp back up. None of this means the U.S. oil industry is in decline. But it does suggest the frantic growth of the last decade may be behind us. From here on, output could level off or even gradually decline. That's not necessarily an immediate problem. A more stable, profit-focused sector could be healthier in the long run. But for investors, the narrative is shifting. Future success may be less about how fast a company can grow—and more about how wisely it can manage its assets in a changing landscape. As the energy world continues to evolve, understanding where we stand in the production cycle isn't just academic. It's central to how we plan for the future.
E&E News
09-05-2025
- Business
- E&E News
Has US oil production peaked? CEO reopens debate.
'Drill, baby, drill' has hit peak oil. Oil and gas leaders have been saying for a while that oil production in the United States could be headed for a plateau — in a few years. Maybe it would start declining in the early 2030s. Not many industry executives have been willing to use the word 'peak,' much less say that the peak was happening — even as oil prices steadily sank. Advertisement But Travis Stice, the chair and CEO of Texas-based Diamondback Energy, said that part out loud this week. With fewer rigs and crews in the field, he told investors he sees output going down for the first time in a long time. It is 'likely that U.S. onshore oil production has peaked and will begin to decline this quarter,' Stice said in a letter to investors released Monday. 'This will have a meaningful impact on our industry and our country.' 'Peak' is a strong word in the oil business. It brings back talk about the once widely held concept that the world was running out of oil. That view was largely put to rest in the 2010s when U.S. producers used advances in hydraulic fracturing to tap sources of oil previously considered too difficult and expensive to exploit. That led directly to the United States going from a net importer to the world's top producer. But that rise seems to be ending, if slowly. The shale business was maturing even before talk of tariffs started raising concerns about the U.S. economy and driving up the cost of steel. And geology has stopped cooperating. Many of the best sites for drilling have been tapped and it's getting more expensive to get significant amounts of new oil out of the tight shale formations that fueled the country's extended boom. Now those tariff worries, economic uncertainty and talk of a global oil surplus are weighing on the closely watched price of oil. The benchmark U.S. crude spot price was $58.50 a barrel on Monday, according to the U.S. Energy Information Administration. That marked a drop of about $20 from the week before President Donald Trump took office in January. On Thursday, oil futures in New York were trading at about $60 a barrel. The oil price is at depths rarely seen in the past 20 years, Stice said, and the U.S. oil business is at 'a tipping point.' Travis Stice is the CEO of Diamondback Energy. | iStock/Diamondback Energy It's an ironic time for the boom to peak. Trump is enacting what might the most pro-oil agenda since the rise of the environmental movement, ripping protective regulations out by the roots and pushing new fossil fuel projects, sometimes with more fervor than the industry itself. But that isn't putting more drill bits in the ground. Diamondback said it is dropping three rigs and a completion crew at least until fall. Other big players are pulling back, too. On Thursday, Houston-based ConocoPhillips said it was lowering its capital spending plans for the year. In a good sign for Trump, gasoline prices have remained relatively low. The U.S. average price for a gallon of regular gasoline was $3.152, AAA reported Thursday — nearly 49 cents cheaper than a year earlier. But experts say the drop is largely tied to economic uncertainty, not increased drilling. The Trump administration says its efforts, in the long term, will both lower prices and let businesses prosper. 'While prices are going to move up and down in the short term, the Trump administration is focused on changing policies, changing the investment climate for businesses in this country, all big wins for the American people and why the President was elected in the first place,' Department of Energy spokesperson Ben Dietderich said in an email. Nicole Schomburg, a senior director at FTI Consulting, which works with many of the oil and gas companies that drove the shale boom, says the U.S. industry is better prepared now than it was for recent price dives in 2014 and 2020. 'People have claimed we're going to see peak oil or that the 'shale bubble' will burst for years. But that hasn't happened,' Schomburg said in an email exchange, 'and one of the big reasons why is because the world has continued to demand more oil than many 'experts' thought.' But as the leader of a top independent producer in the country's dominant Permian Basin oil play, Stice's words carry some weight. And the geological 'headwinds,' he said, are starting to outweigh the 'tailwinds' the industry had enjoyed from technological advances and finding new efficiencies. The head of Occidental Petroleum is also using what might be called 'the p-word,' if a bit less strongly. In an earnings call Thursday, CEO Vicki Hollub said the company had expected a peak in U.S. production sometime between 2027 and 2030, but the growing economic uncertainty means 'it's looking like peak could come sooner.' Trump's outreach to the oil barons always had a contradiction at its heart. 'Drill, baby, drill' sounds great at a rally. But it doesn't necessarily go over as well in a boardroom where company leaders want demand to go up along with prices. Oil executives worried during the 2024 presidential campaign about the prospect of a trade war that could dampen the economy and cool demand. Still, backing Trump was an easy call for many oil executives even as oil production hit world records under then-President Joe Biden. Trump wooed them with promises of deregulation, and they showered him with millions of dollars to fuel his return to power. And the president has delivered on deregulation with an avalanche of executive orders dismantling Biden's agenda aiming at reining in the effects of climate change. As welcome as those orders may be for oil producers, they can't make up for the lower demand caused by the forces that Stice recounted to his investors — global economic worries and a looming boost in supply from OPEC+ producers around the world. Diamondback estimates that the number of fracking crews is down 20 percent in the Permian this year. That means it's down about 15 percent across the country, said Stice, who later this month is set to give up his CEO title and become executive chair of the company he's run as chief executive since 2012. The oil rig count, he said, will likely be down 10 percent by the end of June and still headed downward. Tariffs are starting to bite as well. At Diamondback, Stice said, they have driven up the cost of casing more than 10 percent. For his company, that adds up to nearly $40 million annually. Still, he isn't saying drilling is going to stop. Stice said in his letter that Diamondback would produce 480,000 to 495,000 barrels of oil a day this year, down slightly from an earlier estimate. 'To use a driving analogy, we are taking our foot off the accelerator as we approach a red light,' Stice said in his letter. 'If the light turns green before we get to the stoplight, we will hit the gas again, but we are also prepared to brake if needed.' A green light, he explained during an earnings call this week, means an oil price of $65 to $70 per barrel. That's about $5 to $10 higher than benchmark U.S. oil futures were trading Thursday. Reporter Shelby Webb contributed.
