Peak oil? We're past it

Peak oil is passé, according to one of the world's biggest oil companies.

Speaking at the Michelin Bibendum energy conference in Brazil overnight, Tan Chong Meng, Shell's executive vice president of bio fuels, said the company and many in the oil industry have quietly dismissed the focus on peak oil because it is too hard to accurately measure, and may have already passed.

"We stopped debating about [peak oil] some time ago," he said. "We all have read literature and dates have been pronounced.

"But honestly it's an outdated discussion. What's more important is ... what will the energy mix of the future look like. Oil is only 30 per cent of the world's total energy equation. I think the focus should be on the total energy mix."

However, he emphasised that the oil industry was well aware of the diminishing reserves of crude and the need to use fuel more efficiently.

"We understand the world faces an escalating challenge," he said. "A growing population will need more energy ... but this need must be met while reducing stress on energy consumption, on the climate, and on the environment."

The global demand for energy will surge in the coming decades due to population growth and industrialisation of developing countries, he said.

"We expect by 2050 humankind will use double the amount of energy that we use today. Without intervention obviously the side effects and consequences will be unacceptable."

The challenge, says Tan Chong Meng, is that it takes at least 30 years for mankind to change its consumption habits.

"We have researched all of the current energy types and found that in the 20th century new energy types take about 30 years to reach 1 per cent market penetration. And that's where bio fuels are at now," he says.

"We call this the 30 year rule. In scaling up, it takes time to build sufficient human and industrial capacity to make new energy technology widely available and accepted. But readiness of technology is only part of the problem.

"The bigger issue is the inertia of current technologies. It takes time to evolve. This so-called 30 year rule regarding energy revolution is not an actually law, it's not restrained by physics or science, it's a societal one.

"Changes to what powers our mobility could in principal be accelerated ... but it can only be spurred along with the right governmental support. Policy makers ... need to pull all the levers within their reach to drive change.

"Unfortunately, most of the time discussions [in government] take place without the enough reference to reality."

In Brazil, where the conference was held, all vehicles made locally run on pure ethanol or ethanol-blended fuels -- and more than 60 per cent of motorists run their cars on pure ethanol.

Brazil, the world's biggest producer of sugar cane, derives its ethanol from crop waste. Even so-called full strength gasoline in Brazil has a 25 per cent ethanol content. And all diesel is 5 per cent bio-diesel.

Indeed, in Brazil, ethanol is so popular that local motorists jokingly refer to full strength gasoline as an alternative fuel.

But even with the advances in and improved availability of bio fuels, Tan Chong Meng says ethanol still will be a minority fuel in the years to come.

"Currently it's at about 1 per cent. In another 10 years it may be 5 per cent and in two to three decades it may be 10 per cent. It is still the exception rather than the rule."

All this explains why Shell and other oil companies aren't phased by advances in electric cars and bio fuels (many oil companies now have joint ventures with ethanol suppliers; last Shell sold 9 million litres of bio-fuels worldwide).

The number of cars -- the majority of which will still have internal combustion engines -- is still going to increase globally as the population grows and developing countries get on four wheels.

"It might sound a little bit strange that someone like me, who has spent more than 20 years in the oil industry, is actually trying to help our customers use less of our product. I don't think you'd see an ice cream manufacturer going out and saying it's telling people don't consume this it's bad for your health," said Tan Chong Meng. "But despite all these new technologies [that challenge conventional petrol], we're still going to grow."

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