If deepwater drilling is where over a quarter of new oil reserves are, then any delay in accessing these reserves could mean trouble.
That is the conclusion of the UK Industry Task-Force on Peak Oil and Energy Security.
They conclude that “Forecasting forward five years, it is clear that if we are to meet global demand for oil then deepwater offshore production will account for 29% of new oil supplies by 2015. In this context, deepwater production is vital to secure the new supply that is required to maintain a reasonable cushion between worldwide supply and worldwide demand.”
So by tightening regulations and making stricter inspections this means delays in new deepwater reserves coming on-stream.
So perversely by trying to make things safer, we might drive the cost up.
Therefore, they argue that “any delays as a result of the Gulf of Mexico oil spill have potentially serious consequences leading to spare capacity falls and oil price rises.”
In the report they argue that “Our analysis of the effects of an average six-month delay to deepwater projects suggests a reduction in future spare capacity from three to two million barrels a day by 2015.”
The report from the task –Force which includes Richard Branson’s Virgin, and Jeremy Leggett’s Solar Century, calls for a ‘contingency plan’ to address the risk of peak oil.
“We are running out of time to implement the necessary measures to both protect the UK economy from the threat of peak oil production, and make the necessary switch to more sustainable energy sources,” they add.
It calls for ‘much quicker action’ from the government to support the introduction of renewable energy technology and energy efficiency measures.
The warnings from the group are nothing new. In February, the Task Force warned that we’ve had the credit crisis, the next crisis will be a peak oil crisis.
And this is what Branson himself says: “Our Government must take the problems around Peak Oil very seriously. This year’s Gulf of Mexico disaster has increased the chances of an “Oil Crunch” in the coming decade. “