If you happen to be interested in the topic of “peak oil”, you almost certainly know the name M. King Hubbert. While you may know that Hubbert is widely credited with accurately predicting the peak of US oil production, you may not know the full context of his predictions — which are legendary in peak oil circles.
The history of the scientific study of peak oil dates to the 1950s, when Hubbert, a Shell geophysicist, reported on studies he had undertaken regarding the production rates of oil and gas fields. In a 1956 paper, Nuclear Energy and the Fossil Fuels, Hubbert suggested that oil production in a particular region would approximate a bell curve, increasing exponentially during the early stages of production before eventually slowing, reaching a peak when approximately half of a field had been extracted, and then going into terminal production decline.
Read Experts See Low Oil Prices for Decades to Come as US Shale Boom Goes Global
A peak in oil production, that is the maximum rate of production after which a field, country, or the world as a whole begins to decline is at the core of the peak oil issue. A country is said to have peaked, or reached peak oil after it becomes apparent that oil production in the region is steadily declining year after year.
Oil production in the US from 1900 through 2010 did approximate a bell curve, with peak production occurring in 1970. I documented this production curve in my book Power Plays: Energy Options In The Age Of Peak Oil:
Source: Power Plays: Energy Options In The Age Of Peak Oil
Hubbert’s fame in peak oil circles comes primarily from the assertion that he accurately predicted the 1970 US peak. Because of this prediction, Hubbert is widely-regarded among peak oil adherents as a visionary. He has been called an oracle and a prophet. A recently published article — What Hubbert And Pickens Got Right About Oil, And What’s Next — recounts the uncanny accuracy of his prediction.
The truth, however, is much more nuanced. Hubbert got a lot of things tremendously wrong, and his much-heralded 1970 prediction contains a large caveat of which most people are entirely unaware. Here is what his 1956 paper actually stated.
Hubbert estimated that the ultimate potential reserve of the Lower 48 US states and offshore areas was 150 billion barrels of oil. Based on that reserve estimate, the 6.6 million barrels per day (bpd) extraction rate in 1955, and the fact that 52.5 billion barrels of oil had been cumulatively produced in the US already, Hubbert estimated that oil production in the US would reach maximum production in 1965. That was his base prediction. He wrote “the curve must culminate at about 1965 and then must decline at a rate comparable to its earlier rate of growth.” Hubbert illustrated this 1965 peak in his paper:
Source: Nuclear Energy and the Fossil Fuels by M. King Hubbert
As shown in the illustration, Hubbert projected a US oil production peak in 1965 at an annual production rate of about 2.8 billion barrels, or 7.7 million barrels per day (bpd). However, note that there is another curve rising above and extending beyond the 1965 peak. This was Hubbert’s “contingency case.” He calculated that if the US oil reserve was 200 billion barrels, peak production would occur in 1970, a delay of five years from his base case. However, he indicated skepticism about the reserve being that high, noting that this would imply “an amount equal to eight East Texas oil fields” beyond the 150 billion barrel estimate. Nevertheless, if the US reserve was as high as 200 billion barrels Hubbert estimated a 1970 US oil production peak at 3 billion barrels, or 8.2 million bpd. Oil production in the US did in fact peak in 1970, albeit at 9.6 million bpd.
While Hubbert’s prediction was in the ballpark, those who cite him don’t seem to be aware that his “perfect” 1970 prediction was based on a secondary case about which he expressed skepticism, and it was about 15% too low on the production rate. Hubbert’s base case — a prediction made in 1956 of a 1965 peak — was off by 5 years and was 20% too low. Or to put it another way, his base case at that time was that US oil production would peak in 9 years, but it actually peaked after 14 years and at 15% higher production than he projected.
My point here is to address his oil production predictions based on what he actually wrote. Still, as someone who frequently makes predictions, I will say that his predictions about US oil production were pretty good. They weren’t prophetic, or nearly as exact as many peak oil adherents claim. But they were in the ballpark.
Yet when we look at what he had to say about global production and natural gas production, his predictions were way off the mark. He arrived at an estimate of the ultimate conventional oil production of the world by comparing a number of estimates. He settled on an estimate of 1.25 trillion barrels for the ultimate potential conventional oil production. We now know that this estimate was far too low. But based on this estimate, Hubbert projected that the global peak in crude oil production would occur around the year 2000 at 34 million bpd. In reality, crude oil production in 2000 was more than twice as high at about 75 million bpd. Further, while conventional crude oil production did flatten around 2005, more than a decade later there is no evidence that it has begun to decline. (Overall global production has continued to grow, primarily because of the rise of shale oil production). So this was a big miss.
Hubbert’s defenders will argue that he only really missed the date of the conventional crude oil peak by 5 years. But, his methodology specifies a peak and decline. That is not what we have seen. In fact, until conventional crude begins to decline in earnest we really don’t know how far off the mark his peak 2000 prediction may be. The longer conventional production holds steady (or even modestly increases), the further off the mark his prediction.
In any case, 34 million bpd was not remotely in the ballpark of the production rate in 2000. And Hubbert noted “variations of this assumed maximum rate will advance or retard the date of the culmination.” If you plug in the actual production rates instead of the much lower rates he assumed, his estimated global peak would have been moved far back, likely into the 1980′s. So the cumulative miss over time is huge. By 2016 his curve shows production having fallen for 16 years from the 2000 peak, when in reality conventional production is up a lot since 2000, and has advanced somewhat since 2005.
See Art Berman: Central Bankers Don't Understand - The Economy Runs on Energy, Not Money
Hubbert’s natural gas estimates also underestimated production volumes. Using the same methodology he used for oil, he projected a 1970 peak in US natural gas production at a rate of about 38 billion cubic feet per day (Bcf/d). In reality, 1970 production in the US was 57.6 Bcf/d, and would grow to 59.5 Bcf/d in 1973. (Today’s production rate of 74 Bcf/d is a result of an explosion of shale gas production, which Hubbert didn’t consider).
His estimates of coal production follow a similar pattern. He predicted a peak in global coal production of just over 6 billion metric tons per year around the year 2150. His global coal production estimate for ~2016 was about 4 billion metric tons per year. In reality, coal production has been over 8 billion metric tons in 3 of the past 4 years.
Why were Hubbert’s predictions consistently low? One reason is that even though he allowed for improvements in recovery techniques, he underestimated the impact. Indeed, ”eight East Texas oil fields” were discovered as a result of improved drilling and recovery techniques.
But the biggest issue was simply the underestimate of reserves. US conventional oil production has already surpassed Hubbert’s stretch case for what could be ultimately recovered. Globally, by the year 2000 the world had already produced about a trillion barrels of conventional oil. But the remaining conventional reserve at that time — 1.3 trillion barrels — was still greater than his total estimate of 1.25 trillion barrels made in 1956.
Conclusions
While Hubbert’s defenders are correct that his predictions applied to conventional oil production, as someone who actively participated in peak oil debates a decade ago I can attest that essentially nobody believed that unconventional oil production would ramp up fast enough to prevent a global decline in oil production. The “conventional” part of Hubbert’s prediction only began to get a lot of attention once it was clear that total oil production was still growing steadily. Thus, the impact of unconventional oil on global oil supplies was underestimated. To the extent that Hubbert’s technique has been applied to provide quantitative estimates of future oil supply, or the timing of peak oil supply — it has failed. At the end of the day, the oil markets don’t care whether the oil is conventional or unconventional. What matters is how much is being produced and at what price. (The environmental issues are another matter entirely).
However, this should not be considered a repudiation of Hubbert’s work. As someone who is concerned about future oil supplies, I have found the ideas that Hubbert put forward useful in understanding qualitatively what’s going on. His work also spawned tremendous awareness about the issue of peak oil and resource depletion in general. To reiterate, the purpose of writing this is not to diminish Hubbert’s novel ideas, but rather to strip away the mythology and put his work in proper context. There are certainly things to be learned from Hubbert’s work, but the more it is idolized and treated as prophecy, the less useful it becomes.
