Campbell on Oil
the World's Foremost Expert on Oil and the Oil Business
Confirms the Ever More Apparent Reality of the Post-9-11
Michael C. Ruppert
COPYRIGHT 2002, Michael C. Ruppert and FTW Publications,
www.copvcia.com all rights reserved. May be reprinted
or distributed for non-profit purposes only.]
Oct. 23, 2002, 17:30 PDT (FTW) -- Colin Campbell is
both an academic and a businessman. Educated at Oxford
and holding a Masters degree he has served as a geologist
for Oxford University, Texaco, British Petroleum and Amoco (prior to the BP
Amoco merger). He has served in executive positions with
Shenandoah Oil, Amoco, Fina and was Chairman of the Nordic American
Oil Company. He has served as a consultant on oil for
the Bulgarian government as well as for Statoil, Mobil,
Amerada, Total, Shell, Esso and for the firm Petroconsultants in Geneva. He is the Convener and Editor
of the Association for the Study of Peak Oil and a Trustee
of the Oil Depletion Analysis Center in London.
As a member of The American Society of Petroleum Geologists,
The Geological Society of London, and the Petroleum Institute
of London he has delivered more than 35 lectures on oil
depletion on three continents. His hosts have included
universities, governments, and auto manufacturers. He
has been published more than 150 times in the field including
the 1997 book "The Coming Oil Crisis" (Multi-Science
Publishing Co. & Petroconsultants).
Before beginning this interview it is necessary for
the reader to understand several critical factors about
oil and oil production. All of these factors affect how
much you or industry pays for oil, how much is available,
and what this life-essential commodity can do. Almost
every current human endeavor from transportation, to manufacturing,
to plastics, and especially food production is inextricably
intertwined with oil and natural gas supplies. Commercial
food production is oil powered. All pesticides are petroleum
based, and all commercial fertilizers are ammonia based.
Ammonia is produced from natural gas.
All oil production follows a bell curve, whether in
an individual field or on the planet as a whole. On the
upslope of the curve production costs are significantly
lower than on the downslope when extra effort (expense)
is required to extract oil from reservoirs that are emptying
out. The best and easiest to produce oil is always extracted
first to maximize profits. In 100 years mankind has used
half of all the oil on the planet, oil that took billions
of years to produce and is the result of climactic conditions
that have existed at only one time in the earth's 4.5
billion- year history. Oil is a non-renewable resource.
The key event in the Petroleum Era is not when the oil
runs out, but when oil production peaks, especially as
demand and population are rising. World per capita oil
production peaked in 1979 and has been in decline since.
The peak in volume of total world oil production is upon
us right now, even as the demand or better said -- the
need -- for oil is increasing rapidly.
Several things are a given. First the total remaining
conventional oil on the planet is estimated to be around
1 trillion barrels. Second, at present rates (not those
of five or 10 years from now), the world is using close
to 80 million barrels per day. At the current rate there
would be only enough oil to sustain the planet for another
35 years under the best of scenarios. But the oil that
remains is going to be increasingly expensive to produce
and it will tend to be of a lesser quality, necessitating
higher refining costs, than what has already been used.
All of those costs will have to be passed on in the form
of price hikes or -- in some cases -- spikes. Oil price
spikes invariably lead to recession. The world's economy
is based upon the sale of products that are either made
from oil or which need hydrocarbon energy (including natural
gas) to operate, either via internal combustion or via
Different regions of the world peak in oil production
at different times. The U.S. peaked in the early-1970s.
Europe, Russia and the North Sea have also peaked. However
the OPEC nations of the Middle East peak last. Within
a few years they -- or whoever controls them -- will be
in effective control of the world oil economy, and, in
essence, of human civilization as a whole. Two of the
nations that will peak last are Saudi Arabia and Iraq,
both of which will not peak until the middle of the next
decade. Saudi Arabia contains 25 percent of all the oil
on the planet. Iraq contains 11 percent of all the oil
on the planet.
Science and the oil industry have confirmed that there
is very little oil left to be found, certainly not enough
to make a difference in this grim picture, a picture which
goes a long way toward explaining the events of 9-11 and
will be the likely effects of hitting the downslope of
Big question. Simply stated: war, starvation, economic
recession, possibly even the extinction of homo sapiens,
insofar as the evolution of life on earth has always been
accomplished by the extinction of over-adapted species
(when their environmental niche changed for geologic or
climatic reasons) leaving simpler forms to continue, and
eventually giving rise new more adapted species. If Homo
sapiens figures out how to move back to simplicity, he
will be the first to do so.
soon before we start to feel the effects of dwindling
We already are -- in the form of the threatened U.S. invasion
of the Middle East. The U.S. would be importing 90 percent
of its oil by 2020 to hold even current demand and access
to foreign oil has long been officially declared a vital
national interest justifying military intervention. Probable
actual physical shortage of all liquid hydrocarbons worldwide
won't appear for about 20 years, especially if deepening
recession holds down demand. But people are coming to
appreciate that peak is imminent and what it means. Some
places like the U.S. will face shortage sooner than others.
The price is likely to soar as shortage looms, which itself
may delay peak.
If the U.S. does invade there will likely be a repeat
of Vietnam with many years of fruitless struggle in which
the U.S. will be seen as a tyrant and an oppressor, killing
all those Arabs. It can't hope to subjugate the place
in perpetuity as the people don't surrender easily --
as the Palestinians have shown. So when the U.S. has finally
gone, Russia and China will likely be welcomed there to
produce whatever is left in the ruins.
the major oil companies currently downsizing? If so why?
The majors are merging and downsizing and outsourcing
and not investing in new refineries because they know
full well that production is set to decline and that the
exploration opportunities are getting less and less. Who
would drill in 10,000 feet of water if there were anywhere
else easier left? But the companies have to sing
to the stock market, and merger hides the collapse of
the weaker brethren. The staff is purged on merger and
the combined budget ends up much less than the sum of
the previous components. Besides, a lot of the executives
and bankers make a lot of money from the merger.
much oil is really left?
You have to think of different categories of oil. Speaking
of conventional, which is the easy cheap stuff that has
supplied most uses to date and will dominate all supply
far into the future, there is about 1 trillion barrels
left. To this you have to add:
A) Oil from coal, "shale," tar sands, heavy
oil -- the resource is very large, but extraction rate
is low and costly, sometimes giving negative net energy.
B) Deepwater oil -- (from a depth of greater than 500
meters) about 60 billion barrels
C) Polar -- about 30 billion, maybe.
D) Natural gas liquids -- about 300 billion barrels
take it that it is a given that in any particular oil
field, or globally, costs of extraction increase as one
progresses down the curve. What is the usual nature of
these increased costs? Do they usually require additional
investment of capital for infrastructure? Is there a chart
which shows how costs increase as production declines?
Yes of course costs go up and every situation is different.
In Texas they can still profitably use wells producing
5 b/d. But offshore the threshold is higher. It is more
complex because they have the sunk costs of the platform
and also face substantial abandonment costs. Furthermore
tax distorts the picture, with most operating cost being
written off against taxable income either in the host
or home country or both. But reserves are defined as recoverable
under current or foreseen economics, so non-economic tail-end
theoretical production is not included anyway. I think
the key issue is not so much the economic cut off but
when production of even highly profitable oil heads into
decline. The tail end, which is susceptible to economic
constraints, is small and not very relevant. Oil has a
polarity being either there in profitable abundance or
not there at all -- mainly because it is a liquid that
flows to accumulate somewhere, unlike coal where extraction
is a matter of concentration in seam thickness and access.
Is all oil in the ground recoverable? If not, why not?
Only a fraction of the oil in the reservoir is recoverable
because it does not sit in one big cavern down there but
in the very small pore spaces between the grains of sand.
These grains are coated in water and when it coalesces,
it blocks the pore spaces preventing the further movement
of oil. Also there are many nooks and crannies in the
rocks that are not in communication. Obviously light oil
is easier to extract than heavy. You can pump in steam
etc. to try and move it, which is now routinely done where
It is said that recovery has increased from 30 percent
to 40 percent thanks to technology and is set to rise
from more technology in the future. But most of this improvement
has nothing to do with technology. It is an artifact of
reporting. The industry has always made conservative initial
estimates (liking to build an inventory of unreported
reserves to tide them over bad years and also reduce taxes)
so reserves naturally grow over time.
Besides, extracting a bit more has a minimal impact
on peak, which is the critical turning point, much more
important than eventually running [completely] out, which
we may never do as the tail end can drag on.
would you say to the people who insist that oil is created
from magma, or that there's really so much that we don't
have to worry?
Oil sometimes does occur in fractured or weathered crystalline
rocks, which may have led people to accept this theory,
but in all cases there is an easy explanation of lateral
migration from normal sources. Isotopic evidence provides
a clear link to the organic origins. No one in the industry
gives the slightest credence to these theories: after
drilling for 150 years they know a bit about it. Another
misleading idea is about oilfields being refilled. Some
are, but the oil simply is leaking in from a deeper accumulation.
Central Asian-Caspian pipelines have an impact on the
crisis? How long will it take them to come on line?
Campbell: There was talk of the place holding
over 200 Gb [billion barrels] (I think emanating from
the USGS [U.S. Geological Survey]), but the results after
10 years of work have been disappointing. The West came
in with high hopes. The Soviets found Tengiz onshore in
1979 with about 6 Gb of very deep, high sulfur oil in
a reef. Chevron took over and is now producing it with
difficulty. But offshore they found a huge prospect called
Kashagan in a similar geological setting to Tengiz. If
it had been full, it could have contained 200 Gb, but
they have now drilled three deep wells at huge cost, finding
that instead of being a single reservoir it, like Tengiz,
is made up of reefs. Reserves are now quoted at between
9 Gb and 13 Gb. BP-Statoil has pulled out. Caspian production
won't make any material difference to world supply. There
is however a lot of gas in the vicinity.
To put it in perspective this would supply the world
for a little over a year, but it is broadly the same as
It is quite possible that the Afghan war was about securing
a strong point in this area. But interest in it has now
dwindled along with Caspian prospects as the U.S. turns
to Iraq, which does have some oil. It is curious that
these two U.S. military exercises had different pretexts
A) Afghanistan was to find the supposed architect of
Sept. 11 -- in which it failed; and
B) Iraq is about a sudden and unexplained fear that
it might develop some objectionable weapons that might
pose a threat to someone in the future. North Korea, which
already has nuclear weapons and long range missiles --
and isn't exactly a friendly place -- is not deemed a
threat. The cynic can be forgiven for thinking there
is some other motive for these military moves: could it
and how was it discovered that the Central Asian reserves
were much smaller than anticipated?
I guess you could say over the past 24 months as the different
pieces in the jigsaw fell into place. There is no single
event or date, but rather an evolving picture
about replacement sources and alternative energy? Tar
Of course there is a range of alternatives from wind,
sun, tide, nuclear, etc. but today they contribute only
a very small percentage, and do not come close to matching
the oil of the past in terms of cost or convenience. No
doubt production from tar sands and heavy oils can be
stepped up in the future but it is painfully slow and
expensive, carrying also environmental costs. It will
help ameliorate the decline but has minimal impact on
peak. The simple solution is to use less. We are extremely
wasteful energy users. But it involves a fundamental change
of attitude and the rejection of classical economic principles,
which were built on endless growth in a world of limitless
resources. Those days are over, exacerbated by the soaring
population, itself now set to decline partly from energy
anyone determined what percentage of oil is used for military
purposes worldwide? If so, how much?
I don't know how much is used for military purposes, but
it must be considerable. The U.S. has built a huge stockpile
in the Middle East for the war.
China the end game of competition for oil?
Yes, China is in desperate need of imports as its own
supply depletes. It has been very thoroughly explored.
It will be vying with the U.S. for access to foreign oil.
It is already well established in Iraq.
That is about how I see it.
[A more detailed discussion of the world oil crisis,
its connections to 9-11, and its implications for the
future will be contained in FTW
Editor Michael C. Ruppert's forthcoming book, "Across
the Rubicon: 9-11 and the Last Empire," scheduled
for release by Feral House in spring 2003.]