Royal Dutch Shell Plc  .com Rotating Header Image Shell President Forced to Address 'Peak Oil' Theory

By Adam Porter
03 Feb 2006 at 01:01 PM EST
PARIS ( — Shell announced their record profits at two press conferences this week. The first in Hague in Holland and the second later in the same day in their London centre. The London conferences were attended by Chief Executive Jeroen van der Veer and Chief Financial Officer Peter Voser.
At the conference, Shell [NYSE:RDS-B; LSE:RDSB] revealed 2005 profits of $22.9 billion on revenues of $379 billion, which were up 30% from profits of $17.6 billion in 2004. These were the biggest profits ever made by a British company.
Also in attendance at the conference was author David Strahan. Strahan is currently writing a book on energy supply issues having moved from broadcast journalism at the BBC. Strahan was producer of the seminal BBC Money Programme on ‘peak oil’ theory back in 2000 shortly after the first British fuel protests. He also produced War for Oil for the BBC Money Programme in 2003.
“I was about to start my book’s chapter on the international oil companies,” started Strahan. “As you seldom get access to these people [like van der Veer] one on one I thought I would go to the conference.”
Strahan was interested in the way that Shell was able to announce such large revenues in the current supply situation.
“It struck me that if this is how well the majors do when the market is just ‘tight’ what would happen if there was ever a real shortage of oil,” said Strahan. “So I put this to Mr. van der Veer and asked him what would happen in a real peak of global production and how much money would Shell make?”
Strahan also asked what van der Veer thought of the idea of peak oil and whether or not Shell had looked at the situation itself.
“I asked whether Shell had done any detailed modelling on this question,” said Strahan. “Mr. van der Veer replied that his argument basically was that the world will not [arrive at a peak oil situation]. He said that peak oil is correct as applied to regional areas of production like the North Sea, Texas or the Lower 48, but does not apply to the world as a whole.”
Van der Veer’s actual reply to Strahan on Shell’s webcast was “That is a great question it is much more complex than many people think. That (peak oil) is not how we will go. Because peak oil theory itself is correct, if one takes easy oil close to the markets. If you look at West Texas the oil has gone, or even the North Sea…but if you look at oil sands you don’t know where the peak will come…if you think about coal…there are huge reserves. If you assume we can develop clean coal technologies, [then] there will not be one peak.”
“So there is no one peak. There will be many peaks [for different fields, regions and fuels] and they will be in many different time frames and how that will develop, we don’t know.
We think [for prices] that it is prudent for our company to evaluate projects in a very [many] differing pricing scenarios.”
Strahan then asked if van der Veer expected oil sands to make up the difference in any decline of conventional oil.
“What I do expect,” replied van der Veer, “is at the present price level there is a huge incentive to develop additional forms of energy, hydrocarbon energy and alternative energies, people will respond but it will take some time.”
Strahan considered van der Veer’s replies.
“His basic argument was that as the peaks happen at different times,” concluded Strahan. “So you get a plateau not a peak. But one is not just adding up a bunch of peaks, you are adding up some areas that are rising in production and some that are falling.”
“[Van der Veer] did say that ‘easy oil has peaked’ but then said ‘look at what is elsewhere like the arctic, deepwater and so on.’ But if you listen to people like PFC Energy, the Washington based consultancy, they have suggested that deepwater will peak early in the next decade. He also mentioned oil sands but the overall plan for oil sands is to make just 5 million barrels a day by 2030. I must say it was not terribly convincing,” Strahan said. and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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