Peak Oil for Dummies 94 comments
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Dick Cheney, 46th US Vice-President (speaking as the CEO of Halliburton (HAL) in 1999):
Oil is unique in that it is so strategic in nature… Energy is truly fundamental to the world’s economy. It is the basic, fundamental building block of the world’s economy. It is unlike any other commodity. [1]
Al Gore, 45th US Vice-President, Nobel Peace Prize Laureate (June, 2004):
We almost certainly are at or near Peak Oil. [2]
Introduction
Over the past decade, a fierce debate has emerged amongst energy experts about whether global oil production was about to reach a peak, followed by an irreversible decline.
This event, commonly known as “Peak Oil” far outreaches the sole discipline of geology. From transportation to modern agriculture, petrochemicals and even the pharmaceutical industry all of them rely on one commodity: cheap and abundant oil. In order to sustain the needs of an ever globalized world, oil demand should double by 2050 [3].
Nonetheless, geological limitations will disrupt this improbable scenario. In fact, a growing proportion of energy experts argue that Peak Oil is impending and warn about the extraordinary scale of the crisis.
42 Years of Oil Left?
According to the 2009 BP Statistical Review, the world has precisely 42 years of oil left [4]. Those numbers come from a very simple formula, the R/P ratio, which consists of dividing the official number of global oil reserves by the level of today’s production.
Nevertheless, this methodology is dangerously defective on several key points as it ignores geological realities. Oil production does not consist of a plan level of production that brutally ends one day; it follows a bell-shaped curve.
Indeed, the important day occurs when production starts to decline, not when it ends. As it is a non-flexible commodity, even a small deficit in oil production can lead to a major price surge.
Finally, the R/P ratio does not acknowledge that production costs increase over the time; the first oil fields to be developed were logically the easy ones and so the most profitable. It is well recognized that remaining oil fields consist of whether poor quality oil or remotely located fields which need high technologies and expensive investments.
Therefore, relying on the R/P ratio gives a false impression of security while the actual situation is critical.
Global Oil Reserves: Lies and Manipulations
Oil is a strategic resource; therefore having oil is a key political and economical advantage for a state. This is why politics interfere in the evaluation of oil reserves, especially in countries with poor accountability records; that is, the majority of OPEC countries. In fact, OPEC oil reserves have dramatically increased during the 1980s and 1990s.
However, they have not discovered major oil fields after the 1970s. At this conjuncture, the question of what lays behind these fluctuations needs to be asked.
The geologist Dr. Colin Campbell, founder of ASPO [5], explains the hidden reasons that led to these changes:
In 1985, Kuwait, added 50% to its reserve. At that time, the OPEC quota was based on the reported reserves; the more you reported, the more you could produce. [6]
Fellow OPEC members who were unwilling to see the influence of Kuwait growing, simply raised their reserves soon after. Moreover, OPEC countries continue to present their reserves as flat despite having extracted huge amounts of oil during the past twenty years.
At this point, we should not forget that oil reserves reported by these countries are not audited by independent experts. In 2006, the notorious Petroleum Intelligence Weekly said it had access to confidential Kuwaiti reports which stated that reserves were half the official numbers [7].
In reaction, the Kuwaiti Oil Minister stated,
The Kuwait people are not concerned with numbers. This is related to national security. [8]
In 2006, Dr. Samsam Bakhtiari, a senior energy expert from the National Iranian Oil Company, declared that oil reserves in the Middle-East were “about half, or even less than what the respective national governments claim” and added “as for Iran, the usually accepted official 132 billion barrels is almost 100 billion barrels over any realistic assay” [9].
In fact, importing countries are simply asked to trust OPEC nations. Strangely, but surely, this is done by importing countries who assume these numbers are true and use them in their projections. On a report to the US Congress on Peak Oil, the US Government Accountability Office justly noted these problematic estimations [10].
The question of oil reserves is most relevant. As oil exporting countries have less oil in their ground, Peak Oil will arrive faster. Oil optimists who argue Peak Oil is still decades away rely on these same erroneous data.
In addition, if importing countries assume oil reserves are abundant as they do, the crisis will be unexpected, unprepared and misunderstood; in one word: overwhelming. Similarly, once oil shortages occur, oil importing countries may assume that exporting countries are deliberately reducing their oil exports to harm their national interests.
Such a flawed assumption from oil importing countries is likely to have serious repercussions, and eventually lead to new oil wars.
The Imminent Decline of Global Oil Production
In 2008 the International Energy Agency (IEA) conducted for the first time [11] a detailed field-by-field analysis of global oil production and its findings are bleak. Asked by a journalist on what the previous analysis relied on, the Chief-Economist of the IEA admitted, “it was mainly an assumption” [12].
In the 2008 World Energy Outlook (WEO), they have analysed about 800 fields, which account for ¾ of global reserves and more than 2/3 of global oil production [13].
They come to the conclusion that decline rates are far higher than previously thought, between 6.7 and 8.6% a year [14].
As result, they now estimate that to maintain the current levels of oil production by 2030 the world would need to develop and produce 45 MBD; as said by Dr. Birol, approximately four new Saudi-Arabias [15].
Simultaneously, they have analysed all the projects that are financially sanctioned in all the countries in the world (about 230) up to 2015. As it takes five to ten years to produce oil from a new field, they have a clear image of the coming situation.
When they add all the projects together (if all of them see the light of the day – unlikely with the current credit crunch [16]) they will bring about 25 millions barrels per day [17]. However, because of the important decline rates, the world will still be short of “at least” 12.5 MBD before 2015 [18].
Asked by a journalist if this means Peak Oil, Dr. Birol answered, “We are facing a serious threat” [19].
In 2009, Merrill Lynch conducted a similar analysis and concluded that, “the world now needed to replace an amount of oil output equivalent to Saudi Arabia’s production every two years” [20].
Yet, oil production is already in an irreversible decline in at least 54 of the 65 most important producing countries and we nowadays consume three barrels of oil for a single one discovered [21]; an unsustainable situation.
The latest annual report on geopolitical prospective from the US Joint Forces Command reached the stunning conclusion that:
By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 MBD… The implications for future conflict are ominous...[22]
At this pace, global oil production could decline by 50% from its current level, as soon as 2030 [23].
A Contested Reality: By Whom and Why?
For many years, Peak Oil was ignored by officials from oil companies and governmental agencies such as the IEA [24]. They negligently repeated that production was not at risk. However, over the recent years and in light of indisputable facts, we have seen a radical change in the discourse of the IEA [25] and leading oil companies such as Chevron (CVX) [26] and Total (TOT) [27].
In a recent video interview, Chevron’s Vice-Chairman, Peter Robertson, clearly expressed his fears:
You know, it’s often times people will ask, ‘Why in the world would Chevron be encouraging its customers to use less energy?’ After all, we sell energy – that’s our product… In many ways, a lot of us are concerned about the ability of the world’s supply system to provide the energy that people need…[28]
To the desolation of many, the debate has not been closed. Indeed, a few voices continue to sponsor, actively and loudly, the vision that oil production does not face any danger. Amongst them, we find three notorious voices, namely the CERA oil consultant, the OPEC cartel and not surprisingly in regard to its notorious poor record of scientific objectivity, the oil company, Exxon Mobil (XOM).
At this conjuncture, we can picture the hidden motives for Exxon Mobil to do so. By telling the public that oil production will no longer be plentiful, the consequences for the company are numerous. They include the danger of diversification from oil and creating a context of mistrust regarding oil companies; all of them bad for short-term business.
Regarding the OPEC, we saw earlier how prone they were to manipulate their reserves and we should not expect much from official OPEC statements.
The following comment from Dr. Chalabi, the former OPEC Secretary-General, gives additional information about how the cartel really works:
OPEC countries do not care about what might happen 20 years from now. They care about what they get today. Because, these are politicians, they want more money, to spend rationally or not. [29]
Furthermore, Dr. Sadad al-Huseini, former Head of Exploration and Production at the Saudi-Aramco, publicly contradicted his former bosses, by declaring that, “oil is likely to peak at a 95 MBD plateau by 2015” [30].
Besides, Dr. Shokri Ghanem, former Head of the Research Division at OPEC's Secretariat, head of the Libyan National Oil Company and a relation of OPEC’s current Secretary General, admitted in a 2006 report published by the OPEC Secretariat:
All in all, most would appear to agree that peak oil output is not very far away for all of us. It could take place sometime within the next decade or so, which in fact means that there is not much time left for a world economy to be driven largely by oil. [31]
The Cambridge Energy Research Associates is a well-known energy consultant group and a leading opponent to Peak Oi l [32]. Yet, CERA has been accused of providing a biased vision of the situation as it is “close to the oil industry" [33].
The following declaration from Chris Holtom, former head of British military intelligence, currently a strategic consultant to the oil & gas industry, gives valuable information:
There is a pack of deceit and economy with the truth here - some wilful, some born of ignorance, or fear of "group-think" related to stock price or employment. It needs careful and persuasive exposure of agendas, motives and possible consequences... Peak Oil is a potential Black Swan event, where the consequences are so great that after it we spend most of our time justifying why we didn’t anticipate it… It is a global issue and global bodies need the clout and courage to address them. [34]
Any Viable Alternative Energy?
There is no easy, present, solution to the crisis. Alternatives to oil are still far from being a feasible replacement; hydrogen for example would require 30 to 50 years to replace oil economies [35].
Meanwhile, the automobile industry is now planning to develop electric cars in the near future. While the first electric cars are expected to come on line in 2010-12, in order to replace 50% of the car fleet, the world would need between 10 to 20 years [36].
Besides, as manufacturing a single car requires at least 20 barrels of oil [37], once oil production starts to decline, in 2011-2013[38], it will increasingly become difficult to develop the electric car on a massive scale.
In fact, the closer we get to Peak Oil, the more difficult a massive and costly emergency plan to develop alternative energies will become.
To quote a report on Peak Oil, commissioned by the US Department of Energy,
Previous energy transitions (wood to coal, coal to oil, etc.) were gradual and evolutionary; oil peaking will be abrupt and revolutionary. [39]
As mentioned to me by David Fridley, a scientist at the Lawrence Berkeley National Laboratory and a former colleague of the US Secretary of Energy, Steven Chu:
My own efforts have focused on the science of alternative energy. The deeper you go into this area, the less sanguine you become that there is any effective mitigation possible… The bottom line is that there is no thermodynamic match for petroleum. [40]
The Industrial Civilisation at a Turning Point
In the following declaration, Dr. Jeremy Leggett, former member of the UK Government Renewables advisory board and one of "the key players in putting climate change on the world agenda" according to Time Magazine [41], described in 2006 how the crisis could unfold:
The price of houses will collapse. Stock markets will crash. Within a short period, human wealth -- little more than a pile of paper at the best of times, even with the confidence about the future high among traders -- will shrivel. There will be emergency summits, diplomatic initiatives, urgent exploration efforts, but the turmoil will not subside. Thousands of companies will go bankrupt, and millions will be unemployed… The earth has always been a dangerous place, but now it will become a tinderbox. [42]
While world leaders are debating on how we should manage the current economic crisis, that none of them saw coming, in a 2006 interview, Dr. Colin Campbell effectively forecasted the 2008 oil spike, which was to be followed by a recession and a subsequent fall in oil prices; a scenario that unfolded exactly as he said:
I think we are facing an oil price shock, 100 or 200 dollars a barrel, an economic recession that cuts demand, and I will not be at all surprised if a fall in demand would make the price collapse again. So we might be back to 20 or 30 dollars a barrel next year perhaps. And so you have a price shock, a recession, a recovery, hits again the falling capacity limit, another price shock. And so I think that in the next few years, we have a sequence of vicious circles and gradually the reality of the situation will filtered through. We are on for a very volatile few years with enormous economic consequences. [43]
In fact, a former director at the IEA, who used to be the superior of Dr. Fatih Birol, told me during a discussion that,
The current (economic) crisis was caused by the insufficiency of (oil) supply from 2007 onwards, an avatar of Peak Oil. [44]
Similarly, a recent study on the 2008 oil shock [45], from the economist Dr. James Hamilton - Brookings Institution - concludes that:
The evidence to me is persuasive that, had there been no oil shock, we would have described the U.S. economy in 2007:Q4-2008:Q3 as growing slowly, but not in a recession. [46]
This extract from the Energy Watch Group study on oil production provides useful additional information:
The world is at the beginning of a structural change of its economic system. This change will be triggered by declining fossil fuel supplies and will influence almost all aspects of our daily life... The now beginning transition period probably has its own rules which are valid only during this phase. Things might happen which we never experienced before and which we may never experience again once this transition period has ended. [47]
We are entering a new world with completely different characteristics to the one we have been growing with, the one where boundaries were crossable. It will be an unattractive world of “less far, less fast, less often, and more expensive”[48]; a radical and unexpected evolution or what could better be described as a regression.
The transitory period we are entering now will be, to be sure, chaotic and fierce.
The end-of-the-fossil-hydrocarbons scenario is not a doom-and-gloom picture painted by pessimistic end-of-the-world prophets, but a view of scarcity in the coming years and decades that must be taken seriously. (Deutsche Bank, December, 2004) [49]
Footnotes
[1] Dick Cheney, “Speech at the British Institute of Petroleum”, (Institute of Petroleum, Autumn 1999) (here).
[2] Al Gore, “CNN Larry King Live”, (CNN, 13 June 2006) (here).
[3] Marvin Odum as quoted in NPR, "Shell Sees Global Oil Demand Doubling By 2050", (NPR, 27 February 2009) (here).
[4] British Petroleum, “2009 Statistical Review: Oil Reserves Table” (here).
[5] Association for the Study of Peak Oil and Gas (here).
[6] Colin Campbell, “A Crude Awakening: The Oil Crash”, (Lava Production, 2006) (here).
[7] Petroleum Intelligence Weekly, “Oil Reserves Accounting: The Case of Kuwait”, (Energy Intelligence, 30 January 2006) (here).
[8] Arab Times, “Kuwait oil reserves secret for national security; Shuwayib acting head of KPC”, (Arab Times, 13 May 2007), Web Edition No:12881 (here).
[9] MoneyWeek, "Why we must take Peak Oil seriously", (MoneyWeek, 13 September 2006) (here).
[10] GAO, “Crude Oil: Uncertainty about Future Oil Supply Makes it Important to Develop a Strategy for Addressing a Peak and Decline in Oil Production”, (US Government Accountability Office, Report to Congressional Requesters, February 2007) (here).
[11] George Monbiot, "When will the oil run out?" (The Guardian, 15 December 2008) (here).
[12] Ibid
[13] Olivier Rech interviewed by the author, (Paris: IEA HQ, 18 December 2008).
[14] John Kemp, "Oil industry running faster just to keep up?: John Kemp", (Reuters, 19 November 2008) (here).
[15] The Times, "World needs four new Saudi Arabias, warns IEA", (Times Online, 12 November 2008) (here).
[16] Spencer Swartz, "OPEC Nations Delay Drilling Projects", (The Wall Street Journal, 10 February 2009) (here).
[17] Fatih Birol interviewed by Andrew Evans, "Fatih Birol of the IEA talks the talk about peak oil", (Aceditor, January 2008) (here).
[18] Ibid
[19] Ibid
[20] Tom Arnold, "Oil output could fall by 30m bpd by 2015 - Merrill", (Arabian Business, 4 February 2009) (here).
[21] Royal Swedish Academy of Sciences, “Statements on Oil by the Energy Committee”, (KVA, 14 October 2005) (here).
[25] Javier Blas and Carola Hoyos, “Oil price to bounce back with recovery, IEA warns”, (Financial Times, 6 November 2008).
[26] David J. O'Reilly, “CEO, Chevron in their Real Issues Ad”, (Chevron Corporation, 12 July 2005) (here).
[27] Carola Hoyos, "Falling oil poses threat to supplies", (Financial Times, 22 October 2008) (here).
[28] Peter Robertson, "How Chevron Makes the Most of the Energy We Have", (Chevron, April 2009) (here).
[29] Fadhil Chalabi, “A Crude Awakening: The Oil Crash”, (Lava Production, 2006) (here).
[30] Sadad al Husseini interviewed by Steve Andrews, "Sadad al Husseini sees peak in 2015", (ASPO USA , 14 September 2005) (here).
[31] Shokri Ghanem interviewed in the “OPEC Bulletin”, (OPEC, 11-12 2006), p. 60 to 63 (here).
[32] CERA Press Release, "Peak Oil Theory – “World Running Out of Oil Soon” – Is Faulty; Could Distort Policy & Energy Debate", (CERA, 14 November 2006) (here).
[33] Energy Watch Group, "Peak Oil could trigger meltdown of society", (Press release, 22 October 2007) (here).
[34] Email discussion with the author, 14 May 2009.
[35] US National Academy of Engineering, “The Hydrogen Economy: Opportunities, Costs, Barriers, and R&D Needs”, (The National Academy Press, 2004).
[36] R. Hirsch, R. Bezdek and R. Wendling, “Peaking of World Oil Production: Impacts, Mitigation, & Risk Management”, (US Department of Energy, February 2005).
[37] Belfast Telegraph, "Scientists warn that oil supplies will start to run in four years' time" (here).
[38] Industry Taskforce on Peak Oil & Energy Security, “The Oil Crunch Press Release”, 29 October 2008 (here).
[39] R. Hirsch, R. Bezdek and R. Wendling, “Peaking of World Oil Production: Impacts, Mitigation, & Risk Management”, (US Department of Energy, February 2005), p. 64 (here).
[40] Email discussion with the author, 11 July 2009
[41] Jonathon Gatehouse, "When the oil runs out", (Macleans, 9 February 2006) (here).
[42] Ibid
[43] Dr. Colin Campbell as interviewed by Jonathan Holmes, "Peak Oil?", (ABC, 10 July 2006) (here).
[44] Email discussion with the author (under the Chatham House Rule), 30 April 2009.
[45] John Hamilton, “Causes and Consequences of the Oil Shock of 2007-08”, (Brookings Institution, 23 March 2009).
[46] Ibid, p. 40.
[47] Energy Watch Group, “Crude Oil the Supply Outlook“, (EWG, October 2007), p. 70 (here).
[48] Yves Cochet, "Pétrole Apocalypse", (Fayard, 1 Septembre 2005).
[49] Deutsche Bank, “Energy Prospects after the Petroleum Age“, (DB: 2 December 2004), page. 10 (here).
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This article has 94 comments:
Not that I disagree with the author's conclusion that alternative energy is a wholly inadequate replacement for oil.
But, in an effort to calm public panic, governments will hail alternative energy technologies as the solution to our problem.
Then it will be too late.
Guess what?? Hurrahh!!!--------Fooled again!.
1) Peak Oil effectively became history in 2005, production of Oil has not reduced since then.
2) There is currently no effective replacement for Oil & other Fossil commodities, in their many uses, mainly because governments lack the will.
3) The Fossil Commodities industry, have an enormous amount of Political clout, across all Political Party's, in every nation on earth.
The $64 Trillion question is, where & when will the circuit breakers come?
================
In addition Lionel, whilst you put the case well, there are many who will simply never listen!
> jack
As far as oil goes, it would be $30 a barrel if not for the weak dollar...that is a fact
Let me also point out that our natural gas reserves in the US contain more twice the energy contained in the oil fields of Saudi Arabia. It's very easy to start building trucks and cars that run on NG, and indeed we will soon start making that transition. Epiphany, folks, it’s very easy to transition to a NG transportation economy and we’re beginning to do so. Problem solved for several more generations.
A much better article would have been about why peak oil is a myth, complete with much better references. But then again, no doubt our young author probably has a political agenda.
I am especially impressed by the proposition that the world may see a series of oil price spikes which produce worldwide recession, followed by low oil prices, which lead in turn to new price spikes, etc.
Goldman Sachs is predicting oil prices of $150+ in 2010...Are we seeing that proposition unfold now?
I am long oil, natural gas, and alternative energy. I won't go so far as to predict a "century of war and famine", but it is clear to me that as we exit this recession, greater demand for oil will result in increased pressure on supply...oil prices will increase, recession will follow, and demand will fall...it all sounds so familiar.
www.autoblog.com/2008/...
think a prius running on US produced nat gas as opposed to foreign oil. that said toyota won't manufacture the car in volume because the US government won't support NGV's or the refueling infrastructure to support them. think of the NG infrastructure the money blown on "cash for clunkers" would have bought. instead, we simply have more (and newer) cars running on gasoline (foreign oil). the US gov knows that it will have ultimate control of the american people if it can control their gasoline supply and thus their mobility. so, congress is instituting executive branch martial law legislation, and building up the military for internal use purposes. meanwhile, the american electorate is watching american idol and sports thinking everything is fine and the american dream is still alive...
On Aug 09 10:47 AM geophys wrote:
> There is no such thing as peak oil. Only artificial peak oil brought
> on by political means. Meaning "don't drill here, can't drill there,
> legislate no drill areas, don't touch Greenland or the Antarctic."
> We make our ouwn peak oil by not allowing exploration. Africa has
> been largely underexplored, large areas of the the US Continental
> Shelf-underexplored, reinvestment into mis managed Russian Oil field
> would lead to billions of secondary recovery. Future recovery efforts
> of known fields using nano techology or the like will yield 50-60%
> recovery of original oil in place. That would be a 50-100% increase
> in recoverable oil. There is no end in site in my kids, my kids
> kids or mys kids kids kids lifetime. Unless of course we chose (legislate)
> to make peak oil happen.
His point "don't drill here" is unequivocally correct. I have been to the beaches in Santa Barbara, CA, where oil seeps up from a pretty enormous oil field just below the surface. Will we be allowed to drill in Santa Barbara? Hell no!!!! It would ruin the view for $ multi million mansos near the beach. Should we drill there? Absolutely!
But the Peak Oil argument is not about that: it's about a peak level of production, and the amount of energy and environmental destruction necessary to maintain even current levels.
On Aug 09 11:17 AM buyforeclosures wrote:
> Natural gas is the biggest no brainer there is...WHY doesn't Obama
> get this? WHY does he never speak of it? I am not a NG bull..even
> at current price of $3.67 its probably overpriced. Historically it
> usuallt trades in the mid 2's until the OIL spec bubble drove it
> sky high the last few years. But I do think it is much cleaner, cheaper
> and it is EVERYWHERE! The technology we have these days to find and
> extract it is mindboggling. In Asia almost every taxi and many cars
> have it. A great way to create jobs and become less dependent on
> Foreign oil is to start expanding these operations and have NG fills
> at every Gas station. Wake up Obama....Pickens is right about this
> one and Wind energy is another no brainer along with harnessing energy
> from the U.S vast Oceans .
> As far as oil goes, it would be $30 a barrel if not for the weak
> dollar...that is a fact
survivingpeakoil.blogs...
survivingpeakoil.blogs...
www.peakoilassociates....
Germany during the rise of Hitler. Heil Obama and fall blindly into line. Worry about some threatened fly or lizard and stop all economic activity, including your future. What a stupid bunch. No chance that we will change until it is almost too late. By then, China will own everything and we will be imported to work on their railroads.
On Aug 09 01:15 PM Aaron Ashcraft wrote:
> The writer failed to mention the giant oil find in Brazil, while
> difficult to extract, reserves are enormous. Further, oil shale/tar
> sands in the Rocky Mountains are just waiting to be excavated. Expensive?
> Absolutely, but there are enormous resources just waiting to be pulled
> from the ground.
>
> His point "don't drill here" is unequivocally correct. I have been
> to the beaches in Santa Barbara, CA, where oil seeps up from a pretty
> enormous oil field just below the surface. Will we be allowed to
> drill in Santa Barbara? Hell no!!!! It would ruin the view for $
> multi million mansos near the beach. Should we drill there? Absolutely!
>
>
Cheerfully yours,
Oscar Meyer
Please get your head out of the ground. Major oil fields from Mexico to Russia to the Mid-East are rapidly depleting. And demand from the emerging economies is rapidly increasing.
The whole idea behind "Peak Oil" is not that we will run out of oil, but that we will run out of oil that be exctracted from the ground economically.
Sure they are many alternatives, but none of them yet make economic sense. They're getting closer but not yet.
On Aug 09 11:32 AM Moral Hazards Amok wrote:
> Oh, pleeeeeeeeeeease! The alarmists have been screaming about peak
> oil since the 1920s. They were obviously wrong then and they're also
> wrong now. Oil shale, oil sands, and new technologies allowing producers
> access to oil fields of much greater capacity than anything we've
> tapped so far... We're swimming in the stuff if the democrats and
> their radical Marxist allays will just allow us to produce it.<br/>
>
> Let me also point out that our natural gas reserves in the US contain
> more twice the energy contained in the oil fields of Saudi Arabia.
> It's very easy to start building trucks and cars that run on NG,
> and indeed we will soon start making that transition. Epiphany, folks,
> it’s very easy to transition to a NG transportation economy and we’re
> beginning to do so. Problem solved for several more generations.
>
>
> A much better article would have been about why peak oil is a myth,
> complete with much better references. But then again, no doubt our
> young author probably has a political agenda.
Keep in mind that all the figures quoted in the article are just barrel counting. It does not take into account the whole net energy thing, which comes heavily into play as we go past peak. See my post at goodstockinvesting.blo... where you can see how dramatically unequal barrels are going to become.
On Aug 09 02:52 PM Wisdom vs. Information wrote:
> funny, no one like me who has worked in the oilfield is worried about
> peak oil. demand might exceed supply, causing inflation-adjusted
> prices to go up, but the "Peak Oil Theory" is simply a fraud and
> the people who push these theories are idiots. None of of these theories
> have been proven. fields continue to surprise everyone by refreshing
> themselves; those of you who push theories as fact embarrass yourselves--
> worse, you reduce the quality of the discussion about energy
For many single oil wells production varies approximately as F*EXP(-t/Tc) where t is time and Tc is the time constant. Here EXP is the Euler's number being approximately 2.718 in value. F is the initial or flush number of barrels produced per unit of time. The total production as a function of time is given by P(t) = F*Tc*[1 - EXP(-t/Tc)]. For very large values of time the total production approaches F*Tc as the flow rate diminishes to zero. In one time constant of production 63.21% of the total is obtained. When the well has been pumped for a time equal to 4.605*Tc, 99% of the oil has been obtained. Thus it becomes obvious that it is best to make enough oil to pay for the well before the first time constant has been reached. For an oil field drilling must be done constantly to maintain a given amount of production as all the wells behave as mentioned. Without knowing a lot about the large oil fields it is hard to go into the economics of production. It is interesting to note that a well with a flush production of 10,000 bbl/day would not be considered good in Libya whereas a well with flush production of 100 bbl/day would be a good one in the Bradford oil field. This is due to differing costs and time constants.
When dealing with things that vary exponentially great caution must be exercised. An exponential population growth in the presence of an exponential decrease in resources is a very dangerous situation.
I don't think Washington really want to solve anything. It is right before their eyes. Other motives perhaps ?
On Aug 09 10:47 AM geophys wrote:
> There is no such thing as peak oil. Only artificial peak oil brought
> on by political means. Meaning "don't drill here, can't drill there,
> legislate no drill areas, don't touch Greenland or the Antarctic."
> We make our ouwn peak oil by not allowing exploration. Africa has
> been largely underexplored, large areas of the the US Continental
> Shelf-underexplored, reinvestment into mis managed Russian Oil field
> would lead to billions of secondary recovery. Future recovery efforts
> of known fields using nano techology or the like will yield 50-60%
> recovery of original oil in place. That would be a 50-100% increase
> in recoverable oil. There is no end in site in my kids, my kids kids
> or mys kids kids kids lifetime. Unless of course we chose (legislate)
> to make peak oil happen.
this has been proposed before in the form of a per-gallon federal tax @ the pump such that you always pay @ least 3.50 (or pick a number). it would stabilize exploration & R&D efforts.
since u.s residents are hooked on cheap fuel this idea will never fly.
> jack
But, in general, I find this article lopsided leading to a fear-filled conclusion that is not justified. I don’t see his economy crushing oil price spike scenarios playing out for the following reasons.
1) The author seems to ignore the enormous amount of oil in the Canadian oil sands and Western US oil shale. “… the world's largest deposits [of oil sands] occur in two countries: Canada and Venezuela, both of which have oil sands reserves approximately equal to the world's total reserves of conventional crude oil…” from Wikipeida, en.wikipedia.org/wiki/... . “...A 2005 estimate set the total world resources of oil shale at 411 gigatons - enough to yield 2.8 to 3.3 trillion barrels of shale oil. This exceeds the world's proven conventional oil reserves, estimated at 1.317 trillion barrels…” from Wikipeda, en.wikipedia.org/wiki/... .
Sure, it takes higher oil prices of $100 to $150 per barrel to make extraction profitable. But, this price for oil (about $3.20 to $4.20 gas) is not a severe price spike that will cause an economic crisis.
2) Battery technology is moving along at a lot faster pace than most people realize. So why is battery technology important for oil demand? Note how there are generally 2 separate energy worlds: oil for moving vehicles and electricity for stationary objects. Battery technology is important to allow vehicles to be powered from the electric grid via plug-in vehicles. The electric grid is 2 to 3 times more efficient at delivering energy to a vehicle than gasoline.
The relatively new battery technology, Lithium Iron Phosphate (LiFePO4), is ideally suited for vehicles. It has high capacity from the Lithium, potentially low cost because no expensive metals, no risk of explosion like other Lithium batteries, etc. In 10 years, the technology and manufacturing will be mostly perfected (now it is “state of the art”), and the battery will be cheap (below $200 per kWh) and plentiful for plug-in hybrid vehicles and all-electric vehicles.
As oil prices rise, the demand destruction for gasoline in the US will be extreme. People will drive vehicles will smaller engines and much higher efficiency engines like the VW turbo diesel. But, also people will shift to plug-in vehicles that will dramatically decrease oil usage. I could see gasoline usage in the US drop by 30% or more from 2019 to 2029 (just my guess) with high ($4 plus) gasoline prices and the plug-in vehicles. From 2029 to 2039 I see continued demand destruction for gasoline.
3) New drilling techniques have opened huge new reserves of natural gas in recent years. Some estimates are many decades of supply. When oil is expensive and nat gas is much cheaper, nat gas will replace most of heating oil. CNG will be used much more in local delivery vehicles. It will be used more for generation of electricity to power plug-in vehicles.
4) Solar technology is advancing at a very fast pace. Most people don’t realize how close solar is to reaching “grid parity” where the cost of the solar system is fully paid for (without government subsidies) by the saved electricity from the utility company’s “grid”. In 5 years, solar with be a grid parity for many places like the southwest US, the Mediterranean countries, etc. In 10 years, solar will be at grid parity for many more places, and below grid parity for the above listed places.
I predict that sometime between 5 and 10 years, solar will no longer be something environmentalists push, but something that average people install on their homes for economic reasons. In 10 years, there will be no doubt that installing a solar system will be an economically smart thing to do. There begins the rush as there are no environmental, political, major financing, and “not in my back yard” issues to overcome. For example, newly retired baby-boomers (the ones that saved money for retirement – yes, there are many) are motivated to spend some of their savings on a solar system in order to have very low electric bills for the rest of their lives.
Solar is important to oil because of the increased demand for electricity from plug-in vehicles. Also, many people will buy a home solar system to power their new plug-in vehicle, and others will buy a plug-in vehicle because they just bought a solar system. Why not go nearly 100% energy independent? I know many people that are “itching” to do that. It makes them feel in more control of their world.
5) One further point. Electric vehicles perform much better than ICE (internal combustion engine) vehicles. There is no hesitation at the stop light. Acceleration, cornering, and bad weather handling will be better with electronically controlled 4 wheel drive. Once the general public figures this out, electric drive vehicles will be the new cool vehicle to own. “So what” about the environment.
The rate of decline will determine the severity of the crisis. Our national dependence on oil and being the world's largest military superpower should scare the hell out of oil producers. The US military will take what it needs from the world to survive in its current incarnation. We have more to fear from within than from without. Because we will be the aggressor in this conflict. And, we will spin it within some form of morality that belies our greed.
On Aug 09 09:47 AM Poborsky wrote:
> Great article. I believe that peak oil has already passed. There
> may be a good amount to be discovered in the arctic etc, but it will
> take many years to bring this online. US consumption alone is around
> 18m barrels per day. Do the maths and its frightening. Its not possible
> to keep up with supply. With many oil exporting nations being at
> the other side of the bell curve, they will stop exporting and have
> to use supply for their own demand. We at at the crossroads now.
> Consequences are too scary to contemplate. World population increased
> with the advent of the age of oil. Unless there are major technological
> advances in the next few years then we are in for a century of war
> and famine.
On Aug 09 03:19 PM Poborsky wrote:
> Care to explain why north sea fields are degrading 10% pa. This means
> that exponentially these oil fields are all but finished.
On Aug 09 03:19 PM Poborsky wrote:
> Care to explain why north sea fields are degrading 10% pa. This means
> that exponentially these oil fields are all but finished.
www.theoildrum.com/nod...
and the EIA concludes much the same, see the section "Substitution of Natural Gas for Petroleum Consumption" a little more than half way down the page:
www.eia.doe.gov/oiaf/a...
and then these data about how fast oil supply reduction is occurring for the U.S:
survivingpeakoil.blogs...
The capital for natural gas conversions and supply infrastructure will disappear as oil supply reduction impacts the U.S. economy.
And these article do not even take into account declining oil supplies and how that will impact the economy:
seekingalpha.com/insta...
www.commodityonline.co...
www.guardian.co.uk/wor...
And the IEA indicates that "the oil crisis begins to grip after 2010:"
survivingpeakoil.blogs...
Best regards,
Cliff Wirth
He lost! Get over it. The smarter man won, and thank god!
Don't listen to Fox News, Obama is not a socialist. He's the best leader of our time.
On Aug 09 01:39 PM realold wrote:
> I have fished in my small boat off UC Santa Barbara where gas and
> oil are bubbling up out of the sea floor and coating my boat hull
> with tar. Drilling there would actually enhance the local environment..
> The oil platforms attract all kinds of sea life, invertebrate to
> pelagic. Thanks to the greenies, when the platform is finished, it
> must be dismanteled, and the ocean in a one mile radius swept clean
> killing all the sea life generated. Thanks greenies, you win we
> all lose again. Americans now remind me of
> Germany during the rise of Hitler. Heil Obama and fall blindly into
> line. Worry about some threatened fly or lizard and stop all economic
> activity, including your future. What a stupid bunch. No chance
> that we will change until it is almost too late. By then, China
> will own everything and we will be imported to work on their railroads.
>
> On Aug 09 01:15 PM Aaron Ashcraft wrote:
You can assume a zillion barrels in the ground and total daily production (total liquids) will not exceed 90 million barrels a day, for a whole host of reasons. Actual crude oil production has already peaked.
On Aug 09 10:47 AM geophys wrote:
> There is no such thing as peak oil. Only artificial peak oil brought
> on by political means. Meaning "don't drill here, can't drill there,
> legislate no drill areas, don't touch Greenland or the Antarctic."
> We make our ouwn peak oil by not allowing exploration. Africa has
> been largely underexplored, large areas of the the US Continental
> Shelf-underexplored, reinvestment into mis managed Russian Oil field
> would lead to billions of secondary recovery. Future recovery efforts
> of known fields using nano techology or the like will yield 50-60%
> recovery of original oil in place. That would be a 50-100% increase
> in recoverable oil. There is no end in site in my kids, my kids kids
> or mys kids kids kids lifetime. Unless of course we chose (legislate)
> to make peak oil happen.
Wrong...production costs are cyclical.
The $64 Trillion question is, will innovation deliver sustainable circuit breakers and when will they come?
On Aug 09 10:21 PM Petroleum Engineer wrote:
> A typical comment form a Geophysicist. There is a crucial difference
> between actual daily production and reserves in the ground, and an
> even greater difference between resources in the ground and daily
> production.
>
> You can assume a zillion barrels in the ground and total daily production
> (total liquids) will not exceed 90 million barrels a day, for a whole
> host of reasons. Actual crude oil production has already peaked.
>
>
Seemingly agenda driven, the author chose to ignore the dozen predictions for Peak Oil made by geologists in the last year. Instead, we got the "speaking tour & book sales" version.
the Average of the 20 most recognized forecasts: currently 93-mbd in 2023 (compared to 84-mbd in 2009).
Another seasonally updated chart is the Average of 21 recognized estimates of URR (ultimate recoverable resource). It reveals that: (a) Reserves have doubled since 1982; (b) URR has doubled since Y2k; (c) albeit only 30-Gb (billion barrels) are extracted annually, there are 2,582-Gb of oil remaining.
In short, these alarmist claims have been around forever and are easily dismissed when compared to data and explanations by real geologists.
Al Gore flunked Science at Harvard with a "D", then flunked out of Divinity School. Models are nice but only models. Have the morons ignored the Shoemaker-Levy comet striking Jupiter, or a second struck last month leaving a mark the size of the planet Earth? The next 5 years, our solar system passes through a danger zone. During a nuclear winter, reliance on solar, biofuel, or wind could prove fatal to our own educated morons.
The Resource Pyramid increases with strides in technologies , and industry can afford to transition to Green.
Did global warming did not make his top ten list?
On Aug 09 08:17 PM cjwirth wrote:
> Regarding the future potential for natural gas as a replacement for
> gasoline and diesel, see this comment:
>
> www.theoildrum.com/nod...
>
> and the EIA concludes much the same, see the section "Substitution
> of Natural Gas for Petroleum Consumption" a little more than half
> way down the page:
>
> www.eia.doe.gov/oiaf/a...
>
> and then these data about how fast oil supply reduction is occurring
> for the U.S:
>
> survivingpeakoil.blogs...
>
>
> The capital for natural gas conversions and supply infrastructure
> will disappear as oil supply reduction impacts the U.S. economy.
>
>
> And these article do not even take into account declining oil supplies
> and how that will impact the economy:
>
> seekingalpha.com/insta...
>
>
> www.commodityonline.co...
>
>
> www.guardian.co.uk/wor...
>
>
> And the IEA indicates that "the oil crisis begins to grip after 2010:"
>
>
> survivingpeakoil.blogs...
>
>
> Best regards,
>
> Cliff Wirth
So we have a situation where we may have repeat episodes of 2008.
So faced with this threat, what should a sensible government do?
1) Energy efficiency - like quality, efficiency is free, and yet the government prefers windmills and ethanol, why?
2) Keep liquids for transport. Using natural gas vehicles might seem like a good idea, but why are we burning liquids? In 2007, 11.7 Billion gallons of gasoil were used for purposes other than transportation.
tonto.eia.doe.gov/dnav...
3) Allow drilling. It will not make a massive difference, but available reserves should be exploited, unless there is a specific reason.
4) Gasoline taxes, to encourage consumers to be more frugal.
5) Natural gas infrastructure to enable the best of the fossil fuels to be better utilised.
6) Encourage the best of the alternatives, but always prioritising cost effectiveness.
The problem is that common sense has no lobbyists.
Before attempting to use the peak oil production theory as an investment belief upon which to build one's energy trading strategy, one should be aware that there is a competing theory. Abiotic Oil production theory[2] originated by Russian researchers, (imho) more closely follows the scientific method, and is a more credible theory. The null hypothesis may have been disproved in the Ukraine's Dneiper-Donetsk Basin, the Gulf of Mexico's Eugene Island 330, and evidence of a ethane/methane lake on Saturn's moon Titan.
In this day and age, with the wide variety of political agenda's that seem to flourish and encroach on fundamental individual rights and freedoms, due diligence is required when evaluating any theory put forward that would have a materially effect people's quality of life. Remember, slavery and oppression is the historic norm for the human condition, individual freedom, duty and responsibility is the exception.
[1] www.google.com/search?...
[2] www.google.com/search?...
www.youtube.com/watch?...
On Aug 10 05:28 AM T.Geiger wrote:
> The problem I have with Hubbert's Peak oil production theory[1] is
> that it is just that - a theory. It is framed in such a way that
> disproving the null hypothesis is impossible. A majority of research
> regarding peak oil production and reserves tends to support theory,
> as if the premise is accepted from the start, the researchers are
> biased and data is collected & sited to bolster support. Almost
> a self-fulfilling prophesy.
>
> Before attempting to use the peak oil production theory as an investment
> belief upon which to build one's energy trading strategy, one should
> be aware that there is a competing theory. Abiotic Oil production
> theory[2] originated by Russian researchers, (imho) more closely
> follows the scientific method, and is a more credible theory. The
> null hypothesis may have been disproved in the Ukraine's Dneiper-Donetsk
> Basin, the Gulf of Mexico's Eugene Island 330, and evidence of a
> ethane/methane lake on Saturn's moon Titan.
>
> In this day and age, with the wide variety of political agenda's
> that seem to flourish and encroach on fundamental individual rights
> and freedoms, due diligence is required when evaluating any theory
> put forward that would have a materially effect people's quality
> of life. Remember, slavery and oppression is the historic norm for
> the human condition, individual freedom, duty and responsibility
> is the exception.
>
>
> [1] www.google.com/search?...;rls=org.mozilla%3Aen-...
>
>
> [2] www.google.com/search?...;rls=org.mozilla%3Aen-...
Thanks for this contribution, you must have spent a great deal of time in its preparation.
Jack
On Aug 10 11:25 AM Jack Walker wrote:
> Lionel,
>
> Thanks for this contribution, you must have spent a great deal of
> time in its preparation.
>
> Jack
Oil production is not a bell curve. Instead it is a gently sloping plateau, with ups and downs.
The low hanging fruit is being plucked. Global oil exploration has barely begun. Unconventional fossil fuels swamp conventional fuels in terms of quantity. Clean coal to liquids and gas plus gas to liquids provides a lot of room.
In 20 years microbial biofuels will begin to place a price ceiling on liquid fuels from fossil sources.
Nuclear energy could be a clean and abundant part of the energy and transportation picture within 10 years if not for a neanderthal political system.
On Aug 09 08:32 AM cabaretewilliam wrote:
> Move to the Caribbean, pick a shady spot by the ocean and you can
> live almost without "oil".
Unfortunately, nuclear-powered cars are not practical. And modern mines use oil-powered tools (directly or indirectly). So expensive oil means expensive uranium. Which means expensive nuclear energy. In fact, I've read that most forms of alternative energy are primed by oil. Which means that today's expensive clean coal, wind, hydro, solar, etc energy will be even more expensive once peak oil hits.
On Aug 10 01:27 PM Al Fin wrote:
> Nuclear energy could be a clean and abundant part of the energy and
> transportation picture within 10 years if not for a neanderthal political
> system.
– DESCRIPTION AND RESULTS
pubs.usgs.gov/dds/dds-060/
Just in c
Lionel, you write a learned article and footnote it well. I can tell you have done your homework. Unfortunately, the credibility of the sources are as thin as their arguments. You start out referencing Dick Cheney. All Gore, and British Petroleum. Every one of those has a clear monetary agenda for convincing us we are running out of oil. What major owner of oil stocks, or what oil company, does not want to convince the world that their commodity is incredibly scarce. Outrageous profits are (man)made with scarce commodities. They don’t even have to be scarce, just organize a global price fixing cartel and convince people that your commodity is scarce. This not only helps you gouge everyone, it discourages competition.
Every footnote referenced is a source with an axe to grind. Those readers who are seeking the truth so that they can make informed decisions, might want to reference some serious experts that pursue real science (unlike All Gore); Someone without a profit or political motive. Say someone like the U.S. Geological Survey.
I suggest reading the U.S. GEOLOGICAL SURVEY WORLD PETROLEUM ASSESSMENT 2000 - DESCRIPTION AND RESULTS, located at pubs.usgs.gov/dds/dds-060/. Inquiring minds will learn on page 55, of the 183 page, exhaustive report that the objective scientist at the USGS estimate the world has 5.558 trillion barrels of oil (including natural gas equivalents). At 85 million barrels a day, that would last 161 years. Look it up and make up your own mind. If you really want to enjoy an informative read on how we are feed misinformation go to www.runet.edu/~wkovarik/oil/.
Always look at the facts and where they come from,
TIMERTIM
I've been in touch with top-officials at the IEA and EIA (US Department of Energy) and they recognise Peak Oil is imminent (not publicly...). Read the news in the coming months...
On Aug 10 04:19 PM timertim wrote:
> SORRY THE FIRST COMMENT WAS SENT BEFORE READY.
> Lionel, you write a learned article and footnote it well. I can tell
> you have done your homework. Unfortunately, the credibility of the
> sources are as thin as their arguments. You start out referencing
> Dick Cheney. All Gore, and British Petroleum. Every one of those
> has a clear monetary agenda for convincing us we are running out
> of oil. What major owner of oil stocks, or what oil company, does
> not want to convince the world that their commodity is incredibly
> scarce. Outrageous profits are (man)made with scarce commodities.
> They don’t even have to be scarce, just organize a global price fixing
> cartel and convince people that your commodity is scarce. This not
> only helps you gouge everyone, it discourages competition.
>
> Every footnote referenced is a source with an axe to grind. Those
> readers who are seeking the truth so that they can make informed
> decisions, might want to reference some serious experts that pursue
> real science (unlike All Gore); Someone without a profit or political
> motive. Say someone like the U.S. Geological Survey.
>
> I suggest reading the U.S. GEOLOGICAL SURVEY WORLD PETROLEUM ASSESSMENT
> 2000 - DESCRIPTION AND RESULTS, located at pubs.usgs.gov/dds/dds-060/.
> Inquiring minds will learn on page 55, of the 183 page, exhaustive
> report that the objective scientist at the USGS estimate the world
> has 5.558 trillion barrels of oil (including natural gas equivalents).
> At 85 million barrels a day, that would last 161 years. Look it up
> and make up your own mind. If you really want to enjoy an informative
> read on how we are feed misinformation go to www.runet.edu/~wkovarik/oil/.
>
>
> Always look at the facts and where they come from,
> TIMERTIM
> I've been in touch with top-officials at the IEA and EIA (US Department
> of Energy) and they recognise Peak Oil is imminent (not publicly...).
> Read the news in the coming months...
Really? In the meantime, i advise interested readers to put your money on the less anecdotal information available: In its biannual WEO forecast in Nov-2008, IEA puts PEAK OIL @ 107mbd in 2030 (compared to 84 today).
And the EIA's last projection has PEAK OIL @ 108mbd in 2090.
Albeit both of these are downward revisions, the probability that either Agency will confirm that Peak was last year is a flat zero.
This article quotes Bakhtiari, but his failed forecast was 81-mbd in 2006. Total is referenced, but their 2008 published target is a 100mbd Plateau 2020-2030.
Finally we are to put faith in Colin Campbell's declaration that PEAK OIL was in 2008. Yet, history reveals that he first declared PEAK OIL @ 66mbd in 1989, and has made almost annual pronouncements ever since.
The Scenarios venue at our website tracks the forecasts made a dozen years ago to see who is most accurate. Jean Laherrere of France & the EIA have the best long term projections. Amazingly, their old forecasts for 2008/2009 are within 1mbd.
One can believe those with credibility ... or those selling books or flogging wares on CNBC.
> how do you explain this, freddy?
> img382.imageshack.us/i...
It's just a silly graph. Silver spiked. Iron, corn, sugar, copper & 50 other commodities spiked. Did they all PEAK in July 2008? And why are they all back to 2004 levels today?
And if there is a shortage of oil, why was it only $32/barrel in January? Why was it $67/barrel one year later?
Learn one thing today, grasshopper: Correlation does not imply Causation.
Read what I wrote here:
seekingalpha.com/artic...
Then read above comments on NG vehicles (which are happening in many countries, if not the US) and electric vehicles of various stripes, not to mention all those hybrids and Obama's new CAFE standards. Add all those up and you have a recipe for a crash in oil prices somewhere after 2015.
And since I posted that info on South America, we've come across this little tidbit:
www.oilandgaseurasia.c...
^
Some conversions from that article are in order:
44.55 billion metric tons = 311.85 billion barrels
200-250 billion metric tons = 1.4 trillion - 1.75 trillion barrels
A lot of that is going to be natural gas equivalent, and it is almost surely a resource-in-place estimate but let's still assume 1/2 of the 1.4 - 1.75 trillion barrels is natural gas-eqivalent. That leaves us 700 billion to 875 billion barrels of oil. Then let's assume only 30% of that will be recoverable. That still leaves us 210 - 263 billion barrels of recoverable oil. If we even further assume the guy doing that study was optimistic by double we're still talking about 105 billion barrels minimum.
There's still a lot of oil out there to be discovered folks.
But I suppose Ghawar is insignificant, too. *rolls eyes*
On Aug 11 12:30 AM wadosy wrote:
> 105 billion barrels would last the world about 3 1/2 years.
Well done to Lionel for writing a fairly impartial piece, well researched & a nice departure to see the footnotes on your research sources.
> so the fact that oil production's been flat for the last four or
> five years despite the price increasing seven-fold and drills nearly
> doubling has nothing to do with anything.
Wrong again, grasshopper. In 2003, extraction was 79.6mbd ... and rose to 85.5 by 2008 (1.2mbd/yr growth). BTW, between 1970 & today, oil production rose 40mbd or 1mbd. You are "flatly" in error.
The avg contract price in 2003 was $26. Today it is $67/barrel. So, price is up 2.5's over that period ... clearly not seven-fold.
With 6-mbd of surplus capacity, the industry is poised for several years of new production records and at least four years of sub-triple digit prices.
The rest of your post and the next one border on the lunatic fringe. Sorry, i ain't going there...
It is all based on the internal politics of each country. Governments remain in power because of income generated by exporting oil; if you were a citizen of one of these countries and knew that there was very little oil left, wouldn't you want to stop exporting oil to ensure you have some for your future and overthrow those that gave away your one and only natural resource?
On Aug 10 03:04 PM six wrote:
> Why would OPEC fudge reserve #s to the bad? It makes no sense..
> OPEC wants the price of Oil to go UP. Despite what they tell the
> media I am sure they would rather pump Oil at 120 a barrel vs 60.
> For decades the Peak Oil People have been chanting the demise of
> oil and yet we still have more than enough. Sounds like all the
> gold bugs... There must be something wrong with your brain that you
> can ignore the reality that we have more than enough sources of energy.
> In fact the USA has abundant oil off the east coast but can not drill
> for it. There will be no peak oil. The world is not going to end.
> Wake up....
I'd like to refer to Lionel's first item at the very top of this thread -- Dick Cheney's Haliburton speech: "oil is strategic in nature"
Beginning with Churchill's decision in 1912 to build fast battleships and cruisers powered by oil (not coal), control of the world's known oilfields became a strategic imperative. Hitler's goal was conquest of the Rumanian oilfields. Japan's goal was conquest of Burma and Java - for oil. US policy was to encourage drilling everywhere and anywhere in the lower 48, because oil was (and still is) a vital military requirement.
Cheney's secret 'Energy Commission' in 2001 was convened for the purpose of addressing the reality of imminent Peak Oil.
I'm working on an article for SA on the subject of 'proved' reserves and the fallacy of Monte Carlo probablistic estimates. Meanwhile, consider Cheney's 'strategic' plan to conquer Iraq for oil. At the time, no one anticipated a severe financial crisis that would knock down demand. The question in 2001 was supply:
I can't compromise confidential insider sources. So, let's look at the public record as reported by Wall Street Journal, Reuters, The Washington Post, New York Times, BBC, The Guardian, The Nation, The New Yorker, Sydney Morning Herald, CFR, CBS, MSNBC's Hardball, former Treasury Secretary Paul O'Neill and former Fed chief Alan Greenspan. Brief analysis follows source links.
www.thenation.com/doc/...
www.aljazeera.com/mm/v...
www.smh.com.au/article...
www.energybulletin.net...
news.bbc.co.uk/2/hi/pr...
www.cfr.org/content/pu...
www.guardian.co.uk/wor...
www.washingtonpost.com...
www.commondreams.org/h...
www.globalpolicy.org/s...
www.globalpolicy.org/s...
www.globalpolicy.org/s...
www.guardian.co.uk/wor...
www.guardian.co.uk/wor...
According to then Secretary of the Treasury Paul O'Neill in his memoir The Price of Loyalty, Iraq was much on the mind of Defense Secretary Donald Rumsfeld at the first meeting of the National Security Council on January 30, 2001, seven months before the 9/11 attacks. At that meeting, Rumsfeld argued that the Clinton administration's Middle Eastern focus on Israel-Palestine should be unceremoniously dumped. "[W]hat we really want to think about," he reportedly said, "is going after Saddam." Regime change in Iraq, he argued, would allow the U.S. to enhance the situation of the pro-American Kurds, redirect Iraq toward a market economy, and guarantee a favorable oil policy.
The adjudication of Rumsfeld's recommendation was shuffled off to the mysterious National Energy Policy Development Group that Vice President Cheney convened as soon as Bush took occupancy of the Oval Office. This task force quickly decided that enhanced American influence over the production and sale of Middle East oil should be "a primary focus of U.S. international energy policy," relegating both the development of alternative energy sources and domestic energy conservation measures to secondary, or even tertiary, status.
A central goal of the administration's Middle East focus would be to convince, or coerce, states in that region "to open up areas of their energy sectors to foreign investment"; that is, to replace government control of the oil spigot -- the linchpin of OPEC power -- with decision-making by multinational oil companies headquartered in the West and responsive to U.S. policy needs. If such a program could be extended even to a substantial minority of Middle Eastern oil fields, it would prevent coordinated decision-making and constrain, if not break, the power of OPEC. This was a theoretically enticing way to staunch the loss of American power in the region and truly turn the Bush years into a new unipolar moment in the Middle East.
Having determined its goals, the Task Force began laying out a more detailed strategy. According to Jane Mayer of the New Yorker, the most significant innovation was to be a close collaboration between Cheney's energy crew and the National Security Council (NSC). The NSC evidently agreed "to cooperate fully with the Energy Task Force as it considered the 'melding' of two seemingly unrelated areas of policy: 'the review of operational policies towards rogue states,' such as Iraq, and 'actions regarding the capture of new and existing oil and gas fields.'"
Though all these deliberations were secret, enough of what was going on has emerged in these last years to demonstrate that the "melding" process was successful. By March of 2001, according to O'Neill, who was a member of both the NSC and the task force: "Actual plans.... were already being discussed to take over Iraq and occupy it -- complete with disposition of oil fields, peacekeeping forces, and war crimes tribunals -- carrying forward an unspoken doctrine of preemptive war."
O'Neill also reported that, by the time of the 9/11 attacks on the World Trade Center and the Pentagon, the plan for conquering Iraq had been developed and that Secretary of Defense Rumsfeld indeed urged just such an attack at the first National Security Council meeting convened to discuss how the U.S. should react to the disaster. After several days of discussion, an attack on Iraq was postponed until after al-Qaeda had been wiped out and the Taliban driven from power in Afghanistan. It took only until January 2002 -- three months of largely successful fighting in Afghanistan -- before the "administration focus was returning to Iraq." It wasn't until November 2002, though, that O'Neill heard the President himself endorse the invasion plans, which took place the following March 20th.
With this background, it's easier to understand the recent brief, but highly significant, flurry of controversy over a single sentence in The Age of Turbulence, the bestselling, over-500-page memoir by longtime Federal Reserve Chairman Alan Greenspan. He wrote simply, as if this were utterly self-evident: "I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil."
-- Michael Schwartz
In January 2003, as President Bush was presenting the looming war with Iraq as necessary to protect Americans, the Wall Street Journal reported that oil industry executives met with Cheney's staff to plan the post-war revival of Iraq's oil industry. “Facing a possible war with Iraq, U.S. oil companies are starting to prepare for the day when they may get a chance to work in one of the world's most oil-rich countries,” the Journal reported on Jan. 16, 2003:
“Executives of U.S. oil companies are conferring with officials from the White House, the Department of Defense and the State Department to figure out how best to jump-start Iraq's oil industry following a war, industry officials say.
“The Bush administration is eager to secure Iraq's oil fields and rehabilitate them, industry officials say. They say Mr. Cheney's staff hosted an informational meeting with industry executives in October [2002], with Exxon Mobil Corp., ChevronTexaco Corp., ConocoPhillips and Halliburton among the companies represented.
“Both the Bush administration and the companies say such a meeting never took place. Since then, industry officials say, the Bush administration has sought input, formally and informally, from executives and industry experts on how best to overhaul Iraq's oil sector.”
On April 5, 2003, Reuters reported that the State Department's “Future of Iraq” project headed by Thomas Warrick, special adviser to the Assistant Secretary of State for Near Eastern Affairs, held its fourth meeting of the oil and energy-working group. Documents obtained by Reuters showed “a clear consensus among expert opinion favoring production-sharing agreements to attract the major oil companies.”
-- Jason Leopold
Thanks for a well researched article. I liked the footnotes with sources as well. I have ben reading Seeking Alpha for a few years & have never seen the volume of comments your article has generated.
I believe "Peak Oil" primarily refers to the amount of economically recoverable oil as compared to running out of oil. The low hanging fruit of inexpensive oil is steadily & systematically being depleted. Their are other sources like the tarl sands but this oil is expensive to extract. This depletion of inexpensive oil will be the cause of large consistent price hikes ($100-$300) per barrel within 3 to 5 years & hopefully this will shock us into seriously developing the alternatives the world needs.
Al Gore is a politician, not an expert. Least of all on oil.
2. While the author presents a comprehensive, well-supported argument illustrating the threat, those that counter simply provide a rhetorical response with no factual basis. If you're going to counter, please provide supporting evidence.
3. Here's a video of Colin Campbell discussing how high oil prices result in economic crashes: www.planbeconomics.com.../
4. Here's a video of Al Bartlett lecturing on the limits to exponential growth: www.planbeconomics.com.../
Also, just because timing of predictions are wrong, doesn't mean the predicted event will never occur.
On Aug 09 11:32 AM Moral Hazards Amok wrote:
> Oh, pleeeeeeeeeeease! The alarmists have been screaming about peak
> oil since the 1920s. They were obviously wrong then and they're
> also wrong now. Oil shale, oil sands, and new technologies allowing
> producers access to oil fields of much greater capacity than anything
> we've tapped so far... We're swimming in the stuff if the democrats
> and their radical Marxist allays will just allow us to produce it.
>
>
> Let me also point out that our natural gas reserves in the US contain
> more twice the energy contained in the oil fields of Saudi Arabia.
> It's very easy to start building trucks and cars that run on NG,
> and indeed we will soon start making that transition. Epiphany,
> folks, it’s very easy to transition to a NG transportation economy
> and we’re beginning to do so. Problem solved for several more generations.
>
>
> A much better article would have been about why peak oil is a myth,
> complete with much better references. But then again, no doubt our
> young author probably has a political agenda.
On Aug 11 09:44 PM captainccs wrote:
> >>>Over the past decade, a fierce debate has emerged amongst energy
> experts about whether global oil production was about to reach a
> peak, followed by an irreversible decline.
>
> Al Gore is a politician, not an expert. Least of all on oil.
By 2030, light sweet will be only 48% of global oil production, which in turn will have grown to 99 from 84-mbd today.
In short, if the status of low hanging fruit was your intent, your post is four years late...
www.rigzone.com/news/a...
Most of the people refuting Peak Oil have a very broad definition which often includes deposits that may never be economic as the Return On Energy use in extraction is so low.
What is really not in dispute is that easy, cheap to extract oil has peaked, as on shore Oil peaked in 1980 and shallow off shore peaked around 1990. That is going to have profound effect on the world economy with our current technology and it could take a generation to develop and implement the new technology required.
Starting in the Elizabethan period, England faced a wood fuel shortage due to depletion of its timber resources, with wood prices increasing 3 times as faster as they did normally.
“Three quarters of the patents issued in England between 1561 and 1668 were connected with the coal industry and a seventh were concerned with the drainage problems.”
So a lot of our future capital and technology is going have
In short, Producers came up with a new "Saudi Arabia" every three years...
To avert terminal production decline in the medium to long term, the Industry need only extend its current decadal trend of 3.8-mbd of new capacity/yr. This will counter the current rate of underlying decline (2.8-mbd) and provide 1-mbd for annual growth.
Presently available data on Reserves implies the intersection between (rising) loss factor and new capacity will not be resource constained 'til 2031. Annual production decline will commence unless annual Megaprojects are enhanced.
Even this event is not beyond the realm. Albeit the present trend is 3.8-mbd of new capacity/yr, 4.3 is being installed in 2009 & 4.5-mbd is scheduled to be commissioned in 2010.
Only capital & geopolitical issues threaten oil growth over the coming decades ... not geology.
And hoping nobody would look, his own EIA link shows production of 84.6-mbd in 2005 was surpassed (85.4) last year. It further reveals that the 2005 monthly record of 85.3 was toppled four times and now stands at 86.6-mbd.
Even as he typed his post, analysts around the world had announced upward revisions to their 2009 & 2010 Demand forecasts. With worldwide Surplus Capacity approaching 6-mbd, all monthly/quarterly/annual records are poised to fall in 2011...
It was the collaboration of similar early data between TrendLines & Colin Campbell that resulted his dramatic declaration of the Regular Conventional Crude Peak in his August 2005 ASPO newsletter. Subsequent data revealed that PEAK was actually a few months later ... in 2005.
Neither Campbell nor myself foresee a breach of the 68-mbd production record for regular conventional crude. It is this narrow definition that was the subject of studies by MK Hubbert & Albert Bartlett.
Contributive papers of the "unpure" metric including arctic & deep sea facilities were conducted by Ken Deffeyes, Seppo Korpela, Renato Guseo & John Walsh. As mentioned by William Davison above, differing definitions have not been helpful to the public discourse.
2 by MK Hubbert ('56 & '74), Albert Bartlett ('98) & 2 current forecasts (Hutter & Campbell)
www.shell.com/home/con...
> Another good article on the impending energy crunch by Lionel. The
> link below goes to an interesting paper produced by Shell, which
> descries two future energy scenarios.
The cherry picked data is not indicative of any crunch ... neither total energy nor oil liquids.
The 2009 Royal Dutch Shell projections are indeed a case in point. In 2008, the Scramble scenario had a 99mbd Peak in 2020. The 2009 studay amends this to 97.
The 2008 Blueprints scenario projected a Peak Plateau of 101mbd from 2020 to 2030. 2009 forecasts amends the Peak during this plateau to 100mbd.
Today's production is 84mbd. The outlook for the next two decades remains status quo according to Shell. The probability of imminent Peak Oil is once again marginalized...