Fisking Scientific American on Peak Oil 28 comments
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My friend Gregor Macdonald has up a nice and intemperate comment debunking the recent Scientific American article on technology and oil supplies:
I have now read the Scientific American article. It is perhaps one of the more, if not the most insidious of the recent media pieces on peak oil, in that it leverages the truth about technological advances in oil exploration and extraction to create a falsehood: that these technological advances increase aggregate flows in world supply. It was bad enough that the NYT piece invoked Kashagan as an example--a howler of an example really--because of course Kashagan was discovered in 2000 and not a drop of oil will flow until 2014 (at huge expense and after many western oil cos have abandoned the project after huge losses). That the NYT would invoke Kashagan as an example of recent discoveries is almost absurdist.
The Sci-Am article also trades on one of the most common, recurring misunderstandings and that has to do with scale. In other words, we are always finding new oil and we have to find new oil because we are losing at least 4 Mb/day each year to decline. So we have to not only find new oil, but we have to develop it and get it flowing each year to make up for existing decline. Sci-Am is reporting on technology advances that have been used for years, but, then very inaccurately runs those advances like a stupid battering ram against peak oil. Which is about peak flows, not peak reserves.
It was a truly astonishing article. Any article that conflates reserves and flows is incompetent. The treatment of California and Alberta in particular in the Sci-Am article was so misleading as to be a textbook example of statistical and polemical obfuscation. California oil production peaked in 1986 at over 1.2 Mb/day and is now at half that rate. To lead the reader into thinking that something new is coming for California is quite the dereliction of journalistic duty. Alberta has billions of bbls of oil but would that stop, for example, a US politician from claiming we can increase flows of tar sand oil quite alot, from Alberta? No, but one would have expected something better than a politician's approach to a real problem from a magazine that uses the word Science in its title.
So just to wrap-up here: both the NYT and the Sci-Am articles would have been fine had neither tried to leverage their reporting on discoveries or technologies to refute peak oil (peak flows). Once each article did that, a new systemic and geological problem was being invoked that neither article addressed in any way. It was fallacy of composition at the very least, and laughably but even willfully misleading at the worst.
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Please post articles with content and not just mud slinging.
The world hit peak oil in spring08. That was validated by the $147/bbl price of oil in June 08.
Oil discoveries have averaged 1bbl for every 3- 4bbls we use for a couple decades
Late next yr when the economy recovers, oil will hit $150bbl and will keep going up until he go into recession again. This will happen again and again until we get off imported oil.
On Sep 27 10:27 AM a. palmer jr. wrote:
> Peak oil should be irrelevant before too long, with the coming on
> of the electric and hydrogen cars. I guess we still have a lot of
> gasoline powered lawn mowers around, though. I guess we can change
> them to ethanol. Perfect fuel for lawnmowers, only used in summer,
> etc.
On Sep 27 05:23 PM jerrydd wrote:
>
> The world hit peak oil in spring08. That was validated by the $147/bbl
> price of oil in June 08.
>
> Oil discoveries have averaged 1bbl for every 3- 4bbls we use for
> a couple decades
>
> Late next yr when the economy recovers, oil will hit $150bbl and
> will keep going up until he go into recession again. This will happen
> again and again until we get off imported oil.
On Sep 27 11:00 AM Steve in Greensboro wrote:
> Scientific American took a position contrary to the peak oil orthodoxy?
> Who let them off the politically correct reservation? What's next?
> An entire issue pointing out that global warming is a Leftist fantasy?
On Sep 27 09:56 AM nym wrote:
> Link "article" here leads only to summary. Try www.scientificamerican...
>
> At the end of article you'll see: "ABOUT THE AUTHOR(seekingalpha.com/symbol/s)
>
> Leonardo Maugeri is an economist and senior executive vice president
> of the Italian oil company Eni. He is a visiting scholar of the Massachusetts
> Institute of Technology and a member of M.I.T.'s External Energy
> Advisory Board. In 2007 his book The Age of Oil received the U.S.
> Choice Award. His new book, Beyond the Age of Oil: The Myths, Realities,
> and Future of Fossil Fuels and Their Alternatives, will be published
> in early 2010 by Praeger."
> In my opinion he is not a tribute to the judgement of MIT.
Banking on the hydrogen... that person should read the road map to the hydrogen economy. It will require advances in technology in production, distribution and consumption that we may never achieve. It's like planning on paying your mortgage by winning the lottery... it may happen, but it just might take a while. Oh, and don't be disappointed if it never happens.
On Sep 27 09:05 PM realold wrote:
> Where the heck do you think that electricity will come from? Do
> you have 50k handy to buy an electric car? Will you be happy limiting
> your range to 50 miles or so? Where in your neighborhood do they
> sell hydrogen? Jeez.
The major oil industry players are hard at work lobbying against clean, renewable energy in any form as a replacement to carbon products. They are trying to keep the strangle hold on the American consumer even now when we are driving less then the 1950’s. Consumption in gas and diesel are down per American families to the 1990’s levels. You need to as Americans write, fax, email and call your representative today and tell them we need to get off oil ASAP. The oil industry should be aware that a company could price themselves out of the business. Our employment levels are at the 2000-year level and we are still losing jobs adding to the already lost 10 million-est. to-date.
1. Production from Alberta's tar sands is indeed north of 1 million barrels/day and will easily exceed California's peak production of 1.2 million barrels/day, if it already hasn't. So yes, even when talking about flow rates rather than reserve sizes, it is more than fair to compare the two.
2. There may well be more in store from the state of California, and it may arrive sooner than you think. I'm not sure it will enable California match its 1986 production rate, but on the other hand, even if technological innovations can let an otherwise declining area maintain constant production for an extended period of time, that in itself is testament to what technology can accomplish.
At any rate, some items from the oil fields of the Golden State to watch out for:
stocks.investopedia.co...
^
"An interesting exercise would be to extrapolate this discovery to the entire 1.1 million acres that Occidental has in California. A starting point to do that would be to find out how much acreage the six wells cover. Occidental wouldn't disclose this but when one analyst guessed it at 10% of the total, management would only say that the reserve acreage was "much smaller."
Obviously, there are many unknowns but it is safe to say that this is a multi-billion barrel discovery, and if a find like this could sit unknown for more than 100 years in a worked over area like California, just imagine how much else is out there."
----------------------...
And this, which should interest those familiar with North Dakota's Bakken shale play:
www.ogj.com/index/arti...
^
"Denver independent Venoco Inc. sees 2010 as the year it begins to exploit California’s Miocene Monterey shale in earnest and believes more than 10 billion bbl of original oil in place exist on its onshore acreage.
The Monterey shale play is only now emerging, but the formation may hold the largest shale resource in the US with 300 billion bbl in place, said Timothy Marquez, Venoco chairman and chief executive officer. Monterey holds more than 2 billion bbl on its leases, Venoco estimated.
Venoco, which began geologic studies on the Monterey 4 years ago, has now amassed 200,000 prospective acres and is still leasing onshore. The package includes offshore leases held by production from other formations or not producing and nonproducing onshore acreage."
Stay tuned, :-)
If the world hit peak oil in 2008 when the price went to $147, why is the price now below $70? The rapid reduction in price would indicate that the peak oil theory is incorrect; rather, we experienced a supply disruption or some other anomaly. See Hayek’s discussion of tin as an example. As the price of oil increases, production increases, consumption declines and the search for price competitive substitutes gains velocity. Improved efficiency of everything that uses energy is a form of substitution resulting from price increases. My prediction is that natural gas will become the substitute for oil. Horizontal drilling and fracturing of shale formations worldwide will produce abundant supplies of natural gas for many years into the future. Horizontal drilling and fracturing is resuling in shale plays around the world coming into produciton. Automobiles run just fine on natural gas.
There is enough oil in what are currently deemed unrecoverable reserves such as in the deep ocean, shale formations and oil sands to supply the world for another century, perhaps longer. Extraction will require long-term supply conditions that dictate a price over ~$100. We are nowhere near long-term supply conditions that dictate prices over $100. We have seen peak oil and found it to be leftwing politics.
Peak Oil is a politically driven theory by those who think carbon is a pollutant. The greenies resist every means of energy production except those they deem suitable. Normative judgments are a form of centralized planning, and as Hayak so brilliantly points out, centralized planning is certain to fail.
> Peak Oil is a politically driven theory by those who think carbon
> is a pollutant.
Sigh. Don't confuse geology with ecology. Nor economics with engineering. The basic problem is a lack of big fat structural traps, compounded by a surplus of imaginary reserves.
Most of the shale and tar operators will be bankrupt and gone in a few years, no matter how much money you throw at them.
The price of oil is determined by the highest cost wells needed to keep up with demand. You can have a thousand $20 wells and if they don't meet demand and the only wells left that can are $70 wells, then the price will be over $70 to get them to produce the oil needed.
Peak oil is only about production and whether it can keep up with demand and the numbers are based on normal global demand which will rise as soon as the global economy is back on track. With all the declining wells and new wells not being drilled until the price is up long enough to justify drilling we are creating a very dangerous situation when demand returns.
That may be why China is buying and storing as much oil as it consumes.
You are right. Global warming is a political fantasy of the Left. Global temps are not increasing. The "hockey stick" has been exposed as a fraud based on selected data points. For those of you that haven't already drunk the global warming Kool-aid, have a look at the following link.
wattsupwiththat.com/20.../
But I am convinced that oil will take a big leg up in the next 24 months, not because there will be a global recovery (there won't), but because of the lack of a global power willing to discipline the culturally-medieval Middle East. There will be war.
We are only as rich as our politicians (overlords) allow us to be. And who voted for them?
It is absurd to say the the world hit peak oil last year when oil hit $147/barrel. Supply was increasing ahead of demand that had already begun to fall...
Rather, that is exactly what those "financial engineers" on WS and down in Houston wanted you to believe, and you do.
The reason oil dropped so quickly from mid-July to Dec. is that the perpetrators of this myth had decided that it was just too risky to continue to promote their nonsense, given the political heat that was building and the hearings that were underway.
It would be a shame if "their games" really were exposed, for then we might just get some real regulation, then "the game" would not be able to be played again this year, and the next, and the next....
So, they shorted, made huge profits on the down side....and were back at it this year, even as Gensler putzed around threatening regulation changes while he dragged his feet and delayed real action.
We won't see those high prices in the near term due to constraints in supply. Rather, we will see them again soon only because of no changes in margin requirements and little to NO transparency in the futures markets..
That's a lot of specualtive profit to see slip away...so
"Brazil’s so-called pre-salt oil region may hold between 25 billion and 100 billion barrels of oil, the country’s cabinet chief said. "
www.bloomberg.com/apps...#
On Sep 30 02:08 PM Shale Gas wrote:
> Read it and weep, peak oilers:
"Brazil’s so-called pre-salt oil region may hold between 25 billion and 100 billion barrels of oil, the country’s cabinet chief said. "
=================
Not sure what that has to do with peak oil?
We have 400 billion barrels in the N. Dakota region and over 3 trillion barrels in western states. Peak oil is not about how much oil there is in the world but how much can be produced at a price that doesn't hurt economies.
Also, remember that most of the new finds, like that of Brazil doesn't come on line significantly until 2015 and a lot of it has been contracted to China.
Long term contracts are tying up more and more oil. That is leaving less for us to bid on in the open market. One article states this can even lead to a legal embargo of oil to the U.S.
This is not a simply supply and demand issue because of the cost of production and the value of the dollar going down.
> "Brazil’s so-called pre-salt oil region may hold between 25 billion
> and 100 billion barrels of oil, the country’s cabinet chief said
Try 2 billion boe recoverable, mostly gas, mostly sour.
See article below:
www.peakoil.net/public...